The Zip Co Ltd (ASX: Z1P) share price has shot up 5.38% in morning trade, following the release of a trading update from the buy-now, pay-later (BNPL) provider that revealed record quarterly results.
Q2FY20 results
Zip Co announced record quarterly transaction volumes of $562.6 million, which is up 85% year on year and 40% over 1QFY20. Transaction volumes were boosted by record transactions of $44 million during the Black Friday to Cyber Monday period, with annualised transaction volumes now sitting at $2.3 billion. The company also reported quarterly revenue of $38.5 million for 2QFY20, up 101% year on year and 24% over the previous quarter.
Customer numbers increased to 1.8 million, up 24% on the previous quarter, while merchant numbers increased to 20,875, up 17% on the previous quarter. Receivables increased 113% year on year and 33% on the previous quarter to $1,040.5 million. The Zip app continues to rank in the top 10 in both Apple and Google stores with strong ratings.
Successful launches
Zip successfully launched its much publicised partnership with Amazon Australia in November, providing Amazon's first installment payment option. Other well known merchants that joined the Zip platform or went live during the quarter include Optus, Seafolly, Ola, City Chic, and Sigma. Zip also completed a number of marquee integrations, including with Westpac Banking Corp (ASX: WBC)'s payment gateway and Tyro.
PartPay acquisition
Zip completed its acquisition of New Zealand-headquartered PartPay Limited during 2QFY20. PartPay is a global installment technology platform that provides Zip with exposure to New Zealand, United Kingdom (UK), United States, and South African markets. PartPay has now been rebranded to Zip and successfully integrated into the core business.
Zip NZ generated $0.6 million in revenue on transaction volume of $18.7 million from 117,000 transactions in the 2 months since the acquisition. New Zealand is now annualising over $100 million in transaction volumes and customer numbers grew to 165,000, with 32,000 added during the quarter.
In the UK, a managing director was appointed in December who is responsible for spearheading the go-to-market plan. A team of 10 is on the ground with key hires to start this quarter. Preparations are underway for a strong acceleration in the business in 2020.
Zip Biz progress
Zip acquired the Australian and New Zealand business of SME lending provider Spotcap in September. This provides Zip with a proven SME decisioning platform to allow for the accelerated launch of the Zip Biz product. Zip is currently in pilot with a handful of merchants using the Spotcap decisioning service to onboard Zip Biz BNPL customers.
FY20 financial targets
Zip is tracking well against its FY20 financial targets. Annualising transaction volumes were $2.3 billion at Q2 against a target for the end of the financial year (EOFY) of $2.2 billion. There are currently 1.8 million customers with an active Zip account, against a global EOFY target of 2.5 million.
