DIP IN LOCAL REVENUE HITS ZIP

Zip has taken a major share market hit after posting its second-quarter results in which the company revealed its total transaction volume rose 25 per cent year-on-year to $3.4bn.
The Australian fintech’s revenue also rose 21 per cent to $269.4m in the three months to December 31.
But Zip failed to impress investors, with its lower than expected revenue in Australia sparking a major sell-off, driving its share price to close down 25.3 per cent at $2.44.
Zip reported its Australian revenue fell 2.7 per cent year-on-year, to $103.8m, which it blamed in part on a seasonal decline.
Conversely, its US revenue surged 41.6 per cent to $165.6m, resulting in a total revenue of $269.4m, up 20.5 per cent compared to the same period in the 2024 fiscal year.
Zip chief executive Cynthia Scott remained upbeat, and said the company’s results reflected the company’s ability to “leverage and deliver on our significant growth opportunity”.
“The business is well-positioned to deliver on further product innovation and marketing initiatives in the second half of FY25 to drive profitable growth,” Ms Scott said.
But analysts saw it differently, with Citi’s Siraj Ahmed predicting Thursday’s share price decline, saying Zip’s 20 per cent miss on earnings before taxes, depreciation and amortisation would probably scare investors.
“Zip reported solid TTV growth of 25 per cent on-year, with the US continuing to deliver strong growth while ANZ returned to growth,” Mr Ahmed said.
“However, cash EBTDA missed our forecast by 20 per cent primarily due to a 4 per cent revenue miss, partly due to seasonality as well as higher costs.
”Zip reported an EBTDA of $35.3m for the quarter ending on December 31, which was lower than analysts’ expectations.
Zip’s revenue margin fell to 7.9 per cent, from 8.2 per cent, despite the number of active customers growing 1.5 per cent year-on-year to 6.3 million.