Zip Co’s Record Profit Drives FY26 Guidance Upgrade
Zip Co (ASX:ZIP) shares jumped as much as 24% on Friday before closing 13.66% higher at A$2.33. The move came after the buy now, pay later (BNPL) company delivered a record third quarter and raised its full-year profit outlook. Management now expects FY26 group cash EBTDA of at least A$260 million, up from the previous target of around A$248.6 million. For investors, this update changes how Zip should be viewed. It is no longer just an Australian BNPL story. The US business is now in the driver’s seat.
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Zip’s US Business Is Now the Real Growth Engine
The standout part of this quarter is how fast the US is growing. Both transaction volume and revenue in the US climbed more than 43% from a year earlier, and management expects that pace to continue through FY26. This is not a slow business.
What makes this growth more convincing is that loan losses are staying in check. When a lender grows this quickly, bad debts often rise too. Zip Co is avoiding that trap, and management expects US credit losses to improve further next quarter. In simple terms, Zip is growing fast without taking on riskier customers.
The expanded Stripe partnership, announced in October 2025, is also starting to pay off. It integrates Zip Co into Stripe’s main checkout interfaces, giving Zip access to a much bigger pool of merchants without needing heavy marketing spend.
We believe the US is no longer a “nice to have” for Zip Co. It is now the main reason to own the stock. This shifts Zip Co from an Australian BNPL name into a US-led fintech story.
Record Profit Shows the Business Is Finally Scaling
The headline profit number, A$65.1 million in cash EBTDA, was up more than 41% from a year earlier. More importantly, profits grew much faster than revenue. That is a strong sign of operating leverage, meaning each extra dollar of sales is now dropping more to the bottom line.
Customer numbers barely moved, but that is actually a good thing. Zip Co is making more money from each existing customer rather than chasing growth through expensive sign-ups. That is a healthier path to long-term returns. Zip Co also launched a new product in Australia called ZMobile, a mobile plan offering built in partnership with TPG Telecom. It adds another small revenue stream without tying up much capital.
The Investor’s Takeaway
The upgraded guidance shows management has real confidence in the year ahead, not just hope. But Zip shares are already up 23% over the past 12 months, and they jumped another 24% intraday on Friday. A lot of the good news is now priced in.
The main risks are simple. US credit losses need to keep improving, BNPL sentiment can turn quickly, and US expansion has to stay on track. For existing holders, the thesis is working, and holding on makes sense. For new buyers, chasing a 24% one-day move rarely ends well. In our view, waiting for a pullback is the smarter move.
