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Zip Co (ASX: ZIP) has delivered a record FY26 result, with strong US growth driving higher transaction volumes, profitability and operating margins as the buy now, pay later company looks to build on its turnaround.
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Group cash EBITDA rose 57.9% to $268.9 million, while statutory net profit increased to $116.4 million, from $79.9 million a year earlier. Total transaction volume climbed 27.2% to $16.7 billion, while total income increased 24.6% to $1.35 billion.
The result also showed growing operating leverage, with the operating margin expanding 420 basis points to a record 20%.
The US remains the main growth engine. US transaction volumes increased 42.5% in US dollar terms, while the US operating margin reached 25%. Net bad debts in the US were 1.73% of transaction volume, remaining within Zip’s targeted range.
That combination of rapid volume growth and controlled credit losses is central to the investment case. Zip will need to continue growing its US book without allowing bad debts to rise sharply enough to erase the gains from scale.
The Australian and New Zealand business also improved, with cash EBITDA nearly doubling to $69.5 million. Management is targeting further growth in FY27, guiding to $340 million in cash EBITDA, representing a 26% increase on FY26.
For investors, the outlook is increasingly tied to whether Zip can maintain the pace of US growth while preserving its credit performance and expanding margins. The risks remain clear: faster lending growth can increase exposure to credit losses, while greater competition in the US could pressure revenue yields and increase customer acquisition costs.
However, the FY26 result strengthens the case that Zip’s business has moved beyond recovering from its earlier challenges. The company now focuses on sustaining that momentum as it targets another sizeable increase in earnings.
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