ZIP (ASX:ZIP) outlined what management described as “another very strong set of results” in its FY2026 half-year results briefing, reporting record cash earnings, operating margin expansion, and continued transaction volume growth across both the U.S. and ANZ businesses. Executives also discussed product mix and credit performance, funding and capital management, and an upgraded profitability outlook for the full year.
Record cash earnings and operating margin expansion
Group CEO and Managing Director Cynthia Scott said Zip delivered financial performance “within each of our full year guidance ranges provided in August,” highlighting record cash earnings (cash EBITDA) of AUD 124.3 million for the half. She attributed the result to “accelerated momentum across both markets” and “significant operating margin expansion.”
Group CFO Gordon Bell said the group’s operating margin expanded 569 basis points to 18.7%, calling it a key highlight. On a statutory basis, Zip reported net profit after tax of AUD 52.4 million, which Bell said more than doubled year-on-year. He also noted there were “no one-off items recorded for the period,” and on an underlying basis the company delivered AUD 54 million of improvement in net profit after tax.
Bell summarized the income statement performance as follows:
- Cash gross profit increased 33.5% to AUD 314.3 million
- Cash EBITDA increased 85.6% to AUD 124.3 million
- Statutory net profit increased 127.6% to AUD 52.4 million
U.S. growth: TTV, customers, and product rollout
U.S. CEO Joe Heck said the U.S. delivered “another outstanding set of results,” with over AUD 4 billion in TTV and AUD 292 million in revenue for the half. Heck said growth accelerated to 44.2% in TTV and 46.4% in revenue, and Zip set “a record day and month during the holiday period.” He said the company added over 400,000 customers and over 2,300 merchants in the period.
Heck also pointed to deeper engagement, saying U.S. customers were transacting “over 11 times per annum,” up 20% year-on-year. He described the rollout of new features and products, including making Pay in 2 available to all customers in February 2026. Zip is also piloting My Bills (recurring payments), and progressing Money Coach, an “agentic-guided cash flow management experience,” both expected to roll out further in the second half.
On distribution, Heck said Zip reached general availability on Stripe in August 2025, enabling “any of the millions of merchants on Stripe” to turn on Zip quickly. He said the company added over 1,400 Stripe merchants in the first half, noting Zip had been live for “four and a half months.” He also highlighted enterprise signings such as JD Sports and Goat Group, and said Zip went live with Temu. Zip also discussed its Autofill integration on Google Chrome, citing positive early customer feedback with 86% of surveyed customers indicating intent to use the feature again.
ANZ performance: cash earnings, excess spread, and Zip Plus
Scott said the ANZ business achieved a 138% increase in cash earnings, driven by “a material improvement in excess spread” and momentum in Zip Plus. She said Zip Plus is now being offered to new customers at higher limits of up to AUD 20,000.
Zip also cited new ANZ merchant additions including Didi, Australian Outdoor Living, and White Fox Boutique. Scott said the company executed integrations including with Xero via Stripe and Mint Payments. She also pointed to adoption of new Google Wallet features by more than 170,000 customers, and said the company’s AI chatbot Ziggy was resolving 65% of interactions without human intervention.
Scott said ANZ excess spread expanded by 241 basis points, while net bad debts remained “at their lowest levels since FY 2023.” She added that arrears rates were down 21 basis points year-on-year. The company also reported increasing engagement in ANZ, with transactions and TTV per customer up 23% and 20%, respectively, and noted record transactions and Zip Anywhere open-loop spend during Black Friday and Cyber Monday.
Credit performance, funding, capital management, and FY2026 outlook
Bell said the group maintained a cash net transaction margin of 3.8% in the half. Interest expense as a percentage of TTV improved 38 basis points to 1.3%, which he attributed primarily to lower margins on receivables refinanced in Australia. Net bad debts were 1.7% of TTV. In Q&A, management discussed how new customer acquisition and product mix can increase initial loss rates, while emphasizing calibration and seasoning of customers through Zip’s underwriting and credit models.
Scott and Heck addressed Pay in 8 and Pay in 2 portfolio construction in response to investor questions. Scott said Pay in 8 now represents about 20% of the portfolio and comes with higher losses due to longer duration and higher average order value, adding Zip is comfortable keeping Pay in 8 “no greater than 20% of the portfolio.” Heck said Zip felt comfortable it would stay under the top end of its targeted loss range, and said early-stage delinquency was down quarter-over-quarter, while Pay in 2 was showing “strong early signs of success” on both uptake and credit performance.
On liquidity, Bell said Zip had AUD 239 million of available cash and liquidity at 31 December, and cash inflows for the first half totaled AUD 178.3 million. He described funding market activity, including an Australian AUD 400 million two-year public ABS term deal priced at BBSW + 1.37% in November 2025 and an “innovative” AUD 300 million five-year public ABS term deal priced at BBSW + 1.62% in February 2026. In the U.S., he said Zip established a $283 million warehouse facility and was progressing work to refinance a $300 million warehouse later in the second half.
Zip also reiterated capital management actions completed during the half, including the completion of a AUD 100 million on-market share buyback in December, with 34.9 million shares repurchased at an average price of AUD 2.86, and the acquisition of 5.9 million shares via an employee share trust to offset dilution from incentive programs.
Looking ahead, Scott said Zip’s FY2026 strategic priorities were unchanged, but the company upgraded guidance for operating margin to be greater than 18% and for cash EBITDA as a percentage of TTV to be above 1.4%, while reconfirming guidance for revenue margin and cash net transaction margin ranges. She said Zip expects second half cash EBITDA to be broadly in line with the first half. In Q&A, Bell also discussed foreign exchange as a potential headwind to reported results, noting that based on prevailing forward assumptions the sensitivity could be around AUD 5 million, partially mitigated by U.S. dollar call hedges.
Scott also said Zip continues to evaluate a potential dual listing in the U.S., noting the company submitted a confidential draft registration statement to the SEC in November 2025 and would monitor market conditions, with any listing subject to required processes including regulatory and board approvals. She added she intends to relocate to the U.S., citing the U.S. as Zip’s primary earnings driver and a significant growth opportunity.
About ZIP (ASX:ZIP)
Zip Co Limited engages in the provision of digital retail finance and payments solutions to consumers, and small and medium sized merchants (SMEs) in Australia, New Zealand, Canada, and the United States. The company offers Buy Now Pay Later services, which offer line of credit and installment products to consumers through online and in-store. It also provides unsecured loans and lines of credit to SMEs. The company was formerly known as ZipMoney Limited and changed its name to Zip Co Limited in December 2017.
