Zip Co Surges Nearly 20% After Upgrading FY25 Earnings Forecast

Highlights:

• Zip Co (ASX: ZIP) upgraded its FY25 cash earnings forecast to $153 million, driven by a 219.4% year-on-year surge in earnings to $46 million.
• Strong growth in customer numbers and transaction values across the US and Australia pushed revenues up 25% to $276 million.
• Shares jumped 19.9% at the time of writing, following bullish investor sentiment despite caution from analysts over potential Q4 volatility.

Strong cash earnings and robust consumer activity boost investor confidence

Zip Co Limited (ASX: ZIP) saw its shares jump by nearly 20% on Wednesday after the buy-now-pay-later firm lifted its forecast for cash earnings in FY25. The company now expects to generate $153 million in cash earnings, up from its previous guidance of $147 million, citing continued strong operating performance.

Stellar Year-on-Year Growth

The revised forecast follows a staggering 219.4% year-on-year surge in cash earnings to $46 million, underpinned by solid transaction volume growth and increasing customer numbers across both Australia and the United States. Revenue for the period rose by approximately 25% compared to the previous year, reaching $276 million. The digital payments provider credited the uptick in performance to higher customer engagement and robust demand for its flexible payment solutions, particularly in its key markets.

Analysts Remain Cautious Despite Upbeat Results

Despite the positive outlook, UBS analyst Tim Piper advised caution, noting that Zip’s upgraded guidance of $153 million "still looks conservative at current trajectory," but flagged the potential for volatility in the fourth quarter amid U.S. tariff uncertainties emerging earlier this April.

Investor Reaction

At the time of writing, shares of Zip Co Limited (ASX: ZIP) were trading up 19.9%, reflecting strong investor sentiment and confidence in the company’s future earnings potential. The stock's impressive rally positions Zip as one of the standout performers on the ASX for the day, reinforcing its growing relevance in the fintech sector despite ongoing macroeconomic challenges.

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