‘Record cash earnings’: BNPL stock soars on latest result

A buy now, pay later lender says its cash earnings have surged to a new record off the back of one particular growth segment.

Buy now, pay later lender Zip has reported record cash earnings for the first half of the year following an “outstanding performance” by its US business.

In its latest market update, Zip announced cash earnings before taxes, depreciation and amortisation (EBTDA) came in at $67m, up 117 per cent on this time last year.

This comes off the back of growing transaction volumes and low bad debts.

Zip group chief executive and managing director Cynthia Scott said strength in the US business helped drive the company’s growth.

Zip has announced record cash earnings off the back of strong results out of the US. Picture: Supplied

At the time of writing, Zip shares soared 14.92 per cent to $2.74.

“The record financial outcomes achieved this half have been driven by outstanding US growth and disciplined execution of our strategy, with a focus on delivering enhanced customer experiences,” she said.

“We strengthened our balance sheet to support future growth and, consistent with our focus on cost discipline, continued to deliver significantly.”

The company reported a 40 per cent uplift in total transaction volumes for its US segment on the back of an “exceptional holiday trading period”, including the single largest day of trading in the company’s history.

Active US customers jumped 400,000 to 4.2 million, while average spend and average transactions per US customer increased 33.1 and 29.8 per cent respectively.

The company said its Australian business returned to profits following 18 months of losses. Picture: Supplied

The company flagged its Australian and New Zealand business returned to growth in the second quarter after 18 months as the company focused on improving margins.

“We remain committed to our two-year targets, and following the momentum gained during the half, we expect to deliver cash EBTDA of at least $147m for the year,” Ms Scott said.

Despite a strong cash earnings position, Zip said statutory net profit after tax fell 68.4 per cent to $23m on the back of a 10 per cent lift in costs.

Australian revenues lifted to $302.9m in the six months to December 31, while its US revenue grew to $US199.5m ($314m).

UBS analysts noted that gross profit of $236m was up 3 per cent year on the year and 7 per cent ahead of consensus estimates of $220m. They also flagged that Zip’s full-year cash EBITDA guidance of $147m came in higher than average forecasts of $145m.

The number of merchants on its platform lifted 7.6 per cent to 81,900, but customer growth remained relatively flat, up 1.5 per cent to 6.3 million.

Originally published as ‘Record cash earnings’: BNPL stock soars on latest result