Australian BNPL Zip may charge fees on US, European entities, ‘de-prioritize’ crypto offerings

The Zip logo is seen on a smartphone in front of the same logo shown in this illustration taken January 25, 2022. REUTERS/Dado Ruvic/Illustration

SYDNEY, July 21 (Reuters) – Australian buy-now-pay-later company Zip Co Ltd said on Thursday it is weighing an impairment charge on its new U.S. and European businesses, exiting Singapore and “downgrading” a cryptocurrency offering, with reference to challenging market conditions.

“Reflecting current market conditions, the company has reviewed the goodwill against the Spotii, Twisto and Quadpay assets and is assessing the need to take an impairment charge,” the company said in a trading update.

“Zip is in the process of closing its Singapore operations, in line with its aim to reduce the group’s cash burn. Previously planned new financial services, including crypto… have been deprioritised,” it added.

Amid an explosion of online commerce fueled by the shift to being at home during the COVID-19 pandemic, Zip embarked on an ambitious program of acquisitions since 2020, including US-based Quadpay, Dubai-based Spotii and Czech Republic-based Twisto.

It also included an agreed acquisition of US-based, Sydney-listed rival Sezzle Inc , which Zip canceled earlier this month. read more

The company had also said it plans a service to enable customers to trade cryptocurrencies by mid-2022, an offer to younger consumers that was seen as driving a rally in the digital asset during a period of lockdowns and work-from-home . read more

In a limited trading update on Thursday, Zip said revenue in the three months to June 30 rose 27% from the same period a year earlier, but that included a 30% increase in Australia and New Zealand and a rise of just 12% in the United states.

Zip also said it was discontinuing its Zip Business unit, which sells unsecured loans to small businesses.

The company’s purchase of all shares of New York-based Quadpay in 2020 valued the company at $269 million at the time. Zip did not disclose the size of the potential write-downs on Thursday. [urn:newsml:newsroom:20200602:nL4N2DF196:0]

Reporting by Byron Kaye; Editing by Jacqueline Wong and Stephen Coates

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