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.
Image source: Getty Images
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.
