Buy now pay later (BNPL) and personal lender group Zip Co has recorded a more than two-fold increase in its pre-tax earnings in its latest quarterly results, led by significant growth in its US business and a surge in merchant clients.
The company, in its 3Q25 update, reported cash earnings before interest, taxes, depreciation, and amortisation (EBTDA) of $46.0 million, a 219.4 per cent increase on the figure reported in the same period last year.
This was backed by a strong showing from its US arm, which recorded a revenue bump of 51.4 per cent from 3Q24.
Whilst revenue in its Australian and New Zealand business dipped by 1.3 per cent, this was more than offset by its US gains (with its US arm taking in $173.2 million versus $103.1 million from A/NZ).
As well, while the company’s revenue margin dropped by 0.6 percentage points from its 3Q24 results, this was in large part due to the higher contribution from its US business.
Zip entered the US market in 2020 following its acquisition of fellow BNPL QuadPay.
Zip Co platforms also processed 27.3 per cent more transactions than the same quarter last year, reaching 22.8 million across both A/NZ and US markets.
The number of merchants on Zip’s platforms increased to 83,000 (up 7.2 per cent against 3Q24 figures) off the back of several large merchant signings in the US, including Temu and Tire Agent, and expanding GameStop to online.
While total active customers in Australia/New Zealand dropped by 2.1 per cent between the last quarter, and 6.8 per cent for the same period last year, US gains offset the decline. Overall, Zip saw an overall increase of 4.2 per cent in active customers, reaching a group total of 6.25 million.
Meanwhile, Zip’s total transaction value (TTV) – the sum of all transactions facilitated through the business – increased by 35.7 per cent, totalling $3.3 billion, with its US arm making up US$1.5 billion (AU2.4 billion) of this figure.
Total income is also up 26.5 per cent, year over year, to $278.9 million.
Following the release of the results, Zip’s share price surged by 16.22 per cent today at close on 16 April (hitting $1.72 per share), with a market value gain of $380 million.
The company also upgraded its FY25 guidance, increasing its EBTDA expectations from $147.0 million to $153.0 million.
This share price bounce regains much of the losses experienced over the past month, particularly the 25 per cent hit it took following on 2 April, when the Trump Administration announced its reciprocal tariffs.
Zip Group chief executive and managing director Cynthia Scott welcomed the strong Q3 results, which she said “[reflected] the resilience of our business model, accelerated growth across both markets, and disciplined execution of our strategy.
“We delivered the largest ever quarterly cash earnings in Zip’s history of $46.0 million, underpinned by material operating leverage.
“Our US business continues to deliver significant growth, with TTV and revenue increasing 40.2 per cent and 44.1 per cent year on year respectively, driven by deeper customer engagement.”
Scott also noted the “strong result” in net bad debts across both markets, reduced to 1.6 per cent of TTV, “reflecting the discipline of our credit decisioning processes”.
“Looking ahead, we remain focused on executing our strategic priorities, and following the strong third quarter we reconfirm our two-year targets provided at the start of FY25 and upgrade our earnings expectations to deliver cash EBTDA of at least $153.0 million in FY25.
