- After restructuring and narrowing the scope of its operations, buy now, pay later provider Zip ended its fiscal year with a 31% lower headcount than the previous year-end. Zip had 1,040 employees as of the end of June, according to a fiscal 2023 report, compared to 1,498 at the end of June 2022.
- The Sydney-based company on Tuesday reported an annual loss of 401 million Australian dollars, US $259 million, for the fiscal year ending June 30, according to the report. The company’s loss narrowed compared to last fiscal year, when it reported an annual loss of 1.02 billion Australian dollars, US $719.5 million.
- Zip swapped CEOs earlier this month, moving co-founder and former group CEO Larry Diamond to the role of U.S. CEO, and naming Cynthia Scott, previously CEO of Zip’s Australia and New Zealand business, the company’s group CEO, according to an Aug. 10 release.
In recent months, Zip closed or wound down operations beyond the U.S., Australia and New Zealand to stem cash burn. That included selling South African firm Payflex, Czech company Twisto and United Arab Emirates-based Spotii, according to the report. Zip’s workforce reduction could be tied to the sale of those operations.
All were BNPL acquisitions Zip made in 2021, when the company pursued global growth as the installment trend took off. Zip is a smaller BNPL player facing larger rivals Klarna, Affirm and Block’s Afterpay.
Given high interest rates, less plentiful venture capital and moderation in e-commerce spending, this year has looked far different than 2021. BNPL providers have felt the pressure: Companies that previously had their sights set on massive growth have had to cut costs and tighten underwriting in an effort to achieve profitability.
Some have retreated from certain markets, including Affirm from Australia, even as they’ve sought to remain competitive amid a crowded field. Companies in the space are also bracing for regulatory action, per notices from the Consumer Financial Protection Bureau.
After Zip’s slew of acquisitions in 2021 and its 2020 purchase of QuadPay, it had planned to acquire BNPL rival Sezzle, based in Minneapolis. That deal was scrapped in July 2022 due to tougher macroeconomic and market conditions. Zip paid Sezzle about $11 million as a termination fee related to the proposed acquisition.
In January, Diamond said the company’s M&A days were behind it, as executives focused on growing core business operations. The BNPL company has shuttered operations in the U.K., Mexico and Singapore, among other markets, to better focus on competing in the U.S., Canada, Australia and New Zealand.
Zip is on track to deliver profits on an adjusted basis during the first half of fiscal year 2024, Scott said in Tuesday’s results update. Zip’s Australian business has hit that marker for the past five years; its U.S. business ended the year achieving that on a monthly basis, the company said.
Scott had been the CEO of Zip’s Australia and New Zealand operations since November 2021, the company said. Zip co-founder Peter Gray filled that role with Scott’s appointment as group CEO.
Zip said it added Peloton as a merchant partner in Australia this year, after the stationary bike company and Affirm ended their relationship in that region. Zip’s active customer count dropped 3.5% year over year, to 6.2 million, as it sought to tighten underwriting. Its merchant count rose 11.2% to about 72,300, according to the company’s fiscal year update.
A spokesperson for Zip didn’t immediately respond to a request for comment on the company’s employee cuts.