ZipRecruiter, Inc. Price & Performance (ZIP)

Thanks, operator. Good morning, and thank you for joining us.

For this first half FY 2025 results.

To open, I'd like to begin by acknowledging the traditional of the land on which we meet today. The Gadigal of the Eora nation and pay our respects to elders past and present. This conference call is also being webcast and an archive will be available on this website. I'm joined today by Zipp's Group CEO, Cynthia Scott and Group CFO, Gordon Bell, who will present today's results. We also have U. S. CEO, Joe Heck and A and B's CEO, Peter Gray, who will join us for Q and A. We will start this call with some prepared remarks and then open up to questions.

With that, I'll now hand over the call to our group CEO, Cynthia Scott. [indiscernible] Good morning, everyone, and welcome to Zix's results presentation for the first half financial year 2025. I'm very pleased to present an outstanding set of results for the half. With record financial performance, a continued focus on exceptional and the strengthened balance sheet support future growth. Our U. S. Business delivered excellent results and our AMZ business returned to growth. This is well positioned to capitalize on the significant growth opportunity in our two core markets as we continue to drive scale deliver material operating leverage. This continues to be a strong and sustainably profitable business. With unique competitive advantages as set out on Slide four, And I'll touch on each of these in more detail as we go through the presentation. Our key financial highlights are set out on Slides five and six.

In the first six months of the year, we delivered $6,200,000,000 in [indiscernible] Up 24% year on year from over 45,000,000 transactions. This was driven by a particularly strong performance in U. S. Volume. And increased customer engagement across both markets. Total income was up nearly 20% to $514,000,000 Our revenue margin of 8.2% remains within our two year target range. The year on year movement reflects the increased contribution from The U. S. Now representing 70% of TTB. Active customer numbers were up 1.5% to 6,300,000 with The U. S. Reporting customer growth in both Q1 and Q2. As we continue to add new merchants, with almost 82,000 now on our platform, reflecting strong demand to have Zip available for their customers, Turning to Slide six, This continues to demonstrate strong unit economics Cash gross profit was up 30.1% and credit losses improved 22 basis points to 1.6% of TTV reflecting strong credit performance in both markets. Group cash EPS of CAD67 million dollars was up 117% versus the prior corresponding period.

Reinforcing this ability to deliver significant operating leverage as the business scales. Turning to Slide seven and how we've delivered against our FY '25 At the beginning of the financial year, we set out three clear priorities. Growth and engagement, product innovation and operational excellence. Starting on the left, we saw increased customer engagement in both markets reflecting investment in brand awareness, and the rollout of Zip Plus in Australia. This was achieved while maintaining strong credit performance. In line with our strategy to deliver sustainable profitable growth. We continue to innovate for our customers, including through the rollout of our P and A product in The U. S. And the development of a new personal loan product In delivering on operational excellence, we took further actions to strengthen and simplify our balance sheet. Repaying all corporate debt in July.

To support growth in both markets, we upsized our U. S. Receivables financing facility to US300 million and refinanced US1.1 billion dollars of funding in Australia. The collective impact of these actions can be seen on the next slide. With a record first half cash EBITDA results of $67,000,000 This was driven by outstanding growth in our U. S. Business. Up 80% from the first half financial year twenty twenty four. Now turning to Slide nine. At our FY 'twenty four results, we introduced operating margin to our target ranges. Pleasingly, operating margin increased by five eighty four basis points to 13%, underpinned by disciplined investment in our cost base, to ensure we capitalize on our growth opportunities. While delivering improved returns at the cash earnings line. Turning now to Slide 10. This business model is built on being a responsible lender we've delivered solid progress against our focus. There is financial inclusion and well-being, employee engagement and environmental sustainability. A key highlight for the half was achieving our carbon neutral status for the fourth consecutive year. Before I step through the detailed performance of each region, Slide 12 is a reminder of its unique business model.

Acquiring both customers and merchants onto our platform is fundamental to our two sided business model. For customers, we drive engagement through repeat usage and greater frequency. By providing fair, flexible and transparent payment solutions that can be used for both discretionary and everyday spend, online and in store, which increases customer lifetime value. As our business continues to scale, we unlock efficiencies generating material operating leverage and driving sustainable profitable growth. Slide 13 provides an overview of the unique role of both regions play in driving this longer term opportunity. The U. S. Market continues to present significant opportunity with an addressable BNPL market of US130 billion This play a greater role in providing short term unsecured credit to sum of the 100,000,000 everyday Americans underserved by traditional financial services Our U. S. Business continues to outperform the market with TTV growth of 40.3% versus the weighted average annualized growth at our peers' comparable products, of 30% to 32%. In IND, we're leveraging our market leading capabilities to drive product innovation, including new solutions that broaden our financial services offerings. Increased engagement with our customers, drive receivables growth. Onto Slide 14 to go through our U. S. Performance in more detail.

The 80% growth in cash earnings in our U. S. Business was driven by TTV and revenue growth, of 40.342.3% respectively.

Underpinned by an exceptional holiday period and Ziva customer engagement. Active customer growth, up 6.2% year on year, was supported by our investment in direct to consumer marketing and brand awareness initiatives to drive customer acquisition. We continue to add new merchants in targeted verticals including GameStop, Take Five Oil Change and Major League Baseball Ticketing and Shop. We remain focused on unlocking the significant in store opportunity in The U. S. Which represents 84% of the total payments market.

