Company profile of Zip Co Limited (ASX:ZIP)

Leading digital payments and retail financial service provider, Zip Co Ltd (ASX:ZIP) was founded in 2013 and now marks its presence across 14 international markets. Headquartered in Sydney, Zip claims to create fair, responsible and innovative payment products that help businesses and consumers to have control over their finances.

The company offers digital payment and point-of-sale services to consumers and merchants across the travel, retail, education and health industries. The retail finance solutions are provided in-store and online. This diversified financial company is listed on the Australian Securities Exchange (ASX) under the ticker code ZIP. Earlier it was listed under the ticker Z1P.

Recent developments

In February this year, Zip announced entering into a definitive agreement with Sezzle Inc. (ASX:SZL) to acquire it through an all-scrip transaction. According to an announcement by Sezzle, the value of the proposed transaction was AU$491 million. Recently, an update on the Sezzle acquisition by Zip was floated, according to which the transaction is progressing well.

At the beginning of March 2022, Zip shared that it had completed AU$148.7million of institutional placement. The BNPL giant further informed that the proceeds from the arrangement would be used for the company’s sustainable growth and to strengthen the balance sheet.

With the completion of the placement, Zip announced a share purchase plan. The company aimed to raise AU$50 million and managed to raise AU$23.98 million at an issue price of AU$1.48 apiece. Following the news, the share prices dropped, and a further drop was observed when Zip released its third-quarter results.

Earnings of Zip in last quarter

The fintech firm marked a significant surge in its customers and merchants during the third quarter, ending 31 March 2022 (3QFY22). However, the financial performance sank on a quarter-to-quarter basis. Zip marked the third quarter as a ‘weaker seasonal quarter’.

The group revenue was up by 38% within a year to AU$155.0 million, but it was 4% lower than the December quarter. Compared to the USA, consumer operations across New Zealand, Australia, and the rest of the world made a considerable contribution to the group revenue.

The transaction volume underpinned the company’s revenue. It dipped by 21% quarter-on-quarter and surged by 26% year-over-year.

During the quarter, Zip recorded a 78% increase in customers and a 90% increase in the merchants which a year. Talking about the company’s balance sheet, Zip had AU$303.4 million in cash and liquidity at the end of the quarter.

The fourth quarterly report can be expected on 21 July 2022.

Z1P Share performance

Today (5 May 2022), the shares of Zip were spotted trading 2.91% high to AU$1.06 at 12:54 PM AEST. Including today’s gain, the share price has gained 1.44% on the ASX in the last five trading sessions.

The shares of Zip have declined dramatically in one year by 86% and tumbled by 82.98% in the last six months alone. 2022 until now has not been a good year for Zip as share prices dropped by 75%.

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