Not sure how i feel, however thought it note worthy, Shares up approximately 18% in the last couple of days, granted; off a low base .

Zip and Google Pay Team Up, Providing Customers and Merchants with Flexible Payment Options at Checkout

Merchants who accept Google Pay online now have the option to offer Zip’s Pay-In-4* at checkout, further enhancing customers' ability to manage their expenses with flexible payments.

December 13, 2023 07:00 AM Eastern Standard Time

NEW YORK--(BUSINESS WIRE)--Zip Co. (ASX: ZIP) today announced a collaboration with Google Pay that will enable merchants in the U.S. who accept Google Pay online to integrate the innovative Zip Pay-In-4* service, issued by WebBank. This integration, scheduled for a pilot launch in January 2024, comes as Buy Now, Pay Later (BNPL) adoption is on the rise, offering consumers enhanced flexibility in their payment choices at checkout.

Full article link below.

https://www.businesswire.com/news/home/20231213099245/en/Zip-and-Google-Pay-Team-Up-Providing-Customers-and-Merchants-with-Flexible-Payment-Options-at-Checkout

Disc : Small holding IRL

My wife and I have ZIP accounts and we use It for small purchases, Birthdays, Anniversaries and other small random Items not in our regular budget.

Yesterday when I logged in to my account, I was greeted with a passive aggressive notification that I could not easily clear Instructing me to Increase my payments to clear balance quicker - Felt like a debt recovery strategy.

I make regular payments, and the balance is gone in no time at all.

I logged in to my wife's account and noticed that her required payment had Increased without notice from $80 to $380.

We all know ZIP has poor debt, however if your ZIP's Strategy is to peruse customers that have good credit, pay early etc to easy their cashflow, this is not a good practice.

In the current environment Imagine if ZIP Increased a vulnerable single parents amount and maybe took the food allowance or rent money without notice.

NOT OK ZIP!!

Whilst I do understand @Noddy74's scepticism regarding the ticker code change from Z1P to ZIP and it "not being important" to the performance of the company. I can speak from personal experience how this can have a small impact to shareholders. In my case my accountant's systems logged my holding incorrectly as ZIP instead of Z1P in our proposed filings/tax return - with obviously an error in the overall results (presumably a data entry typo by someone in their firm) - luckily I picked this up only because I line by line checked every holding - but I could easily see how someone could miss this and have an issue

Glad to see management are focused on the important stuff:

Hard to believe it won't fix this:

HY22 Result Update -Another strong quarter from ZIP

Increased revenue - Record transaction volume and an Increase in numbers.

HY22-Results-Update.PDF

Full results 24th February 22

Disc - Hold IRL and SM

BNPL is now a way of life, just like how washing machines replaced doing the laundry by hand.

Will it ever be profitable? Who knows - but airlines are never profitable too. Neither are food delivery companies. Honestly the US has bigger issues to worry about and really, probably have bigger fish to fry. BNPL was probably a low hanging fruit that was needed to generate some buzz.

It's just a matter of backing the right horse - whether that horse is Zip, Afterpay (Square), Paypal, Klarna or others.

Red flags accumulating?

•  Perhaps I'm being too cynical, but todays “non essential” announcement on Nov trading figures seems to correspond nicely with the notification of the performance rights for Grey and Diamond and a flailing share price over the past 12 mths.
• Rebranding, is is just me or is the new logo s**t?
• Loss of momentum/brand recognition in the US by changing Quadpay to Zip
• Acquisitions in far flung places, Poland, Saudi and India. It would seem pretty hard to integrate all the divisions across such a diverse group of countries, with differing regulation requirements and consumer trends/preferences.
• Regulation in the form of increased/improved credit checks. I used to view this as a positive for Zip given they do consumer credit checks and if regulation tightened up they would be a step in front of APT etc. I no longer view this as a threat as I think it is unlikely governments around the world will try and reign in consumer spending at this time.
• AGM, I listened in and found it quite “fluffy”, it felt like they trying too hard to spin positive vibes about the companies culture, for example everyone in the eco system was referred to as a “zipster”. 
• Cash apps/crypto wallets etc, they were early in talking about this but appear to be left behind compared to Square, Paypal, even CBA.