In the half, we delivered a 64% increase [indiscernible] which now represent 22% of TPV up from circa twelve percent two years ago.

Benefiting from increased adoption of the physical card by our customers. The U. S. Business continued to optimize and scale its Pay and Aids installment solution. Which is now available to all eligible customers through the app. PayNet is the next offering of our broader Pay and Z platform which will provide further flexible and personalized installment products for our customers. Turning now to Slide 16. The U. S. Continues to present a significant growth opportunity for this. Based on the sheer size and the early stages of market maturity. With BNPL representing 5% of e commerce spend and less than 2% of total payments. Well below adoption rates in more established markets. Slide 16 provides some insights on The U. S. Customer and our differentiated capabilities. Our customers are everyday Americans, a group of over 100,000,000 Americans have difficulty accessing [indiscernible] to access traditional credit products. Our customers are more likely to use short term unsecured credit products for flexibility and help them manage their cash flow. Over 90% of our customers either work full time, part time [indiscernible] And over 98% of all transactions are repaid in full. We have proven expertise in underwriting. With more than seven years of customer and transaction data, and the ability to swiftly adjust our risk settings, to balance top line growth with loss rates outperforming traditional credit products Finally, in The U. S, merchants are increasingly offering multiple flexible payment options at checkout, recognizing the incremental benefits different providers offer to different customers, Slide 17 shows the increased customer engagement we've achieved over time.

As demonstrated by the chart, transactions and CTV for active customers are up 4449% respectively. Over the last eighteen months. This growth has largely been driven by existing customers, Our data shows that once a customer joins Zip, they spend more per month over time. With our data and underwriting capabilities enabling us to optimize credit lines.

The most recent July 2024 cohort experienced a 26% increase in average spend over the six months of December. We have a clear strategy to drive future growth supported by an engaged customer base. With monthly transacting users 33% higher than two years ago.

Slide 18 covers U. S. Credit performance on a global basis.

Our cohort performance for July to December was commensurate with the growth in new customers, with The U. S. Adding 400,000 active customers. As you can see on the chart, this continues to deliver significant growth while maintaining loss rates within our target range of 1.5% to 2% of TTB. Reinforcing the strength and agility of our credit decisioning platform. Pleasingly, early indicators of January are well within our target range with expected losses at 1.6% of cobalt TPx. Finally, on Slide 19, you can see that The U. S. Has delivered a nearly $100,000,000 turnaround in earnings over the last two years. Driven by strong margin expansion, cost discipline and capital benefits. Turning to the INS business now on Slide 20. [indiscernible] management took deliberate actions to change strategic settings to optimize margins in response to the external environment. After delivering improved margins, and positioning the business for a higher for longer interest rate environment, the ANZ business has shifted its focus to initiatives to drive profitable growth. Improved customer engagement and new product offerings. As a result of these activities, in the first half of FY twenty twenty five, we've seen increased customer engagement and positive improvements to margin.

The ANZ business is well placed to accelerate PTV and receivables growth at healthy margins FY twenty twenty five and beyond. Moving to Slide '21. The ISV business gained momentum through the half.

With TTV returning to year on year growth in the second quarter driven by increased transaction frequency. This momentum continued as we exited the half with Australian TV for December up 10% year on year. And transactions per MTU are now at the highest rate in the history of the company, as more Australians use our products to manage their household finances. Innovation is at the core of this business and we've accelerated the pace of innovation. Growing from three to five products in ANZ in the past eighteen months. During the half, we rolled out Ziploc, to new Zip customers and at higher limits for eligible customers of up to $8,000 And we're seeing good momentum With the monthly acquisition of Zip Plus customers, now more than double the acquisition prior to external launch, And Ziploc's receivables are up 24% over the last three months.

In January, we launched our Zip Personal line, a next generation lending product that rewards customers for on time repayment. We'll provide more details on our new personal loan product construct and its performance later in the year. Turning to Slide 22 for more detail on the With our account based product contract in Australia, yield on the loan book and excess spread is the best way to think about the performance of the business. Increased yield, strong portfolio management and ongoing initiatives to tighten funding costs delivered a 70 basis point expansion in excess spread from the Australian book.

As you can see on the chart, arrears rates and net bad debt continued to improve in response to management actions and risk setting following the seasonal peak. Turning now to Slide 23. Initiatives focused on yield expansion and margin have increased [indiscernible] In line with the usual movements from seasonality, revenue from peak volumes in the second quarter will be realized over the second half of the financial year. With the settings that we have in place and ongoing initiatives to increase growth, from new higher margin products, the business is well placed to drive profitable growth. Turning to Slide 24.

This slide is a reminder of the IMBIT strategic asset that VIT has established in the region. These strategic assets provide strong foundation for our strategy to become a next generation financial service provider. With a highly engaged customer base, approximately 10% of the Australian adult population, products in markets that are well suited to the current operating environment, and a business that's generating healthy excess spread down in the business is strongly positioned to deliver on strategy. Now as announced with our results this morning, having successfully completed the reset of the ASN business, AMZ's CEO and Co Founder, Peter Gray, will be moving to a newly created leadership role at this as Head of Strategic His role will focus on accelerating its growth agenda across both markets, with an initial focus on INS. Peak's new role reinforces this commitment to our innovation culture, and delivering on our significant growth opportunity in both markets. Following a comprehensive search and succession planning process, I'm very pleased to announce Zaretta Alali will join this as AND's CEO from the twelfth of May this year. Soraya brings over twenty years experience in the financial services sector. With a focus on driving scalable growth, digital transformation and enhanced customer experience.

