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Zip Co (ASX:Z1P) - Founders Peter Gray (left) and Larry Diamond (right) - The Market Herald
Founders Peter Gray (left) and Larry Diamond (right)
Source: Sydney Morning Herald
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  • Buy now, pay later provider Zip Co (Z1P) has reported on an impressive fourth quarter and given investors a glimpse into its 2020 financial year results
  • The company brought in $46.4 million in revenue over the quarter, which is up 72 per cent compared to this time last year
  • More broadly, Zip's total FY20 revenue is over $161 million, which is up 91 per cent compared to FY19
  • Zip achieved another milestone and grew its customer base to over two million across Australia and New Zealand
  • Close to 200,000 customers joined in the fourth quarter, which the company says is a sign that people are moving away from credit cards
  • At the end of June, Zip had over 24,500 merchants on board, which is up 50 per cent compared to last year
  • Last month, Zip purchased U.S. buy now, pay later company, Quadpay, for $402 million
  • And next month, the company is aiming to launch an updated version of its financial app, Pocketbook
  • Despite this positive news, Zip is down 6.96 per cent on the market today and is trading for $6.55 each

Buy now, pay later provider Zip Co (Z1P) has reported on an impressive fourth quarter and given investors a glimpse into its 2020 financial year results.

The company brought in $46.4 million in revenue over the quarter, which is up 72 per cent compared to this time last year. The fourth quarter broke records, with the last few months of the financial year bringing $46.4 million in revenue, which is up 72 per cent compared to this time last year.

Australia and New Zealand

In Australia and New Zealand alone, Zip achieved another milestone and had more than two million active customer accounts set up across both countries, which is up 60 per cent compared to this time last year.

Close to 200,000 customers joined Zip in the fourth quarter, which the company says is a sign that people are moving away from credit cards.

During the quarter, there were 2.9 million transactions, spending $570 million, which was mainly online, everyday spending and home categories.

Apps

On the App Store and Google Play, Zip was in the top 10 trending mobile applications, with 4.9 and 4.8-star ratings respectively. The app has been downloaded 2.1 million times by users, — double the statistics compared to last year.

Merchants

At the end of June, Zip had over 24,500 merchants, which is up 50 per cent compared to last year. Zip's significant partnerships include Cotton On, Canon, Petbarn, Camilla & Marc, Oz Sale and more.

During the quarter, the company also signed a deal with Epay Australia, who is a leading alternative payment provider. Epay comes with brands such as Vodafone, Telstra, Optus, Microsoft, Sony, Adobe, BP, Woolworths, JB Hi-FI, Harvey Norman and WH Smith.

Credit performance

In March, the company tightened credit for both new and existing customers due to COVID-19.

Despite this, Zip reported strong transaction volumes with exceptional repayment rates, which saw the receivables increase by only two per cent over the quarter to over $1.1 million.

The average monthly repayment rate increased to 15.6 per cent by the end of the quarter. The company maintained a strong credit performance during the pandemic, with net bad debts of 2.24 per cent in line with management expectations.

Quadpay (U.S.)

Last month, Zip purchased U.S. buy now, pay later company, Quadpay, for $402 million.

Quadpay had an impressive quarter, processing over 1.4 million transactions — an increase of 982 per cent compared to last year.

This delivered a total transaction value of US$163 million (approximately A$232 million), which is up nine per cent compared to quarter three and 800 per cent compared to this time last year.

The U.S. business signed up a further 325,000 customers over the quarter, bringing its total customer base to 1.8 million.

Zip Biz and Spotcap

Zip Biz

Before COVID-19, a number of successful pilots ran for Zip Biz, however, the beta project was put on hold due to the small businesses segment being impacted by the pandemic.

The extra time provided Zip with an opportunity to build a stronger pipeline, refine the operating model and prepare for a 2021 launch.

Spotcap

Meanwhile, Spotcap had a lower June quarter due to COVID-19, but with lockdown restrictions easing and small businesses opening, the business did see a take-up in June volumes.

For the fourth quarter, Spotcap recorded a revenue of $2.2 million on $37.3 million in receivables, with $6.5 million in drawdowns over the quarter.

Pocketbook

Finally, the company's free budget planner and personal finance app, Pocketbook, finished FY20 with around 790,000 users.

Zip is aiming to launch an updated version of the app, Pocketbook 2.0, next month. The app is currently in its final testing stages.

Zip Co's Managing Director and CEO, Larry Diamond, is very pleased with the results, particularly in the fourth quarter, and said that COVID-19 was a big test for the company.

"The business model was tested during COVID-19 and proved extremely resilient — in terms of transaction volume, strong revenue mix and outstanding customer repayment performance," he said.

"Zip is well funded and uniquely positioned to continue to trade and grow in the current environment," he added.

Despite this positive news, Zip is down 6.96 per cent on the market today and is trading for $6.55 each at 1:01 pm AEST.

Z1P by the numbers
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