Shares of Australian payments company Zip Co Ltd (ASX:ZIP) surged by up to 12.7% on Wednesday, hitting A$1.70 after the company reported impressive quarterly earnings and raised its annual financial guidance, bolstered by higher transaction volumes and a growing customer base.
The surge in Zip’s stock outpaced the broader market, which saw muted movement in the ASX 200 index.
The company raised its fiscal 2025 earnings forecast for earnings before tax, depreciation, and amortization (EBITDA) to A$153.0 million (approximately $96.93 million), up from the previous A$147 million estimate. This revision was driven by a robust increase in volumes and cash flow.
For the three months ending March 31, Zip reported a 26.2% year-on-year rise in revenue, reaching A$276.3 million. Total transaction volumes also saw a significant boost, increasing 35.7% to A$3.26 billion. The company also saw a 4.2% growth in active customers, reaching 6.25 million.
Additionally, Zip reported a decline in its ratio of bad debts compared to the previous year. However, while earnings for the March quarter showed a slight dip from the prior quarter—largely due to the typical seasonal impact of the holiday period—this was expected.
Zip, whose key markets are the United States and Australia, has benefitted from resilience in consumer spending despite headwinds like high interest rates and persistent inflation. However, concerns about waning consumer confidence may present challenges for the company in the near term. Zip’s stock has lost nearly half its value amid these worries.
