Ann: FY20 Appendix 4E Preliminary Final Report, page-88

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DJ Zip Co.'s Annual Loss Rises as BNPL Provider Expands -- Update

By Stuart Condie

SYDNEY--Zip Co.'s annual loss widened by 80% due to expansion costs, as growth in the
buy-now-pay-later industry and e-commerce accelerated amid the coronavirus pandemic.
The Australian company Thursday reported a net loss for the 12 months ended June 30 of
20.0 million Australian dollars (US$14.5 million), compared with a A$11.1 million net
loss a year earlier. Zip recorded A$10.3 million in costs related to the acquisition of
New Zealand's PartPay, small business lender Spotcap, and U.S. installment payment
provider QuadPay.
Revenue rose by 91% to A$161.0 million thanks to a 63% increase in customers, as
announced in July.
Zip's partnership with Amazon.com Inc. in Australia helped it to boost customer numbers
to 2.1 million, with merchant numbers rising by 51% to 24,500.
Its reported monthly arrears rate declined to 1.33% from 1.89%, which Zip said
validated its proprietary credit decision-making engine, portfolio management and
collections processes.
The company said it expects to launch in the U.K. in the first half of the current
fiscal year. Its priorities in the current year also include accelerating U.S. growth and
launching its business-lending partnership with eBay Inc.'s local portal, the
announcement of which helped Zip shares rise by 27% to a record close of A$9.65 on
Wednesday.
The company didn't declare a final dividend.
Among Zip's costs that widened its full-year loss was purchase of the 86% of U.S.
installment operator QuadPay it didn't already own. Shareholders will vote on Aug. 31 on
Zip's proposal to issue new shares, options and notes to fund the deal.
Zip moved to increase its exposure to the US$5 trillion U.S. retail market--which is
roughly 15 times larger than Australia's--when it became clear the pandemic was
accelerating the pre-existing shift to online transactions among retailers and consumers.

Zip and larger rival Afterpay both say the shift, coupled with a desire among consumers
for a lower-cost alternative to traditional credit cards, has helped drive their growth
since the start of 2020.
Shares in Zip have risen nearly threefold since January. Their recovery from the lows
plumbed during the initial panic generated by the pandemic is even more dramatic, with
the stock surging more than ninefold since touching A$1.05 on March 23 as consumers
sought lower-cost ways of paying in installments and as businesses sought to maintain
cashflow and convert browsers to buyers.
Bad debts have risen along with unemployment rates in Zip's key markets, hitting 2.24%
of gross receivables by June, compared with 1.63% a year earlier. Receivables rose 73% on
year to A$1.2 billion.
Zip shares were 8.8% lower at A$8.80.
Write to Stuart Condie at [email protected]

(END) Dow Jones Newswires
August 26, 2020 20:35 ET (00:35 GMT)
Copyright(c) 2020 Dow Jones & Company, Inc.

Thursday 27 August 2020 10:35:00.000 AEST