I'll now hand over to Gordon to cover group financial performance. Thank you, Cynthia. Turning to Slide 26.

I'll cover the group's financial performance.

As I noted earlier, Zipp achieved a record group cash EBTDA of $67,000,000 for the half up 117.1% year on year Cash gross profit reached $235,500,000 which was up 30.1% year on year. Underpinning these great results, was total income of $514,000,000 up 19.8% from the first half of FY 'twenty four driven by an outstanding U. S. Business performance. As well as continued portfolio yield, expansion improved excess spread I'll cover operating costs in more detail. But at a high level. Cash operating costs have increased 10.1% in the first half of FY 'twenty four on a like for like basis. For the half, Ziff delivered a statutory net profit after tax of $23,000,000 This is lower than the first half FY 'twenty four due to one off gains in the prior period relating to the convertible bond restructuring. The appendix shows the breakdown of the corporate one off adjustments and non cash items and the reconciliation from cash EBTDA to statutory accounting profit. The main movements relate to movements in credit provisioning, depreciation, and the early extinguishment of the corporate debt facility in July 2024. Covers our unit economics. Cynthia covered TTV [indiscernible] were both superb outcomes to the half.

This remains focused on improving all aspects of our business, For the half, this translated to improved unit economics, and greater operating leverage which has contributed to a 30.1% increase in cash gross profit. Net bad debts written off as a percentage of 1.6% is at the lowest level in the last two years reflecting ongoing discipline with credit settings and portfolio management in both markets. Interest expense as a percentage of TTV was 1.7% an improvement of 21 basis points year on year. Notional interest expense increased as a result of volume growth in U. S. However, offsetting this was the rate benefit we achieved from margin reduction on our Australian receivable finance. The performance for all aspects of unit economics contributed 18 basis points of strengthening in our net cash transaction margin to 3.8% Moving to cash operating expenses. On Slide 28. Cost management remains priority across the group. As we continue to make measured investments in existing business activities, and attractive growth initiatives. Overall, cash OpEx was up 10.1% year on year on a like for like basis. This includes adjusting the first half FY 'twenty four reported number The portion of the cash based short term employee incentives, which were fully accrued for in the second half of twenty twenty four for that full year.

When measured as a percentage of underlying volumes, cash OpEx has decreased 34 basis points year on year on a like for like basis. This reflects its ability to balance measured investment spend and deliver consistent profitable growth. The investments made during the half in projects, people and information technology will support the business at scale our investment was weighted to The U. S. Businesses take advantage of our significant growth opportunity in that market and to enhance our risk and process capabilities to support sustainable future growth. Across both core markets, we invest in growth marketing to support brand and product awareness. Ziff will continue to exercise strong discipline across the group in FY to deliver optimal operating leverage as the business scale. Finally, other operating costs decreased mainly due to the early extinguishment of the corporate debt facility. The next few slides starting with Slide 29, cover the group's liquidity, funding and capital management framework. Slide 29 provides the breakdown of our cash position. Along with the year on year movement in available cash. In the chart on the left hand side, you can see the breakdown of Zip five twenty seven million dollars total cash position. After allowing for cash held at balance sheet date, that was unavailable, and including cash that may be withdrawn from our funding vehicles, the Zipp had $195,500,000 in available cash at thirty one December twenty twenty four.

Important to note that we do see typical seasonal volatility over the calendar year end period, and as a result of the holiday season. We had a January 2025 month end position of $165,900,000 On the right hand side, see the material improvement in our available cash position driven by both operating and non operating cash flows. [indiscernible] operating cash flows comprised cash, EBTDA CapEx, working capital and funding requirements which contributed a positive $59,000,000 of cash inflows. This was driven by the group's outstanding strong operating results offset by floats, working capital which is required primarily for TTB growth in The U. S. Non operating cash inflows of $56,100,000 includes the $50,000,000 proceeds from Zipp's share purchase plan July 2024. Collectively, these actions live in $115,100,000 improvement in our available cash balance since June, further strengthening our balance sheet. Moving to Slide 30. Which outlines the financing facilities in place for Zix receivables and headroom for future growth. Zipp is committed to preserving balance sheet strength to support our existing business and future opportunities. During the half, we completed six funding arrangements which extended our maturity profile and diversified our investor base. And we continue to garner strong support from both existing and new investors.

