1. Cost of Funds (Interest Expense)
Source Explicitly mentioned as "Interest expense as a percentage of TTV improved 34 basis points to 1.3%". Refinancing facilities to lower funding costs is a key focus.
Confidence: high
ZIP.AU
T3Zip Co Limited
New Age Financing '26: Buy Now Pay Later
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OverviewZip Co Limited delivers digital financial and payment solutions, primarily offering Buy Now Pay Later (BNPL) services and credit lines to individual consumers,
Zip Co Limited delivers digital financial and payment solutions, primarily offering Buy Now Pay Later (BNPL) services and credit lines to individual consumers, alongside unsecured loans and revolving credit to small-to-medium businesses. Operating mainly in Australia and the United States, Zip serves millions of customers and thousands of merchants, leveraging AI for growth and product innovation.
Key Inputs And Sourcing
2. Bad Debt Expense (Credit Losses)
Source Explicitly mentioned "U.S. credit losses declining to 1.67% of TTV in the fourth quarter". Managing losses within target range is a key focus.
Confidence: high
3. Labor (Software Development, Operations, Customer Service)
Source Significant workforce implied by mentions of "Zipsters", AI adoption across teams, and customer service.
Confidence: medium
4. Technology Infrastructure & Software (Cloud Services, AI Tools)
Source Investment in "core technology platforms" and "embedding AI across our people, processes and products" indicates significant spend on IT infrastructure and software.
Confidence: medium
5. Marketing & Advertising Services
Source Management target for marketing spend to remain under 0.5% of TTV. Strategic marketing initiatives are used for customer growth and engagement.
Confidence: high
6. Partnership Fees (Payment Networks, Integrations)
Source Leveraging partnerships with Stripe, Google, Visa, and IXOPAY for merchant growth and agentic commerce implies associated fees or revenue share.
Confidence: medium
7. Data & Analytics Services
Source Inferred from reliance on "proprietary decisioning models" and "first-party data" for underwriting and risk management.
Confidence: low
Industry Publications
- Fintech Futures (fintechfutures.com) — Provides global news and analysis on financial technology, including BNPL trends, regulatory changes, and the competitive landscape that could impact Zip Co's operations and strategy.
- Payments Dive (paymentsdive.com) — Offers in-depth coverage of the payments industry in the US, a key market for Zip Co, including developments in digital payments, BNPL, and merchant services.
- Australian FinTech (australianfintech.com.au) — Focuses specifically on the Australian fintech sector, providing local insights into market trends, regulatory updates, and competitor activities relevant to Zip Co's domestic business.
- The Paypers (thepaypers.com) — A global source for news and intelligence on payments, fintech, and e-commerce, offering broad coverage of innovations and market shifts that could influence Zip Co's product development and international expansion.
- PYMNTS.com (pymnts.com) — Covers the latest news and research in payments, commerce, and financial services innovation, offering insights into consumer behavior, technology adoption, and strategic partnerships relevant to Zip Co's growth initiatives.
Economic Data Watch
1. FRED (Federal Reserve Economic Data) — Retail Sales: Retail Trade and Food Services
Metric/field MRTSSM44X72USS
Cadence monthly
Why it matters Directly reflects consumer spending behavior in the US, which is a primary driver of Zip's Total Transaction Volume (TTV) in its largest market.
Signal to watch Sustained growth indicates a healthy spending environment, while declines suggest potential headwinds for TTV.
Confidence: high
2. Australian Bureau of Statistics (ABS) — Retail Trade, Australia
Metric/field Total Retail Turnover (seasonally adjusted)
Cadence monthly
Why it matters Measures overall consumer spending in Australia, directly impacting Zip's ANZ TTV and revenue growth.
Signal to watch Positive growth indicates strong consumer activity, supporting Zip's performance in its home market.
Confidence: high
3. FRED (Federal Reserve Economic Data) — Unemployment Rate
Metric/field UNRATE
Cadence monthly
Why it matters A key indicator of consumer financial health, directly impacting the ability of Zip's low- to middle-income customer base to make repayments and manage credit losses.
Signal to watch Rising unemployment suggests increased credit risk and potential for higher bad debts, while stable or falling rates are favorable.
Confidence: high
4. Reserve Bank of Australia (RBA) — Monetary Policy Decisions
Metric/field Cash Rate Target
Cadence monthly
Why it matters Directly influences Zip's funding costs in Australia, impacting profitability and net transaction margin.
Signal to watch Increases in the cash rate will likely raise funding costs, while decreases could improve margins.
Confidence: high
5. FRED (Federal Reserve Economic Data) — Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
Metric/field CPIAUCSL
Cadence monthly
Why it matters High inflation can strain consumer budgets, particularly for Zip's target demographic, potentially affecting repayment capacity and demand for BNPL services for essential goods.
Signal to watch Sustained high inflation could indicate pressure on consumer discretionary spending and repayment ability.
Confidence: medium
Free Alt Data Watch
1. Google Trends — Search Interest
Metric/field Search term: 'Buy Now Pay Later' (United States)
Cadence weekly
Why it matters Indicates general consumer interest and awareness of BNPL services in Zip's largest market, signaling potential market growth or shifts in demand.
