Zip Co's 1H FY24 results update

Zip Co Limited (ASX: $ZIP) has announced its half-year results for the period ending 31 December 2023 ('1H24'). The company reported a significant improvement in cash EBTDA, with group cash EBTDA reaching $30.8m, driven by strong seasonal performance in US TTV, improved margins, and cost discipline. The group also achieved a 28.9% increase in revenue, totaling $430.0m, and a 9.6% increase in Total Transaction Volume ('TTV') to $5.0b. Additionally, the company saw a 5.0% increase in transaction numbers, reaching 38.6m, and a revenue margin expansion of 130 basis points to 8.5%. Zip's net bad debts remained stable at 1.9% of TTV, and the cash NTM improved to 3.5% amidst a rising interest rate environment. The company's cash gross profit surged by 45.9% to $176.2m, while merchant numbers and active customer numbers also experienced growth.

Zip Group CEO and Managing Director, Cynthia Scott's update

Zip Group CEO and Managing Director, Cynthia Scott, expressed satisfaction with the outstanding result for the half, highlighting the consistent strong performance and successful execution of strategic priorities. The positive Group cash EBTDA of $30.8m was attributed to record transaction volumes and revenue, driven by a particularly strong seasonal performance in US TTV, improved credit losses in core markets, ongoing margin expansion, and continued cost discipline. The Americas business achieved record TTV of $3.1b, up 33.3% versus 1H23, and cash EBTDA of $38.0m. The ANZ business also demonstrated margin expansion with revenue margins up 320 basis points to 11.0% and strong revenue growth of 22.7% versus 1H23, offsetting a significant increase in interest costs. Scott emphasized the company's focus on driving sustainable profitable growth, product innovation, and operational excellence, positioning Zip to capitalize on opportunities in core markets and deliver greater value for customers and merchants.

Summary of 1H FY24 results and strategic outlook

Zip Co Limited (ASX: $ZIP) reported a strong 1H FY24 performance, marked by significant improvements in cash EBTDA, revenue, and transaction volumes. The company's strategic priorities of driving sustainable profitable growth, product innovation, and operational excellence were reflected in the record TTV and revenue achieved in the Americas, as well as the margin expansion and revenue growth in the ANZ market. The launch of Zip Plus in Australia, designed for a higher-for-longer interest rate environment, is expected to drive TTV and margin growth, further contributing to the company's outlook. Zip's continued focus on balance sheet strength, receivables financing, operating costs, and sustainability initiatives underscores its commitment to responsible and transparent operations. With a positive outlook, Zip remains well-positioned to capitalize on opportunities in its core markets and deliver value to its stakeholders.