In October, we exercised the option to upsize our U. S. Funding facility from $225,000,000 to $300,000,000 which provides capacity and support future growth opportunities in The U. S. In Australia and New Zealand, during September 2024, we successfully established a new $300,000,000 warehouse facility labeled BSN4 and executed a $350,000,000 rated public issuance. Label series, twenty twenty four-two, Both of these financings were used to repay the $663,500,000 facility labeled twenty twenty one-two. Additionally, we extended three of our existing facilities during the half. Across Australia and The U. S, we have sufficient funding headroom to support receivables growth. As of thirty one December twenty twenty four, Zipp continues to operate with no corporate debt. We will continue to review corporate funding options as the business the needs of the group develop. Ziff will continue to develop funding programs through considered engagement with existing and expanding investor networks. Refinancing for our two maturing facilities this calendar year is well advanced. And I'm confident we'll continue to successfully manage our financing arrangements to support receivables growth in the second half and beyond. Moving to Slide 31. Slide 31 provides an overview of capital management framework. Our framework aligns with our corporate strategy and focuses on maximizing shareholder return.

Started by the principles of this framework, decisions will be thoughtfully considered to accomplish the balance of building long term value and delivering maximum shareholder return, whilst preserving a resilient balance sheet. Attractive growth opportunities that enhance our competitive position are explored through a lens on risk, expected returns and strategic alignment with regular evaluation. To ensure they are delivering the appropriate returns. Consistent with our strategy for FY 2025, Zipp has prioritized the investment of capital in our existing businesses through the half. And maximizing returns from attractive organic growth opportunities especially in our U. S. Business. We'll continue to evaluate opportunities and deploy capital to drive long term shareholder value.

I'll now hand back to Cynthia to cover the group's outlook and strategy.

Thanks, Louis. Turning to Slide 33. During the half, we refreshed our purpose to unlocking financial potential together. To better reflect strategic priorities and our growth opportunities. Our team is committed to delivering on our purpose and is aligned on our updated mission to bring exceptional experiences innovation and partnerships to every financial journey. Turning to Slide 34. Our FY 2025 strategic priorities remain the same. In the second half, we will scale Zip Plus and personal loans in Australia. And continue to develop our Pay and Z platform in The U. S. And expand our merchant and strategic partnerships. We remain focused on product innovation.

With initiatives to accelerate this further in both regions. And we'll maintain a disciplined approach to investment in our cost base to capitalize on future growth opportunities and drive operating leverage as the business scales further. Moving to outlook on Slide 35. The two year targets we presented at our FY twenty twenty four results remain unchanged. Importantly, we're on track for our FY twenty twenty five result to be within target ranges across all metrics on this page, following the strong performance in the first half.

FY twenty twenty five revenue margin will reflect an increasing weight of the portfolio from The U. S. As well as initiatives to maintain strong Australian portfolio yields and excess spreads U. S. TTV growth and momentum has continued in January 2025. Cash in TIM will reflect a balance of strong top line growth at acceptable credit outcomes to deliver sustainable profitable margin. On cash OpEx we expect FY 2025 to be circa 10% higher than FY 'twenty four cash OpEx of $306,900,000 and we'll continue to exercise a disciplined approach On cash EBITDA as a percentage of KTB, we now expect FY twenty twenty five to be at least in line with our first half performance of 1.1%.

And finally, we expect to deliver FY 'twenty five cash EBITDA of at least hundred and $47,000,000 In closing, we're excited by the momentum in the business. And the significant growth opportunities in both markets. We remain focused on delivering exceptional experiences for our customers and driving scale and operating leverage. On behalf of the executive team, I'd like to thank our incredible team of visitors.

For everything they've accomplished in the first half and our shareholders for their ongoing support. That concludes our formal presentation. And we'll now open the call for Q and A. The first question today comes from Phil Chippendale from Zip Minnet.

Please go ahead. Hi, Cynthia and Gordon. Thanks for your time. Firstly, just circling back Cynthia, you made a comment about performance in The U. S. Business since January. I think your phrase was that The U. S. Continue to see growth in The U. S. Business. I just wonder if we can just focus in on that. Obviously, your business has been growing really well. 39% growth in TTV. In Aussie dollar terms in the December is it growing at a similar level thus far in the current quarter.

Yes. Thanks, Phil, for the question. So the one I said, so the two indications that we gave you for January first '1 as you've noted was in relation to U. S. [indiscernible] What I said was that momentum has continued into January So we continue to see the momentum in The U. S. Business from a PDP perspective in January. That we saw in the first half.

So what that means is that as we've indicated, we see comparable products growth in The U. S. Of between 3032%. Our business, as you've noted, is growing closer to 40%. And we continue to expect that in the second half, we will outperform market price levels of 30% to 32% Zip. The other metric that we gave you an update on was the January performance of losses in The U. S. So we've indicated that that's 1.6% of [indiscernible] Well within our target range.

My second question, just want to touch on the Australian business. In terms of the outlook, you've mentioned the piloting of capital light solutions. Perhaps you could just give us a sense of when you'd be looking to go to market and start to pilot those those programs? We can maybe hear more about it Yes, absolutely. So I might ask Pete to make some comments on this as well. But the so the five products that we've got in market in Australia, New Zealand, the moment, including the two that we've recently launched that being this class now being scaled and Zip Total loans just being launched. They are all on our balance sheet. But as we said when we outlined the FY 2025 to 2027 strategy, we are going to move the Australian business in [indiscernible] Because with the average age of a ZIPP customer being 39 now in ANZ, and obviously they're highly engaged and it's nearly 10% of the adult Australian population. We do see really good opportunities for Fit to offer additional financial services do they engage customer base? And going forward, they will largely be capitalized. So I might hand to Pete just to give some comments on some of the the work that we've been doing around opportunities and the pilots that we've underway for FY '26 Yes.

