Zip’s second quarter results show it can be profitable in the US as it looks to stop spending in overseas markets and end its cash burn problem.
Zip says it finally became profitable in the United States in November and December, but its shares tanked on concerns that it will run out of cash before it exits markets outside of Australia and the US., as the market digested its second-quarter report and news that it had $78.5 million in reserves.“Cash burn remains our main focus. As at December 31, available cash and liquidity fell to $78.5 million versus $140.7 million at September 30,” UBS analyst Tom Beadle said.
RBC Capital Markets analyst Wei-Weng Chen said management’s focus on reigning in bad debts had helped the US business turn to profit. But the disappointing customer numbers were interpreted as more proof that the struggling buy now pay, later sector is headed for imminent doom.