Highlights

  • Zip Co reconfirmed its FY26 Group Cash EBTDA guidance of no less than $260 million, underpinned by US TTV growth above 40% year-on-year in April 2026 (in USD terms).
  • Q3 FY26 metrics showed cash EBTDA growth of 41.5% year-on-year, total income growth of 20.2%, and active customers up 3.5% — demonstrating broad-based operational momentum.
  • ZIP shares rose 4.56% to $2.64 on 7 May 2026, with the stock up approximately 44% over the prior 12 months, reflecting sustained market confidence in Zip's profitability trajectory.

 

Zip Co Limited (ASX:ZIP), Australia's prominent buy-now-pay-later (BNPL) operator, provided a positive market update on 7 May 2026, reconfirming its full-year FY26 guidance while reporting continued momentum across its core markets through the April trading period. ZIP shares responded positively, rising 4.56% to $2.64 during morning trade — a relatively measured but constructive reaction that reflects growing investor confidence in the company's ability to sustain its profitability trajectory.

The stock has been one of the more compelling ASX financial sector performers over the past year, having gained approximately 44% over the prior 12-month period. This performance stands in stark contrast to the Volatility and scepticism that characterised the BNPL sector during 2022 and 2023, when rising interest rates and mounting Credit losses forced a broad reassessment of the sector's Economics. Zip's recovery has been built on a strategic pivot toward the US market, disciplined credit management, and a sustained focus on Operating Leverage.

 

FY26 Guidance Reconfirmed With Margin Metrics Intact

Zip reconfirmed its FY26 guidance across multiple financial dimensions. The headline metric — Group Cash EBTDA of no less than $260 million — remains on track, with the company also reaffirming a Group Operating Margin of more than 40%, a Group cash net transaction margin above 18%, and a Group Revenue margin in the range of 3.8% to 4.2%. These metrics collectively paint a picture of a Business that has successfully transitioned from a growth-at-all-costs model to one that prioritises sustainable, margin-positive expansion.

The FY26 Cash EBTDA guidance of no less than $260 million is particularly noteworthy in the context of Zip's history. Just a few years ago, the company was reporting significant net losses and its viability as a standalone business was being questioned. The current guidance, if achieved, would represent a substantial inflection in the company's financial profile. Zip has also noted that on a constant currency basis, using FY25 weighted average FX rates, the equivalent AUD guidance figure would be no less than $271 million, with executed FX hedges for the second half of FY26 at a rate of 1 AUD = 0.69 USD providing a degree of Earnings predictability.

 

US Business Continues to Lead Growth

The US business remains the primary engine of Zip's growth story, and the April update reinforced this view. Year-on-year TTV growth in the US for the month of April was above 40% in USD terms — a remarkable growth rate for a business of this scale. Zip's US credit outcomes are described as performing in line with expectations and on track, suggesting that the company is managing the balance between growth and credit quality effectively in what remains a competitive and economically dynamic market.

The US BNPL market has evolved considerably since Zip first established its presence through the Acquisition of Quadpay in 2020. Today, the market is characterised by greater regulatory scrutiny, increased competition from established players like Affirm and Klarna, and shifting consumer attitudes toward instalment credit in a higher-rate environment. Zip's ability to sustain 40%+ TTV growth in this context speaks to both the underlying Demand for flexible payment solutions and the company's execution capability in its most important growth market.

 

Q3 FY26 Metrics Demonstrate Broad-Based Strength

The Q3 FY26 operational highlights provided alongside the April update revealed a consistently improving picture across all key operating metrics. Cash EBTDA grew 41.5% year-on-year, demonstrating that profitability is scaling as the business grows. Total transaction value grew 22.4% year-on-year, while total income increased 20.2% over the same period — indicating that revenue conversion from transaction Volume remains solid. Transaction volumes grew 20.3% year-on-year, and the number of active customers increased 3.5%, providing a stable base for continued revenue generation.

Merchant numbers grew 12.7% year-on-year, which is meaningful because merchant network breadth is a key driver of customer engagement and transaction frequency in the BNPL model. A wider merchant network increases the occasions on which customers can use Zip, improving the lifetime value of each customer relationship. The combination of growing customers, growing merchants, and growing transactions — all while expanding margins — represents the kind of compounding flywheel that Zip's management has been working toward since the strategic reset of recent years.

 

FX Dynamics and Constant Currency Performance

A key complexity in evaluating Zip's financial performance is the impact of currency movements, given the significance of its US earnings to the overall group. The company's FY26 guidance is expressed in Australian dollars, and the AUD/USD Exchange Rate has a material influence on reported results. Zip has disclosed that it has executed FX hedges for the second half of FY26 at a rate of 1 AUD = 0.69 USD for US earnings, providing a known exchange rate for a portion of its US-sourced income.

The constant currency disclosure — showing guidance of no less than $271 million AUD at the FY25 weighted average FX rate — is a useful reference point for investors trying to assess the underlying operational performance of the US business independent of currency fluctuations. It suggests that the operational momentum of the US business is even stronger on a like-for-like basis than the reported AUD figures might imply if the Australian dollar were to strengthen.

 

Conclusion

Zip Co's April 2026 trading update and Q3 FY26 highlights present the picture of a company that has successfully navigated one of the more challenging periods in BNPL sector history and emerged with a credible, scalable, and increasingly profitable business model. The reconfirmation of FY26 guidance, supported by 40%+ US TTV growth in April and broad-based improvement in group operating metrics, reinforces the narrative of sustained execution. The 4.56% share price rise on 7 May 2026 and the stock's 44% gain over the prior 12 months reflect growing market recognition of this transformation, while the company's focus on margin quality alongside volume growth distinguishes its current strategy from the growth-at-any-cost approach that characterised the early BNPL era.