The buy now pay later provider Zip Co
(ASX:ZIP) now known under ticker code ZIP unveiled its third quarter revenue up 39 per cent year on year to $159.2 million, up but down four per cent over the quarter.
Customer numbers grew 78 per cent to 11.4 million with more than 86,000 merchants on its books. The group's transaction volume fell 21 per cent to $2.1 billion over the quarter, however rose 26 per cent over the year.
This news comes as the company's $491 merger with US group Sezzle is set to "significantly enhance" its scale and offering in the key US market, "accelerating growth and delivering significant synergies, which will support the group’s path to EBITDA profitability and positive cash flow during FY24", despite US revenue and transaction volumes experiencing double digit declines on a quarterly basis however over the year, the results came in strong.
The company is taking steps to cutting its operating costs by reducing its headcount by $30 million in financial year 2023 with additional initiatives across procurement and automation underway set to be realised in the coming quarters.
The latest broker note from Macquarie cited that after March buy now pay later web traffic slowed over the year for the first time since the broker has been tracking the data since July 2021, the broker is becoming more cautious on the growth profile of the industry with standalone buy now pay later players considered to be at largest risk. The analyst cited that the significant slowdown in web traffic is thought to provide evidence as to why Zip Co merged with Sezzle. The underperform rating and $1.85 price target are retained.
Shares last traded at $1.20.
