Zip Co shares jump on Q3 result and guidance upgrade
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The news: Zip Co shares surged in early trading after the buy now, pay later lender hiked its full-year cash earnings guidance following higher cash earnings and revenue in the third quarter.
Zip shares were up 12.5% to $1.67 at 10:35am AEST, having retreated more than 40% since the turn of the year.
UBS analysts called the result a "strong update" and said Zip's upgraded guidance of $153 million "still looks conservative" at the company's current trajectory. However, the analysts noted the fourth quarter will see "increased uncertainty" due to new US tariffs.
UBS retained its 'buy' rating and price target of $3.35, and reiterated its view that the stock is oversold.
Zip Co lifts full-year guidance after strong Q3 earnings
The news: Buy now, pay later lender Zip Co has lifted its full-year cash earnings guidance after reporting higher cash earnings and revenue in the third quarter.
The numbers: The company said total transaction value (TTV) for the March quarter was up 35.7% from a year ago to $3.26 billion, while quarterly revenue was up 26% to $276.3 million. Cash earnings for the three month period jumped to $46 million.
The context: Zip said its US business continued to deliver significant growth, with TTV and revenue both increasing over 40% year on year, driven by deeper customer engagement. Momentum in the ANZ business also continued, with TTV increasing 12.6% year on year.
The lender now expects to deliver full-year cash earnings before tax, depreciation and amortisation (EBTDA) of at least $153 million, up from its previous estimate of $147 million.
“Looking ahead, we remain focused on executing our strategic priorities, and following the strong third quarter we reconfirm our two-year targets provided at the start of FY25 and upgrade our earnings expectations to deliver cash EBTDA of at least $153.0 million in FY25,” CEO Cynthia Scott said.
Separately, the company said it has appointed former IBM ANZ head Andrew Stevens as a non-executive director, effective 17 April.
