Shares of Zip Co Ltd (ASX: ASX:ZIP) have been on an upward trajectory, continuing their rally this week following the company's latest quarterly cash flow report. The BNPL (buy now, pay later) player has seen its stock surge by 5% on the day to reach AU$2.01 per share, extending its year-to-date gain to a remarkable 216%. This performance contrasts sharply with the broader market, with the S&P/ASX 200 Index (ASX: XJO) rising just over 7% during the same period.
The surge in Zip's share price is largely attributed to the positive results from its cash flow update for the quarter ending June 30, 2024. The company reported AU$224 million in receipts from customers for the quarter, maintaining consistent performance compared to the previous quarter. Year-to-date, Zip has accumulated AU$872 million in cash from customer receipts.
One of the key highlights of Zip's quarterly update was the substantial increase in operating cash flows. After accounting for all expenditures, Zip reported operating cash flows of AU$65 million, which marks a 225% increase compared to the quarter ending December 2023. This growth in cash flow is a positive indicator of the company's operational efficiency and financial health.
Additionally, Zip's financial report revealed a reduction in interest payments, which decreased by AU$10 million sequentially. This decline in interest payments could be beneficial for Zip's future performance, as it may contribute to improved profit margins and overall financial stability.
The quarterly cash flow report also indicated that Zip successfully raised AU$583 million in borrowings while repaying AU$621 million of debt during the period. Despite these repayments, the company ended the quarter with a solid cash balance of AU$353 million, up from AU$327 million in the previous quarter. This increase in cash reserves reflects Zip's strong liquidity position and its ability to manage debt effectively.
The market's response to Zip's quarterly performance has been largely favorable, with the company's shift from aggressive growth strategies to a focus on profitability resonating well with investors. Over the past week, Zip shares have gained more than 10%, and approximately 21.2 million shares have been traded on average in the last month, reflecting strong investor interest.