Signal to watch Increasing search interest suggests growing market adoption or awareness, which could benefit Zip.
Confidence: medium
2. Google Trends — Search Interest
Metric/field Search term: 'Buy Now Pay Later' (Australia)
Cadence weekly
Why it matters Reflects consumer interest in BNPL in Zip's home market, providing insights into the competitive landscape and overall market health.
Signal to watch Consistent or increasing search interest indicates a healthy and growing BNPL market in Australia.
Confidence: medium
3. Apple App Store — App Reviews and Ratings
Metric/field Zip - Buy Now, Pay Later app: Average Rating and Number of Reviews
Cadence daily
Why it matters Provides direct customer feedback on app usability, service quality, and emerging issues, impacting customer satisfaction and retention.
Signal to watch A declining average rating or increase in negative reviews could signal operational or product issues.
Confidence: high
4. Google Play Store — App Reviews and Ratings
Metric/field Zip - Buy Now, Pay Later app: Average Rating and Number of Reviews
Cadence daily
Why it matters Similar to the App Store, this reflects Android user experience and satisfaction, crucial for a digital-first product.
Signal to watch Monitoring for trends in ratings and common complaints can highlight areas for improvement or competitive advantages.
Confidence: high
5. Reddit — Subreddit Discussions
Metric/field Sentiment and themes in r/personalfinance, r/AusFinance, r/Zippay related to 'Zip Pay' and 'Zip Money'
Cadence weekly
Why it matters Offers qualitative insights into public perception, customer issues (e.g., fees, customer service, app glitches), and competitive comparisons not always captured in formal reviews.
Signal to watch An increase in negative sentiment or recurring complaints about specific features or fees could indicate reputational risk or operational problems.
Confidence: medium
Paid Alt Data Watch
1. Similarweb — Website Traffic Analytics
Metric/field zip.co: Total Monthly Visits
Cadence monthly
Why it matters Provides a high-level view of overall digital engagement with the Zip brand, indicating marketing effectiveness and brand awareness.
Signal to watch Consistent or increasing traffic suggests strong brand presence and potential customer acquisition, while declines could indicate competitive pressure.
Confidence: high
2. Similarweb — Mobile App Analytics
Metric/field Zip - Buy Now, Pay Later (US): Monthly App Downloads
Cadence monthly
Why it matters Directly tracks new customer acquisition interest through mobile channels in the crucial US market, complementing internal metrics.
Signal to watch Strong growth in downloads indicates successful marketing and increasing brand appeal to new users.
Confidence: high
3. Similarweb — Mobile App Analytics
Metric/field Zip - Buy Now, Pay Later (US): Monthly Active Users
Cadence monthly
Why it matters Measures ongoing customer engagement and retention within the app, which is critical for driving repeat transactions and TTV.
Signal to watch Consistent growth in active users indicates strong product stickiness and customer loyalty.
Confidence: high
4. Fitch Ratings — US Consumer ABS Performance Monitor
Metric/field Unsecured Loan Performance Monitor: Annualized Loss Rates
Cadence quarterly
Why it matters Provides an independent, aggregated view of credit performance for unsecured consumer loans in the US, serving as a benchmark for Zip's own credit loss targets and portfolio health.
Signal to watch Rising annualized loss rates across the sector could indicate broader economic stress impacting consumer credit, potentially affecting Zip's credit losses.
Confidence: high
5. YipitData — BNPL Transaction Data
Metric/field US BNPL Market Share (by transaction volume)
Cadence monthly
Why it matters Offers granular, real-time insights into Zip's competitive position and market share within the broader US BNPL landscape, crucial for assessing growth strategies.
Signal to watch Increasing market share indicates successful competitive execution, while declines suggest losing ground to rivals.
Confidence: medium
Search Keywords Brand Product
- Buy Now Pay Later
- BNPL
- Pay-in-Z
- Pay-in-4
- Pay-in-2
- Pay-in-8
- My Bills
- All Access Card
- ZMobile
- Zip Plus
- Pay Anywhere
- Zip Pay
- Zip Money
- digital payments
- financial technology
- fintech
- cash flow management
- consumer credit
- merchant solutions
- AI in finance
- agentic commerce
Search Keywords Event Phrases
- FY26 Results
- Earnings Transcript Zip Co
- Zip Co Share Buyback
- Zip Co Share Consolidation
- Quadpay acquisition
- PartPay acquisition
- What They Do (Plain English & Analogies)
- Zip Co Limited is like a digital financial assistant that helps people and businesses manage their payments. For individual shoppers, it's primarily a 'Buy Now, Pay Later' (BNPL) service. This means you can buy something you need or want right away, whether online or in a store, and then pay for it in smaller, manageable installments over time, often without interest. It's similar to a modern, digital lay-by or a short-term, flexible loan that you get instantly at the point of purchase. For small businesses, Zip also provides financial solutions like unsecured loans and lines of credit. They aim to make payments more flexible and help customers smooth out their cash flow, especially for everyday expenses.