Hi, Phil.

So yes, Cynthia touched on, obviously, we have a very large strategic asset now in the Australian community in terms of our customer base. So some of these capital light opportunities will possibly be part of my newer remit in how to test and learn with some of those exciting opportunities to identify additional growth other than those that Cindy just touched on. So just in terms of time frame, I think you would expect to see some of those this half. And we'll probably have more to say on the exact approach go to market sort of confirming some of the outcomes of those tests and testing and the way we're going to accelerate that opportunity as a full year result sure, but we'll probably if you're following closely like some of you do, you'll probably notice some things out in the wild. Thank you. The next question comes from Tim Piper from UBS.

Please go ahead.

Hey, good morning, team. Thanks for taking the question. Just first one on the cash EBITDA. Outlook of $147,000,000 for FY 'twenty five. Thinking about the moving parts, you've kind of given us OpEx growth just back solving it based on your top line momentum. Would it be fair to say that you've kind of assumed a higher net transaction margin in the second half in the first half, I. E. Higher than 3.8% in the second half, it would sort of imply that in the guidance?

Well, Tim, I might I'll ask Gordon to see if more detail on that. But I will say, we give mean, I think, pretty good guidance on four metrics plus the cash EBITDA. So Gord, you want to give some comments in relation to Yes. Look, the way we do give updates in terms of where we're sitting at first half on those outlook ranges. The outlook ranges are, as the name implies, their outlook ranges for two years and we're comfortable to reaffirm those today. We're not going to give [indiscernible] numbers for all of them. The primary measure that we gave today being the outlook of no less $147,000,000 for cash EBTDA would be the number that I would primarily focus on.

Okay. But I mean in the ANZ business, if we're talking about percentages of TTV, I mean the Aussie business should uplift in the second half alone, right, just because of that seasonality and in revenue to TTV margin percentage?

Yes. So you're right. And that's how the Australian business performs. We see revenue coming through in Q3 and Q4 off the back of the the peak volumes in Q2. So you're spot on there. And we have positioned the Australian business for growth and we've seen some pleasing signals in December as Cynthia outlined.

Great.

Thanks. And just a second one on net bad debt in the ANZ business. You kind of gave us a January update for The U. S. Business. Can you give us a bit of a sense on the January trajectory in net bad debts in AU? Is it still seeing that downward trajectory that it's kind of been on over the last six to eight months or so in January?

Look, without giving anything on in the materials what I'd say is nothing notable to call out. We're very comfortable with our performance in Australia. Excellent.

Thanks. Thank you. Thank you. The next question comes from John Marron from CLSA.

Please go ahead. Hey, guys. Thank you for taking the questions. I guess my first one, just hoping maybe if you could just go back through the product announcements in Australia the product roadmap and maybe just hoping to get every refresher on what your longer term thoughts are in this market and just working on that. Consumer and merchant value proposition, especially now the business is on clearly good footing and you're thinking about are you thinking about customer growth stuff like that?

Yes. Thanks, John. Again, I'll answer it make some comments on this. But you're absolutely right. Attraction of this product for our customers is ubiquity that they can be used everywhere in as many settings or as many financial leases as possible. And so our customers are using our products for everyday spend and also for more considered spend. And so the rollout of this plus and now the launch of personal loans is an extension of that. But before I hand to take the one final comment I'll make is that you're right, John, like the business is now being reset or grow. And looking at new customer acquisition as well as increased customer engagement given our suite of products, is certainly something that the business is focused on. So maybe John talk about the product roadmap specifically? [indiscernible] Yes, as we sort of touched on, we have launched two new products in the last fifteen months, which has been a pretty pretty significant sort of achievement for the business as you consider. Historically, we've likely had two products in the previous ten years. So they're very immature in terms of exercising that opportunity and remain very heavily focused on continuing to deliver growth both to new and existing customers from those two products.

I think if you sort of caught the commentary in the presentation that once we've gone above the line or to new customers plus we have started to deliver significantly stronger sort of growth. So we believe we've an expanding product set, not only do we have the opportunity to provide further benefits to existing customers, but also some level of appeal to customers who might not have necessarily felt the utility of the $1,000 discount. So we're pretty bullish about those two products in the early stages of their maturity and how we use marketing to drive some of that growth and invest wisely in channels that can drive customer acquisition for those new products is firmly upon the roadmap So I think in terms of the broader product roadmap, we will continue to focus very significantly on the ball products that currently in market and I think part of the exciting opportunity for me and the business possibly with the newer function is to explore other things that might be bolted onto that that sit outside the plan on a page that we're currently operating with regards to those products. So ways that we might be able to step change or accelerate that platform that is already delivering very strong EBITDA, but now in a growth setting.

Any hints on what that might look like over the longer term? I mean, talking about I think if we were going to market them, I don't know, but it'd be to the analyst community. But No, I think, yes. What we'll do is when we get to the full year, we'll definitely have to give you more detail We've only just launched personal loans in January.

So it's a bit too early to be talking about the product construct and way too early to be talking about the performance.

