Investing.com-- Shares of Australian payments firm Zip Co Ltd (ASX: ZIP ) rose sharply on Wednesday after the company clocked strong quarterly earnings and upgraded its annual guidance on improving transaction volumes and customer numbers.

Zip’s shares jumped as much as 12.7% to A$1.70, outpacing a muted performance in the ASX 200 index.

Zip hiked its fiscal 2025 guidance for earnings before tax, depreciation and amortization to A$153.0 million ($96.93 million) from A$147 million.

The Australian buy now, pay later firm hiked its guidance on improving volumes and cash flow. Its revenue for the three months to March 31 surged 26.2% year-on-year to A$276.3 million, while total transaction volumes soared 35.7% to A$3.26 billion.

Zip’s active customers also rose 4.2% to 6.25 million users, while its ratio of bad debts fell from last year.

Zip’s March quarter earnings did deteriorate from the prior quarter, although this was expected, given that holidays during the December quarter tend to usually boost customer spending.

Zip- whose biggest markets are the U.S. and Australia- has benefited from some resilience in consumer spending over the past year, despite headwinds from high interest rates and sticky inflation.

But recent signs of deteriorating consumer confidence could present near-term difficulties for the firm. Zip’s shares have nearly halved in value on this notion.