- Very Brief History
- Founded in 2013 as ZipMoney Limited in Sydney, Australia, the company initially offered digital credit options. It was listed on the Australian Securities Exchange (ASX) in 2015 and rebranded to Zip Co Limited in December 2017. Over the years, Zip expanded its global footprint through acquisitions, including New York-based Quadpay Inc. in 2020 and New Zealand's PartPay Limited in 2019, which also had early operations in the UK. The company has since undergone significant rationalization, exiting markets in Europe, the Middle East, and parts of Asia to concentrate on its core regions. In July 2026, Zip Co announced the orderly wind-down of its New Zealand business, effective August 2026, to sharpen its focus on Australia.
- "Street Stereotype"
- Zip Co Limited is generally perceived as a prominent player in the 'New Age Financing' sector, specifically within the Buy Now Pay Later (BNPL) market. Investors and analysts often view it as a growth-oriented company with a focus on expanding its customer base and transaction volumes, particularly in its core markets of the U.S. and Australia. The current sentiment, as per the provided context, leans towards a 'LONG' position, suggesting a bullish outlook on its execution and upside potential, while still acknowledging the need to stress-test downside risks.
- Subsidiaries On Linked In*
- {"subsidiaries":[]}
- Customer Sectors & Example Clients
- Zip's customer base spans various sectors, including retail (both online and in-store), utilities, health, education, auto and transport, home improvement, well-being, groceries, and travel. They primarily serve low- to middle-income Americans who are often underserved by traditional credit. Specific top merchant clients mentioned include Temu, Optimum, Rally House, The Iconic, Samsung, and ALDI Solar. Zip also leverages partnerships with payment platforms like Stripe, Google, Visa, and IXOPAY to expand its merchant network.
- New Customers / Segments They'Re Targeting
- Zip is targeting deeper engagement with its existing customer base by expanding its product offerings beyond traditional BNPL. In the U.S., they are focusing on addressing broader cash flow needs, including bills, income smoothing, and rent, particularly for the 100 million low- to middle-income Americans underserved by traditional credit. They are developing products like the 'All Access Card' for persistent recurring expenses and exploring solutions for rent payments. In ANZ, they are looking to drive active customer growth in core credit products while expanding into new 'capital-light offerings' that broaden their proposition and diversify revenue.
- Sales Geographies And Expansion Plans
- Zip Co Limited currently focuses its operations primarily in Australia (part of the ANZ region) and the United States (Americas region). Historically, the company had a broader global presence, including New Zealand, Canada, Mexico, the UK, and parts of Europe, the Middle East, and Asia. However, it has undergone significant rationalization, exiting several markets to concentrate resources. The New Zealand business is undergoing an orderly wind-down, effective August 16, 2026. The company's immediate plans involve deepening engagement and driving growth within its existing U.S. and Australian markets through product innovation and expanding into new product segments. While there is no explicit mention of expanding into new *geographies* in the FY'26 results or FY'27 outlook, Zip maintains the option to pursue a U.S. dual listing when it is in the best interest of all shareholders.
- How Key Themes May Help/Hurt
- The buildout of Buy Now Pay Later (BNPL) can significantly help Zip by driving continued growth in total transaction volume and customer acquisition as more consumers adopt flexible payment options. Their strategic expansion into everyday, nondiscretionary spend categories and broader cash flow management solutions like bills and income smoothing positions them to capture a larger share of consumer spending, making BNPL a more integrated part of daily financial life. Partnerships with major payment platforms also accelerate merchant growth and embed Zip's services within the broader e-commerce ecosystem. Conversely, the BNPL buildout could hurt Zip through intensified competition, potentially leading to pressure on margins or increased customer acquisition costs. Regulatory scrutiny on BNPL products, particularly concerning consumer protection and lending practices, could impose stricter compliance requirements, impacting profitability or operational flexibility. Additionally, economic downturns or rising interest rates could lead to higher credit losses and increased funding costs, challenging their net transaction margins.
3 Main Long-Term Bull Details
- Consistent Profitability and Scalable Growth: Zip has achieved 12 consecutive quarters of group profitability, with record cash earnings up 58% in FY'26, and is guiding for at least 30% TTV growth in the U.S. and increased operating margins in FY'27. This demonstrates a proven ability to grow profitably and leverage its business model for scale. 2. Diversified Product Innovation and Market Expansion: The company is strategically expanding its product offerings beyond core BNPL to include Pay-in-2, Pay-in-8, and broader cash flow management solutions like 'My Bills' and the 'All Access Card'. This innovation targets a larger addressable market by addressing diverse customer needs, deepening engagement, and increasing customer lifetime value, particularly among underserved consumers. 3. AI-Powered Operations and Strong Funding Platform: Zip is heavily investing in and leveraging AI across all business functions, from automating workflows to accelerating product development, positioning itself as an 'AI-powered company'. Concurrently, it is strengthening its funding platforms, reducing funding costs, and diversifying funding sources, providing a stable and efficient foundation for future growth and capacity expansion.
