Zip Co revenue climbs into Christmas season, market reaction muted

Zip Co revenue came in at $27.6m for October, as the company flagged growth across its key verticals in Australia and the US.

The revenue number flowed through from total buy now, pay later (BNPL) turnover of $401.1m, which Zip Co (ASX:Z1P) said was a monthly record and up 104 per cent from the prior year.

The October revenue result was slightly higher than the monthly average in the September quarter, where Z1P booked income of $71.1m (average: $23.7m).

Z1P shares edged higher but traded close to flat around $6.30, off from the August peak of almost $10.

Zip Co revenue

Aside from two spikes in August and October, Z1P shares have held steady in the low-$6 range following the post-Covid BNPL surge after its shares slumped to $1 in March.

While the September quarter result showed triple-digit annual percentage growth in revenue and new customers, the market was looking for more as Z1P shares fell by five per cent following that announcement.

The October result showed Z1P is still hanging onto those triple-digit annual growth rates, as markets assess the outlook following a red-hot period of growth in the space.

Elsewhere, Zip Co said broader company momentum is being outpaced by its US subsidiary QuadPay.

The company said Quadpay contributed $11.4m of the $27.6m revenue figure (41.3 per cent), based off of 200 per cent annual growth in transaction volume to $160.6m.

QuadPay currently has 2.5m customers and the app received 328,000 downloads for the month of October.

Zip Co also pointed to early traction for its ‘Tap and Zip’ partnership with Visa, with “early adopters of this feature transacting on average 4+ times in the last 21 days”, the company said.

Launched last month, the low-margin feature was flagged as possible evidence of cost competition entering the BNPL sector by UBS analysts.

Looking ahead, CEO Larry Diamond said the October result gives the company strong momentum heading into the Christmas shopping season.

Two-thirds of the way through November, Diamond said Z1P is now seeing “annualised volume in excess $5bn per annum” on its platform.