I’ve been in and out of Zip over the years and have made good returns, but I am currently considering whether it has the legs to maintain its 2^nd in line position or if it will fade in importance along with the other 3^rd tier BNPL options.

Would appreciate feedback on the positive and negative sides

Disc: Hold a remaining small holding RL, considering getting out

From Morningstar today.

I have no holdings of BNPL companies but am a contented APT customer

Is this the beginning of the end for BNPL? Editor's Note

Oh, how the mighty have fallen.

Emma Rapaport

The sales event of the year is upon us! 7am on Friday an assault was unleashed on my inbox as every retail company I'd ever given my details to flooded by emails with Black Friday discounts. No cash? No problem. BNPL is available at the checkout. Afterpay-style services are coming up with creative ways to entice us to take on more debt, and the retailers love it. Global fintech Klarna claims retailers who offer BNPL see an increase in average order value of around 45%. We may have cut up the credit cards but we haven't kicked the habit, with Australian's collectively owing more than $900 millionto buy now, pay later (BNPL) services.

But public opinion is wavering. BNPL players including Afterpay, Fupay and Zip Co got a shellacking on the ABC's Gruen panel last week. Host Wil Anderson said F*-U to BNPL, panellist Kirtsy Muddle has a "real ethical problem with it" calling on the advertising regulators to step in, and Todd Sampson thinks it’s a "twisted, dark form of debt" targeting the most financially vulnerable. On social media, love has turned to hate as influencers who once spruiked BNPL to their followers now condemn the service as a modern debt trap. Groups like Financial Counselling Australia have been talking about the dangers of unregulated credit for some time. Now, their concerns are going mainstream.

Investors are heading for the exit. Once market darlings, shares in all the major players are down between 16% and 40% over the last three months. The sector has massively underperformed the S&P/ASX 200 as investors baulk at huge marketing spends, mounting credit losses and lower than expected customer growth.

In the media, it's open season on the ethics and profitability of the BNPL business model. Reporters from the Financial Review ripped into the Beforepayprospectus this week, detailing large write-offs exceeding revenues and accusing the company of building its business off the back of Centrelink recipients. Meanwhile, the Guardian highlighted warnings from Openpay auditor's that the company is facing "material uncertainty" after a reported spike in debts as it?pursues an aggressive growth strategy in the UK and US.

We haven't even discussed the major existential, namely looming regulatory threats as the RBA pushed for an end to merchant surcharges, and increased competition from heavyweights like CBA's Step-Pay, PayPal's Pay in 4 and ApplePay.

As investors, we're told to seek out unloved and out-of-favour stocks, to look beyond the negative press and focus on the fundamentals. However, the question of quality remains. There's no point being contrarian for the sake of it. On the positive side, BNPL offers customers convenient financing, which they seem to like, splitting payment over instalments with interest-free terms. Covid-19's acceleration of the shift to e-commerce means retailers are looking for effective digital marketing channels and services to increase order value. But where's the competitive long-term advantage if their services are easily replicable? Competition is forcing these businesses to pay up big time for customer growth while hampering their capacity to raise fees. Like many sectors in their infancy, loss-making is a feature of pure-BNPL players, with shares prices propped up by hype, dreams of global domination and pivots to more lucrative revenue streams.

At the Morningstar Investor Conference 2020, I interviewed Zip Co CEO Larry Diamond about the company's growth and plans for the future. Many older members of the audience just couldn't understand why his product was so popular with millennials. How it was any different to a credit card, they asked? Therein lies a big risk. BNPL users are young women, like me. They’re drawn to the product because it’s credit without feeling like a credit card. If they start to view BNPL like a predatory credit card, sensing they've been misled by clever lines and celebrity marketing, the backlash could be brutal. Time will tell if I'm wrong but I don't see the sector as a market beater over the long term.

#ZipAGM #Valuation #Isthemarketwrong?

Table 1. Zip finances for FY18-FY21 and anticipated FY22 results added in from AGM. 

