Zip Lifts Cash Earnings 58% to $269M on US Volume Surge

Zip Co Ltd (OTC: ZIZTF) reported record FY26 cash earnings of $269 million, up 58%, with US total transaction value up 42.5% and operating margin at 20%, and guided to $340 million in FY27 cash EBITDA.

Zip Co Ltd (OTC: ZIZTF) closed its 2026 financial year with the kind of numbers buy-now-pay-later companies spent years promising and rarely delivered: record cash earnings of $269 million, up 58%, an operating margin of 20%, and a United States business whose total transaction value grew 42.5%. Management then put a marker down for the year ahead, guiding to $340 million in cash EBITDA for FY27.

Cash EBITDA — earnings before interest, tax, depreciation and amortisation, adjusted to strip out non-cash items such as share-based payments — is the measure Zip and most of its BNPL peers use to show whether the underlying lending machine covers its own costs. For a sector that spent 2021 and 2022 growing volume while burning capital, a 20% operating margin is the more telling line.

The American business is now the engine

The 42.5% growth in US total transaction value (TTV, the gross dollar value of purchases processed through the platform) is the single figure that explains the earnings jump. Volume growth of that order in a market where Zip is a challenger rather than an incumbent implies both merchant additions and rising frequency from existing customers, and it feeds the revenue line before it feeds the margin line.

The mechanics matter here. BNPL economics are a spread business: merchant fees plus late or account fees, less funding costs and credit losses. Once fixed technology and compliance costs are covered, incremental volume drops through at a much higher rate. A 58% rise in cash earnings against 42.5% US volume growth is consistent with exactly that operating leverage — the cost base grew more slowly than the book.

The GuruFocus summary of the earnings call attributes the margin expansion directly to US growth, which is consistent with the volume figure doing the heavy lifting rather than a one-off cost programme.

What the $340 million FY27 guide actually asks for

Guidance of $340 million in FY27 cash EBITDA sets a clear bar. Against the $269 million delivered in FY26, it implies roughly a quarter more earnings in twelve months — a step down in growth rate from the 58% just posted, which is the shape you would expect as the base gets larger. On that arithmetic the guide reads as deliberately reachable rather than heroic, assuming three things hold.

US volume keeps compounding. Not at 42.5%, necessarily, but at a rate that outpaces cost growth. A sharp deceleration would put the fixed-cost base back in focus.
Credit losses stay contained. BNPL loss rates move with the health of the subprime and near-prime consumer. Nothing in the reported figures speaks to that directly, and it is the variable most outside management's control.
Funding costs behave. Zip borrows to lend. Warehouse funding costs sit between gross margin and cash EBITDA, and a move in short rates hits the guide before it hits volume.

Guidance issued at a full-year result is also, in practice, a floor management expects to clear. Investors will judge the FY27 number less on whether $340 million is hit than on whether the US growth rate holds anywhere near the level just reported.

The stock is not celebrating

The market response has been muted. ZIZTF changed hands at 1.88 as of 13:47 GMT on 20 August 2026, down 1.57% on the day from a previous close of 1.91, and sitting at the bottom of a session range of 1.88 to 1.93. That is a result-day drift lower, not a re-rating.

Some of that is context. Broad US benchmarks were soft in the same session: the S&P 500 tracker (SPY) traded at $767.28, down 0.23%, the Nasdaq 100 proxy (QQQ) at $713.66, down 0.34%, and the Dow tracker (DIA) at $531.37, down 0.54%. Zip fell more than any of them, but on a day when nothing was working, a one-and-a-half percent decline on a record print is closer to indifference than rejection.

The other factor is liquidity. ZIZTF is the over-the-counter line for a company whose primary listing and price discovery sit elsewhere; the OTC quote often trails the home-market reaction rather than setting it. Reading too much into a single session's move on that ticker is a trap.

Where BNPL sits after a brutal repricing

The buy-now-pay-later cohort was repriced savagely once interest rates rose, on the straightforward logic that a business borrowing short to lend short cannot survive on volume growth alone. What survived that period has had to demonstrate the opposite: that the unit economics work at scale, that customer acquisition costs amortise, and that the credit book behaves through a cycle.

A 20% operating margin is Zip's answer to the first two. It does not answer the third. Nothing in a full-year earnings summary tells you how a consumer credit book performs in a downturn that has not happened yet, and BNPL loss curves are short — the tenor of the product means problems surface fast, which cuts both ways.

What the result does establish is that the US expansion, the source of most of the cash burn in earlier years, is now the source of most of the earnings growth. That is the inflection the whole sector was supposed to reach.

What to watch from here

Three things will determine whether FY27 validates this print. First, the quarterly cadence of US TTV: a sequential slowdown, disclosed at the first-quarter update, would call the $340 million into question well before year-end. Second, any commentary on arrears and net bad debts as a percentage of TTV, which is where consumer stress shows up first. Third, whether the margin holds at 20% or expands — expansion would suggest the operating leverage still has room; contraction would suggest Zip is buying growth with marketing spend.

For investors weighing the name, the question is not whether FY26 was good. It plainly was. The question is what multiple a BNPL lender earns for growth that is now concentrated in one geography and one consumer credit cycle.

Key facts

ZIZTF price: 1.88, down 1.57%, as of 13:47 GMT 20 Aug 2026
FY26 cash earnings: $269 million, up 58%
US TTV growth: Up 42.5% in FY26
FY27 guidance: $340 million cash EBITDA

Frequently asked questions

How much did Zip earn in FY26?

Zip Co Ltd reported record cash earnings of $269 million for its 2026 financial year, an increase of 58% on the prior year. The company also reported an operating margin of 20%, a level that indicates the underlying lending business is covering its fixed cost base rather than growing volume at the expense of profitability.

What is Zip guiding to for FY27?

Management guided to $340 million in cash EBITDA for the 2027 financial year. Cash EBITDA is earnings before interest, tax, depreciation and amortisation, adjusted for non-cash items such as share-based payments. It is the measure buy-now-pay-later companies typically use to show whether the core lending operation generates cash.

Why did the US business matter so much to the result?

United States total transaction value — the gross dollar value of purchases processed through Zip's platform — grew 42.5% in FY26. Because incremental volume in a buy-now-pay-later business drops through at a high rate once fixed technology and compliance costs are covered, that volume growth is the main driver of the 58% rise in cash earnings and the 20% operating margin.

How did ZIZTF shares react?

ZIZTF traded at 1.88 as of 13:47 GMT on 20 August 2026, down 1.57% from a previous close of 1.91, within a session range of 1.88 to 1.93. Broad US benchmarks were also lower that session, with SPY down 0.23%, QQQ down 0.34% and DIA down 0.54%, so the decline came on a generally weak day.

What is total transaction value in buy-now-pay-later?

Total transaction value, or TTV, is the gross dollar amount of consumer purchases processed through a buy-now-pay-later platform before any fees are deducted. It is the sector's primary volume metric. Revenue is earned as a percentage of TTV through merchant fees and consumer account or late fees, so TTV growth is the leading indicator of revenue growth.

What are the main risks to the FY27 target?

Three variables dominate: whether US transaction volume keeps compounding fast enough to outpace cost growth, whether credit losses stay contained as the consumer credit cycle turns, and whether funding costs remain stable. Zip borrows to lend, so warehouse funding costs sit directly between gross margin and cash EBITDA and can move with short-term interest rates.

Sources

Zip Co Ltd (ZIZTF) (Q4 2026) Earnings Call Highlights: Record Cash Earnings Soar 58% to $269 ... — GuruFocus

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