I thought I'd list a few of the key metrics that I took from the investor presentation - given the amount of sh*t written up by various press outlets it's important to look at more of the detail of what's going on. I've listed slide numbers as well if people want to check:
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TTV up 176% and revenue up 150%, while transaction margin went from 3.8% to 3.5% (a 7.9% reduction). This means the business effectively doubled and a half, while only reducing its margin amount by 7.9%. As Zip continues to onboard large enterprise retailers, this margin may well reduce further, but the key of course is that if TTV and revenue continue to explode it is perfectly acceptable. (sl.2/3)
- TTV up 176%, but net bad debts % went down from 1.33% to 1.28%. This is excellent - the TTV has almost tripled in size, but the % of net bad debts actually reduced compared to a year earlier. (sl.2/3)
- Loan book duration reduced by 40% - as the Pay-in-4 transactions from US/UK/Canada increase this duration should continue to reduce (sl.3)
- Generated 44m in operating cashflow - this is hugely important, as much of the rubbish you'll see written up makes it sound like the company just lost $600m+, which of course it did not. (sl.15)
- Cash gross profit margin maintained as the business has more than doubled (sl.16)
- Australian business has been cash flow positive for 12 quarters! I mean who the hell knew? I thought it was like 1 year or something, but the AUS business, similar to the AUS APT business, serves as an early example of what will be achievable in the new markets. (sl.16)
- Repeat customer usage increased from approx. 75% to 85% (sl.18)
- Very high frequency of customer usage - 22x within the first year - this is critical as it debunks the crap written about using active customers as a metric and the view that BNPL customers aren't loyal and just ditch one provider straight after use. (sl.23)
- Cash EBTDA loss of $22.9m - these sorts of figures are far more useful to understand where the business is from a cash sustainability perspective and any potential cap raises, of which I don't think there is a need for general operational and growth expenses for some time. (sl.41)
- Significant improvement in interest expense from 1.9% to 1% as elements of the Cash Transaction Margin. (sl.43)
The thing is this is the boring sh*t that news outlets don't want to write about, because the only people that care are switched-on investors, whereas ridiculous headlines about the total loss make for much better headlines and page traffic. I think the fact the share price hasn't tanked demonstrates that many in the market were already expecting a large headline loss, but that also many can see from examples such as the above that the business is moving forward positively. I'm going to stop banging on about the shorts, because quite frankly it's getting boring - they've squeezed this for 6 months now and it's time LD/PG actually took a stand and did something about it. Maybe there's something going on in the background they're aware of and they're letting this continue, but often I find the simplest explanation is usually the correct one - which is a small group of large funds have cooperated to increase shorts, deter other insto buyers and drive the price down from ATH. I think LD/PG simply think this situation will correct itself when the business is so large the stock price looks silly, however it won't. If indeed Zip is simply victim of a protracted short attack it's time to end it now.
(20min delay)