Zip Scraps Business Products to Get Profit, Shuts SG Operations
2022.07.22 01:41
Zip Scraps Business Products to Get Profit, Shuts SG Operations
- BNPL company Zip Co tries to get back in the black before running out of cash.
- Zip weighs the US and EU charges, and ‘deprioritizes’ crypto offering.
- With the release of its Q4 results, Zip announced exiting the Singapore market and other offshore locations.
In a recent announcement, Australia-based Buy Now, Pay Later (BNPL) company Zip Co expressed that it was weighing an impairment charge on its newly acquired US and EU businesses and ‘deprioritizing’ crypto offerings, a blow to the sector’s once formidable growth prospects. Zip is getting out of the overseas markets and scrapping products as it desperately tries to get in the black before it runs out of capital.
Zip released its fourth-quarter results on July 21 and with that, pledged to pare back its offshore footprints including exiting Singapore immediately and shutting its business-lending operations by the end of September.
#Australian BNPL Zip weighs US, #Europe charges, ‘deprioritizes’ #cryptocurrency: ReutersFor related stories, please visit https://t.co/YoYEWUGqGl pic.twitter.com/Inu8kYBdEC
— Arab News | Business (@ArabNewsBiz) July 21, 2022
The CEO and co-founder Larry Diamond said in the statement, “In line with its strategic objective to focus on the core markets of Australia and New Zealand and the US, this quarter Zip has continued to make changes and decisions to right-size its global footprint and reduce group cash burn.”
Zip’s global Chief Operating Officer and co-founder Peter Gray said that the company’s growth model was on hold, but not abandoned as the company strives to survive in a new economy and convince investors that it can be profitable.
Gray further added that the strong results recorded by the company’s Australian business demonstrated that “the scale model still holds true” however, abandoning its planned merger with US-concentrated Sezzle would accelerate Zip’s plans to become profitable. He also mentioned,
“The mutual termination was clearly the best outcome for the business. The rationale for combining with Sezzle was effectively one that made sense in a world that doesn’t exist anymore.”
“The valuation and business focus have changed since the deal was announced in February 2022 and it no longer stood up with regards to the commercial rationale,” Gary remarked, adding, “Not having the distraction of integrating another business does allow us to focus on our core business.”
The company said it will provide an update on its UK plans at the full-year results in August, when Zip would also confirm whether it would need to book impairment charges against Quadpay, Twisto, and Spotti assets.
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