BNPL Firm Zip Co Pledges More Conservative Lending


Australian buy now, pay later (BNPL) firm Zip Co says it will be more prudent in its lending and cut $30 million ($22.5 million U.S.) in costs amid a drop in BNPL share prices.

As The Brisbane Times reported Thursday (April 21), Zip says its bad debts had gone beyond its target range, similar to what Afterpay had reported recently.

While the total year-over-year value of transactions on Zip’s platform increased 26%, the Brisbane Times report cites UBS analysts who note this fell short of expectations, as Zip reaffirmed its plans to generate profits earlier than once anticipated.

Zip, a major local rival to Afterpay, offers short-term installment loans in Australia, the U.S., and other markets worldwide. While firms in its industry were some of the most popular stocks on the market last year, their prices have since plummeted, with investors worried about things like the impact of climbing interest rates and bad debts.

Read more: FinTech Lenders Follow Banks Into Uncertain Economic Climate

PYMNTS examined 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 sanguine. As of last week, that index, which includes companies such as Open Lending and MoneyLion, is down roughly 27% this year alone.

Zip Co-founder and Chief Executive Larry Diamond said the company was aiming to accelerate its path to profitability, a goal the firm hopes to reach by 2024 based on earnings before tax, depreciation, and amortization (EBTDA).

“In the half-year results we acknowledged a change in external factors and announced several adjustments to our strategy — with a refined focus on sustainable growth, strong unit economics, and fast-tracking profitability,” Diamond said.

“The quarter saw us continue to deliver top-line growth and strong revenue margins while beginning to implement this refreshed strategy.”

See also: Zip Co Snaps Up BNPL Firms Twisto Payments And Spotii Holdings

Last year, Zip C announced it would acquire BNPL companies Twisto Payments and Spotii Holdings in a deal that put a combined valuation of the two companies at $180 million Australian ($133 million U.S.)