Australian buy-now-pay-later provider Zip has reported positive cash earnings for the half-year period after experiencing a 29% increase in revenue and successfully managing its bad debts.
Financial Performance Highlights
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Cash Earnings: Zip achieved cash earnings before tax, depreciation, and amortization of A$30.8 million for the six months ending in December, compared to a loss of A$33.2 million during the same period the previous year.
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Revenue Growth: The company saw its annual revenue reach A$423.0 million, resulting in a statutory net profit of A$57.2 million, while also expanding its revenue margin by 130 basis points to 8.5%.
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Analyst Expectations: Despite the average analyst forecast predicting a net loss of A$83.3 million, Zip surpassed expectations with its cash earnings forecast sitting at A$29.3 million, slightly above the lower end of its guidance range.
Steady User Growth and Debt Management
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User Base: Zip experienced a 3.3% increase in its user base, reaching 6.3 million users by the end of December.
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Debt Management: The company maintained net bad debts at 1.9% of the transaction value on its platform compared to the previous year.
Strategic Shifts Amidst Challenges
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Global Expansion Setback: Zip has been refocusing on achieving positive earnings after facing challenges from a failed global expansion attempt amidst rising interest rates, inflation, consumer sentiment issues, and global uncertainties.
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Strategic Actions: In response to setbacks, the company reported cumulative net losses of A$2.17 billion over three years, terminated an acquisition deal with rival Sezzle Inc., and shut down international operations outside of the U.S.
With a commitment to financial stability and growth, Zip continues to adapt its strategies to navigate the evolving landscape of the buy-now-pay-later industry.
