Zip (ASX:Z1P) share price edges higher after record quarterly update

Can the Zip share price follow through after today's positive first quarter update?

The range-bound Zip Co Ltd (ASX: Z1P) share price is edging higher on Monday after the company released its highly anticipated first quarter update.

At the time of writing, the Zip share price is up 1.17% to $6.93.

A young man in a retail shop pays for his purchases using a card

Image source: Getty Images

Zip share price opens higher on record quarterly performance

Zip delivered yet another strong quarterly performance following a successful rebrand and continued international expansion. Highlights for the first quarter ended 30 September include:

  • Record quarterly revenue of $136.8 million, up 89% year-on-year
  • Record quarterly transaction volume of $1.9 billion, up 101%
  • Record transaction numbers of 14.7 million, up 177%
  • Customer base of 8.0 million, up 82%
  • Merchants on the platform of ~55,200, up 71%

During the quarter, Zip successfully completed a global rebrand across 6 countries, in addition to the US changing from Quadpay to Zip.

US market paves way for growth

Despite the Zip share price trading at roughly the same levels as when it first acquired QuadPay back in June 2020, its US business continues to gather momentum, delivering triple-digit growth across the board.

Year-on-year revenue surged 182% to $67.1 million, transaction volumes jumped 204% to $955.4 million and transactions rose 165% to 5.3 million.

Zip was pleased to highlight that its brand awareness among under 45s is "almost at an all-time high" despite only recently commencing its brand campaign.

Looking ahead, the company pointed to growth initiatives such as its Microsoft Edge roll-out and launch of its physical card program.

Zip believes the US business is "very well placed to make the most of the seasonally strong Q2, beginning with Zip Fest in late October, the roll-out of Microsoft in November and the promotional shopping activity driven by Black Friday and Cyber Monday."

ANZ market grows despite"challenging environment for retail"

Zip's Australia and New Zealand operations delivered solid growth despite ongoing lockdowns.

Year-on-year revenues increased 42% to $64.5 million, transaction volumes rose 48% to $916.9 million and transactions jumped 179% to 9.2 million.

During the quarter, a number of new product features were launched including an improved Zip Money instalment offering, bill switching and affiliate funded offers, as well as cashback.

UK in its early days

Zip officially launched in the United Kingdom in December and has so far delivered an encouraging set of operating metrics.

UK revenues increased 17% quarter-on-quarter to $1.2 million while transaction volumes rose 50% to $21.4 million and transactions doubled to 200,000.

During the quarter, Zip UK launched its virtual card technology in the app, allowing customers to shop online and pay in 4 at any affiliate merchant.

What's next for Zip?

The Zip share price has been relatively stagnant despite the company continuing to kick goals and expand on a global scale.

During the quarter, Zip announced its expansion into India through a strategic investment in ZestMoney. Zip previously said that India "has the potential to become one of the largest markets globally and by FY2026 is forecast to have US$300bn."

Zip is now live in Mexico and "starting to build momentum". The company said that its local sales and marketing team "continues to build a strong pipeline of enterprise merchants".

Zip launched organically into Canada in Q4 FY21, leveraging cross border shopping through its large base of US merchants. The company said that its Canadian business "continues to grow", recently opening up to the second largest region in the country, Quebec.

Finally, Zip revealed that its Middle East acquisition, Spotii, was completed today. Integration of the business into Zip was "well progressed".

Zip share price in 2021

Its been a frustrating year for Zip shareholders, despite a positive 22.5% year-to-date performance.

The Zip share price has largely been range-bound since early May, trading around the low $7 level.

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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