3 Main Long-Term Bear Details
- Exposure to Credit Risk and Economic Sensitivity: Despite disciplined credit management, Zip's business is inherently exposed to credit risk, especially given its target demographic. Economic downturns, rising unemployment, or increased inflation could lead to higher bad debts and credit losses, impacting profitability, as evidenced by the need to manage losses within a target range. 2. Intense Competition and Regulatory Headwinds: The BNPL sector is highly competitive, with numerous players including Afterpay, Affirm, and Klarna, as well as offerings from traditional financial institutions. This competition can pressure margins and market share. Furthermore, increasing global regulatory scrutiny on BNPL products could lead to stricter compliance requirements, potentially limiting product flexibility or increasing operational costs. 3. Funding Cost Volatility and Capital Structure Management: While Zip has improved its funding costs, the business remains sensitive to interest rate fluctuations, which can impact net transaction margins. Ongoing capital management initiatives, such as share buybacks and proposed share consolidation, while aimed at shareholder value, also highlight the continuous need to optimize its capital structure in a dynamic financial market.
- Competitors And Differentiation
- Zip's primary competitors in the Buy Now Pay Later (BNPL) space include Afterpay (Block Inc.), Affirm, and Klarna. Traditional credit card companies and other short-term lending solutions also represent indirect competition. Zip differentiates itself by focusing on building trust with its target customer base of low- to middle-income individuals who are often underserved by traditional credit. They offer flexibility and choice through their 'Pay-in-Z' platform, which includes Pay-in-2, Pay-in-4, and Pay-in-8 options. A key differentiator is their significant investment in and leverage of AI across operations, customer experience (e.g., virtual agents Zia and Zigi), and product development, positioning them as an 'AI-powered company' for agentic commerce. They also emphasize their proprietary decisioning models, first-party data, and scaled distribution for profitable underwriting, and are expanding beyond traditional BNPL into broader cash flow management solutions like 'My Bills' and the 'All Access Card'.
- Recent Performance & What The Market'S Focused On
- Zip Co Limited delivered strong FY'26 results, exceeding guidance with record group cash earnings up 58% to $269 million and achieving its 12th consecutive quarter of group profitability. Total transaction volume (TTV) grew 27% to $16.7 billion, driven by 42.5% TTV growth in the U.S.. Operating margin expanded to a record 20%. U.S. credit losses declined to 1.67% of TTV in Q4, remaining within their target range. ANZ cash earnings almost doubled. The market is focused on Zip's ability to sustain its strong TTV growth, particularly the guided 'at least 30%' for the U.S. in FY'27, while maintaining disciplined credit performance within its target loss range. Investors are also closely watching the expansion of its 'Pay-in-Z' platform and new product initiatives like 'My Bills' and the 'All Access Card' to deepen customer engagement and diversify revenue streams. The company's continued operating margin expansion, capital management initiatives (including a new AUD 50 million share buyback and proposed share consolidation), and the ongoing strengthening of its funding platforms are also key areas of market attention. The strategic investment in AI and its impact on efficiency and innovation is another significant focus.
- Revenue Segments And Estimated Mix
- United States — Mix: ~67.6%; Source: FY26 revenue of AUD 903.05 million out of total revenue AUD 1,336.1 million; Trend: U.S. revenue increased over 44% to USD 613 million (in local currency), and was the top-performing segment.
- Australia and New Zealand (ANZ) — Mix: ~32.4%; Source: FY26 revenue of AUD 433.05 million (calculated) out of total revenue AUD 1,336.1 million; Trend: ANZ revenue returned to growth, and cash earnings doubled. The New Zealand business is winding down.
- Product Brands
- Zip Pay
- Zip Money
- Zip Plus
- Pay-in-2
- Pay-in-4
- Pay-in-8
- Pay-in-Z
- My Bills
- All Access Card
- Zia
- Zigi
- ZMobile
- ZedAI
- Pay Anywhere
Bull / Bear DetailsZip Co Limited (ZIP.AU) has demonstrated a strong turnaround to sustainable profitability, driven by robust U.S. growth and a revitalized ANZ segment. The compa
Thesis
Zip Co Limited (ZIP.AU) has demonstrated a strong turnaround to sustainable profitability, driven by robust U.S. growth and a revitalized ANZ segment. The company's strategic focus on AI integration, product diversification beyond traditional BNPL (e.g., My Bills, All Access Card), and disciplined capital management positions it for continued expansion and shareholder value creation, despite potential interest rate headwinds. (Updated: 2026-09-07)
Bull case
Zip exceeded its FY26 guidance with record group cash earnings up 58% and expanded operating margins to 20%, marking its 12th consecutive quarter of group profitability. The FY27 outlook projects strong U.S. TTV growth of at least 30% and group cash EBTDA of $340 million, demonstrating consistent financial performance and a clear growth trajectory.
The company is strategically expanding its product offerings beyond core BNPL, including the Pay-in-Z platform (Pay-in-2, Pay-in-4, Pay-in-8), My Bills, and the All Access Card. This diversification aims to address broader customer cash flow needs, deepen engagement, and increase transaction frequency, thereby expanding the addressable market and enhancing customer lifetime value.
