The Zip Co Ltd (ASX: ZIP) share price is up 3% after revealing a good trading update for April 2026.
Zip is a growing buy now, pay later operator that has a presence in the US, Australia and New Zealand.
Strong growth in the US
The buy now, pay later business reported that momentum has continued across the group in April.
The business reported that in the US, year-on-year total transaction value (TTV) growth for the month of April was more than 40% in US dollar terms.
Zip also revealed that US credit outcomes are “performing in line” with expectations and it’s on track to be less than 1.75% of TTV in the fourth quarter of FY26.
If the business does achieve that level of losses, it will be a reduction from 1.84% in the second quarter of FY26 and lower than the 1.86% in the third quarter of FY26.
FY26 guidance reconfirmed
Zip is expecting that FY26 US TTV can grow by more than 40% in US dollar terms.
The business also expects that group cash EBTDA (EBITDA explained, but it includes interest) will be more than $260 million. The group cash EBTDA margin as a percentage of TTV is expected to be more than 1.4%.
Its group operating profit margin is expected to be more than 18% and the group revenue margin is guided to be around 8%.
Zi’s group cash net transaction margin (NTM) is expected to be between 3.8% to 4.2%.
The US is driving the business ahead
Zip said that its US business is high-growth and executing strongly in an attractive, early-stage market. It’s the main driver of Zip these days.
It said that it has a “differentiated US customer base, being the underestimated American, with a proven ability to profitably underwrite these customers”.
Zip says that it serves 4.6 million of the 100 million or more Americans that have been “underestimated by traditional financial services providers”.
The buy now, pay later business says these are “hardworking, ambitious” consumers seeking financial progress and “many are new to credit or rebuilding it, yet they make responsible financial decisions every day”.
Final thoughts on the Zip share price
If Zip is able to continue expanding in the US, capturing dollars that would have been spent in other ways (such as credit cards), then it could still have a large growth runway ahead.
The business is already profitable and it continues to grow at an impressive rate.
It’s probably underestimated by the market, though it’s not the sort of business I’d buy for my own portfolio. There are other ASX growth shares I’m interested in that are less reliant on the ability of US consumers to continue paying for their spending. But, I wouldn’t be surprised if Zip beat the ASX share market return over the next few years.
