Zip Co Posts 30% TTV Growth and Doubles Operating Margin in FY25
Zip Co Limited’s FY25 results reveal a powerful US market expansion driving a 147% rise in cash earnings and a strategic Nasdaq dual listing consideration.
- Total transaction volume up 30.3% to $13.1 billion
- Cash EBTDA soars 147% to $170.3 million
- US now accounts for 71% of total transaction volume
- Operating margin nearly doubles to 15.8%
- Nasdaq dual listing under consideration to support US growth
Robust Growth Anchored by US Expansion
Zip Co Limited (ASX – ZIP) has unveiled its FY25 financial results, showcasing a remarkable leap in performance largely propelled by its US operations. Total transaction volume (TTV) surged 30.3% year-on-year to $13.1 billion, with the US market now contributing 71% of this volume, underscoring the company’s successful penetration into the early-stage but rapidly growing US Buy Now Pay Later (BNPL) sector.
Cash earnings before tax, depreciation, and amortisation (EBTDA) skyrocketed by 147% to $170.3 million, reflecting disciplined cost management and improved credit outcomes. This translated into an operating margin expansion from 7.9% to 15.8%, a significant milestone for the company’s profitability trajectory.
Strategic Initiatives and Product Innovation
Zip’s FY25 strategy focused on deepening customer engagement and broadening its product suite. The US business saw active customer growth for the first time since FY22, with monthly transactions per customer increasing by over 20%. The company expanded its Pay-in-Z platform, notably scaling Pay-in-8, which accounted for 18% of fourth-quarter TTV, supporting higher average order values.
In Australia and New Zealand (ANZ), Zip returned to TTV growth driven by Zip Plus and the launch of a Personal Loan product, while maintaining strong credit discipline with net bad debts reduced to 1.5% of TTV. The company also invested heavily in AI-powered innovations, including the launch of the GenAI chatbot Zigi, and enhanced risk management systems to support scalable growth.
Capital Management and Nasdaq Listing Plans
Zip strengthened its balance sheet with refinancing initiatives that extended funding tenors and lowered margins, including a $400 million five-year variable funding note and a $300 million Australian bond issuance. The company has also launched a $50 million on-market share buyback, signaling confidence in its valuation and future prospects.
Importantly, Zip is actively considering a dual listing on the Nasdaq to better access US capital markets and support its dominant growth in the region. This move is subject to board approval and regulatory processes but reflects the company’s ambition to maximise long-term shareholder value amid increasing US investor interest.
Sustainability and ESG Commitments
Beyond financials, Zip highlighted its ongoing commitment to environmental, social, and governance (ESG) principles. The company reported strong employee engagement, increased female representation in technology roles, and partnerships supporting financial inclusion and hardship assistance. These initiatives align with Zip’s mission to deliver fair and flexible financial services responsibly.
Looking ahead, Zip’s FY26 priorities include sustaining US TTV growth above 35%, advancing AI-driven product innovation, and maintaining cost discipline to further improve operating margins. The company’s strategic investments and operational excellence position it well to capitalise on the expanding BNPL market, particularly in the US.
Bottom Line?
Zip’s FY25 results mark a pivotal step in its US expansion journey, with the Nasdaq listing decision poised to shape its next growth chapter.
Questions in the middle?
- Will Zip secure regulatory approval and board backing for its Nasdaq dual listing?
- How will Zip balance rapid US growth with maintaining disciplined credit risk management?
- What impact will AI-powered innovations have on Zip’s customer engagement and profitability?