Table 2. A comparison of BNPL – (note: Klarna not a publicly listed company)*Acknowledgement that this was adapted from Phil your mind on Youtube

Table 3. Global retail Total Addressable Market 

(Apologies for formatting issues - Script editor did not like my tables - so numbers up the front party at the back)

I have spent the last few days digesting the latest ZIP AGM information and reviewing company results. This has led me to ask 2 questions:

1.     Why does Zip trade at such low P/S multiples to its BNPL competitors?

2.     What is unique about ZIP? If there is a USP (unique selling point) why isn’t the market getting it?

What we have just learnt from Zip is that October FY22 Total Transaction Volume (TTV: what we compare in the BNPL space) hit a new all-time monthly record and reached A$770m (remember that this is across its US, AU and NZ businesses).

Extrapolating out 12 months –  $770 m x 12 with no growth baked in and no seasonal fluctuation and for only US, AU and NZ, Zip is likely looking at a FY22 TTV of $9B+. 

FY22 in the table above shows slightly lower TTV these are results coming out of this weeks AGM – which are notoriously conservative and once again only account for US, AU and NZ figures.

See Table1.

Side note: Net bad debts are down for FY21 at 1.28%. Chairperson Diane Smith-Gander on ABC this week put this another way “only 1 in 100” Zip customers pay late. 

In search of the answer to question 1: Why does Zip trade at such low P/S multiples to BNPL competitors?

I have cheated a little and adapted a table from Phil your mind on Youtube for a quick look at BNPL competitors. These are rough figures tabulated prior to this weeks AGM. I note there is some rounding in this table but it gives us a quick eyeball of what is going on in this space. Specifically how much TTV is passing down to Revenue for each of these companies. 

See Table 2.

 Klarna’s is not publicly listed – we know that this global player has its primary foothold in Europe. Its TTV appears huge but its revenue seems very low with low margins. However it has a staggering number of customers - 90m. There is frequent speculation of a Zip buyout from Klarna.

Zip clearly states its goal is to be the dominant global BNPL player in its own right. So I am going to set speculation about consolidation in this sector aside.

Affirm trades at a P/S multiple of roughly x42 it has an attractive 10% margin. So for every $100 in TTV $10 is generated in revenue. Afterpay trades at a P/S multiple of roughly x38. It has slightly lower margins of 4%. Not quite as attractive.

So where does this leave ZIP, as you can see for yourself Zip has a very low P/S multiple of x8. However it has a pretty impressive margin of 7.21%. So for every $100 in TTV $7 is generated in revenue. Pretty attractive. 

So is the P/S ratio of Affirm and Afterpay woefully high? Or is the P/S ratio significantly undervalued for Zip? Why is there such a huge valuation gap?

What is the difference in these companies? Why is this occurring?

One could argue that the market has spoken with the Square / Afterpay deal and someone is prepared to pay these multiples for growth and dominance in this sector. 

Why I believe these multiples are being accepted – a quick TAM breakdown (I know some hate the use of TAM so sorry to those members in the Strawman community, I am only highlighting the below figures to elucidate the size of the financial shift we are witnessing).

It appears that bigger players are prepared to pay handsomely for a company that can successfully harness customers with their platforms to gain exposure to this huge opportunity. 

It is important to note that Zip released information at the AGM that it is planning to move more broadly and expand beyond retail sales into more mature markets as well. Zip has recently partnered with Virgin, setting itself up to take advantage of the world opening up. 

This move into travel is clearly attractive, as Affirm has also cottoned on to this growth strategy and has announced a partnership with American Airlines in the US. 

Zip has also partnered with Sabre to integrate its payment network across travel agents and hotels. 

Zip has its sights set on moves into automotive, home improvement and the big one…..online recurring payments such as energy or telecommunications bills. 

Let’s take a look at the second pre-posed question before drawing conclusions on the first. 

Question 2. What is unique about ZIP? If there is a USP (unique selling point) why isn’t the market getting it?

I like the idea that you should be able to sum up what a business does in a sentence to ensure that you really get its mission. 

“Zip wants to be your global payments solution.”

I believe this is Zips USP. Its business strategy varies from Afterpay and Affirm. 

You will hear arguments that BNPL has no MOAT and that any player can enter and take a slice of the pie. My counter – Is can they do it well, globally?

