Zip shares (ASX: ZIP) led the ASX 200 today, jumping 18.22% to close at A$3.05 after the company put up record full-year profits, and unveiled ambitious targets for the year ahead.
Zip’s share price has been known for it’s volatile moves, yet today’s bounce was more pronounced than most expected. The price jumped out of the gate, hit an intraday high at A$3.11, and after a mid day lull, proceeded to push back above A$3 into the close as markets worked through the FY26 results that beat the upgraded guidance.
Record Profit and Margin Expansion Boost Zip Shares
Zip reported record cash EBTDA of A$268.9 million for FY26, up 57.9% on the prior year and comfortably above the “no less than A$260 million” guidance issued in April. The beat suggests operational momentum accelerated into the fourth quarter rather than fading, a key signal that management is under-promising and over-delivering.
Total revenue rose 24.7% to A$1.34 billion, driven by a 27.2% increase in total transaction volume to A$16.7 billion. More importantly, the company’s operating margin expanded sharply to 20.0%, up from 15.8% in FY25, demonstrating the operating leverage inherent in the model as scale improves and credit performance stabilises.
Net profit after tax reached A$116.4 million, up 45.7% year-on-year, marking a significant milestone for a company that was burning cash and facing existential questions just two years ago. Active customers grew a more modest 3.7% to 6.5 million, indicating that revenue growth is being driven by higher engagement and average revenue per user rather than aggressive customer acquisition.
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The standout performer was the US business, where transaction volume and revenue grew more than 42% in local currency terms. The US now accounts for the majority of group transaction volume and represents Zip’s primary growth engine, with management reporting that credit losses remain within target ranges despite the rapid expansion.
In Australia and New Zealand, the company reported improved revenue and receivables growth led by its Zip Plus product, a higher-yield offering that targets more creditworthy customers. Zip also announced it is winding down New Zealand operations to sharpen its focus on the larger Australian market, a move markets interpreted as disciplined capital allocation rather than a distress signal.
Balance Sheet Strength and Capital Management Plans
Zip strengthened its funding position during FY26, securing new note issuances and warehouse facilities that lifted available cash and liquidity to A$246.5 million. Management completed A$150 million of on-market share buybacks during the year and announced a further A$50 million buyback program for FY27, returning value to shareholders.
The buyback activity, combined with positive free cash flow, represents a sharp reversal from the capital-raising cycles that plagued the BNPL sector during the 2022-2023 downturn.
Separately, Zip reiterated its interest in a potential dual listing on a US stock exchange, having filed a confidential draft registration statement with the SEC in late 2025. Management emphasised that any dual listing would be conditional on supportive market conditions and execution of the growth plan.
Ambitious FY27 Targets
Looking ahead, Zip set a group cash EBTDA target of A$340 million for FY27, representing 26% growth on the FY26 result. The company is targeting an operating margin of 20% to 22%, consistent with the FY26 outcome, and expects US transaction volume to grow by more than 30% in US dollar terms.
Group revenue margin is expected to stabilise around 8%, in line with recent quarters, as the company balances growth with credit discipline. Management highlighted ongoing investments in product innovation, including the recently launched ZMobile telecommunications offering and expanded personal loan products, as well as AI integration to improve underwriting, collections, and customer engagement.
The FY27 guidance implies that Zip can sustain high growth rates while maintaining or even expanding margins, a combination that would be unusual for a consumer credit business outside of exceptional operating environments. The market will scrutinise quarterly updates closely to assess whether the company can deliver on these ambitious targets, particularly if macroeconomic conditions deteriorate or credit losses tick higher.
What Next For ZIP?
Despite trading 8.96% lower YTD, there has been a real shift in sentiment surround ZIP, and one which has seen the share price more than double (+121%) off the 52 week low of A$1.38 just five months ago. The company has now delivered three consecutive reporting periods (1H26, 3Q26, and FY26) that showed accelerating profit growth, margin expansion, and disciplined capital management, giving bulls plenty to get behind.
Now the attention will turn to continued execution. There remain plenty of risks on the horizon, and bears are certainly not laying down without a fight here. It has been a mighty session today in leading all ASX 200 stocks, yet there remains work to be done if ZIP is to get back towards previous heights.
Bull Case:
- US business growing over 40% with controlled credit losses driving group profit
- Operating margin at 20% demonstrates sustainable profitability and operating leverage at scale
- A$200 million buyback program signals management confidence and supports earnings per share
- Dual US listing optionality could unlock valuation re-rating to fintech peer multiples
- FY27 guidance of A$340 million cash EBTDA implies continued strong momentum
Bear Case:
- Consumer credit is cyclical; macro downturn could spike bad debts and collapse margins
- Modest 3.7% customer growth suggests limited user base expansion and ARPU dependency
- Regulatory tightening in Australia or US could cap fees or raise compliance costs
- Warehouse funding reliance exposes company to capital market volatility and spread widening
- Ambitious FY27 targets leave little room for execution missteps or guidance disappointment
