Fastest Growing Stock? ZIP Takes Off
My name is Henry Jennings from Marcus Today. It is reporting season, and one of the big ones I’ve been following has just dropped their numbers today. This, of course, is Zip – a company we have recommended and held for some time.
There’s certainly a lot of interest in this one out there, and many will remember Zip from the days of the buy now, pay later boom.
It’s interesting to get a bit of a catch-up, and I’ve just come off the conference call with the Zip team. Congratulations to the team – they have delivered in spades. This comes on the back of a number of upgrades we’ve seen in recent months after the last set of results.
Just to give you an idea:
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Cash EBITDA of $170.3 million, up 147%
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Operating margin (cash EBITDA/total income) of 15.8%
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Total transaction volume $13.1 billion, up 30.3%
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Revenue margin 8.3% vs 8.7% in 2024 (lower due to higher US contribution)
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93 million transactions on the Zip platform, up 22% on FY24
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Gross profit of $509 million
All up, a pretty good set of numbers. The market has really accelerated these, with the stock up 22% as I go to air on Friday morning.
Also importantly, from a Zip perspective, they are flagging a dual listing and a potential Nasdaq listing. Still a long way to go – approvals required and a lot of hoops to jump through – but it highlights Zip’s big focus on the US market.
The US remains very under-serviced by financial institutions when it comes to what they call “middle and ordinary Americans” – around 100 million people that Zip is looking to target. So there’s plenty of upside in the US.
Buy now, pay later is no longer the force it once was in Australia, that’s for sure. But on the conference call, management sounded upbeat and optimistic about the outlook. That’s a big tick. I’d imagine we’ll see broker upgrades from here in both stock price and price targets.
Another tick in the box.
They did talk about 2025 being a defining year. And it’s fair to say that it is. They’ve got no debt, balance sheet strength, and a clear focus on America. We’re not seeing the same push for international expansion beyond Australia, New Zealand and the US, which was one of Zip’s problems in the past – spreading itself too thin.
All up, not bad at all. Zip will also benefit from lower interest rates. The market has celebrated this, and the stock has been on a huge run in the last few years. That seems justified given these numbers.
It is also potentially going to hit the ASX 100, and is certainly the fastest-growing stock in the ASX 200. So today’s 22% rise is well deserved.
The question now is whether it can continue to push higher. That’s always the question, but I would expect broker upgrades on the back of these numbers.
Finally, for those interested, I’ll be doing a reporting season wrap webinar on September 17th – rounding out results season, covering what we’ve learned, some of the key themes, and the stocks that have outperformed and underperformed. That should be interesting and available to all.
Thanks very much for listening. Just remember, all of this is general advice only. Please do your own research and contact your own financial adviser regarding any of the thoughts, ideas or insights in this presentation.
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