In a significant moment for Zip Co Limited (ASX: ZIP), Larry Diamond, the company’s co-founder and US Chairman, has stepped down from his roles, marking the end of an era for the digital financial services firm. Diamond’s departure signals a shift in leadership dynamics at Zip as it navigates a promising yet challenging phase of growth.
Announced on 3 December 2024, the decision comes as Diamond sets his sights on establishing a Family Office and Foundation to focus on philanthropic pursuits. Despite stepping away from formal responsibilities, he remains firmly tied to the company, retaining an advisory role on strategic initiatives.
It is being reported Diamond offloaded 30 million shares at $3.35 each shortly after Tuesday’s market open, securing bids at a 2.3% discount to Monday’s closing price. Stockbroker Unified Capital Partners facilitated the trade. Following the sale, Diamond retains approximately 25 million shares in Zip, maintaining a vested interest in the company he co-founded in 2013 alongside Peter Gray.
Larry Diamond
Diamond’s tenure at Zip has been transformative. From its origins in Sydney as a fledgling start-up, Zip has grown into a multi-billion-dollar ASX-listed fintech powerhouse operating across Australia, New Zealand, and the United States. The company offers innovative digital payment solutions to millions of customers while connecting them with a global network of merchants.
Reflecting on his departure, Diamond said:
“Now is the right time for me to step back from my day-to-day role at Zip. I’m very proud of what Zip has achieved and have total confidence in the team that will be leading the company to continued great success.”
Diane Smith-Gander AO, Chair of Zip’s Board, highlighted the wider trend of founders stepping away as companies mature, acknowledging Diamond’s pivotal role in shaping the company and the sector:
“We respect Larry’s decision and express our appreciation of his extraordinary achievement.”
Diamond’s exit coincides with a period of robust financial performance for Zip, driven by significant momentum in the US market. The company’s Q1 FY25 results, released in late October, showcased a 233.7% increase in Group Cash EBITDA to $31.7 million. Total Transaction Volume (TTV) surged 22.8% to $2.8 billion, with revenue climbing 18.8% year-on-year to $239.9 million.
The US division has been the standout performer, recording a 42.8% increase in TTV to US$1.3 billion and a 43.9% rise in revenue to US$92.1 million. The company’s US CEO, Joe Heck, is credited with driving these results, as Zip continues to capture market share and expand its merchant partnerships.
Group CEO Cynthia Scott remarked on the company’s trajectory:
“Larry has prepared the team well for this natural progression and is stepping down at a time when we have the leadership and broader team executing strongly on a strategy that is delivering for the company and its shareholders.”
While Zip’s US operations shine, the Australian and New Zealand business faces a more subdued outlook, with only marginal improvements in key metrics. In Q1 FY25, TTV in ANZ grew by a modest 3.1%, while revenue dipped slightly by 1.5%. However, the company’s strategic focus on portfolio management has led to improvements in credit performance and excess spread, offering a silver lining.
The company has also made strides in fortifying its financial position. A fully underwritten equity placement and share purchase plan earlier this year allowed Zip to retire all corporate debt, strengthening its balance sheet. As of September 2024, the company boasted $341.5 million in cash, a robust position to support its ongoing expansion.
Diamond’s departure comes at a time when the broader buy-now-pay-later (BNPL) industry is grappling with regulatory scrutiny, rising competition, and changing consumer preferences. However, Zip’s strong US performance and focus on operational excellence provide a solid foundation for its next phase of growth.
For investors, Diamond’s retained stake of over 55 million shares serves as a reassuring signal of his confidence in Zip’s future. As the company enters this new chapter, guided by a refreshed leadership team, the echoes of its co-founder’s vision will undoubtedly remain a guiding force.
The guard may be changing at Zip, but its ambitions remain as bold as ever. As one chapter ends, another begins—a future that Larry Diamond, even from the sidelines, will continue to help shape.