SYDNEY, August 20, 2026, 23:40 AEST — Trading in Australia had ended for the day.
- Zip finished at A$3.05, rising 18.2%, following record FY26 cash earnings.
- FY27 cash EBTDA guidance was increased to A$340 million, indicating growth of 26%.
- Net bad debts rose to 1.77% of transaction volume, compared with 1.52% previously.
Shares of Zip Co Limited ASX:ZIP rose 18.2% on Thursday, following annual results that surpassed its revised guidance. The stock ended the session at A$3.05, increasing market capitalisation by around A$586 million in a single day.
The step reflects more than just the upcoming earnings change. Zip forecasted FY27 cash EBTDA at A$340 million, which is A$71.1 million higher. The rise in market value on Thursday was roughly 8.2 times that growth.
This ratio serves as a key measure for investors. Markets seek sustained operating leverage rather than temporary growth. Credit losses have become a larger consideration.
| FY26 metric | Result | Year-on-year | Investor read-through |
|---|---|---|---|
| Total transaction volume | A$16.7bn | +27.2% | Faster scaling |
| Revenue | A$1.336bn | +24.7% | Growth lagged transaction volume |
| Cash EBTDA | A$268.9m | +57.9% | Marked operating leverage |
| Operating margin | 20.0% | +420bp | Expenses increased at a slower rate than revenue |
| Net bad debts / TTV | 1.77% | +25bp | Credit costs rose |
| Statutory net profit | A$116.4m | +45.7% | Improved profit conversion |
Group CEO Cynthia Scott stated that steady execution has laid the groundwork for Zip’s upcoming growth phase. She highlighted improved engagement levels, increased operating leverage, and A$150 million returned via buybacks through FY26.
The US unit continues to drive growth. Transaction volume increased by 42.5% in US dollars, with revenue up 44.3%. The number of active customers grew 9.3%, as spending per customer rose 30.5%.
| FY27 guidance | Target | FY26 base | Change / range |
|---|---|---|---|
| US TTV growth | >30% | 42.5% | Growth to slow from higher base |
| Group revenue margin | About 8% | 8.1% | Remains largely unchanged |
| Cash net transaction margin | 3.8%–4.0% | 3.9% | Consistent range |
| Operating margin | 20%–22% | 20.0% | Potential expansion up to 200bp |
| Cash EBTDA | A$340m | A$268.9m | +26% |
The nature of this growth is important. US customers made 23.1% more transactions. In-store transactions jumped 67%, accounting for 27% of total US transaction value. Over 98% of transaction volume was fully repaid.
However, group net bad debts increased by 25 basis points to 1.77% of volume. The revenue margin slipped to 8.1% compared with 8.3% previously. Management attributed the change in margin to the more rapidly expanding US segment.
| Rerating bridge | Amount | Method |
|---|---|---|
| Shares on issue | 1.246bn | 30 June 2026 |
| Increase in share price | A$0.47 | Closing price of A$3.05 minus previous close of A$2.58 |
| Additional equity value | About A$586m | Shares times daily price gain |
| FY27 EBTDA uplift | A$71.1m | A$340m minus A$268.9m |
| Value uplift / EBTDA uplift | 8.2× | A$586m divided by A$71.1m |
Zip unveiled a fresh share buyback plan of up to A$50 million. Based on Thursday’s closing price, this amount could buy back roughly 16.4 million shares, representing 1.3% of the total shares on issue. The exact volume repurchased will be contingent on the share price and alternative capital requirements.
Analysts maintained a bullish stance on the result. The most recent S&P Global survey indicated 12 buy ratings, with no hold or sell recommendations. The average price target of A$4.16 stayed 36.4% higher than Thursday’s closing price.
| Analyst recommendations | Rating | Target | Upside from A$3.05 |
|---|---|---|---|
| Citi NYSE:C — Siraj Ahmed | Buy | A$3.55 | 16.4% |
| Royal Bank of Canada (TSE:RY) — Julian Mulcahy | Buy | A$4.40 | 44.3% |
| UBS Group AG SWX:UBSG — Lucy Huang | Buy | A$4.10 | 34.4% |
| B. Riley Financial NASDAQ:RILY — Hal Goetsch | Buy | A$4.70 | 54.1% |
| 12-analyst consensus | Strong Buy | A$4.16 | 36.4% |
Zip climbed 9.3% over the past week since the August 12 close, with Thursday accounting for the full increase. In contrast, the benchmark index gained roughly 0.2% during the same Thursday session.
No Zip results are set for release next week. Investors will focus on target revisions following earnings and updates regarding credit losses. Employee-plan share acquisitions are slated to begin near August 31, with the updated buyback anticipated to follow.
Risks: Accelerated US growth could increase losses, and higher funding costs have the potential to squeeze transaction margins. Weaker consumer demand or shifts in regulation may also threaten the FY27 operating leverage outlook.
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A$586m rally meets a A$71m earnings step
Price: A$3.05 · +18.2%
