Can Zip Sustain Momentum After Upgrading FY25 Guidance and Share Buy-Back?
Zip Co Limited has raised its FY25 cash EBTDA guidance to at least $160 million, driven by robust transaction growth in the US market exceeding 40% year-on-year in May 2025. The company also continues its share buy-back program amid steady credit performance.
- FY25 cash EBTDA guidance upgraded from $153m to $160m
- US total transaction value (TTV) growth above 40% year-on-year in May
- No significant changes in credit loss performance since Q3
- On-market share buy-back program ongoing with $22.6m spent to date
- FY25 results expected within previously announced two-year target ranges
Strong Momentum in US Market Drives Upgrade
Zip Co Limited (ASX – ZIP) has signalled continued strength in its trading performance, particularly in the United States, prompting an upward revision of its full-year 2025 cash earnings before tax, depreciation, and amortisation (EBTDA) guidance. The company now expects to deliver at least $160 million in cash EBTDA, up from the previous forecast of $153 million.
This upgrade reflects sustained momentum in total transaction value (TTV), with the US segment reporting year-on-year growth exceeding 40% in May 2025. Such robust expansion underscores the resilience of Zip's business model and its effective execution of strategic initiatives in a competitive digital payments landscape.
Stable Credit Performance and Capital Management
Alongside growth metrics, Zip has maintained stable credit loss performance since the third quarter, indicating disciplined risk management across both its Australian/New Zealand and US markets. This stability provides a solid foundation for the company’s optimistic outlook.
In line with its capital management framework, Zip has actively pursued an on-market share buy-back program, acquiring 12.3 million shares at a total cost of $22.6 million to date. This move signals confidence from management in the company’s valuation and future prospects, while also aiming to enhance shareholder value.
Outlook and Strategic Implications
Zip remains on track to meet its two-year target ranges for FY25, as outlined in its February 2025 market update. The company’s focus on expanding its footprint in the US; a market with significant growth potential; appears to be paying dividends, positioning Zip well against peers in the digital financial services sector.
CEO Cynthia Scott highlighted the company’s disciplined strategy and the resilience of its model, emphasizing that the upgraded guidance reflects both operational strength and market opportunity. Investors will be watching closely to see if Zip can sustain this trajectory amid evolving economic conditions and competitive pressures.
Bottom Line?
Zip’s upgraded guidance and ongoing buy-back underscore confidence, but sustaining US growth will be key to maintaining momentum.
Questions in the middle?
- What specific factors are driving the US market’s exceptional transaction growth?
- How might evolving credit conditions impact Zip’s risk profile in the coming quarters?
- What is the timeline and expected impact of the remaining share buy-back program?