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Buy-now-pay-later provider Zip Co (ASX: ZIP) has delivered record quarterly cash earnings of $65.1 million for the three months to March 2026, up 41.5 per cent year-on-year, leading the company to upgrade its full-year guidance as surging US growth continues to underpin its profitability trajectory.
The company now expects group cash EBTDA of no less than $260 million for FY26, or no less than $271 million on a constant-currency basis.
The upgraded guidance represents a material step-up from the outlook provided at Zip's half-year results in February, when management said second-half cash EBTDA would be broadly in line with the $124.3 million posted in the first half.
Total transaction volume (TTV) for the quarter hit $4 billion, up 22.4 per cent on the prior corresponding period, with the US business accelerating to 43.1 per cent TTV growth in US-dollar terms to reach US$2.12 billion.
US revenue climbed 43.3 per cent to US$155.5 million over the same period.
Non-discretionary spend categories such as groceries and utilities contributed significantly to US growth which Zip says reflects the company's "value proposition for low-to-middle income Americans".
Group revenue rose 20.2 per cent year-on-year to $332.2 million for the quarter, while operating margin expanded to 19.4 per cent from 16.5 per cent in the third quarter of FY25.
“Zip’s resilient business model continues to drive increased profitability at scale," says Zip Co CEO Cynthia Scott.
"Momentum continued across both markets, underpinned by deepened customer engagement and disciplined execution."
The US market now accounts for the lion's share of Zip's growth engine.
The 43.1 per cent US TTV growth in local-currency terms outpaced the group average by a wide margin, with Zip's American business also delivering an operating margin of 22.3 per cent for the quarter.
Group net bad debts rose to 1.93 per cent of TTV, up from 1.64 per cent in the prior corresponding period, though management notes that US net bad debts held steady at 1.86 per cent on a quarter-on-quarter basis.
Zip expects US net bad debts to decline below 1.75 per cent in the fourth quarter of FY26, underpinning its confidence in credit quality.
Zip's active customer base stood at 6.5 million across 93,900 merchants at the end of the quarter.
The company's Australia and New Zealand segment saw active customers decline 7.4 per cent year-on-year, although management has emphasised its focus on retaining "highly-engaged customers" rather than pursuing volume growth in the mature domestic market.
The results come after Zip began a $50 million on-market share buyback in March, having already completed a prior $100 million buyback in December 2025.
As at the end of the quarter, Zip had purchased 13.8 million shares at a cost of $21 million under the new program.
The company earlier this month also announced ZMobile, a capital-light mobile plans offering in Australia designed to extend its product ecosystem beyond payments.
Available cash and liquidity stood at $234.8 million at the end of the quarter.
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