The Zip Co Ltd (ASX: ZIP) share price is on a tear today.
Shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed yesterday trading for $1.48. In morning trade on Wednesday, shares just leapt to $1.705 apiece, up 15.2%. After some likely profit-taking, shares are changing hands for $1.66 at the time of writing, up 12.6%.
For some context, the ASX 200 is just about flat at this same time.
Zip's strong outperformance follows the release of the company's third-quarter update for the three months to 31 March (Q3 FY 2025).
Here's what's stoking investor interest today.
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Zip share price rockets on results
The Zip share price is getting a hefty boost after the company reported a 219% year-on-year increase in cash earnings before tax, depreciation and amortisation (EBTDA) of $46 million.
In other strong growth metrics, total transaction value (TTV) for the three months came in at $3.3 billion, up 36% on Q3 FY 2024, while total income of $279 million was up 27%.
Revenue margin of 8.6% slipped from 9.2% from the prior corresponding period, which management said reflected a higher contribution from its United States business. The cash transaction margin was stable at 3.9%.
Transactions, meanwhile, were up 27.3% to 22.8 million over the quarter.
And the Zip share price could be catching some added tailwinds, with the company noting that its net bad debts had dipped to approximately 1.6% of TTV, down from 1.7% in Q3 FY 2024.
Zip also reported growth in both active customers and merchants using its services.
As at 31 March, the ASX 200 BNPL stock has 6.3 million active customers, up 4.2% year on year. While merchants using Zip's platforms increased by 7.2% to around 83,300.
In light of the strong quarter, Zip upgraded its guidance for the full FY 2025. Zip forecasts it will deliver cash EBTDA of at least $153 million, up from prior guidance of at least $147 million.
What did management say?
Commenting on the strong quarterly results sending the Zip share price soaring today, Cynthia Scott said, "Zip's momentum continued in the third quarter, reflecting the resilience of our business model, accelerated growth across both markets, and disciplined execution of our strategy."
Scott added:
We delivered the largest ever quarterly cash earnings in Zip's history of $46.0 million, underpinned by material operating leverage.
Our US business continues to deliver significant growth, with TTV and revenue increasing 40.2% and 44.1% year on year respectively, driven by deeper customer engagement. Momentum in the ANZ business continued, with TTV increasing 12.6% year on year.
Looking ahead, Scott said:
We remain focused on executing our strategic priorities, and following the strong third quarter we reconfirm our two-year targets provided at the start of FY25 and upgrade our earnings expectations to deliver cash EBTDA of at least $153.0 million in FY25.
With today's intraday gains factored in, the Zip share price is up 39% since this time last year. Shares remain down 44% in 2025.