Zip is leveraging AI extensively across its operations, from automating workflows and accelerating product development to enhancing customer support. This technological integration, coupled with successful refinancing initiatives in both the U.S. and Australia, is reducing funding costs and improving net transaction margins, supporting scalable growth and operational efficiency.
Bear case
Despite strong credit performance in FY26, the company faces potential macroeconomic headwinds from changes in unemployment, inflation, and interest rate expectations, particularly in the ANZ portfolio. The inherent seasonality of losses, which typically increase from Q4 to Q1, also presents a risk if economic conditions deteriorate, potentially impacting credit quality.
The success of Zip's ambitious product expansion strategy, including new offerings like income smoothing and the All Access Card, hinges on effective execution and significant customer adoption. Failure to seamlessly integrate these new products or to achieve widespread uptake could lead to increased operational complexities, diluted focus, and a slower realization of anticipated growth.
The digital payments and BNPL sector remains highly competitive, with numerous established players and emerging fintechs. While Zip emphasizes trust and product breadth, intense market competition could pressure pricing, margins, and market share. Additionally, evolving regulatory landscapes in key markets could introduce new compliance costs or operational restrictions.
Bull / Bear Case
- Bear Case
- Despite recent profitability, Zip faces significant macroeconomic headwinds, including rising interest rates in Australia and the U.S., which could increase funding costs and pressure credit quality, especially given the inherent seasonality of losses (typically increasing Q4 to Q1). The BNPL sector is highly competitive and maturing, with global growth moderating and increasing regulatory scrutiny pushing for credit-like oversight, potentially leading to higher compliance costs and operational restrictions. The success of Zip's ambitious product expansion strategy, such as the All Access Card and income smoothing, carries execution risk; failure to achieve widespread adoption could dilute focus and slow anticipated growth. While credit performance has been managed, the target demographic's sensitivity to economic shifts and the prevalence of late payments in the broader BNPL market (34-41% in the U.S.) pose ongoing risks to bad debts.
- Bull Case
- Zip Co Limited has demonstrated a strong turnaround, achieving 12 consecutive quarters of group profitability and exceeding FY26 guidance with record cash earnings up 58% to $269 million. The company projects robust FY27 performance, targeting at least 30% U.S. TTV growth and $340 million in group cash EBTDA. Strategic product diversification, including the expanding Pay-in-Z platform (Pay-in-2, Pay-in-4, Pay-in-8), My Bills, and the All Access Card, aims to deepen customer engagement and expand the addressable market beyond traditional BNPL. Extensive AI integration across operations is enhancing efficiency and accelerating product development. Furthermore, successful refinancing initiatives are lowering funding costs, and active capital management, including share buybacks, underscores a commitment to shareholder value. The U.S. market shows strong customer acquisition and engagement, with in-store TTV growing 67% and embedded finance volumes doubling.
- More Compelling & Why
- Bear. Given the current Price-to-Earnings (P/E) ratio of approximately 27x and negative Free Cash Flow, the valuation appears stretched for a credit services company facing a tightening macroeconomic environment. The strongest argument for the bear case is the persistent headwind from rising interest rates in both Australia and the U.S., which directly impacts Zip's funding costs and credit loss provisions, potentially undermining future profitability and growth targets in a maturing, competitive BNPL market. My view would flip to bullish with a sustained decline in global interest rates, coupled with clear evidence of new product diversification significantly reducing reliance on traditional BNPL and consistently generating positive free cash flow.
Key Factors
| Key Factor | Why It Matters | What To Watch | What It Signals | Where/How To Track | Free Alt Data | Paid Alt Data |
|---|---|---|---|---|---|---|
| Adoption and Engagement of New U.S. Products (Pay-in-2, My Bills, All Access Card) | Successful adoption and increased engagement with new products like Pay-in-2, My Bills, and the All Access Card are critical for diversifying Zip's revenue streams, deepening customer relationships, and expanding its total addressable market beyond traditional BNPL in the U.S. | Pay-in-2 TTV mix (was 3% of TTV in Q4 FY26). Percentage of U.S. customers using My Bills (was 50% in FY26). Launch and early uptake metrics of the All Access Card. Transactions per active customer (was 13.1x per annum in FY26). | Bullish if Pay-in-2 TTV mix continues to grow significantly (e.g., >5% in Q1 FY27), My Bills adoption increases (e.g., >60% of customers), All Access Card launches successfully with strong early uptake, and transactions per active customer continue to rise (e.g., >14x). Bearish if these metrics stagnate or decline. | Zip Co Limited's quarterly earnings calls, investor presentations, and potentially specific product updates or press releases. The next update is expected around October 19-22, 2026, for Q1 FY27 results. | Google Trends: Search volume for 'Zip Pay-in-2', 'Zip My Bills', 'Zip All Access Card'. App store reviews and mentions of new features for the Zip app. | Apptopia/Sensor Tower: Feature usage within the Zip app; Earnest Research/Second Measure: Consumer transaction data for spend patterns on new Zip products. |