Zip is unique in that they are already aiming for seamless global integration of their technology stack. Through both established and emerging markets. Zip’s technology allows a payment solution that already accounts for currency conversion and allows global companies wherever they are located in the world to transact and accept payments instantly. This bodes well for Zips touted move into crypto early next year- this global currency movement strategy should equally apply to digital currencies. Also note the purple wallet in Zips logo…..we all know it is coming. 

Companies that are opting to use BNPL solutions that don’t have this global integration will likely be at a disadvantage. I can see this getting very messy for the likes of companies like Amazon who are partnering with different payment providers in different countries which seems odd and a bit of an accounting and forex headache. Hopefully Zip will solve this problem for Amazon!

It was only in May 2020 that Zip acquired Quadpay. It is now fully integrated as Zip.

In the past 18 months Zip has expanded into 10 new territories + Singapore (Singtel Dash just announced). Zip has used balance sheet proceeds or issued shares to enable these acquisitions and partnerships. This has been felt in Zips bottom line and resulting share price but currently none of this global TTV or Revenue has been added to Zips future Topline growth projections. 

The Zip payment app is now trilingual – English, Spanish and French. 

Zip has acquired or partnered with companies across these territories. It’s recent partnership with Zestmoney was not a full purchase and only a % ownership stake for now. Hence, revenue from this company is not likely to influence Zip’s Topline numbers in the near future.

The AGM finally released results from its purchase of TWISTO. We will get to this in a minute.

One can argue that Zip’s growth strategy has largely contributed to the divergence or valuation gap between its BNPL competitors. I have heard grumblings about Zips constant share price dilution and this being the major reason Zip is undervalued. Which is interesting to look at. 

There is now roughly 600 million shares in circulation for Zip. The Twisto acquisition meant that roughly $180 million worth of new shares coming onto the market had to be absorbed. It is important to remember however that for every $100 in TTV $7 will be translated to revenue. So these extra shares bought Zip entrance into a new EU territory where it gained access to a business with a $328m TTV (roughly $23 million in revenue).

Twisto grew its TTV by 93% in Sept-21 vs Sept-20 and monthly active users for Twisto was up 65% for the same period. Twisto users are transacting on average 15 x per month equating to roughly $400 in spend. Remember the Twisto figures have not yet been included in the Zip TTV or revenue figures. 

The AGM gave the first sign of guidance for these expanded global markets. Zip sign posts TTV of $50 million for December alone from these new global acquisitions in Spotti (Middle East), Payflex (Africa) and Twisto (Europe).  These are 100% ownership stakes for Zip so should be incorporated into TTV from Q2-Q3 FY22. Followed shortly by Zip’s launch into Canada and Mexico. This equates to 5 new territories to add to Zips TTV and revenue shortly. 

Zip copped a lot of flak for its US marketing spend and the Quadpay rebrand. There are arguments that marketing expenses are too high and Zip is spending too much money on acquiring new customers. This is the best bear argument that I have heard. Time is needed to see if Zips moves are bold or foolish. 

I feel question 2 is answered for me. Zip has a global USP. I am prepared to pay $6.20 per share tomorrow to gain access to this expansion. I have just gained 5 new territories that will add to Zips TTV and revenue in FY22 and beyond. 

What is even better than this is that I get to pay the same price tomorrow that I did at this time last year. So I get growth plus expansion baked in to the $6.20 share price. 

So is 2020 my $6.20 bought me access to $397.50 worth of revenue in Zip.

In 2021 my same $6.20 buys me access to roughly  $531 million dollars’ worth of revenue + Twisto, Payflex and Spotti’s revenue and potentially Zip Canada and Mexico’s revenue.

I am pretty happy with this uptick in value from a stagnant share price. 

Back to question 1. 

 I don’t honestly believe that I have heard or have met anyone who can give me a plausible explanation of the valuation gap in the BNPL space. 

Every analyst and the like discuss the net bad debt as the primary concern. This seems to weigh more heavily on Zip than its compatriots but Zip is showing that this is pretty well controlled year on year. 

