AUS
NZ
UK
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Highlights:
- TTV surged 23.9% to $6.2 billion, driven by 40.3% growth in the US.
- Cash EBTDA jumped 117.1% to $67 million, with operating costs falling as a percentage of TTV.
- Management forecasts cash EBTDA of at least $147 million for FY25, signaling continued profitability.
Shares of Zip Co Ltd (ASX:ZIP) soared 11% to $2.65 on Tuesday morning following the release of its half-year results, which showcased robust growth in transaction volumes, rising profitability, and improving operating leverage.
Half-Year Performance Highlights
Zip, a leading buy now, pay later (BNPL) provider, delivered impressive growth across key metrics for the six months ended 31 December 2024:
- Total Transaction Value (TTV): Up 23.9% to $6.2 billion
- Total Income: Up 19.8% to $514 million
- Cash Gross Profit: Up 30.1% to $235.5 million
- Cash EBTDA: Up 117.1% to $67 million
- Net Bad Debts: Improved to 1.6% of TTV (from 1.8%)
- Revenue Margin: Slightly lower at 8.2% (from 8.5%)
The surge in TTV was primarily driven by the US market, where transaction value jumped 40.3% to US$2.9 billion (A$4.36 billion). This growth more than offset a 1.2% decline in Australia and New Zealand (ANZ) TTV to $1.89 billion.
Customer and Transaction Growth
Zip’s transactions increased 18.4% year-on-year to 45.7 million, reflecting:
- US transactions: Up 35.9% to 22.2 million
- ANZ transactions: Up 5.5% to 23.5 million
Active customers rose 1.5% to 6.34 million, with the US market leading the charge (up 6.2% to 4.22 million). However, ANZ active customers declined 6.2% to 2.12 million, reflecting a more competitive domestic market.
Operating Efficiency and Profitability
Zip continued to improve its operating leverage, with total operating costs falling to 2.7% of TTV (down from 3%). This cost discipline contributed to the 117.1% surge in cash EBTDA, which hit a record $67 million for the half.
Confident Outlook for FY25
Management remains bullish on future growth, with Zip on track to meet its two-year targets. The company expects to deliver cash EBTDA of at least $147 million for FY25, more than double the first-half result.
CEO Peter Gray expressed confidence in Zip’s momentum:
“Following the momentum gained during the half, we expect to deliver cash EBTDA of at least $147 million for the year. Our team is focused on executing our FY25 priorities, driving long-term shareholder value, and fulfilling our purpose of 'unlocking financial potential, together.'”
Market Reaction and Share Performance
Investors cheered the results, sending Zip’s stock price up 11% in early trading. The stock has now climbed 180% over the past 12 months.
