Zip Co posts record cash EBTDA and upgrades FY26 guidance

The Zip Co Ltd (ASX: ZIP) share price is in focus today after the company posted record cash EBTDA of $65.1 million, up 41.5% year-on-year, and upgraded its FY26 guidance.

What did Zip Co report?

• Total transaction volume (TTV) rose 22.4% year-on-year to $4.0 billion.
• Total income increased 20.2% to $335.2 million.
• Operating margin expanded to 19.4% from 16.5% in the prior year.
• Net bad debts were stable at 1.9% of TTV, within management targets.
• Active customers grew 3.5% to 6.5 million at quarter end.
• FY26 group cash EBTDA guidance upgraded to no less than $260 million.

What else do investors need to know?

Zip’s US business delivered standout growth, with TTV and revenue each rising more than 43% year-on-year in local currency. Credit losses in the US remained within target ranges, and management expects these to fall below 1.75% of TTV in the fourth quarter.

In Australia and New Zealand, Zip launched ZMobile, a new capital-light revenue stream. The company also began an on-market share buy-back of up to $50 million in March, having already acquired $21 million of shares by the end of the quarter.

Zip continues to invest in AI capabilities, with 95% of employees using enterprise-grade tools. Funding remains in focus, highlighted by a successful $300 million note issue in Australia and ongoing refinancing work in the US.

What did Zip Co management say?

Group CEO and Managing Director Cynthia Scott said:

Zip’s resilient business model continues to drive increased profitability at scale, delivering record cash earnings of $65.1m, up 41.5% year on year. Operating margin expanded 292bps to 19.4%, reflecting strong unit economics and significant operating leverage. Momentum continued across both markets, underpinned by deepened customer engagement and disciplined execution.

What’s next for Zip Co?

Following its strong third-quarter performance, Zip has upgraded its FY26 group cash EBTDA guidance to at least $260 million and reaffirmed all key target ranges for the year. US transaction volume is forecast to rise over 40% in FY26, while group operating margins are expected to remain above 18%.

Management will focus on balancing profitable growth, controlling credit losses, and building out new products like ZMobile. Zip also plans to continue leveraging its AI initiatives to improve customer experience and operational efficiency.

Zip Co share price snapshot

Over the past 12 months, Zip shares have risen 23%, outperforming the S&P/ASX 200 Index (ASX: XJO) which has risen 15% over the same period.

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The post Zip Co posts record cash EBTDA and upgrades FY26 guidance appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.