Reporting season 2022: Zip set to buy rival; Invocare recovers

Posted: 28 February 2022 10:06 am
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Reporting season is underway with investors gaining a snapshot of how businesses are actually performing.

Things are slowing down as we enter the final day of reporting season.

In today's edition, investors got a snapshot into how COVID is impacting a challenger BNPL, an alternative loans provider and a funeral provider.

Here's what you need to know:

Invocare

You might think a funeral provider would be the last company to be impacted by a global pandemic, but in the case of Invocare, restrictions to funeral gatherings have drastically impacted the company's bottom line.

The company is reporting an increase in statutory revenue of $532.5 million, up 11% on the year prior and earnings before income taxes which rose 36% to $77.8 million.

Overall earnings per share are 31.6 cents, and the company will pay a fully franked dividend of 11.5 cents.

Ivocare's outlook shows that the impact COVID continues to have on our workforce, supply chain, operations and client families is difficult to predict and presents an ongoing risk through 2022.

CEO Oliver Chretien said, "As we move into the growth phase of our strategy, I am confident that we do so on more solid foundations. Whilst the COVID environment can change quickly and deliver shocks to consumer confidence, evident in the past 2 months, our first half 2021 result demonstrated the potential of the business under 'normal' conditions."

Shares in Invocare fell 0.24% to $12.34.

Zip

Delaying its announcement, Zip has officially taken over Sezzle, as the 2 buy now pay later businesses look to add scale following increasing competition in the market.

Zip temporarily delayed its announcement of its half yearly results due to the merger.

In order to make the deal happen Zip will have to further capital raise off the back of a beaten down share price.

The deal with Sezzle comes off the back of an 89% lift in revenues for Zip. Most of its expansion came in the form of acquisitions as it moved into the Middle East through a purchase of Spotii and through Eastern Europe with Twisto.

The company notes its current active customers were up 73% to 9.9 million in the 6 months until 31 December, while its transaction volumes are up 91.7% to $4.44 billion.

On the other side, Zip continues to lose money as cost of sales increased 192.5% while bad debts and expected credit losses soared 402.7%. Overall the company lost $242.2 million.

Zip co-founder and global CEO, Larry Diamond said that the company is pleased to report another strong set of numbers with exceptional growth in its key growth metrics: transaction volume, revenue, and both customer and merchant numbers.

“We acknowledge there has been a shift in the external environment, arguably quicker and more severe than we first forecasted. Accordingly, we have refined our strategy with a focus on sustainable growth in our core markets, maintaining strong unit economics – particularly credit performance, broader cost management, right-sizing our international footprint, which accelerates our path to profitability,” he said.

Beforepay

App-based lender, Beforepay, which allows people to access a portion of their salary before payday has seen its losses grow by almost sixfold.

The company said in the 6 months until December losses were $19.62 million, compared with $3.35 million in the prior corresponding period.

However, most of the losses were in marketing costs, as the business looks to grow over the longer term.

On the brighter side for investors, while costs grew, so did revenue. Beforepay says its revenue is now $5.95 million up from $973,806.

Beforepay CEO, Jamie Twiss, said, "Beforepay has delivered a strong performance for the first half of the year across all key metrics. In particular, I'm very pleased with our strong customer growth, our sharp decline in defaults relative to our half year in the 2021 fiscal year, and our positive unit economics."

Shares in Beforepay are up 3.48% to $1.19.

At the time of writing Cameron Micallef owns shares in Zip.

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