Zip share price on watch following record result

Zip continues to grow its top line despite the tough economic environment.

| More on:
a surprised investor reading about an asx share price in a newspaper

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Zip Co Ltd (ASX: ZIP) share price will be on watch on Tuesday.

That's because the buy now pay later (BNPL) provider has just released its FY 2023 results. Let's see how it performed.

Zip share price on watch following record FY 2023 results

  • Record transaction volume (TTV) up 7% to $8.9 billion
  • Transaction numbers up 8.3% to record 72.7 million
  • Record group revenue up 16.1% to $693.2 million
  • Revenue margin improved 60 basis points to 7.8%
  • Cash gross profit up 20.4% to $250.6 million
  • Expenses down 34% to $618.8 million
  • Loss before tax improved 53.9% to $372 million

What happened in FY 2023?

For the 12 months ended 30 June, Zip reported a 16.1% increase in revenue to $693.2 million.

This was driven by record transaction volumes and numbers, despite US and ANZ active customers falling from 9.6 million to 6.2 million, combined with an increase in its revenue margin to 7.8%. The latter is above its medium-term targets.

As for profits, Zip reported a 20.4% increase in cash gross profit to $250.6 million for the year.

However, while Zip has managed to cut its expenses down by over a third to $618.8 million, this couldn't stop the company from posting another large loss.

Zip's core Cash EBTDA was negative $48.2 million and its loss before tax came in at $372 million. The latter represents an improvement of 53.9% year on year.

At the end of the period, Zip had cash and cash equivalents of $152 million, down from $241.3 million a year ago.

Management commentary

Zip's new Group CEO, Cynthia Scott, said:

In the last 12 months, Zip has delivered strongly against our updated strategy. The strength of our FY23 results was driven by record transaction volumes and revenue, and improved credit losses and margins as well as cost reductions and capital management initiatives.

Revenue growth was solid at 16.1% year on year and revenue margins expanded by 60 basis points to 7.8%. We took targeted action and brought credit losses within our target range to 2.0% of TTV and delivered NTM expansion to 2.8% of TTV. We achieved this against a backdrop of rising interest rates and inflationary conditions, demonstrating the resilience and increasing relevance of our product offering to our customers and merchants.

Outlook

Management notes that Zip US and NZ exited FY 2023 cash EBTDA positive on a monthly basis. Whereas Zip's AU business has been cash EBTDA positive for five years.

In light of this, the company expects to achieve cash EBTDA profit during the first half of FY 2024.

Scott adds:

We achieved an important milestone, exiting FY23 with the US and NZ businesses cash EBTDA positive, along with the Australian business which has been cash EBTDA positive for five years. Cash EBTDA from core businesses improved by 54.8% in the second half versus first half, exceeding our guidance (of a half-on-half improvement of up to 50%) and reflecting a business that is growing sustainably and on track to deliver group positive cash EBTDA during 1H24.

Looking ahead, we are focusing on maintaining the momentum, driving sustainable growth and product innovation in our core markets of ANZ and the US as we deliver on our mission to be the first payment choice, everywhere and every day.

The Zip share price is down 60% over the last 12 months.

Should you invest $1,000 in Zip Co right now?

Before you buy Zip Co shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Zip Co wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor James Mickleboro 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 Zip Co. 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 Scott Phillips.

More on Earnings Results

Happy couple doing online shopping.
Earnings Results

This ASX 200 stock is rising on $148m half-year profit

Another record result was recorded for Peter Alexander but Smiggle is struggling.

Read more »

Accountant woman counting an Australian money and using calculator for calculating dividend yield.
Earnings Results

Guess which $12 billion ASX 200 stock just lifted its dividend by 10%

Passive income investors will be pleased with the latest results from this ASX 200 stock.

Read more »

A scientist in a white coat and glasses puts her arms in the air in a sign of strength and success.
Earnings Results

Sigma shares climb after reporting massive 878% profit jump for FY25

Big profits have been reported from this pharmacy chain giant this morning.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Earnings Results

Brickworks shares higher on half year results and dividend increase

This blue chip has released its half year results. How did it do?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Share Gainers

Why this little-known ASX share just rocketed 27% in today's struggling market

The ASX share is grabbing investors' interest on Wednesday. But why?

Read more »

A woman holds her hands to the side of her face as she sits back in shock at something she is reading or seeing on her computer screen.
Earnings Results

Myer shares crash 10% on disappointing half year results

It was a tough half for the department store operator.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Earnings Results

New Hope shares surge 8% on half-year profit jump, dividend increase, and buyback

This coal miner impressed with its half year results. Here's what it reported.

Read more »

A lion dressed in a business suit roars as two sheep sit awkwardly at the boardroom table.
Materials Shares

Liontown share price roars higher on half year results

This lithium miner has handed in its report card on Friday.

Read more »