Zip Co (ASX:ZIP) Hits Record $65.1m Quarterly EBTDA and Lifts FY26 Guidance to $260m

On Friday, 17 April 2026, Zip Co (ASX:ZIP) shares surged as much as 24% intraday after the company released a strong quarterly update before the market opened, before cooling to close up 13.7% at A$2.33. Three numbers caught everyone's attention: record cash earnings of A$65.1 million (up 41.5% from a year ago), a higher full-year profit forecast of at least A$260 million, and US revenue growing more than 43%. But the bigger story isn't the beat itself. It is that the US business is now the main reason to own this stock, and that changes how investors should think about Zip.

The US Is Now Driving the Whole Business

Zip's US arm is on a tear. Both transaction volume and revenue grew over 43% from a year ago, and management expects similar growth to continue all year. For a BNPL company, that pace is unusual.

What makes this growth believable is that bad loans are not rising along with it. US net bad debts stayed steady at 1.86% of transaction volume, while the group-wide figure sat at 1.9%. More importantly, management expects US bad debts to fall below 1.75% next quarter. In simple terms, Zip is growing fast without lending to riskier customers.

A big reason for the success is Zip's deeper partnership with Stripe. By plugging directly into Stripe's checkout, Zip can reach far more US shops without spending heavily on marketing.

This shifts the story for investors. Zip used to be seen as an Australian BNPL company with US ambitions. Today, it looks more like a US fintech business with a profitable Australian home base. That is a much bigger opportunity, and it explains why the market reacted so strongly on Friday.

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Profits Are Growing Faster Than Revenue

The most important sign of a healthy business is when profits grow faster than sales. That is exactly what happened this quarter. Total transaction volume rose 22.4% and total income grew 20.2%, but cash earnings jumped 41.5%.

Operating margin also expanded to 19.4%, up from 16.5% a year ago. In plain English: every dollar of sales is now producing more profit than before.

Customer numbers grew only modestly to 6.5 million, but each customer is spending more and making Zip more money. That is higher-quality growth than simply chasing new sign-ups. In Australia, Zip also launched ZMobile, a new mobile services product that adds another revenue stream without using much capital.

After years of doubts about whether BNPL could ever be truly profitable, Zip seems to have answered the question.

What This Means for Investors

The upgraded full-year forecast shows management is confident about what's coming. Brokers agree. Macquarie has an outperform rating with a A$3.40 target, and Ord Minnett rates it a Buy with a A$4.00 target.

But there's a catch. Zip shares are up roughly 23% over the past year, and even after Friday's pullback from intraday highs, much of the good news is already in the price.

Key risks to keep in mind: US bad debts still need to keep trending down toward 1.75% as guided, BNPL is a competitive and sentiment-driven sector, and the entire growth story now depends on flawless US execution.

For investors who already own ZIP, this result confirms the long-term thesis. Taking some profit on strength is a reasonable option for those sitting on big gains. For new buyers, chasing a stock that briefly spiked 24% in a single session is rarely the smartest entry. Waiting for a calmer moment usually works better. Zip is executing well, but price discipline still matters.

For deeper analysis of high-growth ASX names like Zip Co, ASR's Investing Report covers premium growth ideas with detailed risk frameworks. New readers can also start with our free Top-3 Stocks & Market Outlook Report for current ASX ideas and broader market context.

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