The Zip Co Ltd (ASX: ZIP) share price is racing higher on Tuesday morning.
At the time of writing, the buy now pay later (BNPL) provider's shares are up 10% to $3.07.
Why is the Zip share price jumping?
Investors have been bidding the company's shares higher this morning following the release of its first quarter update.
According to the release, Zip delivered group cash EBTDA of $31.7 million for the three months. This is up an impressive 233.7% over the prior corresponding period. It is also almost half the $69 million group cash EBTDA it recorded in the entirety of FY 2024.
Management advised that this earnings growth was driven by a particularly strong performance from the US business. It notes that Zip US delivered total transaction volume (TTV) of US$1,301.8 million for the period, which is up 42.8% year on year. This led to US revenue increasing 43.9% to US$92.1 million.
Commenting on the US business, Zip's CEO and managing director, Cynthia Scott, said:
Our US business continued to deliver outstanding growth, with TTV up 42.8% and revenue up 43.9%, versus 1Q24, driven by ongoing engagement in higher-margin channels such as the App.
In the local market, the company's growth was more modest. Zip ANZ delivered a 3.1% increase in TTV to $871.5 million and a 1.5% lift in revenue to $102.5 million. Scott adds:
In ANZ, the yield on receivables increased to 19.2% driven by strategic portfolio management actions, and excess spread expanded to 6.9%, a very strong result in the current high interest rate environment.
Total active customer increased by 1% quarter on quarter to 6.08 million. This comprises 3.94 million US active customers (up 2.6%) and 2.14 million ANZ active customers (down 7%). Management notes that its US active customer growth was underpinned by customer demand for the app and initiatives to drive brand and customer awareness in the US market.
Management commentary
Zip's leader was pleased with the quarter. She said:
Zip has continued to drive scale and deliver significant operating leverage in FY25, with the team delivering a Group Cash EBTDA result of $31.7m, up 233.7% vs 1Q24. When compared to 1Q24, Group revenue for the quarter grew by 18.8% and Group TTV grew by 22.8%.
During the quarter, we refreshed our Purpose to 'unlocking financial potential, together', to better reflect Zip's strategic priorities and our growth opportunity. Our team is committed to fulfilling Zip's refreshed Purpose and is aligned on our refreshed Mission 'to bring exceptional experiences, innovation and partnership to every financial journey'. Zip remains focused on delivering its FY25 priorities of growth and engagement, product innovation and operational excellence.
The Zip share price is now up 900% over the past 12 months.
