![]() ![]() He also points out the company has experience in doing so, having seen margins fall and ultimately recover at the start of the pandemic. The US might be a huge opportunity, but these results suggest it’s not one without considerable risk as Zip chases growth in a market where the economic backdrop has shifted sharply.ĭiamond says the company has tweaked its risk models such that it can bring cash transaction margins back into the 2.5 per cent to 3 per cent target range. It’s hard to escape the sense that Zip spent too much money acquiring customers who it probably shouldn’t have been extending credit to during the December half. Yes, its growth numbers still look relatively impressive, with TTV up 93 per cent to $4.5 billion, transaction numbers up 147 per cent to 36.3 million, and revenue up 89 per cent to $302.2 million.Ĭredit risks also appear to be an issue: at June 30 last year, Zip held $204.5 million in receivables, but during the December half it wrote $67.6 million, or 33 per cent, of this amount. The problem is that this journey looks like it’s getting a lot more tricky. “We are still very early on in the buy now, pay later journey.” He expects that to grow two-fold by 2024, illustrating the growth opportunity ahead of the group. ![]() The theory is that a bigger, broader and cheaper to run business will allow Zip to chase what Diamond sees as a massive growth opportunity still ahead of the sector.Īs he said repeatedly on Monday, buy now, pay later accounts for just 2 per cent of the $25 trillion retail sector. This includes up to $80 million of cost savings, although the company also notes it will spend $60 million in restructuring costs to get at these enduring savings. Scale should also bring synergies, with $130 million in annual earnings before interest, tax, depreciation and amortisation benefits expected by the end of the 2024 financial year. ![]()
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