But when we get to the full year, absolutely, we'll give you a bit more color on existing products we've got in market, but also as we go into give a bit more color in relation to his new role. Some of the priorities going as we head into FY '26. '6. Okay. That's fair. Maybe just one quick one then. Like U. S, it's all BNPL, expanding that BNPL product. What point do you think you export some new consumer product to that market.

Yes, it's a great question, John. And I will hand to Joe just to give his perspective as well. I guess my overarching observation would be as we in the prepared remarks, the BNPL product penetration in The U. S. Is still less than 2% of total payments. And 5% of e commerce, so very nascent. Relative to more mature markets. And our customer base in The U. S. 4,500,000 is really just the start of the potentially more than 100,000,000 customers. So we've got a lot of organic growth in the product that we've got in market today. That being said, Joe and the team see great opportunities for us to expand that product set. So Joe, did you want to make some comments in relation to that? Sure. John, thank you for the question. We're really excited about where The U. S. Stands today as Cynthia previously mentioned, we've added over 400,000 new customers and we're finding high, high engagement with that customer base Transactions in total spend rising 3330% respectively. So we see significant Attractive growth ahead with our core performance. And we'll continue to really listen to our customers and what's going to drive ongoing engagement.

And we'll continue to explore as opportunities arise All right. Thanks, guys. Appreciate the time. Thank you. The next question comes from Suraj Ahmed from Citigroup.

Please go ahead. Good morning. Cynthia, just on The U. S. January momentum, can you just clarify whether that in includes any benefit from Payone eight or is that to come through the course of the half? And any comments on new customers as well?

Thanks, Raj. I won't go into great detail breaking down the January number. But what I will say is that in the half, we expanded Pay and Age to all eligible customers in the app and that happens through the course of the half. So you'll start to see that impact of that momentum as we go into the second half.

Some of which will be in January, but really what we're seeing from our customer base Joe just highlighted in The U. S. Is high levels of engagement and strong demand from new customers to join Cab Access as it's Joe, I might Suraj, I might just throw to Joe and see whether there's anything else you wanted to add. In relation to the customer base measure?

Yes, great question. I think previously mentioned we've had really significant consumer growth, but I think being [indiscernible] ANA plays a critical role in that. And we continue to listen to the customer and we we anticipate we'll continue to launch ways in which we'll drive better engagement, which ultimately drives better TTV and results for The U. S. And Suraj, that's why when we refer to our Pay and Z platform, the full Pay and Z platform will be launched and live in FY '26. So PayNex is just the first iteration or the next iteration after our Paynet four. But the PayN4 platform gives us that flexibility that Joe is referring to So we can listen to what our customers want and need and we can create and ensure we've got flexible payment solutions.

Got it. Second one, on Australia, I mean, interesting that December TTV was up 10%. I know there's a bit of lag in the Australian business given the book. Can you just help us as to how to think about TTV to receivables and revenue because I'm just trying to understand, given there's a skew to the second half on [indiscernible] should we be thinking our revenue would be more than 10% given the momentum, this will be helpful.

You're just right now, this is Raj. So I think what you're asking is Q2 was up 10% in December, what's the impact on revenue and Yes.

Absolutely, you're right. So the PTV growth that we saw in Q2, the revenue in Australia from that growth will flow in Q3 and Q4.

And beyond, I think, Ziraja, I think there's definitely seasonality particularly if you're measuring things to volume. I think the way to possibly consider as part of the thinking is obviously we have a broader portfolio of products [indiscernible] and income or revenue is is effectively a function of receivables.

So that revenue margin on receivables and the excess street spread, obviously driving some of those metrics and under the previous sort of focus on margins, getting receivables it was managed as part of that exercise, which effectively led that to shrink. So now as that grows with the growth setting, revenue will continue to flow from that. But in terms of the original question, yes, the second half in terms of the seasonality of that revenue and those margins is healthy. Brian, can I also just quick clarification? You haven't given an excess spread for February in Australia. I mean, that should have expanded because of the rate cut, isn't it? Yes, Sarai, this is Gordon. We haven't given excess beds for February.

I think you may have been referring to January. No, we haven't given that information I would say we've been open before in terms of the the impact of a rate cut. 25 basis points in Australia is about $5,000,000 annualized just purely of the a $2,000,000,000 financing book. So that to the extent that there are rate cuts, that's the numbers of the modeling.

Thank you. The next question comes from Roger Samuel from Jeff Please go ahead.

Hi, Manny. Two questions for me. First one, mentioned you remain very disciplined with cost. So what metrics you look at to make sure that you are getting the return on investments whether it's TTV growth or customer growth and also how easily can you run-in your costs when things do not turn out as well as as you expect? Yes. Roger, it's Gordon. I'll take that one.

Look, the short answer is we do have discretion and the ability to move our cost base and hence why we're very comfortable in the statements around disciplined investment and making sure we've got investment in attractive opportunities. That's probably the the opening statement. The second thing I would say is that we've We've been spending money in areas that really drive really drive outcomes and you'll see that coming through throughout the whole income statement. So the operating leverage remains in that statement. And where we've been investing in people, processes, brand marketing, etcetera. We're really seeing that driven by the TTV growth and then the cash gross profit growth and the cash EBITDA growth. So we see it throughout. On the philosophy, look, we will invest where we see the best return for shareholders. And right now, you've seen the outcome of that in the first half with some of the investments in in the attractive opportunities in The U. S. Sure. My second question is just on the bad debt. Obviously, you guys have performed really well. But do you think that the bad debt has percentage of TTV would increase as you pursue growth in both regions?

