Australia’s Zip soars on strong earnings, outlook, US listing plan

(Reuters) -Shares of Australia’s Zip surged over 25% on Friday to hit their highest level in more than three years after the buy-now-pay-later (BNPL) company reported higher annual earnings and announced plans for a secondary U.S. listing.

The company’s cash earnings before taxes, depreciation and amortization (EBTDA) more than doubled to A$170.3 million ($109.38 million) in the year ended June 30, higher than a Visible Alpha consensus estimate of A$160 million.

The earnings growth came on the back of strong performance of its U.S. business, which delivered a 41.6% growth in total transaction volume (TTV), driven mainly by spend on non-discretionary items.

The company’s net bad debts were 1.5% of TTV, down from 1.7% last year.

Zip said it expects more than 35% growth in its U.S. TTV in fiscal year 2026. According to Citi analysts, that, along with an assumption of 6% revenue growth in Australia, implies cash EBTDA of A$230 million this fiscal, ahead of consensus estimate of A$215.8 million.

The company also said it was considering a listing on Nasdaq, while maintaining its primary listing in Australia.

“It is expected that a dual listing will support Zip’s significant growth opportunity in the U.S. (which now represents over 80% of divisional cash earnings),” Zip said in a statement, adding that it had seen an increase in interest from U.S. investors.

Zip shares jumped as much as 25.6% to A$3.920 by 0102 GMT, reaching their highest point since early January 2022. The stock was also the best performer on the ASX 200 benchmark index, which was down 0.3%.

Zip shares have gained more than six-fold in value since the end of 2023, when reduced consumer spending, rising interest rates, and heightened regulatory scrutiny sapped confidence in BNPL stocks.

($1 = 1.5569 Australian dollars)

(Reporting by Himanshi Akhand in Bengaluru; Editing by Subhranshu Sahu)