By Stuart Condie
SYDNEY--Australia's Zip raised its annual earnings guidance after more inflation-weary U.S. consumers used its installment-payment platform to purchase groceries and utilities.
With U.S. consumer prices rising at their fastest annual pace in two years thanks to the Iran war, Zip's U.S. March-quarter revenue jumped 43% from a year earlier to US$155.4 million. The surge far outstripped a 5% rise across its original Australia and New Zealand markets.
The bump comes with players across the so-called buy-now-pay-later sector seeking to expand beyond the fashion and beauty segments that powered early growth through the Covid-driven surge in online retail.
This month, Afterpay-owner Block flagged utility installment payments as a key feature of its widely used Cash App. Groceries, education and health were growth drivers for Zip across its past full fiscal year, and the trend has continued.
"Non-discretionary spend categories such as groceries and utilities contributed significantly to growth, reflecting Zip's value proposition for low-to-middle income Americans," Zip said Friday.
In the U.S., the number and total value of transactions on Zip's platform both far outpaced the 9% growth in customers. That suggested consumers are using Zip more frequently and for higher-value purchases.
U.S. consumers spent US$2.12 billion via Zip over the quarter, the third in Zip's fiscal year. U.S. bad debts were barely changed from the previous quarter at 1.86% of transactions, and Zip said it expected that to fall below 1.75% in the current quarter as it adjusted credit settings.
Analysts flagged Zip's ability to maintain credit quality while growing U.S. customers as a highlight. Zip had 4.6 million U.S. customers at the end of March, and an additional 1.9 million across Australia and New Zealand.
"This is a very disciplined management performance in the context of the broader environment and the quarter. Management are more fully in control than what the market had expected," said Jonathon Higgins, an analyst at Australia's Unified Capital Partners.
Zip's quarterly U.S. revenue grew 29% in Australian dollar terms due to softening in the U.S. dollar over the past year. That still beat the 20% seen at group level.
Group cash earnings before tax, depreciation and amortization jumped more than 41% from a year earlier to 65.1 million Australian dollars, equivalent to US$46.6 million.
The ASX-listed company now expects so-called Ebtda for its full 2026 fiscal year of at least A$260 million. It had previously guided for about A$248.6 million.
Zip shares jumped more than 12% in early trade, making them the best performing stock in Australia's S&P/ASX 200 index.
Zip has already said that Chief Executive Cynthia Scott will relocate from Sydney to New York by the end of June. It has also filed a draft registration with the U.S. Securities and Exchange Commission for a potential dual listing.
Write to Stuart Condie at stuart.condie@wsj.com
(END) Dow Jones Newswires
April 16, 2026 21:48 ET (01:48 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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