It has been a wild morning for the Zip Co Ltd (ASX: ZIP) share price following the release of the company's quarterly update.
In early trade, the buy now pay later (BNPL) provider's shares were up as much as 11% to 92.5 cents.
Whereas the Zip share price is now down 6.5% to 78 cents.
Zip share price bouncing around on record quarter
- Record quarterly transaction volume up 22% quarter on quarter to $2.7 billion
- Transaction numbers up 15% quarter on quarter to a record of 22.6 million
- Record quarterly revenue up 12% quarter on quarter to $188 million
- Revenue margin of 6.9%
- Cash transaction margin of 2.6%
- US business delivered positive operating earnings in November and December
- Credit loss rates down to 1.1% of total transaction value
- Active customer numbers flat at 7.4 million
What happened during the quarter?
For the three months ended 31 December, Zip reported a 16% quarter on quarter increase in revenue to $183.9 million. This reflects a 28% increase in US revenue to $85.7 million, a 7% lift in ANZ revenue to $88.6 million, and a 13% rise in Rest of the World revenue to $9.6 million.
This revenue growth was underpinned by a 23% increase in transaction volume and a 15% lift in transactions, which offset flat active customer numbers.
However, the big news, which is likely what gave the Zip share price its huge early boost this morning, is that the company's US operations delivered positive cash EBTDA in November and December. Pleasingly, this isn't expected to be a one-off during the holiday period. Management believes that the business is on track to exit FY 2023 cash EBTDA positive on a sustainable basis.
And with Zip ending the period with available cash and liquidity of $78.5 million, management appears confident that this will be sufficient to support the company through to cash EBTDA profitability.
Management commentary
Zip co-founder, global CEO, and managing director, Larry Diamond, was very pleased with the quarter. He commented:
We are very pleased to deliver another strong quarter of record volumes despite the challenging external environment and adjustments to our risk settings. During the quarter Zip continued to make great progress on the strategy to deliver sustainable growth, right-size our global cost base and accelerate our path to profitability.
The underlying business remains strong, and we are pleased with the benefits and reduction in cash burn from the ongoing simplification of the business footprint and focus on core products and core markets.
In the current environment of heightened inflation and cost of living pressures, Zip continues to provide a simple, fair and easy to use product that customers can use everywhere and every day, creating a world where people can live fearlessly today, knowing they're in control of tomorrow."
