Zip Posts 24.8% TTV and 20.5% Revenue Growth, Cash EBTDA Hits $35.3m
Zip Co Limited has posted record-breaking second quarter results for FY25, driven by exceptional holiday trading and robust growth in the US and ANZ markets. The company reported a 24.8% increase in Total Transaction Volume and a 50.2% rise in cash EBTDA.
- Record Total Transaction Volume (TTV) of $3.4 billion, up 24.8% year-on-year
- Revenue climbs 20.5% to $269.4 million
- Cash EBTDA surges 50.2% to $35.3 million
- US market leads growth with 38.3% TTV and 41.0% revenue increases
- Active customers reach 6.3 million; merchant network expands to 81,900
Strong Momentum Drives Record Financials
Zip Co Limited (ASX: ZIP) has delivered a standout performance in its second quarter of FY25, posting record Total Transaction Volume (TTV) of $3.4 billion, revenue of $269.4 million, and cash EBTDA of $35.3 million. These figures represent significant year-on-year growth of 24.8%, 20.5%, and 50.2% respectively, underscoring Zip's accelerating momentum amid a robust holiday trading season.
The company’s CEO and Managing Director, Cynthia Scott, highlighted the strength of Zip’s operating leverage and its ability to capitalize on growth opportunities. "Our strong performance was driven by outstanding US growth, with year-on-year TTV and revenue growth of 38.3% and 41.0% respectively," Scott said, emphasizing the record-setting single largest trading day and month in Zip’s history during the quarter.
US Market: The Growth Engine
The US segment continues to be the powerhouse behind Zip’s expansion, with TTV reaching US$1.6 billion and revenue hitting US$107.4 million. Active customers in the US grew by 280,000 to 4.22 million, a 7.0% increase quarter-on-quarter and 6.2% year-on-year, driven by direct app engagement and heightened brand awareness initiatives.
Importantly, Zip maintained disciplined credit risk management, with monthly cohort loss rates stabilizing within the target range of 1.5% to 2.0% of TTV. The US merchant network also expanded modestly by 1.3% to 24,400, including notable partnerships such as Heritage Grocers, reflecting Zip’s targeted approach to vertical growth.
ANZ Market Rebounds with Innovation and Yield Improvement
In the Australia and New Zealand (ANZ) region, Zip returned to TTV growth, driven by a strong increase in transaction numbers. The rollout of Zip Plus, a new product aimed at enhancing customer engagement, contributed to a 110 basis point increase in portfolio yield to 18.6%, a remarkable achievement in a high interest rate environment.
Credit quality in ANZ also improved, with net bad debts declining to approximately 1.5% of TTV, down from 1.7% in the prior year. The company reinforced its presence in the travel retail vertical through partnerships with Lagardère Travel Retail and Travello, and went live with the James Pascoe Group, expanding its merchant footprint to 81,900.
Robust Funding and Liquidity Position
Zip’s balance sheet remains strong, with total cash of $527 million and $195.5 million in available liquidity as of December 31, 2024. The company enhanced its US funding facility from US$225 million to US$300 million, providing greater capital efficiency and flexibility to support ongoing growth. Additionally, Zip renegotiated terms on a key funding note, extending maturity to June 2027, further solidifying its financial foundation.
Operating cash flow generation was healthy, with $48.6 million generated during the quarter, reflecting effective working capital and receivables funding management.
Looking Ahead: Innovation and Growth Priorities
Zip remains focused on its FY25 strategic priorities: driving growth and engagement, advancing product innovation, and achieving operational excellence. The company plans to leverage its strong holiday momentum and expanded customer base to fuel further profitable growth in the second half of FY25.
With a diversified merchant network, improving credit metrics, and a solid funding platform, Zip is well-positioned to continue unlocking financial potential for its customers and shareholders alike.
Bottom Line?
Zip’s record quarter sets a high bar, but sustaining growth and managing credit risk will be key as it navigates competitive and economic headwinds.
Questions in the middle?
- How will Zip sustain its rapid US growth amid evolving consumer credit conditions?
- What impact will further product innovations like Zip Plus have on customer retention and margins?
- Can Zip maintain its improving credit performance as transaction volumes scale?
