All eyes will be on the Zip Co Ltd (ASX: Z1P) share price on Thursday when it hands in its highly anticipated half year results.
Ahead of the release, I thought I would pick out three things for investors to look out for. They are as follows:
Strong revenue growth and a narrowing loss
The market is expecting the buy now pay later (BNPL) provider to deliver further strong growth in key metrics tomorrow. According to a note out of Morgans, its analysts are forecasting half year revenue of $162 million. This will be more than double the $69.6 million revenue it recorded in the prior corresponding period. It will also be more than the entire revenue ($161 million) that Zip achieved in FY 2020. And while this isn’t expected to lead to profitable operations just yet, Morgans expects its net loss to narrow to $25 million. If the company outperforms this, then it could be good news for the Zip share price.
Active customer numbers
Zip has already pre-released a number of key metrics with its second quarter update. For example, at the end of December, Zip’s active customers reached 5.7 million. This was up 97% over the prior corresponding period. The company is likely to provide an update on its growth since the end of the half. The market will no doubt be looking to see if its QuadPay business has continued to attract new customers in large numbers. This is especially relevant given the increasing competition in the key US market from PayPal and Shopify. Once again, any under- or over-performance by its growing US business could have a big impact on the Zip share price on Thursday.
International expansion
Another thing for investors to look out for with the Zip half year result is its international expansion. Zip officially launched its UK business at long last in December after COVID-related postponements. While the country being in lockdown won’t have helped with its launch, the market will be keen to see if it is gaining traction with UK consumers. And as Zip is never one to sit still, it wouldn’t be surprising if further expansion plans, potentially into Canada or mainland Europe, were announced.
The Zip share price is up 113% since the start of the year. Investors will no doubt be hoping it extends these gains tomorrow with another strong result.
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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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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