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Australia's Zip reports record Q3 revenue growth, eyes expansion in Canada and Asia

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Nikhil Nainan
·2 min read
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* Record revenue, transaction volumes, customer growth

* Picked up stake in Philippine BNPL in third quarter

* Made soft launch in Canada in third quarter

By Nikhil Nainan

April 13 (Reuters) - Australian buy-now-pay-later (BNPL) firm Zip Co Ltd on Tuesday posted record revenue, transaction volumes and customer growth in the third quarter and unveiled plans to expand into Canada and Southeast Asia, sending its shares soaring over 11%.

The strong performance was driven by growth at Quadpay, its U.S. unit, where customers, volumes and revenue grew in triple digits as competition with larger rivals Afterpay, Klarna and Affirm in the world's top economy heats up.

Zip, which has been beefing up its international presence to better compete, picked up a strategic stake in Philippine firm TendoPay and made a soft launch in Canada during the quarter.

In December, Zip raised A$150 million in capital to fund its expansion in the United States, UK, and pick up stakes in companies in the Middle East and eastern Europe.

In the third quarter ended March, transactions volumes more than doubled from a year earlier to A$1.6 billion ($1.22 billion), while revenue came in at A$114.4 million, up 80%.

Active customers reached 6.4 million, supported by a 19% jump in U.S. additions from the end of December, while the number of merchants on its platform touched 45,300.

"3Q is a soft quarter on a seasonal basis, but the current run-rate in the US business in particular and growing customer and merchant base in ANZ, regional expansions bode well for 4Q21," RBC Capital Markets wrote in a client note.

In Australia, its net bad debt fell to 1.78% from 1.93% three months earlier. Zip did not provide a number for the United States.

"Our US business was again a standout, confirming our position as truly one of the fastest growing global BNPL leaders," Zip Chief Executive Officer Larry Diamond said.

Shares jumped as much as 11.2% to A$9.25, before scaling back some of those gains to trade 9% higher after an hour of trade. ($1 = 1.3130 Australian dollars) (Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Subhranshu Sahu)