ZIP Co Delivers Record Q3 and Launches $50M Buyback

About Zip Co. Limited

ZIP Co Ltd (ASX: ZIP) is a leading Australian financial technology company operating in the Buy Now, Pay Later (BNPL) sector. The company offers instalment payment solutions to consumers and merchants across Australia, the United States, and global markets. ZIP provides flexible credit at checkout and drives customer acquisition for retailers. Following a multi-year restructure, ZIP has transitioned from a high-growth, loss-making fintech to a more sustainable, profitability-focused model, with a sharp emphasis on cost control, margin expansion, and shareholder returns.

Q3 FY25 Earnings Beat and Strategic Momentum

ZIP delivered its strongest quarterly performance to date in Q3 FY25, reporting $46 million in cash EBTDA, up 219% year-on-year and ahead of analyst expectations. This growth was driven by operational leverage, strong performance in the U.S. market, and disciplined credit management. The company also upgraded full-year FY25 guidance to $153 million, up from $147 million previously.

Total Transaction Volume (TTV) for the quarter rose to $2.3 billion, supported by key merchant partnerships and increasing repeat customer usage. Revenue increased in line with TTV, while costs remained tightly controlled. ZIP has made significant improvements in credit performance, with net bad debts at 1.6% of TTV, a stable and sustainable range for the sector. Meanwhile, loss rates across lending cohorts continue to decline, highlighting improvements in customer quality and risk models.

ZIP’s U.S. business continues to scale effectively, contributing a major share of earnings. New high-profile merchant integrations during the quarter included Temu, Tire Agent, and GameStop (online), which are expected to support further growth in the June quarter. The company continues to deepen its relationships with large retailers while maintaining its digital-first, low-cost structure.

Management attributed the strong result to continued focus on profitable growth, repeat customer engagement, and channel optimisation. With the restructuring phase now complete, ZIP is shifting toward shareholder value creation and capital efficiency. The record cash EBTDA outcome validates the company’s operating model in a rising-rate environment and sets a strong foundation heading into FY26.

Investors responded positively to the news, with high trading volume despite a slight dip in share price on the day. The upcoming capital return plan may support sentiment going forward.

$50M Buyback and Capital Return Strategy

In a major shift from growth-mode expansion, ZIP announced a $50 million on-market share buyback, set to commence on 23 April 2025. This move reflects a high level of confidence from the board in the company’s balance sheet, cash flow visibility, and margin strength. It also signals a pivot toward capital return and long-term value creation for shareholders.

The buyback comes after ZIP’s multi-year transformation strategy, during which it exited unprofitable markets, optimised risk models, and streamlined its cost base. Now profitable and generating strong free cash flow, ZIP is using excess capital to reward shareholders and manage dilution from previous share-based financing rounds.

The company stated that the $50 million buyback will be funded from existing cash reserves, with no need for new capital or debt issuance. The initiative allows ZIP to improve earnings per share and return profile, while retaining flexibility for ongoing merchant and customer investment. This capital return is also expected to improve investor confidence, particularly among institutional holders seeking a sustainable fintech exposure.

The move is timely. With shares still trading well below previous highs despite a +24.89% 1-year return, ZIP sees the buyback as a value-accretive move. It also aligns with broader fintech trends, where profit-focused operators are now outperforming high-growth peers in the BNPL space.

Looking ahead, investors will monitor execution of the buyback, further revenue growth from the U.S. market, and any updates to strategic partnerships or product innovation. With a market cap near $1.93 billion, ZIP is firmly re-establishing itself as a leading, sustainable fintech on the ASX.

The company has entered FY26 with profitability, momentum, and now, a clear strategy to return value directly to shareholders.