Zip Co’s April TTV Jumps 40% in US, Cash EBTDA Guidance Steady
Zip Co Limited reported robust April trading with over 40% year-on-year growth in US total transaction value, underpinning a strong profitability turnaround and reaffirming its FY25 cash EBTDA guidance of at least $153 million.
- April TTV growth exceeds 40% year-on-year in US market
- Group cash EBTDA guidance reaffirmed at $153 million for FY25
- Operating margin improved to 14.2% year-to-date FY25
- Stable credit loss performance across regions
- Ongoing $50 million on-market share buyback program
Strong Momentum in US Market
Zip Co Limited (ASX: ZIP) delivered a compelling update on its trading conditions for April 2025 at the Macquarie Group Conference, highlighting sustained momentum in its core markets. The standout feature was the US business, where total transaction value (TTV) grew by more than 40% year-on-year, reinforcing Zip’s position in an early-stage but rapidly expanding Buy Now, Pay Later (BNPL) market.
The US segment now accounts for approximately 73% of Zip’s TTV, reflecting the company’s strategic focus on scaling its presence in a market with significant headroom for BNPL adoption. Zip’s tailored product offerings, including the Pay-in-Z instalment plan, are resonating well with a customer base primarily aged 25-44, many balancing work and family commitments.
Profitability Turnaround and Operational Leverage
Zip has experienced a significant turnaround in profitability, driven by US growth and operating leverage. The company reported a year-to-date operating margin of 14.2% for FY25, up from 7.9% in FY24, alongside a record cash EBTDA of $46 million in the third quarter. This improvement underscores Zip’s disciplined execution and scalable business model, which generates revenue from both customers and merchants.
Importantly, credit loss performance remains stable with no material changes reported, reflecting Zip’s robust underwriting capabilities and active credit management. The company’s portfolio continues to be resilient, with over 98% of transactions repaid in full, supporting sustainable growth.
Capital Position and Shareholder Returns
Zip maintains a strong balance sheet with nil corporate debt, $2.75 billion in customer receivables, and $204.5 million in available cash and liquidity. The company has also launched a $50 million on-market share buyback program, having repurchased 3.9 million shares for $6.4 million to date. This move signals confidence in the company’s valuation and future prospects.
Outlook and Strategic Priorities
Zip reaffirmed its FY25 guidance of at least $153 million in cash EBTDA, with an expected circa 10% growth in cash operating expenses, subject to market conditions. The company remains on track to meet its two-year target ranges, as outlined in its half-year results earlier this year.
Looking ahead, Zip is focused on scaling personal loans in Australia, piloting capital-light propositions in ANZ, and expanding embedded distribution channels in the US. Innovation remains a core pillar, with ongoing enhancements to customer journeys and operating systems designed to support future growth.
Bottom Line?
Zip’s robust US growth and operational discipline position it well for sustained profitability, but market dynamics and credit risks warrant close monitoring.
Questions in the middle?
- How will Zip sustain its rapid US TTV growth amid increasing BNPL competition?
- What impact might rising cash operating expenses have on full-year profitability?
- Will credit loss trends remain stable if economic conditions shift unexpectedly?
