BNPL Firm Zip promises more conservative loans
Australian company Buy Now, Pay Later (BNPL) ZipCo says it will be more cautious in its lending and cut costs by $30 million (US$22.5 million) amid a falling BNPL share price.
As The Brisbane Times reported on Thursday, April 21, Zip claims its bad debt had exceeded its target range, as Afterpay reported recently.
While the total value of transactions on Zip’s platform year-on-year increased by 26%, the Brisbane Times report quotes UBS analysts who note that this fell short of expectations , as Zip reaffirmed its intention to turn a profit sooner than expected.
Zip, a major local rival to Afterpay, offers short-term installment loans in Australia, the United States and other markets around the world. While companies in his sector were among the most popular stocks on the market last year, their prices have since fallen as investors worry about things like the impact of rising interest rates and debt. irrecoverable.
Read more: FinTech lenders follow banks in uncertain economic climate
PYMNTS reviewed the uncertain landscape of the FinTech lending world earlier this week, noting that a look at the FinTech IPO index suggests expectations (by investors) are less than optimistic. Since last week, this index, which includes companies such as Open Lending and MoneyLion, is down about 27% this year alone.
Zip co-founder and chief executive Larry Diamond said the company aims to accelerate its path to profitability, a goal the company hopes to achieve by 2024 based on earnings before taxes, depreciation and amortization ( EBTDA).
“In the half-year results, we recognized a change in external factors and announced several adjustments to our strategy – with a refined focus on sustainable growth, a strong unit economy and accelerated profitability,” Diamond said.
“The quarter allowed us to continue to deliver top line growth and strong revenue margins as we begin to execute on this renewed strategy.”
See also: Zip Co acquires BNPL Twisto Payments and Spotii Holdings
Last year, Zip C announced it would acquire BNPL companies Twisto Payments and Spotii Holdings in a deal that would put a combined valuation of the two companies at A$180 million (US$133 million).