Australian BNPL company Zip has released its Q2 FY23 results revealing a record quarter and profitability in the US for the first time.
Last year saw the company wind down from the UK and cease operation as it focused on its strong ANZ market and growing US reach. This strategy was successful for Zip, delivering its most profitable quarter in the US with a revenue of $56.4 million, up nearly 25 percent from the previous quarter for the region.
Zip boasts 7.4 million active members on the platform. Of those, 2.3 million users are in ANZ. Zip ANZ delivered strong revenue growth of 17 percent YoY. ANZ revenue was up 7 percent from last quarter, and 17 percent YoY at $88.6 million. In Australia, Zip went live with new enterprise merchants, Jetstar, Uber and eBay AU.
Globally, merchants on the platform increased to 97.5k (up 19 percent YoY). ANZ is the leading market with 45.9 thousand merchants using the platform, a 14 percent increase YoY.
“We are very pleased to deliver another strong quarter of record volumes despite the challenging external environment and adjustments to our risk settings,” said Zip Co-Founder, Global CEO and Managing Director, Larry Diamond. “During the quarter Zip continued to make great progress on the strategy to deliver sustainable growth, right-size our global cost base and accelerate our path to profitability. It was very exciting to onboard great brands such as Uber, Jetstar and eBay to our payments platform in Australia and deliver positive cash EBTDA for the US business in November and December, including very strong results on credit performance. We also made great inroads to our liability management retiring $70m of convertible notes in a highly accretive transaction.”
Diamond is optimistic for the rest of the year. “We continue to provide increased benefits to both customers and merchants in today’s high cost environment and are well-positioned for any potential future regulatory changes. The underlying business remains strong, and we are pleased with the benefits and reduction in cash burn from the ongoing simplification of the business footprint and focus on core products and core markets,” he said. “In the current environment of heightened inflation and cost of living pressures, Zip continues to provide a simple, fair and easy to use product that customers can use everywhere and every day, creating a world where people can live fearlessly today, knowing they’re in control of tomorrow.”
In the report, Zip addressed the BNPL regulations discussion. The company referred to the Australian Department of the Treasury’s report from November 2022, which identified three potential options for BNPL regulation. Of the options identified, Zip ‘strongly advocates’ for Option 2, which would require providers of BNPL products to hold an Australian Credit Licence (“ACL”) and comply with modified and scalable Responsible Lending Obligations under the Credit Act, including conducting credit and affordability checks on all applicants.
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