Zip Co Growth Surge
Zip Co Reports Record FY26 Earnings Driven by Significant U.S. Operations Growth
Key Points
Zip's U.S. business was the primary driver of FY26 growth, delivering about A$903.1 million in revenue (up ~37.3%), with the U.S. representing about 76% of group transactions and U.S. TTV rising 42.5% in USD terms; U.S. in-store TTV grew 67%, and the U.S. merchant base expanded to roughly 30,800, including enterprise partners Temu, Optimum and JD Sports.
Zip began winding down New Zealand operations in July 2026 as part of a strategic shift to reinforce Australia-focused growth.
FY26 saw accelerated product and AI-enabled enhancements, including Pay‑in‑2 rollout in the U.S. (Feb 2026), My Bills expansion to about half of Zip’s U.S. customers, the AI-powered virtual agent Zia, and the May 2026 launch of ZMobile in Australia, plus digital credit limit increases for Zip Plus.
Capital management actions included A$150 million in on-market buybacks during the year, with a further buyback up to A$50 million planned for FY27, and management considering a share consolidation and a potential dual listing on a U.S. exchange.
FY27 guidance remains constructive, with cash EBTDA targeted at about A$340 million (roughly 26% higher), an expected operating margin range of 20-22%, and anticipated U.S. TTV growth exceeding 30% in USD terms.
Zip Co posted record FY26 results with cash EBITDA of A$268.9 million, up 57.9% from the prior year, as Yahoo Finance reported. Revenue climbed to roughly A$1.34–1.35 billion while statutory net profit surged 45.7% to A$116.4 million, driven by strong U.S. growth and margin expansion to around 20%. The fintech company will not pay a dividend but returned A$150 million to shareholders via buybacks and guided FY27 cash EBITDA toward A$340 million, signaling sustained momentum.
U.S. Business Powers Growth to Record Earnings
The U.S. operation drove Zip's record result, delivering A$903.1 million in revenue—up 37.3%—and representing 76% of group transactions. Grafa noted U.S. total transaction volume (TTV) jumped 42.5% in USD terms, while in-store TTV surged 67%. The U.S. merchant base expanded to roughly 30,800, including enterprise partners Temu, Optimum, and JD Sports.
Active customers near 6.5 million and merchants around 97,000 powered the overall platform. Zip contained net bad debts within targets at about 1.77% of TTV, demonstrating credit quality discipline despite rapid scaling.
Product Innovation and AI Reshape the Platform
Zip rolled out Pay-in-2 in the U.S. in February 2026 and expanded My Bills to roughly half its U.S. customer base. The company launched Zia, an AI-powered virtual agent, and introduced ZMobile in Australia in May 2026. Digital credit limit increases for Zip Plus customers rounded out a year of rapid feature expansion.
These enhancements aim to deepen engagement and stickiness. Zip is also considering a share consolidation and a potential dual listing on a U.S. exchange to fuel future growth.
Strategic Shift: New Zealand Exit, Capital Returns Step Up
Zip began winding down New Zealand operations in July 2026 to sharpen focus on Australia and the U.S. The move reflects a strategic pivot away from lower-margin markets. A$150 million in buybacks executed during FY26, with a further A$50 million planned for FY27, prioritize shareholder returns over dividends.
Yahoo Finance reported shares surged 17% to A$2.97 in early trade after the earnings release. FY27 guidance targets an operating margin range of 20–22% and U.S. TTV growth exceeding 30% in USD terms, underscoring management confidence in continued expansion.
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