The Zip Co Ltd (ASX: ZIP) share price has jumped 10% in response to a trading update.
Zip is one of the largest buy now, pay later businesses in Australia and the US.
Zip’s April 2025 trading update
The buy now, pay later business said in an investor presentation that it “continues to evolve”, particularly in the US.
Pleasingly, Zip reported that momentum in total transaction value (TTV) growth has continued across both markets. In the US, year-on-year TTV growth for the month of April was above 40%.
Zip said that its portfolios in both regions “continue to perform well” and there have been no material changes to credit loss performance. It has seen a significant turnaround in group profitability thanks to US growth and operating leverage.
The buy now, pay later business has purchased 3.9 million Zip shares for a total cost of $6.4 million to date as part of Zip’s $50 million on-market share buyback program.
FY25 guidance reconfirmed
Zip announced it was reconfirming its FY25 guidance for cash EBTDA of at least $153 million, including operating expenditure growth (in cash terms) of around 10%, subject to market conditions.
The company said it’s on track for its FY25 result for be within its two-year target ranges.
Zip said it has a clear strategy to drive future growth, including securing new merchant and strategic partnerships, benefiting from scale, providing (and growing) new products, improving and automating “key customer journeys”, enhance the core operating systems for scale, and optimising the funding structures.
The buy now, pay later business said that its US business continues to increase its market share in an attractive market and it has a simple, well-capitalised balance sheet. Zip also said its disciplined execution is driving significant operating leverage.
Considering the Zip share price is down 40% in 2025 to date, I think this could still be an opportunity to invest, particularly if interest rates continue to reduce in Australia and New Zealand. However, there are other ASX growth shares that appeal to me more.
