Zip Co Limited (ASX: ZIP)
Zip achieved an impressive FY24, with the company strengthening its core positions in key markets and delivering strong financial performance across metrics. Zip reported a record total transaction volume (TTV) of $10.1 billion, supported by four consecutive quarters of profitable growth, positive operating cash flows, and substantial revenue growth to $868.0 million. The company’s financial discipline and targeted growth strategy were reflected in a record cash EBTDA of $69.0 million. Early indications for FY25 are equally encouraging, as business momentum and customer loyalty continue to grow.
In FY24, Zip took decisive steps to simplify and solidify its financial foundation. Key actions included refinancing receivables facilities in ANZ and the Americas on more favourable terms, extinguishing all outstanding convertible notes, and raising $217.0 million in institutional equity to repay the company’s existing corporate debt facility and related exit fees. Additionally, a Share Placement Plan raised an extra $50.0 million, further enhancing liquidity. Zip also completed a Small Shareholder Sale Facility, streamlining its shareholder base in line with its simplification strategy. Risk management continues to be a priority for the Board, with FY24 investments aimed at aligning Zip’s risk practices with the company’s size and strategic focus. Notable steps included refining risk appetite statements, reviewing regional risk registers, and bolstering risk and compliance measures, particularly in cyber and data security.
The strengthened balance sheet has positioned Zip as a self-sustaining business with no corporate debt, sufficient capital, and positive free operating cash flows to support future growth. Zip’s ongoing performance underscores its potential to continue enhancing experiences for customers, merchants, partners, and shareholders.
The U.S. business performed especially well, with TTV increasing by 42.8% and revenue up by 43.9% in the first quarter of FY25, driven by customer engagement in higher-margin channels such as the Zip App. In ANZ, strategic portfolio management drove the yield on receivables up to 19.2%, with an expanded excess spread of 6.9%, showcasing resilience and profitability amid high-interest rates. Looking forward, Zip remains focused on its FY25 priorities: growth and engagement, product innovation, and operational excellence. These pillars aim to further strengthen the company’s competitive positioning, optimize product offerings, and streamline operations. Zip’s robust balance sheet and disciplined risk management framework provide a solid foundation for sustainable expansion and long-term shareholder value creation as the company capitalizes on growth opportunities in a rapidly evolving market.
Source: Company’s Report
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