Zip Details 40%+ US Growth in April as Credit Losses Track Below 1.75% Target
Zip maintains momentum with April US growth above 40%
In its Macquarie Group Conference presentation delivered on 7 May 2026, Zip Co reported continued strong performance across both operating divisions, with April trading data confirming momentum from the third quarter has carried forward. The buy now, pay later (BNPL) provider’s US business recorded year-on-year transaction volume growth above 40% in April (measured in USD), while credit losses in the division are tracking to management’s target of less than 1.75% of transaction volume for the fourth quarter ending June 2026. The company reconfirmed all FY26 guidance metrics, including Group cash EBTDA of greater than $260 million.
The April update provides investors with visibility between the March quarter results and the upcoming full-year announcement. Management’s decision to reaffirm guidance following the April trading period indicates confidence in the business trajectory heading into the final quarter of FY26.
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What is cash EBTDA and why it matters for BNPL investors
Cash EBTDA (earnings before tax, depreciation and amortisation) measures operating profitability by excluding non-cash accounting items and capital structure decisions. For BNPL companies, this metric strips out the accounting treatment of loan originations and bad debt provisioning, which can distort traditional profit measures due to the timing differences between when loans are originated and when losses crystallise.
The metric matters for Zip because the company’s business model is capital-intensive at the point of customer acquisition but becomes increasingly efficient at scale. As the platform grows, fixed costs spread across a larger volume base, merchant payment processing becomes more efficient, and underwriting models improve with additional data. This operating leverage means revenue can grow modestly while profitability expands significantly — a dynamic visible in Zip’s recent results where cash EBTDA growth has consistently outpaced transaction volume growth.
For investors, cash EBTDA progression indicates whether the business is moving towards sustainable free cash flow generation, which ultimately determines the company’s ability to fund growth internally rather than relying on external capital.
3Q26 performance demonstrates operating leverage
Zip’s third quarter results spanning January to March 2026 showcased the scalability of its platform, with cash EBTDA expanding 41.5% year-on-year while transaction volume grew 22.4% — demonstrating that profitability is accelerating faster than top-line growth. The company processed 27.4 million transactions during the quarter across a merchant network of 93,900 partners, serving an active customer base of 6.5 million.
| Metric | 3Q25 | 3Q26 | YoY Growth |
|---|---|---|---|
| TTV | $3.3b | $4.0b | +22.4% |
| Total income | $278.9m | $335.2m | +20.2% |
| Cash EBTDA | $46.0m | $65.1m | +41.5% |
| Transactions | 22.8m | 27.4m | +20.3% |
The divergence between revenue growth (20.2%) and cash EBTDA growth (41.5%) illustrates the company’s operating leverage thesis in action. As the platform scales, incremental revenue drops more efficiently to the bottom line due to lower marginal costs for customer servicing, technology infrastructure, and risk management. This margin expansion is occurring across both divisions, though the drivers differ between the high-growth US market and the mature ANZ business.
The active customer base grew modestly at 3.5% year-on-year, indicating the company is focusing on deepening engagement with existing customers rather than pursuing aggressive customer acquisition. Transaction growth of 20.3% outpacing customer growth suggests rising average transaction frequency across the platform.
US division executing in early-stage market
Zip’s US business represents approximately 75% of divisional transaction volume and continues to deliver strong growth, with third quarter volume expanding 43% year-on-year. The division serves 4.6 million active customers and has processed a cumulative US$25 billion across 192 million transactions since launch, generating annual transaction volume of A$12.0 billion.
Management positions the target customer segment as “underestimated Americans” — financially responsible consumers who have been overlooked by traditional credit providers due to thin credit files or non-prime FICO scores. The presentation outlined customer trust metrics that support this positioning, with Zip ranking as the #2 most trustworthy brand and #1 for responsible lending among BNPL peers, according to external research conducted by YouGov in January 2026. The company reported a customer net promoter score of +73 for the quarter.
The US underwriting capability represents a key competitive differentiator. Zip’s AI-driven credit models leverage 1.4 billion unique data points sourced from over 13 million first-party customer records, incorporating 2,800 behavioural features from internal and third-party data. This allows the company to assess creditworthiness for customer segments that traditional FICO-based models may decline or misprice.
