Zip Co Ltd (ASX: ZIP) shares enjoyed a stellar month of outperformance in August.
Shares in the S&P/ASX 200 Index (ASX: XJO) buy now, pay later (BNPL) stock closed out July trading for $3.23. When the closing bell rang on 29 August, shares were changing hands for $4.26 apiece.
That put Zip shares up a blistering 31.9% over the month, smashing the 2.6% gains delivered by the ASX 200 over this same period.
Here's why investors piled into the ASX 200 stock in the month just past.
Zip shares lift off on ongoing growth runway
If you could cherry-pick your days, the best time to have bought Zip shares in August was the 20th, when shares closed the day at a bargain $3.04 each.
Two days later, following the release of Zip's FY 2025 results on 22 August, shares in the BNPL company rocketed 20.2%. And this is a $5.3 billion company we're talking about.
ASX investors were overheating their buy buttons on the day after Zip reported an eye-popping 147.0% year-on-year increase in FY 2025 cash earnings before tax, depreciation and amortisation (EBTDA) to $170.3 million.
The company also achieved a 30.3% increase in total transaction value (TTV) from FY 2024 to $13.1 billion.
And with Zip's operating margin improving to 15.8% from 7.9% the prior year, its cash gross profits of $509 million were up 34.0%.
Zip's shares have also been getting support from the company's $50 million share buyback program. In FY 2025, Zip repurchased $29.8 million shares as part of the program, which commenced in April.
More growth forecast for FY 2026
The big boost Zip shares enjoyed on 22 August was also spurred by strong FY 2026 guidance.
Management expects the 2026 financial year will see Zip deliver US TTV growth of more than 35% (in US dollars). They forecast a group revenue margin of around 8%, roughly in line with the 8.3% reported in FY 2025.
And Zip upgraded the FY 2026 outlook for its operating margin to between 16.0% and 19.0%. That compares to an operating margin of 15.8% in FY 2025.
"We are well placed to deliver on our refreshed FY26 guidance and next horizon of growth, as we execute our strategic priorities of growth and engagement, product innovation, and platforms for scale, and fulfil our purpose of unlocking financial potential, together," Zip CEO Cynthia Scott said on the day.
As for September, halfway through the second trading day of the new month, Zip shares are changing hands for $4.29 apiece, up 0.7% from the August close.
