Zip : Q2 FY22 - Zip momentum continues

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20 January 2022

Q2 FY22 RESULTS UPDATE

Zip momentum continues

Zip Co Limited (ASX: Z1P) ("Zip", or the "Company") is pleased to announce today its Q2 results for the period ending 31 December 2021.

KEY HIGHLIGHTS (Q2 FY22)

• Note: all fgures in AUD unless otherwise specifed.
• • Record group quarterly revenue of $167.4m (up 58% YoY).
  • Record quarterly transaction volume of $2.6b (up 53% YoY).
  • Record transaction numbers for the quarter of 22.4m (up 85% YoY).
  • Customer numbers increased to 9.9m (up 57% YoY).
  • Merchants on the platform increased to 81.8k (up 110% YoY).
  • Achieved target of more than $50m transaction volume per month from expansion markets1 (and Payfex) in both November and December.
  • Zip signed enterprise merchants including Footlocker, Mercari, Revolve, Shein, Driven Brands, Swappa, Electronics Express, Nespresso, Virgin Australia, Oscar Wylee, Culture Kings, Under Armour and many more.
  • Completed the acquisition of Twisto providing a regional HQ and passport for European expansion. The acquisition of Payfex is expected to complete in early 2022.
  • Renewed the Variable Funding Note (VFN) within the Master Trust, extending its maturity to March 2024. Increased the facility limit to $535.4m (from $513.7m) and the weighted average margin on the VFN reduced by 0.5%.

1 Expansion markets include Canada, Mexico, Twisto (Poland and Czech Republic) and Spotii (UAE and KSA).

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CEO UPDATE

Zip Managing Director and Global CEO, Larry Diamond said:

"Some solid growth in the quarter as Zip delivered another very strong set of numbers. The business continues to execute on its strategy with growth driven by both customer and merchant acquisition, and the increasing levels of engagement as we pursue our mission of becoming the frst payment choice everywhere and every day. The growing contribution from expansion markets is pleasing and should continue to build in the medium term in line with Zip's global strategy. Despite external noise and challenges the business continues to deliver and we are very well placed to continue the growth and momentum in 2022."

BUSINESS PERFORMANCE

Zip continues to deliver with strong Q2 results across its BNPL operations in the United States, Australia, New Zealand, United Kingdom and Expansion Markets2:

Pro-forma fgures based on Zip's unaudited fnancials as of 31 December 2021.

Financial Performance2 (AUD)	Q2 FY22	QoQ		YoY
Revenue	$163.1m	19%	↑	58%	↑
USA	$79.1m	18%	↑	60%	↑
ANZ	$75.9m	18%	↑	45%	↑
UK	$2.1m	75%	↑	N/A
Expansion Markets1	$6.0m	30%	↑	107%	↑
Transaction Volume	$2,588.7m	30%	↑	55%	↑
USA	$1,161.2m	22%	↑	64%	↑
ANZ	$1,273.7m	39%	↑	40%	↑
UK	$32.3m	51%	↑	N/A
Expansion Markets1	$121.5m	33%	↑	118%	↑

• Unaudited management accounts. All fnancial fgures are translated into AUD using the average quarterly foreign exchange rates for the respective quarter. Reported current and comparative fnancial performances include entities not acquired are reported on a pro-forma basis.

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Transactions	22.4m	32%	↑	85%	↑
	USA	6.5m	23%	↑	55%	↑
	ANZ	13.4m	43%	↑	106%	↑
	UK	0.3m	50%	↑	N/A
	Expansion Markets1	2.2m	5%↑	47%↑
use
Operational Performance2	As at	QoQ		YoY
		31 Dec 2021
	Customers3	9.9m	11%	↑	57%	↑
	USA	5.7m	14%	↑	78%	↑
personalFor	ANZ	3.0m	3%	↑	20%	↑
UK	183.4k	47%	↑	N/A
Expansion Markets1	1.0m	11%↑	43%↑
	Merchants4	81.8k	39%	↑	110%	↑
	USA	18.5k	8%	↑	120%	↑
	ANZ	40.2k	6%	↑	34%	↑
	UK	0.4k	100%	↑	N/A
	Expansion Markets1	22.7k	514%↑	3,683%	↑

• Number of active customer accounts.
  4 Number of accredited merchants.

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REGIONAL UPDATES

Zip US

All key operating metrics include Zip's BNPL operations in the US based on Zip's unaudited fnancials as of 31 December 2021.

Financial Performance2	Q2 FY22	QoQ		YoY
	(USD)
Revenue	$57.6m	17%	↑	60% ↑
Transaction volume	$845.1m	20%	↑	63% ↑
Transactions	6.5m	23%	↑	55% ↑

Operational Performance2	As at	QoQ		YoY
	31 Dec 2021
Customers3	5.7m	14%	↑	78%	↑
Merchants4	18.5m	8%	↑	120%	↑

Key highlights for the US include:

• Both transaction volume (up 63% YoY) and transaction numbers (up 55% YoY) delivered record results, driven by increases in both new and transacting customers. Zip had a record number of transacting customers in both November and December.
• Ahu Chhapgar (ex PayPal, Mastercard, Citi) joined as Global CTO and Levi Aron (ex SevenRooms, Deliveroo) joined as Chief Growth Ofcer, signifcantly increasing the Company's leadership capability .
• ZipFest was a four day pre-holiday shopping event held in October which resulted in over 70k app downloads and ~20% WoW TTV growth.
• Launched with Mercari, Revolve and Shein in the quarter with a healthy pipeline developing including a number of advanced discussions with top 50 US retailers.
• App downloads remain healthy with 1.4m new downloads in the quarter.
• In line with our strategic objective to increase penetration into the large instore opportunity we have completed signifcant work to prepare for the launch of our

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physical card program. We will be looking to scale this program in Q3, signifcantly improving our in-store channel capabilities.

Zip ANZ

All key operating metrics include Zip's BNPL operations in Australia and New Zealand based on Zip's unaudited fnancials as of 31 December 2021.

Financial Performance2	Q2 FY22	QoQ		YoY
	(AUD)
Revenue	$75.9m	18%	↑	45%	↑
Transaction volume	$1,273.7m	39%	↑	40%	↑
Transactions	13.4m	43%	↑	106%	↑

Operational Performance2	As at	QoQ		YoY
	31 Dec 2021
Customers3	3.0m	3%	↑	20% ↑
Merchants4	40.2k	6%	↑	34% ↑
Credit Performance (AU)5	As at	As at
	31 Dec 2021	30 Sep 2021
Arrears	1.64%	1.87%
Net Bad Debts	2.83%	2.44%
Receivables	$2,164.2m	$1,809.1m

Zip ANZ again delivered very strong results in what is typically a strong seasonal period, including in December when external COVID challenges signifcantly impacted the broader environment and general retail conditions.

Key highlights for Zip ANZ included:

• A step change in transaction volume, up c.40% both QoQ and YoY driven by strong increases in customer engagement over the period.

• Australian fgures only. Arrears defned as those accounts greater than 60 days delinquent. Bad debts defned as those accounts greater than 180 days delinquent on an annualised basis. Receivables defned as amounts due from customers.