Zip (ASX:Z1P) share price on watch with 130% revenue growth in HY21

The Zip Co Ltd (ASX:Z1P) share price will be on watch today after it reported 130% growth of revenue for the first half of FY21.

| More on:
Zip share price man hitting digital screen saying buy now pay later

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: Z1P) share price will be on watch today after revealing strong levels of growth in its FY21 half-year result.

What did Zip report?

Zip revealed that it generated record revenue of $160 million, which was growth of 130% year on year. At December 2020 it was generating annualised revenue of at least $480 million.

This revenue growth was made possible thanks to total transaction volume (TTV) growth of 141% year on year to $2.32 billion – this was annualising at $7.5 billion at December 2020.

Zip reported that it made positive cash earnings before tax, depreciation and amortisation (EBTDA) with cash gross profit margins increasing to 54%. The buy now, pay later company said that it is demonstrating market leading unit economics whilst investing for global growth.

The company said that the addition of Quadpay delivered a step change in unit economics, revenue yield and capital efficiency for the company. Revenue as a percentage of TTV was 6.89%, the gross profit margin as percentage of TTV was 3.71% and the blended book is now recycling every three months on average.

Zip said that it now has more than 5.7 million active customers, which was an increase of 217% year on year. It also has more than 38,500 merchants across the US, Australia, New Zealand and the UK.

The company said that its credit performance continues to deliver market leading results with net bad debts of 1.93% in Australia, demonstrating the strength of Zip's proprietary real-time credit decision technology.

New growth and partnerships

Zip said that it has secured key partnerships with Gamestop, Fanatics, Newegg and Sunglass Hut in the US. It has also partnered with Harvey Norman Holdings Limited (ASX: HVN), Domayne and Adore Beauty Group Ltd (ASX: ABY) in Australia.

The buy now, pay later business also said that it has launched in the UK in December 2020 with a number of brands including Boohoo, JD Sports, Fanatics and Cotton On with a strong global pipeline building.

Zip said it has now launched 'Tap & Zip' in Australia, becoming a Visa principal issuer. It has enabled a Chrome extension in the US, which enables users to pay later on any website.

It has established a new markets team to explore strategic and opportunistic expansion. During the half, a number of investments were made in the buy now, pay later space across Europe and the Middle East. Canada is currently in the pilot stage and scheduled for a soft launch in the second half of FY21 to support the US merchant base.

Zip business was formally launched after its beta period, with a refreshed brand, signing names like eBay and Facebook as partners. This allows small businesses to buy now, pay later for advertising and working capital.

Zip share price movements

The Zip share price has been shooting higher this year. Since the start of 2021, Zip shares have risen higher by 112%.

Outlook

Zip said that it has global momentum and it has set the foundations to accelerate growth across the world over the rest of FY21. It's looking for new opportunities and strategic partnerships to expand the footprint.

It also said that it has a strong pipeline of global retail partnerships. Zip is going to keep focusing on healthy and sustainable unit economics.

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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 Bruce Jackson.

More on Share Market News

Happy young woman saving money in a piggy bank.
Share Market News

Buy these ASX dividend shares to beat term deposits

These shares could be superior to term deposits according to analysts.

Read more »

The silhouettes of ten people holding hands with their arms raised against the sky, as the sun rises or sets in the background.
Share Gainers

Here are the top 10 ASX 200 shares today

The ASX was back to the races this Tuesday.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Opinions

Could Soul Patts shares hit $50 in 2025?

This company jumped more than 16% yesterday.

Read more »

Stethoscope with a piggy bank in the middle.
Broker Notes

Australian health insurance: Does Macquarie prefer Medibank or NIB shares?

Medibank and NIB shares have both surged in 2025. Here’s what Macquarie expects now.

Read more »

A woman reaches her arms to the sky as a plane flies overhead at sunset.
Travel Shares

Why the Qantas share price soared 20% in May to new all-time highs

With another stellar month in May, Qantas shares are up more than 79% in a year.

Read more »

Man smiling at a laptop because of a rising share price.
Broker Notes

9 ASX 200 shares just upgraded to strong buy ratings

Brokers have upgraded these shares amid expectations of price growth over the next 12 months.

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Share Gainers

Why DroneShield, Judo, Pepper Money, and Strickland shares are surging today

These shares are having a good session on Tuesday. But why?

Read more »

A young woman holds an open book over her head with a round mouthed expression as if to say oops as she looks at her computer screen in a home office setting with a plant on the desk and shelves of books in the background.
Share Fallers

Why Elders, IDP Education, Life360, and Pilbara Minerals shares are falling today

Let's see why investors are selling these shares.

Read more »