Zip Co Posts Record FY26 as US Growth Drives Profit Surge

Zip Co (ASX: ZIP) delivered a record FY26 result, with US growth lifting transaction volumes, profitability, and operating margins as the buy now, pay later lender capitalises on its turnaround.

Group cash EBITDA surged 57.9% to $268.9 million. Statutory net profit hit $116.4 million, up from $79.9 million a year earlier. Total transaction volume rose 27.2% to $16.7 billion, and total income climbed 24.6% to $1.35 billion.

The operating margin expanded 420 basis points to a record 20%, reflecting growing leverage in the model.

US transaction volumes jumped 42.5% in US dollar terms, and the US operating margin reached 25%. Net bad debts in the US came in at 1.73% of transaction volume, within Zip’s target range. That combination of rapid volume growth and controlled credit losses is the crux of the investment case. Zip will need to keep expanding its US book without letting bad debts climb enough to undercut the margin gains from scale.

The Australian and New Zealand segment also improved, with cash EBITDA nearly doubling to $69.5 million. Management is guiding to $340 million in cash EBITDA for FY27, a 26% increase on FY26.

For investors, the outlook hinges on whether Zip can sustain US growth while preserving credit performance and expanding margins. Faster lending could increase exposure to losses, while competition in the US may press revenue yields and raise customer acquisition costs. The FY26 result, however, strengthens the argument that Zip has moved past recovery mode. The focus now is on holding that momentum through the next earnings target.