The big question is around bad debts, actual write offs during the period were $3.8m (Note 7: Customer Receivables on page 15 of the report) which is well below the provisioned amount everyone is talking about above of $6.1m. With the carry over from the previous period they are allowing for $6.9m in bad debts in the first half of 2018. It does seem high and I haven't done the modelling, but I'd like to think the people working at Zip are smarter than I am and have got this right.
Looking at the arrears number, they have actually dropped which should be directly correlated to bad debts however as they are accounted for after 60days we only know how many people have been slow at paying up until the end of October. Q3 results will be telling as we'll find out how well holiday shoppers can pay their bills although with the momentum the company has been building over the past few months I'd expect growth to keep accelerating and bad debts to continue being a bit of a mystery.
DB
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