Ann: Q1 FY24 Results - Zip achieves positive Group cash EBTDA, page-1977

C'mon Tekvest you know better than that. Plenty of expenses remain static regardless of revenue growth, obvious ones are the cost of staffing, also some major fixed costs such as building leases, equipment, admin, etc. The three directly variable expenses that change in line with revenue are transaction processing costs, interest on borrowings which relate to the UMS, and bad debts. The key is to make sure that interest and bad debts do not blow out.

You want to find the break-even point where the UMS generates sufficient company revenue to cover all fixed and variable costs.... and any UMS over that should then be profit, illustrated below with $100m growth in UMS:

100m growth in ums with say 9% revenue margin = 9m company revenue
Variable costs as % of UMS are:
2% transaction costs = $2m
2% bad debts = $2m
2% interest exp = $2m

So technically this should leave the company with profit of $3m on UMS growth of $100m. You can play around with these %s and see what happens when they blow out, or if they reduce.

It's all about reaching sufficient scale and managing the unit economics which is how the bnpl model can actually work despite what many commentators say.