ASX Earnings Wrap: Zip and Butn signal a BNPL comeback; while Kogan disappoints again

It’s the half yearly season again as the ASX market announcements page becomes increasingly flooded with earnings lodgements.

To save you the trouble of trudging through it all, we’ve wrapped up the highlights from some of the reports that caught our eye.

Zip Co (ASX:ZIP)

Highlights for Q2 FY23:

• Record group quarterly revenue of $188m, up 12% YoY
• Record transaction volume for the quarter of $2.7b, up 22% QoQ
• Record transaction numbers for the quarter of 22.6m, up 15% QoQ

Zip’s results have signalled a potential bounce back in the BNPL sector.

Zip continues to deliver solid top line metrics with good results across its consumer operations in the core markets of the US and ANZ.

The company delivered a strong quarter of record volumes despite the challenging external environment.

During the quarter Zip also continued to make progress on the strategy to deliver right-sizing of its operations towards profitability.

As a result, its cash transaction margin improved to 2.6% in the quarter, up from 2.2% in Q1 FY23.

In Australia, credit losses continue to improve as the company focuses on proactively managing its risk settings and repayments collections. For the quarter, credit losses in AU were 2.10% of TTV.

In summary, here’s a full rundown of the company’s Q2 performance by region:

“The underlying business remains strong, and we are pleased with the benefits and reduction in cash burn from the ongoing simplification of the business footprint and focus on core products and core markets,” said Zip co-founder and global CEO, Larry Diamond.

 

Butn (ASX:BTN)

Highlights for Q2 FY23:

• Third consecutive quarter of record originations in Q2 FY23 of $112m, up 73% on pcp
• Net revenue of $3m, up 119% on pcp
• In December platform originations were a record $10.9m

Momentum in the Butn BNPL platform continues to accelerate, with platform origination growth a consistent and increasing component of Butn’s overall origination levels.

The Q2 FY23 platform originations exceeded $29 million compared with approximately $3.6 million in the pcp, reflecting the rapid growth and future potential of this distribution channel.

Importantly, Butn’s revenue margin increased to 2.6%, up from 2.1% in the pcp, reflecting a significant improvement in industry mix to higher-margin segments.

“Butn continues to deliver sustained record performance, with originations at record levels for both the quarter and the month of December. This marks the third consecutive record quarterly result,” said co-CEO, Rael Ross.

Ross said the company’s partnership with MYOB is growing strongly, with Butn continuing to roll out its platform solution to a broader MYOB business user base during the quarter.

“We continue to deepen our reach across our strategic channel partners, together with our cash position and increasing debt facilities providing growing momentum in FY23 and beyond.”

 

Kogan (ASX:KGN)

Highlights for H1 FY23:

• Gross Sales of $471.1m, a decline of 32.5% YoY
• Gross profit of $41.3m, a 52.2% drop YoY
• Inventories reduced to $98.3m

The half once again reflected subdued sales activity for the online retailer.

Kogan says its performance was caused by soft trading conditions and the cycling of a period in the prior year impacted by COVID-19 lockdown orders.

“The impacts of inflation and interest rates have begun to affect the lives of Australians and New Zealanders,” said CEO, Ruslan Kogan.

The company however managed to improve its operational cost, with excess inventory reduced to $98.3 million (comprising $84.1 million in-warehouse and $14.2 million in transit) as at 31 December.

Having now cleared through the bulk of this excess inventory, Kogan will continue streamlining the business to return to the levels of operating margins prior to the COVID-19 pandemic.

The company expects gross margins to improve from January, and to further optimise operating costs progressively through the second half of the financial year.

 

Spacetalk (ASX:SPA)

Highlights for Q2 FY23:

• $3.3m improvement in Q2 FY23 free cash flow as compared to Q1 FY21
• First time Spacetalk has had a positive quarterly cashflow since Q3 FY21
• $4.2m cash in bank

Compared to the pcp, the $3.3m cash inflow was a fantastic transformation vs the outflow of $2.9m in Q1 FY21.

During the quarter, Spacetalk exited a lower profitable product line (budget watch) in favour of a more profitable alternative.

The company also underwent a significant cost reduction program, with $2m slashed over Q3.

The search for a CEO is still progressing but has reached the final stage, and the company says it’s hoping to to announce something to the market shortly.

 

Share prices today:

 

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