Ann: Q3 FY23 Results Update - ZIP Improves Margins, page-21

Quarterly report seemed solid at first read!

My main concerns from the report:
1. Customer numbers (particularly in the USA) are stangant or declining - although this may largely be due to getting rid of the bad debt customers/tightening of lending policies - so customers aren't increasing but perhaps the existing customer pool is becoming higher quality
2. Australian bad debts - a little high for my liking, and particularly concerned if it continues to rise
3. Zip Business might struggle given the current environment, especially with a 40% drop in Originations. On the plus side this significant drop in Originations apparently only translated to a 3% drop in revenue at this stage quarter on quarter.

Pleasant surprises from the report:
1. Great increase in margins - very impressive for ANZ revenue to have increased in Q3 compared to the Xmas period
2. US bad debts has been contained to a lower level than I expected, and faster than I expected

Would like to see some more traction regarding number of merchants and partnerships moving forward, and am also hoping to see the number of physical Zip cards that have been issued rise significantly over the next 12 months - it seems very low for the number of customers (only 10% so far have a physical card).

I don't know enough about the difficulties of refinancing all their funding facilities etc, but it seems like there are quite a few maturing in the next 18 months so possible issues there?

Under capital management it also mentions 5.1 million of inflows from equity released from Zip's debt funding program and bank guarantees cancelled. Is this part of the $20 million they are saying they will receive this half? Or is the $20 million in addtion to this $5.1 million?

Look forward to hearing everyone's thoughts!