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  • Fintech Zip Co (Z1P) has generated $45 million in revenue for the March 2020 quarter, despite a COVID-19-fueled downturn in discretionary spending
  • The revenue accrued represents a 96 per cent increase on the prior corresponding period (PCP)
  • However, transactional volume slumped eight per cent compared to last quarter, while total transactions dropped by roughly one per cent
  • Nevertheless, Zip says the figures demonstrate the ongoing and sustained demand for its services during COVID-19
  • To support its growth, Zip has launched a ‘Shop Everywhere’ feature, allowing Aussie users to pay in instalments at any online store
  • According to Zip, customers have used this feature to pay for essential goods during the pandemic
  • More broadly, the company’s global businesses has continued to grow, securing global partnerships with Cotton On Group, Nandos and even brands like Tommy Hilfiger and Calvin Klein
  • Despite the results, cost-cutting measures such as salary cuts have been implemented, but Zip assures shareholders its financial position is strong
  • Zip is down 4.63 per cent on the market and shares are trading for $2.06 each

Fintech Zip Co (Z1P) has generated $45 million in revenue for the March 2020 quarter.

This impressive figure represents a 96 per cent increase to the prior corresponding period (PCP), as well as a 17 per cent increase on the December 2019 quarter.

In the first seven days of April, Zip has seen a 6 per cent uplift in transaction volume compared to March and a 15 per cent increase against February. For the March 2020 quarter, the transaction volume totalled $518.7 million which is an 84 per cent jump compared to the PCP.

This shows the ongoing and sustained demand for Zip’s services, even amid the COVID-19 crisis.

“Despite the economic impact of COVID-19, the Zip ANZ business continues to perform strongly, with healthy customer growth, transaction volume, and a strong pipeline of new partners in the March quarter,” Zip Managing Director and CEO Larry Diamond said.

Quarterly performance and outlook

During the quarter, the buy now, pay later company launched the ‘Shop Everywhere’ feature, which allows Australian app users to pay with Zip at any online store.

The function works by generating a one-time-use virtual card number at the checkout. This feature together with the current Zip digital wallet functionality gives users the option to pay for everyday things such as groceries, fuel and any other expenses.

Statistically, customer numbers increased by 194,000 to 1.95 million, up 67 per cent to the PCP.

The coronavirus has caused a lot of discomfort, uncertainty and financial struggles which is why Zip’s initiatives continue to be utilised.

Zip Australia

Zip Co’s Australia business had a strong December 2019 quarter but unfortunately segued into a transactional drop. Positively, though transactional volume was still up 77 per cent compared to the PCP.

Over the quarter, Zip added 156,000 customers and roughly 1800 merchants.

The fintech darling also signed its first global agreement with fashion and lifestyle retailer, Cotton on Group.

Zip partnered with Payflex in South Africa and QuadPay in the U.S. to offer the buy now, pay later service to customers shopping at Cotton On Group brands. These include Cotton On, Cotton On Body, Cotton On Kids, Rubi, Factorie and Typo.

The company expanded its offerings to other world-renown brands such as Nandos, Grill’d, Universal Store and even Phillips-Van Heusen Corporation (PVH) brands like Tommy Hilfiger, Van Heusen and Calvin Klein.

Receivables increased by 13 per cent over the quarter to over $1 billion. The monthly customer repayment rate was 12 per cent for the quarter and net bad debts were 1.84 per cent at the end of the quarter compared to 1.68 per cent at the end of the December 2019 quarter.

Zip believes its credit-decision technology, the management of its receivables portfolio and credit checks from day one has positioned it well to continue trading in the current environment.

Zip New Zealand

Zip New Zealand generated $1 million in revenue through a transaction volume of $22.1 million from 143,000 transactions in the March quarter.

Customer numbers increased to over 204,000 and merchant numbers grew by 150 to over 1250.

Unfortunately, as New Zealand went to alert level four late last month, most online and retail was closed and caused volumes to drop. Despite this, Warehouse Group and Noel Leeming have been providing essential goods online which has led to transaction volumes beginning to normalise.


Small and medium enterprise (SME) lender and Zip subsidiary, Spotcap, reported quarterly revenue of $2.8 million on receivables of $40.6 million.

The COVID-19 pandemic is expected to directly impact the SME lending environment, however Spotcap continues to support its clients based on their individual circumstances.

In response to the changes, the company has adjusted its credit policies and procedures. It is engaging in Government initiatives such as the Australian Government SME Guarantee to support small businesses for the next six months.


Over 775,000 Australians use Zip’s Pocketbook platform, making it a leading personal finance management app in Australia.

Pocketbook is being reinvented with a new app that uses banking data to help users improve their personal finances, and achieve savings and lifestyle goals.

The launch of Pocketbook 2.0 is expected in Q4 FY20 and will hopefully help Australians take control of their finances during this uncertain period.

COVID-19 cost reductions

Zip has taken appropriate cost-reduction measures to position itself for the possibility of an economic downturn.

The fintech company has reduced its full time workforce by 20 per cent, which has saved roughly $8 million. The board and other senior staff members have taken a voluntary 20 per cent reduction in their salaries. Zip has also reduced planned capital expenditure to $1.2 million and is considering delaying the launch date of U.K. operations.

“COVID-19 has presented an unexpected and significant challenge to many in the community, and our priority remains ensuring the safety of our staff and supporting our customers and retail partners,” Larry stated.

“Zip is well funded and uniquely positioned to trade through the current environment, given our product differentiation, strong proprietary credit platform, healthy repayment profiles and penetration into defensive, everyday spend categories,” he added.

Current financial position

Zip has over $1.1 billion of total available facilities, with $101.5 million currently undrawn. The undrawn facilities and Zip’s healthy repayment profile enable the company to still meet its medium-term receivable funding requirements.

Zip also boasts sufficient liquidity of over $30 million to support business growth.

Additionally, through the acquisition of Spotcap in 2019, Zip has facilities of $47 million ($37 million drawn) to support its SME lending operations.

Zip continues to work with its funding partner to navigate the COVID-19 impact and potential access to Government-led initiatives to support SME lending in both Australia and New Zealand.

FY20 financial targets

Zip has two targets for the rest of the 2020 financial year. These include hitting $2.2 billion in annualised transaction volumes and a global target of 2.5 million customers.

Zip currently has 1.95 million customers with an active account, but the company says the current economic conditions and the delay of its launch in the U.K. could impact this target.

Zip is down 4.63 per cent on the market and shares are trading for $2.06 each at 12:12 pm AEST.

Z1P by the numbers
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