Zip Co Ltd (ASX: ZIP) shares are on the move on Monday morning.
At the time of writing, the buy now pay later (BNPL) provider's shares are up 12% to a 52-week high of $4.94.
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Why are Zip shares jumping?
Investors have been buying the company's shares this morning in response to the release of two big announcements.
The first was the release of Zip's first quarter update, which revealed that its strong growth has continued into FY 2026.
For the three months ended 30 September, Zip reported a 38.7% increase in total transaction volume (TTV) to $3.9 billion. This was driven by a 51% jump in US TTV to approximately $2.9 billion and an 11.1% lift in ANZ TTV to $968 million.
Active customers increased 5.3% to 6.4 million and transactions lifted 21.9% to 26 million.
Zip's revenue margin slipped year on year to 8.2% (from 8.6%), reflecting a higher contribution from the US.
Nevertheless, the company's first quarter revenue still increased 32.8% over the prior corresponding period to $318.5 million.
And with its cash net transaction margin increasing modestly to 4%, Zip reported record cash EBTDA of $62.8 million. This marks a 98.1% increase compared to the same period last year.
Importantly, this was achieved with the percentage of net bad debts to TTV remaining flat at 1.6%.
Zip's CEO, Cynthia Scott, was rightfully pleased with the company's performance during the quarter. She said:
Zip continues to deliver sustainable, profitable growth at scale, with record cash earnings of $62.8m up 98.1% year on year. This was underpinned by strong unit economics, material operating leverage and disciplined execution, driving a significant increase in operating margin to 19.5%.
Scott also revealed that a strong start to the year means that growth in the US in FY 2026 is likely to be stronger than first expected. As a result, the company has upgraded its expectations for the full year. She explains:
Following a strong start to the year, we have upgraded our expectation for US TTV growth to be above 40% (in USD) for the year and reconfirm the remainder of our target ranges as previously announced in August. We remain focused on executing our strategic priorities of growth and engagement, product innovation and platforms for scale.
Share buyback increased
Another reason that Zip shares are on the move today is that management has announced an increase to its ongoing share buyback.
It has lifted its limit from $50 million to $100 million. As of 3 October, Zip had bought back 17.8 million shares for a total consideration of $43.4 million.
Commenting on the decision, Scott said:
We continue to execute on our strategic priorities with the Group generating strong operating cash flows and maintaining a strong balance sheet. The increase in our on-market share buy-back limit from $50m to $100m is consistent with our capital management framework which guides our approach to maximising shareholder returns, while preserving balance sheet strength and the flexibility to pursue attractive growth opportunities.
