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Australian Investment Blog

ASX:ZIP 30/10/2024

Zip Co. (ZIP) – Focus on the U.S paying off

A strong session for Zip yesterday following a good quarter as strong adoption of their payment solution in the U.S drove a decent beat to earnings – impressively, in a period that is generally on the quieter side before the Christmas rush sets in. Interestingly, the US market now accounts for almost 60% of total revenue and is certainly where the growth resides.

Key updates:

  • Earnings (EBITDA) of A$31.7m, over 3 times higher than the same quarter the year prior.
  • A 40% rise in U.S revenue to A$137.4m driven by a 40% increase in Zip transactions in the U.S
  • Continued expansion to 80,100 total merchants, including major businesses American Airlines, MLB and Gamestop

Zip has run up in recent weeks, along with the broader BNPL sector. The ANZ business is lagging, but this was largely purposeful as the business’s focus switched to the US. It must be acknowledged that this is a significant turnaround from Zip, with a focus on growing more sustainably and being more targeted in their approach, i.e., having a focus on the growing market (U.S).

From here, the momentum is very good as we head into the seasonally strong Christmas period. They previously guided to 30%+ growth in the US in FY25 and have held their end of the bargain so far. We think they will easily beat this number with the magnitude of the beat largely coming down to the strength of Christmas trade.

  • We hold Zip in our Emerging Companies Portfolio – it’s been one of our better positions, currently up ~76%.
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MM remains long and bullish ZIP
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Zip Money Co (ZIP)
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