The Zip Co Ltd (ASX: Z1P) share price has rebounded off its lows but is still trading notably lower on Friday.
At the time of writing the payments company’s shares are down over 7.5% to $6.03. This is despite the release of another positive announcement this morning.
What did Zip announce?
This morning Zip released an update which revealed that its strong performance continued during the month of May.
In May, Zip recorded monthly transaction volume of $189.3 million and revenue of $15.6 million. This was a 63% and 78% increase, respectively, over the same period last year.
And while this growth is a touch slower than in April, when transaction volume lifted 86% and revenue rose 81% growth, it is still a very impressive rate of growth in such a challenging economic environment.
Zip added 65,000 new customers during the month, lifting its total to 2.1 million. This represents a total increase of 63% since this time last year.
Also growing strongly was its merchant numbers. They are up 46% year on year to 23,600.
Net bad debts low but rising.
At the end of May, Zip’s net bad debts stood at 2.16%. This compares to 1.99% at the end of April.
Management notes that this is in-line with expectations and significantly outperforming the market average.
Positively, monthly arrears, which is a forward indicator of future losses, reduced from 1.57% in April to 1.47% in May. In addition to this, there was no material change to the number of hardship assistance requests.
Zip’s Managing Director and CEO, Larry Diamond, commented: “May was another strong month for Zip – the performance of the business, both in terms of the continued strong transaction volume, and in particular the outstanding repayment performance, demonstrates the resilience of the Zip business model.”
The chief executive notes that the company is benefiting from the shift away from cash to digital, contactless payments, and ecommerce. Pleasingly, he expects this trend to continue in the future even after the pandemic ends.
Mr Diamond explained: “We also anticipate ecommerce penetration to remain at elevated levels post COVID-19 as consumers gain familiarity shopping online, and retailers invest significantly in this space.”
The chief executive also revealed that Zip is on course to achieve its guidance in FY 2020. “We remain on track to hit our FY20 target of $2.2b in annualised transaction volume set at the beginning of the year,” he concluded.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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