ZIP -4.56%: the BNPL company was out with their quarterly report for the 3 months to March and there was a bit to unpack – they also started trading under their new code, ZIP, previously Z1P (number 1). Shares initially traded higher but faded through the afternoon to close lower. Transaction volumes grew 26% year on year to $2.1b while revenue grew 38% to $159m as the business saw transaction margins pick up. Credit losses remain an issue, tracking in line with the 2.6% seen in the first half, one of the key reasons the business has been under pressure. It’s hard to see a runway to profit if you’re giving back what you earn (and then some) on each transaction. They’re working on their costs with $30m to come out in FY23 while the changes they’ve made to their risk settings is likely to start coming through in lower credit losses late in the financial year, but more so in FY23. The Sezzle (SZL) acquisition remains on track and the business is now targeting breakeven in FY24. Overall an average update, but no worse than the half-year.
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Performance update for March, stocks that drove returns & our current positioning
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MM holds a small position in ZIP in the Emerging Companies Portfolio
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