And also conscious that you have a few new products as well, so Personal Loan C plus pain at painz. Is there any risk that you had a bad debt may increase or perhaps you can mitigate that by launching all these new products, which is got higher revenue margin Yes. Thanks Roger. I'll start and then I'll ask Joe to make a comment on the management in The U. S. As well. Thing I'd say is [indiscernible] we're always very cautious and prudent in the way we roll out new products. [indiscernible] we generally go through one or two or even three pilot stages. To get that right calibration of of growth and adoption for bad debts and arrears. So we'll be very judicious in the way that we allow new products to grow. To make sure that we're not doing that at the expense of bad debts or rising numbers. So that's our philosophy and that will be the same velocity for any new products. Joe, I might just ask you to give any comments on how the rollout PayN8, which has been along that pilot phase.

Yes. I'll continue to echo what Gordon just mentioned. I think we take a really responsible approach to manage the outside opportunity with the risk that we take. Continue to anchor to a very strong underwriting experience and position. [indiscernible] we see the upside within The U. S. Opportunity, one in which we'll continue to lean into responsibly and stay within our target range. The next question comes from Julian McCarthy from E and P. Question for Cynthia. Just in relation to your confidence in the sort of medium term outlook given there's a lot of noise in US economy at the moment.

Walmart saying consumers are tapped out, I think Domino's saying consumer under pressure and then you've got whatever comes to sort of day to day and then you've got Afterpay launched on the Cash App. Do you see any of those things having an impact on the business? Or are you kind of in your own little sort of sphere now where you're in this really strong growth trajectory?

Thanks. Look, what I would say, we are in a really strong growth trajectory, but we've also got access to a customer base and we are in the early stages still of accessing that customer base. So really need our products and want our products the flexibility to manage their cash flows.

So whether different retailers see the retail environment differently from their perspective, The advantage of our product is what we see is our customers just use use our product in whatever retail setting they want. Whether that is in store or online and whether that's the everyday spend or larger more considered [indiscernible] But I might ask Joe just to make some comment on the resilience of The U. S. Consumer because we are certainly still seeing our consumers being very resilient [indiscernible] Yes. No, it's a great question. And we as Cynthia mentioned, we are anchored in a consumer base that has shown incredible resiliency and a need for our products in this particular stage. I think The U. S. Is going through Maybe a reduction in the regulatory pressure, which has made things a little bit simpler to operate within And we continue to see just the availability of our credit vehicle being an attractive option in this environment, which I think is powering some of the tailwinds on the growth that we're seeing. So just on that regulatory thing, I mean, it's been major changes since from came in. Does that potentially increase competition or just remove any sort of breaks that may have been put on by the previous administration?

Yes. So just on the regulatory landscape, we still have the same stance and that is that we support business purpose regulation. And anything that supports the consumer from a regulatory perspective but still enables innovation and growth, we are supportive of. Just on the competition point, The U. S. Market, we've talked about this before. The U. S. Market is interesting. Because it is at such an early stage of penetration of the product, and growth in the customer and merchant franchise is actually a lot of room for everyone to grow. And I think probably the biggest change that I've observed over the last six months and this is a credit to Joe and the work that his team has been doing, is a real recognition of how unique our customer base is And from a merchant's perspective, the value that we add being at checkout in terms of bringing an incremental customer to a merchant and also then enabling that customer to have a higher average order value. So increasingly what we're seeing is merchants are very comfortable [indiscernible] an overlap in terms of our customer base. So the competitive dynamic is actually very constructive.

Thank you. The next question comes from Jack Lynch from RBC Capital Markets. Please go ahead.

Hi, Cynthia Gordon. Well done on the result. Just the first question on the outlook for revenue margins in the ANZ business. Obviously, we've got the credit controls there. And plus looks like it's performing well. Just thinking how we balance those things for the second half, are we expecting margin expansion in that business? And the second one, just on the outlook for the merchant pipeline. Previously flagged, there's been some merchants coming through maybe for The U. S. Has there been any changes to that business?

Yes. I might ask Gordon to make a comment in relation to Ziploc and the ANZ margins. And then Joe, I'll ask you to make a comment in relation to the merchant Yes. I think I'll just reiterate, I think you're thinking about the right way and that's how we describe it in the fact that we see the revenue from our Q2 peaks, if you like, coming through in the second half. The average tenure of our Australian our current Australian products is that sort of seven to nine months. So So that's why we talk about the second half of seeing that revenue. So that will impact the margin. And I think second question Also, I think Joe, I might add second question was in relation to the merchant pipeline. And Joe, I might ask you to make some comments in relation to what you're seeing on the merchant side in The U. S. Yes. On the merchant side, we're extremely excited about where we're sitting. I think the pipeline strong. In particular, we worked on refreshed value prop in go to market that I think is yielding some early momentum across the board. The merchant channel in general, I think, has moved to a place of looking to optimize their checkout and one in which Zip plays a really, really significant role within.

And then we're in the early days of activating our channel distribution partner [indiscernible] And so when we look at upside within the calendar year, we're extremely excited about where the pipeline is. [indiscernible] thanks, Joe, for that comment. I will ask Gordon just to address your question in relation to yield.

