Australian buy-now-pay-later provider Zip Co. has reported a substantial reduction in its annual loss and expressed confidence in achieving positive earnings during the first half of its current fiscal year.
For the 12 months ending June, Zip recorded a net loss of AU$401 million ($257.9 million), significantly lower than the AU$1.015 billion loss reported in the previous year. Meanwhile, revenue increased by 16% to AU$693.2 million on a continuing-operations basis.
Zip had already disclosed unaudited revenue figures for its last two quarters and did not declare a dividend.
According to data compiled by FactSet, analysts had forecasted a net loss of AU$324.1 million with revenue amounting to AU$723.9 million. It is not anticipated that Zip will achieve a statutory profit until fiscal 2026.
After excluding one-off items, including a goodwill and intangibles impairment of AU$821.1 million in fiscal 2022, Zip reported an adjusted pretax loss of AU$204.7 million on an underlying basis.
The company experienced growth in its core-business revenue margin, which expanded to 7.8% of total transaction value from 7.2% in the previous year. Additionally, the percentage of net bad debts relative to the total transaction value decreased from 2.7% in fiscal 2022 to 2.0%, primarily due to a reduction in U.S. bad debts.
Chief Executive Cynthia Scott, who recently assumed leadership from co-founder Larry Diamond, remarked, “We achieved this against a backdrop of rising interest rates and inflationary conditions, demonstrating the resilience and increasing relevance of our product offering to our customers and merchants.”
Zip’s U.S. unit, which contributed to 45% of its annual revenue, concluded fiscal 2023 with positive monthly earnings after tax, depreciation, and amortization.
The company anticipates achieving the same outcome for the entire business during the first half of fiscal 2024, which commenced on July 1.