The Zip Co Ltd (ASX: ZIP) share price is on the slide on Tuesday.
In morning trade, the buy now pay later (BNPL) provider's shares are down 9% to 85 cents.
This follows the release of its half-year results.
Zip share price falls despite strong growth
- Total transaction volume (TTV) up 9.6% to $5 billion
- Group revenue up 28.9% to $430 million
- Cash gross profit up 45.9% to $176.2 million
- Group cash EBTDA of $30.8 million (from negative $33.2 million)
- Profit after tax of $73 million but adjusted loss before tax of $1 million.
What happened during the first half?
For the six months ended 31 December, Zip delivered a 28.9% increase in revenue to $430 million.
This was driven by a 5% increase in transaction numbers to 38.6 million, TTV growth of 9.6% to $5 billion, and a 130 basis points increase in its revenue margin to 8.5%.
Zip's group cash EBTDA came in at $30.8 million for the half, up from a loss of $33.2 million a year earlier. Management advised that this was driven by a strong seasonal performance in US TTV, improved margins, and cost discipline.
Finally, the company reported a profit after tax of $73 million for that half. However, this includes one-offs which boosted its result. Its adjusted loss before tax came in at $1 million.
How did its businesses perform?
Zip Americas delivered a record half for TTV (up 33.3%) and revenue (up 40.3%). US bad debts continued to perform well with monthly cohort loss rates at or below 1.4% of TTV.
Australia and New Zealand (ANZ) reported revenue growth of 22.7%, which offset a significant increase in interest costs. Management believes this demonstrates the resilience of the business model.
Management commentary
Zip's CEO and Managing Director, Cynthia Scott, described the half as "outstanding". She said:
Zip has delivered an outstanding result for the half, demonstrating consistent strong performance and continued successful execution of our strategic priorities. A particular highlight was achieving positive Group cash EBTDA of $30.8m. This was driven by record transaction volumes and revenue following a particularly strong seasonal performance in US TTV, improved credit losses in both core markets, ongoing margin expansion and continued cost discipline.
Looking ahead, we remain firmly focused on our three strategic pillars for FY24 – driving sustainable profitable growth, product innovation and operational excellence. Zip is very well-positioned to capitalise on the near and medium term opportunities in our core markets of ANZ and the Americas and deliver greater value for our customers and merchants.
