The Zip Co Ltd (ASX: ZIP) share price is falling on Wednesday morning.
At the time of writing, the buy now pay later provider's shares are down 2.5% to $1.57.
Why is the Zip share price falling?
Investors have been selling the company's shares following the release of a presentation this morning ahead of its appearance at the Macquarie Group Ltd (ASX: MQG) conference.
That presentation included both a summary of its market opportunity and a trading update for the month of April.
In respect to the former, Zip reminded investors that it has a significant growth opportunity.
It highlights that the buy now pay later market is valued at US$130 billion in the United States. This compares to Zip's current market share of US$5.1 billion, which gives it a significant growth runway.
Zip also highlights that adoption is still in the early stages with just 6% of ecommerce transactions taking advantage of the payment method in the country. This compares to 15% in Australia and 20% in Germany.
Trading update
According to the release, the operating environment continues to evolve, particularly in the United States.
However, momentum in total transaction value (TTV) growth has continued across both markets.
For example, in the United States, year on year TTV growth for the month of April was above 40%. This is broadly in line with the 47.1% TTV growth it reported for its United States business during the third quarter of FY 2025.
Importantly, management notes that the portfolios in both regions continue to perform well and there are no material changes to credit loss performance. This likely means that its net bad debt is in line with the third quarter rate of approximately 1.6% of TTV.
What else?
Zip also revealed that it has purchased 3.9 million shares for total consideration of $6.4 million to date as part of its $50 million on-market share buyback program.
Available cash and liquidity levels remain stable to those reported at the end of the third quarter.
Outlook
The good news is that management continues to expect the company to deliver on its guidance for FY 2025.
It has reconfirmed its FY 2025 guidance for cash EBTDA of at least $153 million. This includes cash operating expenditure growth of circa 10%, subject to market conditions.
It also stated that it is on track for its FY 2025 results to be within the two-year target ranges, as previously announced to the market with its half year results in February.
Despite today's move, the Zip share price is still up 17% over the past 12 months.
