One of Australia’s biggest buy now, pay later businesses has set a new earnings record as more people use its service to pay for everyday essentials such as utilities and insurance.
The news boosted Zip shares, which bounced more than 15%, after it revealed a 41% jump in quarterly cash earnings to a landmark $65.1 million.
Zip’s total transaction volume was up 22.4% to $4 billion in the March quarter, while its operating margin expanded to 19.4%, from 16.5% a year ago.
Its bad debts increased, ticking up from 1.6% of total transaction volume a year ago to 1.9% in the March quarter.
Zip said this was within management targets and forecast bad debts to fall under 1.75% of total transaction volume in the June quarter.
In Australia and New Zealand, where it has almost two million customers, spending with Zip was up 18.2%.
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“Growth was driven by increased use of Zip for everyday spend, including utilities, insurance, education and health,” it said in a statement.
Zip also operates in the US, where it has 4.6 million active customers.
The number merchants on Zip’s platform increased 12.7% to 93,900, while Zip’s overall number of active customers rose 3.5% to 6.5 million.
“Zip’s resilient business model continues to drive increased profitability at scale,” chief executive Cynthia Scott said.
Instalment spending surges
Zip now expects to make no less than $260 million in full-year earnings before tax, depreciation and amortisation.
Zip had previously forecast second-half earnings to be broadly in line with its first-half $124.3 million, which would have meant full-year cash earnings of around $248.6 million.
According to fintech group Raiz Invest, consumer spending via instalments has surged 26% over the past three years, from $469 per month in January 2023 to $589 in January 2026.
Raiz Invest chief executive Brendan Malone has told AAP that much of the spending relates to households managing grocery bills, covering school expenses and otherwise trying to make ends meet.
Zip shares were changing hands at $2.37 in morning trading – up 50% over the past month, albeit down 31% from the start of the year.
Zip partnered with TPG Telecom in Australia to launch ZMobile on April 9, a new mobile offering that lets customers activate an eSIM and manage their plans in the Zip app.
AAP
