Zip shares plunge on disappointing earnings
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More news: Shares in Zip have slumped nearly 25% to $2.47 after the buy now pay later lender reported lower-than-expected growth in second quarter cash earnings to $35.3 million.
RBC Capital Markets analyst Jack Lynch said Zip delivered a mixed Q2 result with the strong US performance overshadowed by softer revenue yields in the ANZ business and cash earnings below expectations.
Citi analysts said a lower revenue margin drove a 20% miss to the company's cash earnings, "partly due to seasonality as well as higher costs".
Zip lifts second quarter earnings, revenue
The news: Buy now pay later lender Zip has reported higher earnings and revenue in the December quarter on the back of record transaction volume.
The numbers: The company said total transaction volume rose nearly 25% from a year ago to a record $3.4 billion, while quarterly revenue was up 20.5% to $269.4 million and cash earnings jumped 50% from a year ago to $35.3 million.
The context: The lender said its strong performance during the quarter was led by outstanding US growth, driven by an exceptional holiday trading period. US consumer engagement is growing strongly and the business delivered a second consecutive quarter of active consumer growth.
Zip said the ANZ transaction volumes returned to growth, with the focus on margin improvement and the rollout of Zip Plus.
What they said: “The business is well-positioned to deliver on further product innovation and marketing initiatives in the second half of FY25 to drive profitable growth,” chief executive Cynthia Scott said.
The source: ASX announcement
