Zip Co Limited (ASX:ZIP) is a digital financial services company operating mainly in the United States, Australia and New Zealand. FY26 delivered higher transaction volume, income and cash earnings, with the US Business accounting for most of the group’s growth. At the same time, ANZ customer numbers moved lower, making customer engagement, Credit quality and US transaction growth important measures for FY27.

Cash EBTDA Reaches A$268.9 Million

Zip reported FY26 cash EBTDA of A$268.9 million, up 57.9% from the prior year.

The Operating Margin increased to 20.0%, representing an improvement of 420 basis points.

The increase shows that cash Earnings grew faster than total income during the year as scale and Operating Leverage increased across the group.

Transaction Volume Rises to A$16.7 Billion

Total transaction volume increased 27.2% to A$16.7 billion.

Total income increased 24.6% to A$1.3474 billion.

Because transaction volume grew slightly faster than income, the group Revenue margin moderated to 8.1%.

The relationship between transaction growth and revenue earned per dollar of volume remains important as the US becomes a larger part of the group.

Cash Gross Profit Reaches A$642.3 Million

Cash gross profit increased to A$642.3 million in FY26.

Cash net transaction margin was 3.9%, broadly consistent with the level recorded during earlier parts of the year.

This measure incorporates income, funding costs, transaction expenses and credit losses, making it useful for assessing the Economics of Zip’s lending activity.

US Remains the Main Growth Contributor

The United States accounted for the majority of Zip’s transaction volume during FY26.

US transaction growth continued at a materially higher rate than the ANZ business, supported by higher customer engagement, merchant growth and expanded payment options.

Zip has increasingly become a US-led business, meaning changes in US consumer spending and credit performance now have a larger influence on group results.

US Customer Numbers Continue to Increase

Active customers in the US increased during FY26.

Growth in transaction volume exceeded growth in the customer base, indicating higher activity across the existing customer population alongside new customer additions.

Zip has continued expanding payment Options in the US, including its Pay-in-2 offering and broader Pay-in-Z product range.

ANZ Growth Is More Moderate

The Australia and New Zealand business continued to generate transaction and revenue growth, but at a lower rate than the US.

Active customer numbers in ANZ declined over the year.

This means ANZ growth is increasingly dependent on transaction frequency, customer engagement, receivables growth and adoption of products such as Zip Plus rather than growth in the number of active accounts.

Group Active Customers Reach 6.5 Million

Zip ended FY26 with 6.5 million active customers, up 3.7%.

Merchants using Zip increased to approximately 97,400, up 13.8%.

Merchant expansion increases the number of locations and digital channels through which customers can transact, but future earnings still depend on transaction frequency, credit performance and revenue margins.

Credit Losses Remain an Important Measure

Net Bad Debts were 1.8% of TTV for FY26.

Credit performance is particularly important for Zip because the company provides short-duration consumer credit.

Losses can rise if customer repayment behaviour deteriorates, particularly during periods of household financial pressure.

Zip has continued managing credit settings alongside transaction growth rather than focusing solely on customer acquisition.

US Bad Debts Were Monitored Through FY26

During 3Q26, US net bad debts were approximately 1.86% of TTV.

At that stage, Zip expected the US loss rate to moderate during the fourth quarter.

The full-year group result of 1.8% indicates that credit losses remained within the company’s operating framework while transaction volume continued to expand.

Funding Remains Part of Unit Economics

Zip relies on external funding facilities to finance customer receivables.

Funding costs are therefore an important component of cash net transaction margin.

The company continued working on funding capacity, flexibility and Capital efficiency during FY26.

Interest rates, Facility pricing and receivables growth can all influence future cash earnings.

Cash Earnings Growth Exceeds Income Growth

Cash EBTDA increased 57.9%, compared with total income growth of 24.6%.

The difference reflects operating leverage as revenue growth was achieved without an equivalent increase in the underlying cost base.

This relationship will remain important in FY27 because further earnings expansion depends partly on whether cost growth remains below income growth.

FY27 Guidance Targets Further Earnings Growth

Zip has guided to FY27 cash EBTDA of approximately A$340 million.

The company also expects US TTV growth of more than 30% in US dollars.

Group revenue margin is expected to remain around 8%, while cash net transaction margin is expected to remain within a range of approximately 3.8% to 4.0%.

These measures remain subject to consumer activity, funding costs and credit performance.

Capital Returns Continue Through Buy-Backs

Zip has continued using share buy-backs as part of its capital-management framework.

The company’s ASX disclosures during September and October 2026 show that the buy-back program remains active.

Repurchasing shares reduces the number of securities outstanding but also uses cash that could otherwise support receivables growth, product Investment or funding capacity.

US Growth Increases Currency Exposure

The increasing contribution from the United States means Zip’s reported Australian-dollar results are more sensitive to movements in the Australian dollar against the US dollar.

US operational performance is therefore best assessed alongside the company’s constant-currency or US-dollar growth measures.

Exchange-rate movements can cause reported Australian-dollar growth to differ from the underlying US operating trend.

1Q FY27 Update Is the Next Checkpoint

Zip is scheduled to release its first-quarter FY27 trading update on 23 October 2026.

The update should provide further information on US TTV growth, active customer trends, credit losses and cash net transaction margin.

These measures will provide an early indication of progress against the FY27 cash EBTDA target.

Key Risks and Areas to Watch

Credit quality remains a central risk because higher consumer defaults would directly affect cash transaction margins.

Funding costs and access to receivables financing also influence earnings.

Regulatory changes affecting consumer credit may alter compliance costs or product structures, while currency movements affect the translation of US earnings.

US transaction growth, net bad debts, revenue margin and delivery against the A$340 million FY27 cash EBTDA target will remain important indicators.