Yes. Jack, you asked about revenue margin. We've had a couple of questions on an AU. And it's [indiscernible] mean, we talked to The way that we actually monitor the portfolio and the way that we look to drive performance on the Australian product set is around the overall portfolio yield and then the excess spread on that portfolio With a slightly longer duration products, we see that as the better way to manage the moving parts there versus the shorter duration products. It also takes out the the TTV variation month to month quarter to quarter, etcetera. So page 22 of the investor deck is probably where where I would focus and just talk to that excess spread number, which 6.9% for December, We're really pleased with and as Cindy mentioned, that's about 70 basis points higher than one year ago.

Which points to the a number of the moving parts in the Australian business, which Pete that we are managing a really well top line [indiscernible] view, managing credit and managing interest costs just to round that one out for you.

Thank you. The next question is a follow-up from Suraj Ahmed from CJS group Please go ahead. Just two questions. Just first one, Cynthia and Joe, just on the merchant pipeline, right? I mean, we've been talking about potentially strong enterprise merchant adds for maybe a year. Just wondering what's given your comments about merchants being happy having more than one player checkout, What's delaying And just keen to understand, should we be seeing some strong merchant big merchant ads pick up in the course of this half?

Thanks, Arad. Well, I'll make a comment then I'll ask I'll ask Joe to give his perspective as well. The thing with enterprise merchants, sales lead time to actually find the merchant, but then importantly, actually to do the tech integration can be twelve to eighteen months. So when Joe talks about the fact that we've got a really strong pipeline of merchants, we do, but it actually just takes time to complete the sales process and then do the tech integration before we go live. And so we wouldn't announce a merchant and obviously we need their approval before we can announce them. We wouldn't announce the merchant until we actually go live with them. So hence you can get that [indiscernible] But I will say that we do have really strong a really strong pipeline of enterprise merchants that Joe and the team are working with. And we're also leveraging as Joe said, said earlier, we're leveraging our channel partnerships with Stripe and Adient and others to bring more merchants in targeted verticals where the average order value or the the target spend is higher So whether that's travel, automotive and ticketing in particular, Joe, do you want to make some additional comments or add some color?

Yes. Yes, really good commentary there as well. I think the timing is significant, but also refreshing the go to market and really focusing on what makes Zip different with our merchants. And how we can bring incremental value to the merchants and our consumer base. I think the other areas on the channel distribution partnerships with the Stripe and Adience, those take a while to put in place and they they take a while to get alignment on sales acumen and target customers. And we continue to stay focused on building that pipeline out with these partners and aligning the value prop with their BD folks.

So I think net we feel good about where we're at and we think there's significant growth ahead throughout the next calendar year.

Got it. And one quick technical question for Gordon maybe. Just looking at provisions in Australia, so that actually [indiscernible] I must say a bit surprised because I thought the book is in a better shape. Can you just talk to is it just a macro overlay that you've taken in terms of the provisions?

Thanks. Yes. In simple terms, Suraj, accounting provisions increased in the half. It was a very even split between The U. S. And Australia. U. S. Is predominantly volume related. We've seen huge growth there, which is commensurate with everything in The U. S. And in Australia, it's just a mix of modeled outcome and overlay. So we're very comfortable with where we're sitting [indiscernible] Thank you.

The next question is a follow-up from John Marron from CLSA. Please go ahead.

Hey, thanks for the follow-up. Just a quick congrats to Soraya joining the team there. Pete, I do want to put you on the spot here a little bit. I think we've heard bits and bobs about what your new role might entail, but just hoping to get a summary from you on what your new remit is? Is it product focused, partnership focused? What is head of growth strategic growth mean and guess it sounds to me like SIP is elevating its ambition to longer term versus putting an old co founder to pasture, if you will, So just hoping to get some clarity there.

John, may I know we are not putting a The grass is very green over here. John. So I can tell you what the bellies pretty happy. Now look, it's really exciting, look for me personally to sort of and I had the business [indiscernible] very comfortable with the trajectory of the growth Of the Australian business, but Latifian and I very aligned on we want to be looking for medium term and how we can actually accelerate or Some of the numbers and the outcomes that we're delivering. So it is a pretty broad remit with regards to your question. So it very much would be product related. It would also be strategic partnership related. There might be bolt on opportunities or new technical capabilities that we can actually test and learn without disrupting the core. Before getting traction and then implementing in the core. So it really is an opportunity to explore a broad range of opportunities that might deliver benefit to our customers or the core business. So, very sort of excited Small team but very, very growth focused and obviously a narrower remit than what sort of been undertaking the previous couple of years. So no pass, just sadly.

And let me tell you the Gold Coast haven't had a run for a number of years and then I'll likely do in the short term.

Okay. All right. Thanks, Pete. Thanks for going over time for me. Thanks, John. I think that brings us to where I know I'm conscious where it time. But I just want to thank everyone for joining us today. Thanks for the engagement all of the great questions. We really appreciate your suspect there might be a few more questions and we are catching up with a number of a number of you on the call today. In the interest of you've got other questions, please do send them through to Vivian and Dylan. And we look forward to catching up again soon.

Thanks for joining. [indiscernible] [indiscernible]