The Zip Co Ltd (ASX: ZIP) share price is pushing higher on Tuesday morning.
At the time of writing, the buy now pay later provider's shares are up 16% to 35 cents.
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Why is the Zip share price rising?
Investors have been buying the company's shares this morning following the release of its first-quarter update.
Here's a summary of how it performed during the three months ended 30 September:
- Transaction volume up 11% to $2.3 billion
- Transaction numbers up 6.1% to 18 million
- Revenue margin up 1.4 percentage points to 8.9%
- Quarterly revenue up 31.9% to $204.4 million
- Cash transaction margin improved to 3.5%
- Positive EBTDA achieved
According to the release, Zip's Americas business was the star of the show during the quarter. It reported a 45.7% increase in revenue to $97.8 million. This was supported by a 25.4% lift in ANZ revenue to $104.1 million.
It was a similar story for transaction volume, with the Americas business delivering a 34.6% increase to $1,392.9 million and the ANZ business recording a 9.6% increase to $899.6 million.
Positively, this growth was achieved despite Zip reporting a modest decline in active customers across both regions. It now has 6.1 million active customers, which is down 1.8% year on year.
One metric that could be catching the eye this morning is Zip's net bad debts as a percentage of total transaction value. It came in at 1.99% for the period, which is down from 2.34% a year earlier. However, this is a rise from 1.84% during the fourth quarter of FY 2023.
Management commentary
Zip's CEO, Cynthia Scott, was pleased with the quarter. She said:
Zip delivered a positive cash EBTDA result as a Group for 1Q24, a significant milestone, reflecting the strength of the ANZ business, further strong momentum in US TTV, ongoing margin expansion and continued cost discipline. Zip continues to expect to achieve a positive Group cash EBTDA result for 2H24 and following a particularly strong start to the year, Zip now expects to achieve a positive Group cash EBTDA result for FY24.
The result was driven by a strong performance in both core markets, with TTV growth in the US accelerating to 29.4% YoY, while maintaining solid credit performance at 1.3% of cohort TTV. The ANZ business expanded revenue margins again to 11.6% for the period.
