Australia's Zip soars on strong earnings, outlook, US listing plan
FILE PHOTO: Zip logo is seen on a smartphone in front of displayed same logo in this illustration taken January 25, 2022. REUTERS/Dado Ruvic/Illustration/File Photo
Shares of Australia's Zip surged over 25 per cent on Friday to hit their highest level in more than three years after the buy-now-pay-later (BNPL) company reported higher annual earnings and announced plans for a secondary U.S. listing.
The company's cash earnings before taxes, depreciation and amortization (EBTDA) more than doubled to A$170.3 million ($109.38 million) in the year ended June 30, higher than a Visible Alpha consensus estimate of A$160 million.
The earnings growth came on the back of strong performance of its U.S. business, which delivered a 41.6 per cent growth in total transaction volume (TTV), driven mainly by spend on non-discretionary items.
The company's net bad debts were 1.5 per cent of TTV, down from 1.7 per cent last year.
Zip said it expects more than 35 per cent growth in its U.S. TTV in fiscal year 2026. According to Citi analysts, that, along with an assumption of 6 per cent revenue growth in Australia, implies cash EBTDA of A$230 million this fiscal, ahead of consensus estimate of A$215.8 million.
The company also said it was considering a listing on Nasdaq, while maintaining its primary listing in Australia.
"It is expected that a dual listing will support Zip's significant growth opportunity in the U.S. (which now represents over 80 per cent of divisional cash earnings)," Zip said in a statement, adding that it had seen an increase in interest from U.S. investors.
Zip shares jumped as much as 25.6 per cent to A$3.920 by 0102 GMT, reaching their highest point since early January 2022. The stock was also the best performer on the ASX 200 benchmark index, which was down 0.3 per cent.
Zip shares have gained more than six-fold in value since the end of 2023, when reduced consumer spending, rising interest rates, and heightened regulatory scrutiny sapped confidence in BNPL stocks.
($1 = 1.5569 Australian dollars)
