ZIP's coming 1Q FY24 Trading Update

Meanwhile, whilst the spite and scaremongering of bankruptcy on ZIP threads on Hot Copper continues and very rarely financial discussion (only the old 2022 bankruptcy narratives alas), what will more professional investors be looking for in ZIP's upcoming trading update?

Revenues first and foremost of course. This trading update last year (1QFY23) it announced group quarterly revenue of $163.2m (up 19% YoY). Its full year was +16% to $693m.

It also important to consider as a % of TTV (total transaction value) as well. Its revenues as a % of TTV were 7.9% ($693mill/$8.816bill) at full year, up from 7.3% ($597mill/$8.157bill). That is, the TTV ZIP was involved in grew by 8.1% on the year, but its revenue from that by more at 16%. Analysts will expect ZIP's revenues as % of the TTV to be pushing into 8%+, particularly given the slight slowdown in overall TTV growth $2.2b (up 15% YoY) in this update last year, but that growth tailing off in the financial year, showing only 6.4% (YoY) for 4QFY23.

Contrary to the generic macro-economic fears down-rampers try to blithely assign to ZIP, its shown above that its overall business still grows, albeit that expansion slowing a bit, and more so does it earnings metrics within that, as ZIP improves the business. Revenue margins were only 7.6% in 4QFY22, and a lowly 7.4% this time last year in this equivalent trading update, but were much improved to 8.5% in the final quarter of FY23. They will likely need to be in the 8-9% range to not disappoint analysts.

Cash transaction margins all important of course, and in the 1QFY22 update were 2.2%. Those margins improved to 3.1% for the final quarter of the FY23 (up from 2.8% in Q3 FY23) - they were 3.1% in FY2021 and 3.8% in FY2020 for context - and analysts will expect to see them in the low 3% range from company guidance/noise.

The eyes of some of my less esteemed posters (who inspire me to post some more factual information on ZIP threads) will of course be focused on bad debts. Again, to give Hot Copper readers a little more context, ZIP reported bad debts at 1.89% in 3QFY23 and 1.86% in 4QFY23. ZIP needs to keep them below its 2% target range in 1QFY24 and very loosely US improvements have recently offset AU declines:


(taken from ZIP's 4QFY23 trading update)

There is a lot of useless distracting noise on ZIP threads and not much substance. These and other figures are what analysts will be looking at in the upcoming trading update in ZIP. Hopefully this gives other Hot Copper readers some solid context for the figures when reading them.

ZIP has guided to breakeven in 1HFY24 - not that you'd believe it from reading these threads. I am stating the obvious (it alas needs to be amongst the crap that pervades these threads for the most), but at the half way mark for that guided breakeven period, this trading update is pivotal to that, but to be clear; as discussed in other threads, ZIP will no doubt keenly report a positive EBTDA for the period as its definition, but will very unlikely report positive EBITDA for the half year period - ZIP reported the US exiting FY23 EBTDA positive and has been reporting ANZ as such for 5 years now.

(Cue now being ridiculed by the usual cohort of course, despite stating past reported metrics)