| U.S. Credit Losses as a Percentage of TTV | This metric is crucial for assessing Zip's risk management capabilities and the underlying health of its loan book in the U.S., directly impacting net transaction margin and overall profitability. Maintaining losses within target demonstrates disciplined underwriting. | U.S. credit losses as a percentage of TTV, reported quarterly. | Bullish if U.S. credit losses remain within the 1.5% to 2.0% target range. Bearish if U.S. credit losses are consistently above 2.0%, indicating deteriorating credit quality or ineffective risk controls. | Zip Co Limited's quarterly earnings reports and investor presentations. The next update is expected around October 19-22, 2026, for Q1 FY27 results. | Federal Reserve Bank of New York: 'Household Debt and Credit Report' for aggregated consumer loan delinquency rates in the US. Federal Reserve: Delinquency Rate on Consumer Loans, All Commercial Banks. | Equifax: Market Pulse reports on U.S. Consumer Credit Trends for detailed delinquency data. FICO: Industry-wide consumer credit scores and delinquency trends. |
| Group Operating Margin Expansion | Operating margin expansion demonstrates the scalability of Zip's business model and its ability to achieve operating leverage as Total Transaction Volume (TTV) grows. This directly translates into increased profitability and shareholder value. | Group operating margin percentage, reported quarterly. | Bullish if Group operating margin is within or above the 20% to 22% target range for FY27. Bearish if Group operating margin is consistently below 20%. | Zip Co Limited's quarterly earnings reports and investor presentations. The next update is expected around October 19-22, 2026, for Q1 FY27 results. | N/A | S&P Global Market Intelligence: Peer company operating margins for comparison within the BNPL and digital payments industry. |
| U.S. Total Transaction Volume (TTV) Growth | U.S. TTV growth is a primary indicator of Zip's expansion in its highest-growth market, directly impacting revenue and overall profitability. Sustained strong growth confirms the company's ability to scale its platform and acquire or engage customers, reinforcing the long thesis. | Quarterly U.S. TTV growth percentage in U.S. dollar terms, as reported in the company's financial results. | Bullish if U.S. TTV growth is at least 30% year-on-year, in line with or exceeding the FY27 guidance. Bearish if U.S. TTV growth is significantly below 30% year-on-year. | Zip Co Limited's quarterly earnings reports and investor presentations. The next update is expected around October 19-22, 2026, for Q1 FY27 results. | Google Trends: 'Zip Pay US' or 'Zip Buy Now Pay Later' search volume; App store rankings for the Zip app in the US. | Apptopia/Sensor Tower: Zip app download and active user trends in the US; Similarweb: Web traffic to Zip's US domain. |
| Group Cash Net Transaction Margin (NTM) | Cash NTM is a core measure of the profitability of each transaction after funding costs and bad debts, reflecting the efficiency of Zip's business model and its ability to generate cash. A stable or expanding NTM indicates strong unit economics despite market conditions. | Group cash NTM percentage, reported quarterly. | Bullish if Group cash NTM is within or above the 3.8% to 4.0% target range. Bearish if Group cash NTM is consistently below 3.8%. | Zip Co Limited's quarterly earnings reports and investor presentations. The next update is expected around October 19-22, 2026, for Q1 FY27 results. | Central bank interest rate announcements (e.g., RBA, Federal Reserve) as funding costs are a key component. | Bloomberg Terminal/Refinitiv Eikon: Interbank lending rates and bond yields relevant to Zip's funding costs. |
Key Reported Metrics, Reratings Triggers & ResultsU.S. Revenue Growth directly reflects the top-line performance of the critical U.S. market, indicating the effectiveness of their monetization strategies and ma
Upcoming print · 2027-02-24
| Key reported metrics | ||
|---|---|---|
| Metric | Last period | Why it matters |
| U.S. Revenue Growth | over 44% | U.S. Revenue Growth directly reflects the top-line performance of the critical U.S. market, indicating the effectiveness of their monetization strategies and market penetration. |
| Group Cash EBTDA Growth | 58% | Group Cash EBTDA demonstrates overall profitability and operational efficiency, a core focus for management after achieving consistent profitability and exceeding guidance. |
| U.S. Total Transaction Volume (TTV) Growth | 42.5% | This metric is a key indicator of the high-growth U.S. business, reflecting successful customer acquisition, engagement, and product expansion, which is a core strategic focus for Zip. |
Key QuestionsWill Zip Co Limited achieve its FY27 U.S. Total Transaction Volume (TTV) growth guidance of at least 30%, and will the expansion of its Pay-in-Z platform and ne
Will Zip Co Limited achieve its FY27 U.S. Total Transaction Volume (TTV) growth guidance of at least 30%, and will the expansion of its Pay-in-Z platform and new offerings like My Bills and the All Access Card drive increased customer engagement and new customer acquisition as expected?
- Question 2
Can Zip Co Limited expand its group operating margin to the guided 20-22% range and maintain its cash Net Transaction Margin (NTM) between 3.8% and 4.0% in FY27, considering ongoing investments in U.S. growth and the impact of funding cost reductions versus potential interest rate rises?
