Highlights

  • Zip Co (ASX:ZIP) reported record FY26 cash EBTDA of $268.9 million, supported by growth across key markets.
  • The company delivered its 12th consecutive quarter of underlying profitability.
  • US operations remained the main growth driver, with higher transaction volumes and improved earnings.
  • Key focus areas include US expansion, Credit quality and competitive positioning.

Zip Co Limited (ASX:ZIP) reported a strong FY2026 financial performance, highlighting continued growth in its buy now, pay later platform and improved profitability across its operations. The company delivered record underlying earnings, expanded margins and maintained momentum in its US business, while investors continue to assess the sustainability of future growth.

The result marked another step in Zip’s transition towards a more profitable operating model, supported by disciplined cost management, improving unit Economics and stronger contribution from its core markets.

What Just Happened?

Zip released its FY2026 full-year results on 20 August 2026, reporting its 12th consecutive quarter of underlying profitability. The company highlighted record cash earnings, stronger margins and continued expansion across its US operations.

The FY2026 result showed cash EBTDA of $268.9 million, representing growth of 57.9 per cent compared with the prior year. Statutory net profit after tax increased 45.7 per cent to $116.4 million.

The company also announced continued Capital management initiatives, including the completion of its previous share buyback program and plans for further capital returns.

The results reinforced Zip’s focus on sustainable profitability rather than solely pursuing transaction growth, with management continuing to prioritise Earnings quality and operating efficiency.

Digging Into the Numbers

Zip reported group total transaction Volume (TTV) of $16.7 billion for FY2026, representing growth of 27.2 per cent. Total income increased 24.6 per cent to $1,347.4 million, while cash Gross Profit rose 26.2 per cent to $642.3 million.

Operating Margin expanded to 20.0 per cent, improving by approximately 420 basis points compared with the previous year.

Cash EBTDA, Zip’s preferred underlying earnings measure, increased to $268.9 million, while statutory NPAT reached $116.4 million.

The US Business remained the largest contributor to growth. US TTV increased 42.5 per cent in Australian-dollar terms to approximately US$8.6 billion, with US cash EBTDA reaching US$154.7 million.

Active US customers increased 9.3 per cent to 4.6 million, while transactions per customer increased 23.1 per cent to 13.1 annually. In-store TTV also grew strongly, accounting for 27 per cent of US transaction volume.

The ANZ business also improved, with segment cash EBTDA increasing 98.6 per cent to $69.5 million. Operating Margin expanded to 15.9 per cent, although customer numbers declined during the period.

Credit performance remained within targeted levels, with group net Bad Debts at approximately 1.8 per cent of TTV.

Why the Market Is Paying Attention

Zip’s FY2026 performance highlights the company’s progress in building a profitable BNPL platform within a highly competitive market.

The company competes against major global players including Afterpay, Klarna and Affirm, as well as traditional financial institutions expanding into instalment payment solutions. In this environment, sustainable margins, customer engagement and credit management remain important competitive factors.

The US market continues to represent the largest growth opportunity for Zip, supported by increasing transaction volumes, higher customer engagement and improving profitability.

However, as the business scales, maintaining credit quality while expanding transaction volumes remains a key consideration. Consumer credit conditions and spending patterns will continue to influence performance across the sector.

The Bigger Story

Zip’s FY2026 results reflect a broader transformation from a high-growth BNPL company focused on expansion towards a more disciplined and profitable financial technology platform.

The company’s improved earnings profile has been supported by stronger margins, operating efficiencies and increased contribution from the US market.

Capital management has also become a larger part of Zip’s strategy. The company completed a $150 million buyback during FY2026 and outlined a further buyback program of up to $50 million for FY2027.

While the business has improved its profitability profile, competition remains intense and future growth will depend on maintaining customer acquisition, transaction growth and responsible lending practices.

What Investors Should Watch Next

  • US transaction volume growth and whether Zip can maintain its targeted expansion trajectory.
  • Credit quality trends and movements in bad debt levels as lending volumes increase.
  • Sustainability of ANZ earnings improvement following recent margin gains.
  • Progress on the FY2027 buyback program and capital management strategy.
  • Competitive developments across global BNPL markets.

Conclusion

Zip Co (ASX:ZIP) delivered a strong FY2026 result, with record cash earnings, improved margins and continued profitability across its operations. The company’s US business remains the primary growth driver, while improvements in ANZ demonstrate progress in operational efficiency.

The next phase will focus on maintaining growth momentum while managing credit risks and competitive pressures. Zip’s ability to balance expansion with sustainable profitability will remain central to its longer-term performance outlook.