There is general commentary around the theme of inflation and market sell offs but this applies to all BNPL. Corporate earnings in the US especially are easing these ‘sky is falling’ concerns. There does seem to me to be a lot of bias in mainstream media outlets such as the AFR regarding Zip. There are frequent positive announcements surrounding Afterpay however even positive news regarding Zip has bearish under tones. I am not sure what/ if any vested interests may be at play here. 

I think this mainstream bias has added to the general negative sentiment around Zip. The share price stagnation has not helped adding to the “what have you done for me lately attitude” As Matt Joass puts it in the Baby Giants podcast.

Furthermore analysts are only forecasting Zip’s share price based on Aus/NZ, US and UK markets. They are not factoring in other new territories. Either way it seems odd to me. I suspect the market will re-rate Zip in the future and I have put money on it. 

Cheers

@Nnyck777

Ps. Sorry PDF tables didn’t paste and my jpeg images aren’t as clear and I couldn't manage to format in the body of the text. Oh well

#BPNLIndia

Lizzie Chapman CEO and Co-founder of Zestmoney - one of India's fastest growing BNPL companies was interviewed on Daily Dispatch. She discusses the $50 million investment by Zip to sure up Zest's balance sheet. Lizzie explains the BNPL is a $99 Billion market opportunity in India. She expects a 3-4 x revenue increase in the next 9-12 months in the business. BNPL is not only gaining fast traction online but similar growth is anticipated in traditional bricks and mortar shops post pandemic. There are currently 75,000 merchants offering Zest BNPL products but she states that she anticipates this to grow to 300,000 + in the next year.

Zip's investment and stake in Zest looks like a very exciting opportunity if this growth can be reached.

Zip -Easy at a retail level.

We use ZIP pay at a retail level and it so easy to use and relatively well priced. Historically we used the GE, now Latitude, products (GEM Visa, Buyers Edge and others). These have have essentially disappeared, other than for older customers with historical accounts. Customers either ask "do you have Afterpay or ZIP" Zip also offer ZIP Money which is a longer term product. Zip is now integrated into our POS system which makes it a bit more sticky for a retailer.

#or credit cards apparently

VISA distancing itself from the “credit card”

#young people don't like bank #Credit cards are out #BNPL is in #BNPL validation

 Visa’s latest marketing strategy is an interesting one. If you are interested in the BNPL do yourself a favour and research some of the latest marketing from the traditional leaders in lending. 

Visa is a giant and amazingly successful lending company with a strong history and a Buffett favourite. 

The market research  team of this behemoth has obviously asked the question what is it that our customers want? The market has clearly answered. That’s right VISA is no longer a credit card company……..It is now a NETWORK! – The dirty “credit word” is mentioned once in its latest ad.

I think this ad is a signal that there is a major shift occurring right now. The current incumbents are keenly trying to catch a ride on this latest wave of change. That wave is clearly moving away from “traditional credit.” I believe this is a further validation that BNPL is rattling cages and that the likes of Klarna, Zip and Afterpay are rattling cages.  

The ads voice over states:

 “You probably think visa is a credit card huh. But it’s actually more like a signature. Visa is a network……It’s the wizadry behind the scenes connecting everyone to just about everyone else……meet visa a network working for everyone”

So here we have a global player – rebranding themselves as a network – a connector as opposed to a credit card provider.  

For those watching this space and following or investing in the new lending models it is telling when the giants are shedding old wrinkly credit skins and dressing in new shinier “network cloaks”

Peter Switzer weighs up whether to sell or buy APT and ZIP in Switzer Daily

He concludes "that banks and their credit cards are simply not liked by young people, who are the future. I’m sticking with my Zip stocks and could buy more if the price falls significantly from here."

Zip successfully prices A$ 400 million senior convertible notes due 2028

Zip Co Limited (ASX: Z1P) (“Zip” or the “Company”) is pleased to announce thatit has successfully priced A$400m zero coupon senior unsecured convertible notes due 2028 (the “Notes”) (the “Offering”).

The Notes will mature on 23 April 2028 unless otherwise redeemed, repurchased, or converted in accordance with their terms and conditions. The Notes are convertible into fully paid ordinary shares of Zip (the “Ordinary Shares”). The initial conversion price of the Notes is A$12.39 per Ordinary Share, which represents a conversion premium of 35% over the Reference Share Price.

