Zip Co continues to shut down overseas operations, reporting that it completed the wind-up of its UK and Singapore businesses in the December quarter and started the process to shutting its business in Mexico.
The company released a December quarter update yesterday, saying it is also working on plans to close operations in the Middle East.
Apart from the US, where Zip continues to develop its business, remaining international operations include South Africa, Poland and the Czech Republic.
It said its Payflex business is the leading buy now play later provider in South Africa and has good prospects. The focus in Poland and the Czech Republic is on cost savings and adjustment to risk settings.
It also stopped offering two business finance products, Trade and Trade+, selling the outstanding receivables. It still offers a product called Zip Business Capital.
Zip disclosed that it is still cash flow negative but with $78.5 million of available cash and liquidity it is confident It has sufficient reserves to get to cash EBTDA profitability.
“Underlying monthly cash burn has continued to decrease and is expected to further improve with the benefit of actions taken to delver profitability in core markets,” it said.
One of the company’s biggest problems has been poor underwriting and weak risk management. It reported an improvement in that area, with net bad debts as a percentage of transaction volume falling from 2.39 per cent in the September quarter to 1.49 per cent in the December quarter.
Trading performance during the quarter was mixed, with US transaction volume up 12 per cent, compared with the previous corresponding period, and revenue up 8 per cent; and Rest of the World volume up 19 per cent and revenue up 19 per cent.
In Australia and New Zealand revenue was up 17 per cent year-on-year but transaction volume was down 6 per cent and transaction numbers were down 4 per cent.
Active customer numbers fell 1 per cent, led by a 7 per cent fall in the US. The company is improving its bad debt performance but it is shedding customers to get there.