- Question 3
Will Zip Co Limited successfully manage U.S. credit losses within its 1.5% to 2.0% target range amidst new product expansion and typical seasonality, and will its active capital management initiatives, including further share buybacks and the proposed share consolidation, effectively maximize long-term shareholder returns?
Earnings Transcript Summary
· 2026FY Earnings Call
| 3 Things Management Is Most Focused On | Call Takeaway & Tone | Prior Quarter'S Y/Y Growth By Segment | 3 Things Analysts Most Pressed On (And Mgmt Responses) | Revenue Segments |
|---|---|---|---|---|
| 3 Things Management Is Most Focused On1. **Sustainable, Profitable Growth and Operating Leverage:** Management emphasized exceeding FY'26 guidance with record group cash earnings up 58% to $269 million, marking their 12th consecutive quarter of group profitability, and expanding operating margin to a record 20% (up 420 basis points). They highlighted disciplined unit economics and strong credit performance as key drivers. 2. **Investment in AI and Technology for Future Growth and Innovation:** A key focus is the continued evolution as an AI-powered company, embedding AI across people, processes, and products, enhancing core technology platforms, and accelerating development. This includes using AI for workflows, code writing, and customer support (Zia and Zigi). 3. **Expanding Product Proposition and Deepening Customer Engagement (especially in the U.S.):** In the U.S., management is focused on growing the core Pay-in-Z platform, expanding the proposition into additional cash flow needs (e.g., My Bills, income smoothing, All Access Card, rent), and building capabilities for a broader multi-product business. In ANZ, the focus is on strengthening digital wallet relevance, building a recurring spend hub, and launching new capital-light products. | Call Takeaway & ToneThe call conveyed a highly positive and confident tone, highlighting Zip Co's strong financial performance in FY26, which exceeded guidance with record cash earnings and expanded operating margins. Management emphasized the company's successful transformation to sustainable profitability, driven by robust U.S. growth and a return to growth in ANZ. Key themes included leveraging AI and technology for future innovation, expanding product offerings (especially in the U.S. beyond traditional BNPL), and disciplined credit management. The announcement of further share buybacks and a proposed share consolidation underscored a commitment to active capital management and maximizing shareholder value. Management's responses to analyst questions were transparent and detailed, reinforcing their control over key operational and financial metrics. | Prior Quarter'S Y/Y Growth By SegmentFor FY25 (prior fiscal year): Total transaction value (TTV) rose 30.3% to $13.1 billion. U.S. TTV increased 41.6% year-on-year to US$6.0 billion. U.S. revenue grew 46%. ANZ revenue declined 0.9%. Compared to the prior fiscal year (FY25), FY26 saw a deceleration in total TTV growth (27% vs 30.3%), an acceleration in U.S. TTV growth (42.5% vs 41.6%), a slight deceleration or similar U.S. revenue growth (over 44% vs 46%), and an acceleration in ANZ revenue growth (returned to growth vs -0.9%). | 3 Things Analysts Most Pressed On (And Mgmt Responses)1. **U.S. TTV growth guidance for FY27 (at least 30%) and its components/drivers:** Analysts questioned the ability to exceed 30% growth and the implied increase in usage rates. Management responded that the 30% growth is strong, cycling off strong prior-year comparisons, and will be driven by a combination of net new customer growth, higher engagement from existing customers, and the expansion of different Pay-in-Z products (Pay-in-2, Pay-in-4, Pay-in-8). They noted that the U.S. usage rate of 13.1x transactions per annum still has significant runway compared to Australia's over 20x. 2. **U.S. Bad and Doubtful Debts / Loss Rate (1.5% to 2.0% target range) and its implications:** Analysts asked what being within this range allows the company to do for TTV growth and how the range is considered given Pay-in-2's potential for lower bad debts, as well as typical seasonality. Management reiterated that the consistent 1.5% to 2% loss range demonstrates control over losses, allowing them to manage levers for TTV growth and customer acquisition. They confirmed no change to the U.S. overlay and that products are performing as expected, also acknowledging that losses typically increase from Q4 to Q1 due to seasonality. 3. **Cash Net Transaction Margin (NTM) guidance (3.8% to 4.0%) and influencing factors:** Analysts inquired about the puts and takes influencing the flattish margin profile, particularly with the U.S. having a structurally lower margin. Management explained that positive impacts from facility refinancing (especially in the U.S.) are balanced by challenges from base interest rate rises (75bps in Australia, 25bps in U.S.) and stable credit losses within target ranges. The range was narrowed due to another year of performance and potential interest rate movements. | Revenue SegmentsTotal transaction volume (TTV) grew 27% to $16.7 billion. U.S. TTV grew 42.5% to USD 8.6 billion. U.S. revenue increased over 44% to USD 613 million. ANZ revenue returned to growth, and ANZ cash earnings almost doubled. |
Transcript Tidbits
| About Expanding Eligible Market | About Competition | About The Broader Industry | Where Things Are Headed | Updates On Theme | Broader Themes Emerging | Bullish-Leaning Quotes (Short) | Bearish-Leaning Quotes (Short) | Hiring |
|---|---|---|---|---|---|---|---|---|