As previously announced, Zip intends to use the proceeds of the Offering (net of commissions, professional fees and other administrative expenses) to drive growth in core markets, expand into new regions and for general corporate purposes.

DISC: I hold...Trading Halt now lifted and no Share Purchase Plan/Entitlement Offering for us....

14/4/21 7:37pm

Z1P announces A$400 million senior convertible notes offering to accelerate global expansion

Zip Co Limited ACN 139 546 428 (ASX: Z1P) (“Zip” or the “Company”) announced it has today launched an offering of A$400m senior unsecured convertible notes due 2028 (the “Notes”), (the “Offering”). The Notes are convertible into fully paid ordinary shares of Zip (the “Ordinary Shares”).

Zip Co-founder and COO, Peter Gray said:

“We are very excited to welcome a new group of global investors to the Zip ecosystem, embracing our journey and mission to be the first payment choice everywhere and every day.

The additional capital from this Offering will support the active pursuit of both core and international growth opportunities, as Zip becomes a truly global BNPL player, leveraging our very strong momentum and the worldwide shift away from the broken credit card, towards a better, fairer digital alternative”.

The Offering is being marketed to eligible investors with the final terms and conditions of the Notes to be determined via a book-build process expected to be completed prior to market open tomorrow. A summary of the key terms and conditions of the Notes is set out in the Appendix of this announcement.

It is intended that the proceeds of the Offering (net of commissions, professional fees and other administrative expenses) will be used to drive growth in core markets, expand into new regions and for general corporate purposes.

It is intended that the Notes will be listed on the Official List of the Singapore Exchange Securities Trading Limited (“SGX-ST”). Conversion of the Notes will be physically settled by the issuance of new Ordinary Shares.

Jarden Australia Pty Limited (“Jarden”) and Merrill Lynch Equities (Australia) Limited (“MLEA”) are acting as Joint Lead Managers (“JLMs”) on the Offering.

In connection with the Offering, to facilitate some or all of the hedging activity that may be executed in relation to the Notes:

•  Jarden intends to sell ordinary shares (the “Delta Placement”) to facilitate some or all of the hedging activity that may be executed in relation to the Notes; the manner of conducting the Delta Placement will be determined by Jarden, in consultation with Zip. The clearing price per Ordinary Share under the Delta Placement will be used as the reference share price for the Notes.
•  One of the founders of Zip (“Stock Lender”) intends to enter into a stock lending agreement with Merrill Lynch International (the “Stock Borrower”) pursuant to which the Stock Lender will lend a certain number of Ordinary Shares to the Stock Borrower, and the Stock Borrower will be required to return the borrowed Ordinary Shares to the Stock Lender pursuant to the terms of the agreement (“Stock Borrow Facility”)

Co-founders Larry Diamond and Peter Gray have expressed an intention to sell a small portion of their holdings (up to 1.5 million and 0.5 million Ordinary Shares respectively). Proceeds from the sale will be used primarily to fund their respective tax liabilities. This sale is intended to be executed in conjunction with the Delta Placement.

An independent sub-committee of the Board has determined that it was in the best interests of Zip’s shareholders to enable this transaction.

Release approved by the Chief Executive Officer on behalf of the Board.

Disc: I hold....Trading Halt remains....

Q2 FY21 TRADING UPDATE

GROUP HIGHLIGHTS * Note: all figures in AUD unless otherwise specified. 

? Record group quarterly revenue of $102.0m (up 88% YoY).

? BNPL December revenue $40.2m (up 94% YoY).

? Record quarterly transaction volume of $1.6b (up 103% YoY).

? December transaction volume of $628.4m (up 104% YoY). ? Transaction numbers for the quarter of 10.7m (up 149% YoY).

? Customer numbers increased to 5.7m, up 97% YoY.

? Merchants on the platform increased to 38.5k (up 73% YoY).

? Zip US (QuadPay) delivered record results in Q2 across all core metrics – $673.1m in transaction volume, $47.6m in revenue and 915k new customers.

? The Company raised $176.7m in equity, with the majority of funds allocated to fuel the significant US growth opportunity.

DISC~I hold