Did Zip really outgrow former ASX favourite Afterpay in the June quarter?

Zip appears to be growing in markets where Afterpay has struggled.

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Key points

  • Block revealed today that Afterpay saw a total of US$5.3 billion of transactions in the June quarter – 13% more than it did in the prior corresponding period (pcp) 
  • That's nothing to scoff at, except for one thing... 
  • Zip achieved $2.2 billion of total transaction value in the same quarter, 20% more than that of the pcp 

You heard it here first, folks. Zip Co Ltd (ASX: ZIP) outperformed former market darling Afterpay in some crucial measures in the June quarter. One of which was growth in customer spending.

Perhaps the company’s comparatively strong growth has helped bolster the Zip share price lately.

Zip’s stock has gained more than 140% over the last 30 days to trade at $1.24. Though, it’s still 71% lower than it was at the start of 2022.  

So, how did the former S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) giant succumb to its comparatively minute competitor in the June quarter? Let’s take a look.

Did Zip really outgrow the former ASX fave?

Owners of Zip shares, rejoice. The company recorded notably higher growth than Afterpay in the June quarter, beating its former ASX peer’s total transaction growth by 7%.

On releasing Block Inc (ASX: SQ2)’s latest quarterly results today, the US-based tech monolith announced its recently acquired Afterpay brought in US$5.3 billion of total transactions over the three months ended 30 June.

That represents a year-on-year increase of 13%.

Afterpay’s transaction growth was slowed by shifts to online spending, competition, and foreign currency impacts.

Block chief financial officer Amrita Ahuja noted Afterpay’s growth held up better in its “more mature regions” like Australia, continuing:

Trends have flowed more in North America, a newer market for Afterpay, where the primary vertices of fashion and beauty are both discretionary retail, and where the Afterpay in-person product is still ramping up.

Meanwhile, as my Fool colleague James reported last month, Zip boasted $2.2 billion of transactions in the June quarter – a 20% year-on-year increase. That’s not too shabby.

Its growth was mostly driven by an uptick in the US – the same market Afterpay is seemingly struggling in.

Zip’s transaction volume in the nation rose 17% year on year last quarter. That in Australia and New Zealand lifted just 7%.

Whether the remaining ASX 200 BNPL stock can continue to compete, however, remains to be seen. Particularly as Ahuja pointed to Afterpay’s potential upwards trajectory, saying:

As we integrate Afterpay, we see an opportunity to further diversify, particularly in the US with our base of millions of Square sellers across a range of high ticket verticals and omni-channel products.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Block, Inc. and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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