Zoom2u Faces Revenue Challenges as Core Delivery Business Declines 11% in Q2
Zoom2u Technologies reports a positive EBITDA and cash flow for the first half of FY25, driven by growth in its Locate2u and Shred2u platforms, despite a revenue dip in its core Zoom2u delivery service during Q2.
- Positive Group EBITDA of $45k in H1 FY25, a $430k improvement year-on-year
- 10% revenue growth to $3.2 million in H1 FY25, led by Locate2u and Shred2u
- Zoom2u platform revenue declined 11% in Q2 FY25 amid consumer confidence challenges
- Adoption of Treasury Management Policy enabling Bitcoin transactions
- Cash from operations turned positive at $20k in H1 FY25 with a $1.44 million cash balance
Positive EBITDA and Revenue Growth in H1 FY25
Zoom2u Technologies Limited (ASX: Z2U) has reported a notable turnaround in its financial performance for the first half of fiscal year 2025. The company achieved a positive EBITDA of $45,000, marking a $430,000 improvement compared to the prior corresponding period’s loss of approximately $385,000. This improvement was accompanied by positive cash flow from operating activities of $20,000, reversing a negative cash flow of $791,000 in the previous year.
Group revenue for H1 FY25 rose 10% to $3.2 million, driven primarily by growth in the Locate2u and Shred2u businesses. Locate2u, the company’s SaaS platform for delivery management, recorded an 8% revenue increase in Q2 FY25 and a 15% rise over calendar year 2024. Meanwhile, Shred2u, a subsidiary under 2u Enterprises, posted an impressive 43% revenue growth in Q2 and 39% for CY24.
Challenges in Zoom2u Platform Performance
Despite these gains, the core Zoom2u on-demand delivery platform experienced a revenue decline of 11% in Q2 FY25, with calendar year 2024 revenues down 3% year-on-year. The company attributed this shortfall to ongoing weakness in consumer confidence and lower margins from enterprise customers. This underperformance during the peak delivery quarter signals potential headwinds in the competitive last-mile delivery market and raises questions about Zoom2u’s ability to regain momentum.
Zoom2u’s CEO Steve Orenstein highlighted that while the Locate2u business continues to expand, the Zoom2u platform’s results fell below expectations. He pointed to new enterprise customer wins for Locate2u, including Ontime Delivery Solutions and ACM Parts, which are expected to drive future revenue growth by leveraging enhanced product functionality.
Strategic Innovation with Cryptocurrency Integration
In a move to position itself at the forefront of technology innovation, Zoom2u has adopted a Treasury Management Policy allowing the acquisition of Bitcoin and acceptance of customer payments in Bitcoin where feasible. This strategic decision reflects the company’s intent to embrace emerging payment technologies and diversify its treasury assets, potentially appealing to a broader customer base and investors interested in cryptocurrency exposure.
Financial Position and Outlook
Zoom2u ended the quarter with a cash balance of $1.44 million and reported a modest cash outflow from operating activities of $17,000 in Q2, a significant improvement from the $401,000 outflow in the prior corresponding quarter. The company’s loan facilities remain intact, with secured loans from Pure Asset Management and Commonwealth Bank supporting liquidity.
Looking ahead, Zoom2u’s management remains focused on revenue growth and cost optimisation to achieve sustainable operations. The company’s upcoming investor webinar will provide further insights into its strategic priorities and operational execution.
Bottom Line?
Zoom2u’s positive EBITDA and strategic moves signal progress, but Zoom2u platform’s revenue dip underscores ongoing market challenges.
Questions in the middle?
- Can Zoom2u reverse the revenue decline in its core delivery platform amid consumer uncertainty?
- How will the adoption of Bitcoin payments impact customer acquisition and treasury management?
- What cost optimisation measures will the company implement to sustain profitability?
