Zip to wind down non-core businesses, on the path to profitability

Australian buy-now pay-later (BNPL) firm Zip Co (ASX: ZIP) is exiting a number of non-core businesses, including its business finance arm, in order to reduce cash burn and right-size its global footprint.

The Sydney-based company, which claims to have enough liquidity to support it through to cash EBITDA profitability, says the decision was made so it can drive increased earnings and expand margins.

This strategy is intended make Zip profitable eventually and decrease global people costs by $30 million in FY23, and will see the company exit its Singaporean business by September, wind down its business finance arm Zip Business, ditch its product suite of Trade and Trade Plus, and retire personal finance app Pocketbook which it acquired in 2016.

Previously planned new financial services products, including crypto and investment products, have also been “deprioritised” under the strategy.

The announcements were made as part of Zip’s Q4 results update, which detailed group quarterly revenue increasing by 27 per cent to $160.1 million, and transaction volume for the quarter growing by 20 per cent to $2.2 billion.

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Source: Zip to wind down non-core businesses, on the path to profitability