Australian buy-now-pay-later provider, Zip Co., has announced impressive results for the fourth quarter, with increased revenue margins and reduced credit losses. These positive outcomes have positioned the company to report profitable earnings in the first half of the upcoming fiscal year.
During the three months ending in June, Zip recorded revenue of AUD 193.8 million, marking a 21% YoY growth. Notably, the company’s core-business revenue margin expanded to 8.5% of the total transaction value, up from the previous year’s 7.6%.
In terms of credit losses, net bad debts as a percentage of total transaction value decreased to 1.86%, compared to 1.89% in the previous quarter. This improvement was primarily driven by a decline in bad debts in the United States, which decreased from 1.15% to 0.85%. However, the net bad-debt ratio in Australia and New Zealand increased from 2.56% to 3.11%.
Despite economic challenges and the rising cost of living for many households, Chief Executive Larry Diamond remains optimistic about Zip’s performance. He stated, “Many consumers are doing it tough, with the cost of living a challenge for many households.”
Providing further positive news, Zip’s U.S. unit concluded fiscal 2023 with positive monthly earnings, excluding tax, depreciation, and amortization expenses. The company anticipates achieving similar results for the entire business during the first half of fiscal 2024.