The Zip Co Ltd (ASX: ZIP) share price is marching higher on Thursday, up 2.31%.
Shares in the ASX buy now, pay later (BNPL) company closed yesterday trading for 52 cents. They are currently swapping hands for 53.2 cents apiece. Zip shares climbed as high as 56 cents each this morning — a 7.7% jump.
This comes following the release of the company's third-quarter results for the three months ending 31 March (Q3 FY23).
Read on for the highlights.
Zip share price lifts alongside quarterly profits
- Group quarterly revenue of $182 million, an increase of 15% from Q3 FY22
- Transaction volume of $2.2 billion, up 9% year on year
- Revenue margin for the core business of 8.3%, up from 7.9% in Q3 FY22
- 2 million active customer numbers as at 31 March
What else happened during the quarter?
The Zip share price could also be receiving a boost today from the company's improved cash transaction margin for its core business. That increased to 2.8% for the quarter, up from 2.5% in Q3 FY22. This was in line with medium-term targets.
The ASX BNPL stock also reported revenue growth of 23% year on year for its ANZ segment. Meanwhile in the United State segment, credit loss rates dropped to 1.2% of total transaction volumes, down from 3.7% in Q3 FY22.
Zip signed or launched a number of key enterprise merchants over the three months. Those included: ASICS in Australia, PlaceMakers in New Zealand, and Pet Supermarket and World Wrestling Entertainment in the US.
In Australia, Zip has also signed and launched with Peloton in the new quarter. The company said its Australian business delivered record revenue in Q3 FY23, with current market conditions and industry consolidation "providing a great opportunity to increase market share".
What did management say?
Commenting on the results sending the Zip share price higher today, CEO Larry Diamond said:
We are very pleased to again deliver both solid top line growth and strong, improved margins for the quarter.
Zip's differentiated business model, which is less reliant on discretionary consumer spending, is proving resilient in the current operating environment with core cash transaction margin increasing to 2.8%, driven by revenue margin expansion to 8.3% and an ongoing focus on credit performance.
What's next?
Looking to what could impact the Zip share price in the months ahead, the ASX BNPL stock expects aggregate net cash inflows of approximately $20 million in H2 FY23. That relates to the divestment of its Twisto businesses in Central and Eastern Europe, its Payflex business in South Africa, and the wind-down of its business in the Middle East.
Zip reported it's on track to deliver up to 50% core cash EBTDA improvement in H2 FY23 versus the $33 million result for H1 FY23. The company said it is well funded with sufficient available cash and liquidity to support it through to cash EBTDA profitability in H1 FY24.
Zip share price snapshot
As you can see in the chart below, the Zip share price will need some more up days like today to get back into the green.
Shares in the ASX BNPL stock are down 3% in 2023 and down 55% over the past 12 months.
