Shares of Australian payments company Zip Co Ltd (ASX:ZIP) saw a significant rise on Wednesday, climbing by as much as 12.7% to A$1.70, driven by strong quarterly earnings and an upgraded annual forecast. The jump in Zip’s stock outpaced the overall performance of the ASX 200 index, which saw more modest movement.
The company raised its fiscal 2025 earnings guidance, revising its expectations for earnings before tax, depreciation, and amortization (EBITDA) to A$153.0 million ($96.93 million), up from a previous forecast of A$147 million.
Zip attributed the revision to positive growth in transaction volumes and a boost in customer numbers. For the quarter ending March 31, the company reported a 26.2% year-on-year increase in revenue, totaling A$276.3 million. Total transaction volumes also saw a substantial 35.7% rise, reaching A$3.26 billion. Additionally, Zip’s active customer base grew by 4.2%, reaching 6.25 million users. The company also reported a reduction in its bad debt ratio compared to the previous year.
Despite these positive results, Zip’s earnings for the March quarter showed a slight dip from the previous quarter, a trend generally expected due to the seasonal uptick in spending during the December quarter holidays.
Operating primarily in the U.S. and Australia, Zip has managed to maintain its momentum despite challenges like high interest rates and persistent inflation, which have pressured consumer spending. However, emerging signs of weakening consumer confidence may pose near-term challenges for the company. This concern has already contributed to a near-halving of Zip’s share value over recent months.