| About Expanding Eligible MarketZip is expanding its merchant network, with over 97,000 merchants on its platform, including 5,200 added through Stripe integration and enterprise merchants like Temu, Optimum, and Rally House. In-store TTV grew 67% and embedded finance volumes more than doubled. The Pay-in-2 product has seen strong growth, with transactions up 86% quarter-on-quarter in Q4, and the My Bills feature is now available to half of U.S. customers for recurring spend. Zip is expanding into new categories like auto and transport, and health and education, which were its fastest-growing this year. The company is exploring opportunities beyond traditional BNPL, including bills, income smoothing, and rent, with My Bills scaling, income smoothing and the All Access Card in development, and rent in exploration. In ANZ, Zip launched ZMobile, its first capital-light product, and is focusing on driving active customer growth in core credit products while expanding into new capital-light offerings. The All Access Card aims to tap into more recurring expenses and simplify the in-store user experience. | About CompetitionZip aims to position its brand as different from other BNPLs, focusing on trust with a customer base largely distrustful of the financial system. The company's right to win comes from its underwriting experience, first-party data, and scaled distribution. In Australia, Zip's ambition is to be the 'homegrown digital challenger, delivering everyday relevance beyond finance'. | About The Broader IndustryThe broader U.S. consumer backdrop remains resilient with relatively steady unemployment and improving real wage growth. However, many everyday Americans face cash flow timing challenges due to bi-weekly pay and monthly bills, creating opportunities beyond BNPL. The industry is also experiencing a 'higher rate environment', with base interest rate rises of 75 points in Australia and 25 points in the U.S. in the last year, which presents challenges. | Where Things Are HeadedZip is well-positioned for its next phase of growth and innovation, with a focus on active capital management in FY '27, including an additional buyback, proposed share consolidation, and further investment in U.S. growth. The company is evolving as an AI-powered company, embedding AI across people, processes, and products, and enhancing core technology platforms. For FY '27, Zip expects U.S. TTV growth of at least 30%, a group cash NTM range of 3.8% to 4%, an increased operating margin of 20% to 22%, and group cash EBTDA of $340 million, representing approximately 26% year-on-year growth. Strategic priorities include growing the core Pay-in-Z platform, expanding into additional cash flow needs, and building capabilities for a broader multiproduct business. Zip is also considering a U.S. dual listing when it's in the best interest of shareholders. The company expects typical seasonality in loss rates, with losses typically increasing from Q4 to Q1. | Updates On ThemeBuy | Broader Themes EmergingAI, Agentic Commerce | Bullish-Leaning Quotes (Short)We exceeded our FY '26 guidance with record group cash earnings up 58% to $269 million. These results demonstrate Zip's earnings power and mark our 12th consecutive quarter of group profitability. The U.S. had another really strong year, and importantly, we accelerated top line growth off a much larger base. TTV grew 42.5% to USD 8.6 billion, while revenue increased over 44% to USD 613 million. 2026 was a step change for ANZ, a year of stronger performance, renewed growth and significantly improved profitability. We expect our high-growth U.S. business to deliver very strong TTV growth of at least 30%. We expect to deliver group cash EBTDA of $340 million in FY '27, representing material growth of approximately 26% year-on-year. | Bearish-Leaning Quotes (Short)In the ANZ portfolio, in the last quarter, we've had some changes to unemployment, inflation and interest rate expectations. Base interest rate rises... That probably challenges a little bit. We recently announced the orderly wind-down of the New Zealand business. Typically, yes, losses do go up Q4 into Q1. | HiringEvery Zipster now actively uses enterprise AI tools, helping to automate workflows across almost every area of the business, including merchant onboarding, customer experience and collections. AI assists around 86% of code written by our U.S. technology teams and 57% in Australia, accelerating development and speed to market. AI-powered virtual agents, Zia and Zigi, have enhanced customer support, and AI agents have been deployed across merchant onboarding, co-creation, fraud collections, and underwriting. The company recognized and thanked its New Zealand 'Zipsters' for their contribution following the wind-down of the New Zealand business. |
Upcoming Events
| Catalyst ID | Estimated Timing | Estimated Date Start | Estimated Date End | Catalyst | Why It Matters | Ticker Or Theme Specific | Transcript Date | Source Type |
|---|---|---|---|---|---|---|---|---|
| ZIP.AU_b19fe4b2 | AGM in November | 2026-11-18 | 2026-11-18 | Shareholder approval for a proposed share consolidation at Zip's Annual General Meeting. | A share consolidation would bring Zip's share count to a level more appropriate for its market size and position, potentially improving per-share metrics and market perception. | Ticker | 2026-08-19 | earnings_transcript |
| ZIP.AU_bca6bdb7 | in a couple of weeks / in about a month or so | 2026-09-02 | 2026-09-19 | Release of the notice of meeting with details regarding the proposed share consolidation. | This will provide specific details on the proposed share consolidation, allowing investors to understand the exact terms and potential impact before the AGM vote. | Ticker | 2026-08-19 | earnings_transcript |