The Zip Co Ltd (ASX: ZIP) share price is up 12% after the buy now, pay later business announced its FY26 result and guidance for FY27.
Zip is one of the larger buy now, pay later businesses in Australia and the US.
FY26 result
Here are the highlights from the Zip report for the 12 months to 30 June 2026:
- Total transaction volume (TTV) grew 27.2% to $16.7 billion
- Total income rose 24.6% to $1.35 billion
- Cash gross profit increased 26.2% to $642.3 million
- Cash EBTDA (EBITDA explained, but interest is included) grew 57.9% to $268.9 million
- Cash net transaction margin (NTM) maintained at 3.9%
- Statutory net profit increased 45.7% to $116.4 million
- Share buyback of $50 million announced
What happened in this report?
The US was again the driver in this period and has become very important for the Zip share price.
Zip reported that US TTV increased by 42.5% in US dollar terms. In Australian dollar terms, US TTV grew 35.6% to $12.7 billion and ANZ TTV se 6.2% to $4 billion.
US revenue grew by 35.6% in AUD terms to $903.1 million, while ANZ revenue jumped 4.6% to $432.9 million.
Total active customers increased 3.7% to 6.52 million, with US active customers increased 9.3% to 4.65 million and ANZ active customers fell 8%.
Zip did note that its net bad debts as a percentage of TTV increased from 1.52% in FY25 to 1.77% in FY26. However, this was reportedly in line with management targets and strategic settings.
The buy now, pay later business also announced that it intends to buy up to $37.5 million of Zip shares via its employee share trust to mitigate the dilution impact from equity incentive plan allocations.
It also recently announced it was exiting New Zealand.
Dual listing?
The company noted that it continues to monitor market conditions and consider a potential dual listing on a US stock exchange.
Any possible listing would be subject to board and regulatory approvals, and would only proceed if it were in the best interests of shareholders.
Outlook for the Zip share price
The company said it’s going to drive growth and innovation, while investing for long-term scale.
In FY27, the company expects US TTV to grow by more than 30% in US dollar terms, from an increasingly larger base, balancing profitability and loss performance.
It also expects a (lower) group revenue margin of around 8% because of the greater influence in the US.
The buy now, pay later business also expects a cash net transaction margin of between 3.8% to 4% and a group cash EBTDA of $340 million, reflecting year on year growth of 26%.
I’d be very happy if I were a shareholder about this result and the guidance for the next financial year. The company is growing strongly in the huge market of the US, which is a big opportunity.
As long as the company can balance growth with reasonable net bad debts, it could deliver solid growth for a long time.
Despite the Zip share price rising strongly in recent times, it may still be undervalued if it keeps growing cash earnings at more than 20% per year. However, it’s not the sort of business I’d buy for my own portfolio. Instead, I’m looking at other ASX growth shares.
