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ZIP share price rebounds 3.99% after brutal post-Q1 reaction

It’s been a difficult few days for ZIP shareholders, with the company’s stock falling as much as 19% since the market opened on Wednesday.

ZIP share price rebounds Source: Bloomberg

Things look to be tracking to plan, even if investors are turning skittish.

Overall, ZIP (ASX: Z1P) churned out an impressive set of quarterly figures when it released its Q1 results to the market on Wednesday. Yet its stock still fell: dropping as much as 19% since trading commenced on Wednesday.

Healthy growth and lofty ambitions weren’t enough, it would seem. Though it should be noted that today ZIP’s share price did indeed rebound, rising as much as 3.99% in the first hour of trade.

It’s also worth remembering that on a year-to-date basis ZIP’s share price is up a staggering 255%. The ASX 200 benchmark is up just 19.9%, by comparison.

ZIP share price: first quarter results in focus

Between the fourth quarter of FY19 and the first quarter of FY20, ZIP (ASX: Z1P) has witnessed strong growth across all of its key operating metrics.

On the top-line, the fast-growing company saw its revenue reach $31.0m, a 15% increase on a quarter-over-quarter basis.

Total merchants and customers in ZIP’s ecosystem also increased, hitting 17,890 and 1,414,584, respectively.

Building on this strong start to FY20, ZIP also reported that its transaction volume hit A$402.1m in the first quarter – an increase of 14% on a quarter-over-quarter basis and 111% on a year-over-year basis.

CEO thoughts

Commenting on the company’s quarterly results, ZIP’s MD and Chief Executive Officer Larry Diamond pointed out that:

‘Well known enterprise brands continue to join the platform, with Big W (part of the Woolworths Group) one of the most recent additions, and a solid pipeline of new brands looking to integrate prior to the holiday trading period.’

Maybe more importantly however were comments from Mr Diamond that spoke to ZIP’s global ambitions. Here, the CEO said:

'Although there remains a large addressable market opportunity here in Australia which remains a continued focus, the global phenomenon of BNPL is underway, and it is critical Zip plays a future role in its growth story.’

Indeed, speaking on their expansionist ambitions, the company also noted that plans for 'the UK are well advanced and will be shared at Zip's AGM in late November.'

The outlook: a lofty FY20 ambition

ZIP expects to grow its all-important network of users and merchants significantly by the end of FY20.

Here, ZIP (ASX: Z1P) is targeting 2020 end of financial year figures of 2.5 million customers and annualised transaction volumes of A$2.2bn.

It will be interesting to see how ZIP tracks with achieving these goals.

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