Started strong but faded as the session rolled on. The numbers were strong – Zip are good at keeping the market informed with almost monthly updates so they shouldn’t have come as much of a surprise. Transaction volumes a huge 141% ahead of 1H20, dropping down to revenue of +130% meaning revenue margins were a bit tighter. They did come in cashflow breakeven, operational leverage the key – while competition will drive revenue margins lower, the idea the market is buying into is the operating leverage story where cost growth runs well below top line growth.
The main driver of growth was clearly the Quad acquisition which saw Zip take a real lunge at US, customer numbers tripling there on 12 months. We had the management team in this afternoon and they were very focussed on the international push – not just in the US but tagging the UK and other smaller jurisdictions. For now, a small portion of their volumes are taken in the UK, but it remains a key selling point to grow the merchant base. Hard to fault the result, selling today at least in part due to APT looking to raise cash.
MM is bullish Zip
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