Zip Co Ltd (ASX:ZIP, OTC:ZIZTF) today unveiled a blockbuster FY25 performance, sending its share price soaring — up nearly 20% as of 2 pm AEST on Friday, and hitting three‑year highs amid widespread investor enthusiasm.
The fintech standout posted cash underlying earnings (EBITDA) of $170.3 million, a 147% gain on FY24, comfortably beating market expectations of around $160 million. This surge was powered by impressive scale efficiencies and surging demand, particularly in the US.
Zip’s US business emerged as the powerhouse, delivering 41.6% year-on-year growth in total transaction volume (TTV) and similarly robust revenue gains in USD. Notably, it forecasts US TTV to grow more than 35% in FY26, with dividends recalibrated toward this high-growth engine.
Credit quality also improved, with net bad debts falling to 1.5% of TTV (versus 1.7% in FY24), reinforcing confidence in Zip’s risk management amid scaling operations.
Further boosting sentiment, Zip confirmed plans for a dual listing on Nasdaq, aimed at unlocking further US growth and capitalising on rising institutional investor interest — especially as US operations now represent more than 80% of divisional cash earnings.
This marks another strong beat-and-raise trajectory for Zip: earlier in FY25 it upgraded its EBITDA guidance not once, but twice — from A$147 million to A$153 million in Q3, and again to A$160 million following strong May trading.
What’s driving the surge?
- US momentum: Non-discretionary sectors — groceries, education, healthcare — are driving higher and stickier spend. Holiday trading contributed strongly, with Zip’s app-based ecosystem further deepening engagement.
- Operational leverage: Cash gross profit rose 34%, operating margin nearly doubled (FY25: 15.8% vs FY24: 7.9%), and transaction margins ticked up slightly.
- Capital-friendly moves: Full repayment of corporate debt, acquisition of $50 million share buyback capacity (with $29.8 million already executed), and strengthened liquidity (cash growing to $137.8 million) underline management’s balance sheet discipline.
- Analyst support: Brokers like UBS deem Zip’s FY25 forecast conservative; Citi projects EBITDA could reach $230 million in FY26, reflecting US momentum and Aussie stability.
Outlook and investor sentiment
Zip’s FY26 guidance — including more than 35% US TTV growth, group operating margin of 16–19%, and improved cash net transaction margin (3.8–4.2%) — projects continued acceleration and profitability. Combined with its Nasdaq listing ambition, Zip is squarely positioning itself as a global BNPL contender.
Investors responded enthusiastically, pushing shares up more than 25% intraday following the results release, making ZIP the top performer on the ASX 200, even as broader markets lagged.