The Zip Co Ltd (ASX: Z1P) share price was among the best performers on the Australian share market last month.
The buy now pay later provider’s shares stormed a remarkable 54% during the month of August.
Why did Zip Co share price smash the market in August?
There were a couple of reasons for Zip Co’s incredibly strong performance last month.
The first was its impressive performance in FY 2020, which led to the company reporting an 87% increase in transaction volume to $2.1 billion and a 91% lift in revenue to $161 million.
Key drivers of this growth were strong increases in customer and merchant numbers in the ANZ region during the 12 months. At the end of the period, Zip Co had more than 2.1 million customers and 24,500 partners on the Zip platform. This was an increase of 62% and 51%, respectively, year on year.
Another positive from the result was its bad debt. Zip Co reported a strong credit performance with net bad debt write-offs of 2.24% and arrears at 1.33%. This was in line with management’s expectations and significantly outperforming the market.
Zip Business and eBay Partnership.
Also getting investors excited in August was the announcement of the launch of Zip Business and a partnership with eBay Australia.
This new partnership gives 40,000 Australian small and medium-sized businesses the opportunity to access working capital via the eBay marketplace.
Management notes that it has been designed to give merchants the freedom to purchase inventory, cover short-term expenses such as marketing campaigns, and manage their cashflows, via access to flexible lines of credit.
As part of the launch, the company is bringing its Spotcap brand into the Zip Business portfolio. Zip Business will be leveraging the deep credit experience in the Spotcap business and combining it with Zip’s sophisticated risk decisioning and real-time onboarding to rapidly scale the SMB Buy Now Pay Later offering.
Pleasingly, management appears to have more products up its sleeve. It advised that this is the first in a series of exciting integrated products and solutions Zip will progressively roll out as it launches Zip Business.
This could mean more positive news flow in September, further supporting the Zip share price.
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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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