Zip Co shares on the rise

Quarterly revenue for company $38.5m, up 24pc

BUY now, pay later company Zip Co Ltd’s shares have surged on a trading update showing it was on track for a bumper year.

Zip Co’s December quarter was its best ever as customers splurged in sales on Black Friday, Cyber Monday and Boxing Day.

Black Friday sales not only benefited Zip Co but were felt across the nation with the online sales event dragging traditional December spending into November, according to last week’s Australian Bureau of Statistics figures.

Zip Co’s quarterly revenue was $38.5 million, up 24 per cent on the first quarter of 2019/20, the financial technology company said in a trading update to the ASX yesterday.

Zip Co also posted a record quarterly transaction volume of $562.6 million for the second quarter of 2020, up 40 per cent on its first quarter.

By the end of December, 1.8 million customers had an active Zip account that allows them to buy now and pay later without a credit card at 20,875 merchants, including Amazon Australia.

Customer numbers are up 24 per cent from the September quarter, while merchants are up 17 per cent.

RBC Capital Markets analyst Tim Piper said Zip Co was tracking nicely and he expected it to exceed its $2.2 billion target at the end of the financial year.

The 1.8 million active customers and 20,875 merchants were broadly in line with RBC projections, Mr Piper said.

“This appears a solid result at the top-line beating consensus estimates as anticipated by us,” he said.

Zip Co also raised equity sufficient to attract further master trust funding in the coming quarter, he said.

Zip Co’s shares were up 3.12 per cent at $3.64 at the close of trading yesterday.