Recent spending patterns across the US customer base indicate:
- Automotive, transport and fuel are the fastest-growing categories
- Everyday spend including groceries and utilities is growing strongly
- Restaurants and dining remain resilient despite broader economic pressures
- All customer age cohorts are growing, with middle-age cohorts contributing the majority of spend
The US represents both the primary growth opportunity and the key execution risk for Zip investors. Credit outcomes tracking to management’s target of less than 1.75% of transaction volume for Q4 2026 validates the underwriting model’s ability to profitably serve this customer segment at scale. Net bad debts written off reached 1.86% of transaction volume in Q3 2026, with management forecasting Q4 2026 losses below the 1.75% threshold.
ANZ delivers stable yield with expanding excess spread
The Australia and New Zealand division represents approximately 25% of divisional transaction volume and functions as the mature, profitable anchor of the group. With 1.9 million active customers — representing roughly 10% of the Australian adult population — and a merchant network of 64,900 partners, the division generates annual transaction volume of A$4.0 billion.
The key profitability metric for the ANZ business is excess spread, which expanded from 6.9% in Q1 2025 to 9.1% in Q3 2026, even as yield compressed modestly from 19.2% to 18.5% over the same period. Excess spread measures the difference between the interest rate charged to customers and the cost of funding plus expected losses, indicating the division’s ability to generate profit margin on its lending book.
The expansion in excess spread despite yield compression suggests improving credit performance and funding efficiency. Lower bad debt rates and reduced funding costs have more than offset the impact of competitive pressure on customer pricing. This dynamic is commercially significant because it demonstrates the ANZ business can maintain profitability even if pricing competition intensifies further.
ZMobile extends customer value proposition
The presentation highlighted ZMobile, Zip’s mobile telecommunications offering powered by TPG Telecom, as a capital-light diversification initiative. The subscription-based service provides value-packed mobile plans through a simplified four-click sign-up experience managed within the Zip app, with early and discounted access for existing customers.
For Zip, ZMobile represents an additional recurring revenue stream with strong unit economics that strengthens customer engagement beyond the core payments product. The capital-light model contrasts with the company’s lending activities, as Zip does not need to fund the mobile services directly. The strategic benefit lies in deepening the customer relationship and creating a broader financial services platform that addresses multiple spending and cash flow management needs.
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FY26 guidance reconfirmed
Following the April trading update, Zip reconfirmed all FY26 guidance metrics previously issued to the market. The company expects to deliver Group cash EBTDA greater than $260 million, US transaction volume growth above 40% (in USD terms), and Group operating margin above 18.0%.
| Metric | FY26 Guidance |
|---|---|
| Group cash EBTDA | >$260m |
| US TTV growth (USD) | >40% |
| Group operating margin | >18.0% |
| Group revenue margin | ~8% |
| Group cash EBTDA as % of TTV | >1.4% |
| Group cash net transaction margin | 3.8 – 4.2% |
Management provided currency context for the cash EBTDA guidance, noting that the $260 million target equates to $271 million when adjusted to FY25’s average foreign exchange rate of 1 AUD = 0.645 USD. The company has executed foreign exchange hedges for the second half of FY26 at a rate of 1 AUD = 0.69 USD, providing some protection against currency volatility given the US business represents the majority of group earnings.
The reconfirmation of guidance following April’s strong trading performance provides investors with increased confidence in full-year delivery. With one quarter remaining, the company appears positioned to meet or exceed the stated targets, particularly given US growth tracking above 40% and credit losses on track for less than 1.75% of transaction volume in Q4 2026.
Zip’s dual focus continues to centre on executing high-growth strategy in the US market while maintaining profitability expansion in the mature ANZ business. The presentation data confirms the operating leverage thesis is playing out as management projected, with cash EBTDA growth consistently outpacing revenue growth. For investors, the key validation remains the US division’s ability to maintain credit quality while scaling volume — a dynamic the April update suggests is tracking to plan.
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