This article first appeared on GuruFocus .
-
Cash Earnings (Group):Record group cash earnings increased 58% to $269 million.
-
Total Transaction Volume (TTV):Grew 27% to $16.7 billion.
-
Operating Margin:Reached a record 20%, with 420 basis points of operating margin expansion.
-
Statutory Net Profit After Tax:Increased 46% to $116 million.
-
Cash Gross Profit:Increased 26% to $642 million.
-
Cash Net Transaction Margin:Maintained at 3.9%.
-
Interest Expense:Improved 34 basis points to 1.3% of TTV.
-
US TTV:Grew 42.5% to $8.6 billion.
-
US Revenue:Increased over 44% to $613 million.
-
US Cash Earnings:Grew 51% to USD155 million.
-
US Operating Margin:Reached 25%.
-
US Credit Losses:Declined to 1.67% of TTV in the fourth quarter.
-
ANZ Cash Earnings:Almost doubled, with operating margin expanding by more than 750 basis points.
-
FY27 Group Cash EBITDA Guidance:Expected to reach $340 million, representing growth of approximately 26% year on year.
-
FY27 Operating Margin Guidance:Expected to be in the range of 20% to 22%.
Release Date: August 20, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
-
Record group cash earnings up 58% to $269 million, exceeding FY26 guidance and marking the 12th consecutive quarter of group profitability.
-
US TTV grew 42.5% to $8.6 billion with revenue up over 44%, while cash earnings grew 51% to USD155 million and operating margin reached 25%.
-
ANZ cash earnings almost doubled, with operating margin expansion of more than 750 basis points and a return to revenue and Australian receivables growth.
-
Group operating margin expanded by 420 basis points to a record 20%, demonstrating strong operating leverage and scalability.
-
US credit losses declined to 1.67% of TTV in Q4, within the target range, while maintaining strong customer repayment behavior.
-
Funding costs improved, with a new US warehouse facility at materially lower margins and refinancing of over $2.5 billion of Australian receivables at improved margins.
-
Strong customer engagement metrics: US transactions per active customer up 23% to 13.1 times per annum, and ANZ transaction and spend per customer grew 17% and 15% respectively.
-
AI integration across the business, with AI assisting 86% of code written by US tech teams and 57% in Australia, enhancing efficiency and speed to market.
-
Capital management initiatives include an additional AUD50 million buyback and a proposed share consolidation, alongside a strong balance sheet with available cash and liquidity of $247 million.
-
FY27 guidance expects group cash EBITDA of $340 million, representing ~26% growth, with US TTV growth of at least 30%.
Negative Points
-
US TTV growth slowed in Q4 due to product mix and customer acquisition levels, though still strong for the year.
-
Base interest rate rises in Australia (75 basis points) and the US (25 basis points) could pressure net transaction margins.
-
ANZ macro overlay increased in the last quarter due to changes in unemployment, inflation, and interest rate expectations, potentially impacting provisions.
-
The wind down of the New Zealand business reflects a strategic focus on Australia, which may limit geographic diversification.
-
The company faces seasonality in US credit losses, with losses expected to rise from Q4 into Q1, which could cause market concern.
-
The share consolidation is subject to board and shareholder approval, adding uncertainty to capital management plans.
-
The US refinancing to a rated ABS transaction is still in progress, with pricing not yet finalized, creating some uncertainty in funding costs.
-
The company's guidance for US TTV growth of at least 30% is subject to market conditions, and July growth was above 30%, but there is no guarantee of sustained performance.
-
The cash NTM margin guidance of 3.8% to 4% is narrower than before, reflecting potential challenges from interest rate rises and credit losses.
-
The company is prioritizing additional investment in the US, which could increase expenses and impact near-term profitability if not managed carefully.
Q & A Highlights
Q: Can you provide more color on the FY27 outlook, specifically the drivers behind the US TTV growth guidance of at least 30% and the group's cash EBITDA target of $340 million? A: Cynthia Scott (Group CEO and Managing Director) confirmed the company expects US TTV growth of at least 30% in US dollar terms, driven by a combination of net new customer growth, higher engagement from existing customers, and the expansion of products like Pay-in-2, Pay-in-4, and Pay-in-8. She noted that the guidance is strong, especially given they are cycling off very strong comparables from the prior year. For the group, they expect to deliver cash EBITDA of $340 million in FY27, representing material growth of approximately 26% year-on-year, underpinned by a cash NTM range of 3.8% to 4% and an increased operating margin of 20% to 22%.
Q: What are the key puts and takes influencing the group's cash NTM margin guidance of 3.8% to 4% for FY27? A: Gordon Bell (Group CFO) explained that there are several positive and negative factors. Positively, the refinancing of facilities, particularly the new US rated ABS transaction, will lower funding costs. Negatively, base interest rate rises (75 basis points in Australia and 25 in the US) will challenge the margin. Credit losses are expected to remain steady within the US target range of 1.5% to 2%. He noted the range was narrowed due to another year of strong performance and the potential for further interest rate rises.
Q: Can you elaborate on the new product initiatives in the US, particularly the "All Access Card" and how it differs from the existing "Pay Anywhere" offering? A: Joseph Heck (US CEO) explained that the "Pay Anywhere" offering is a one-time use card with a loaded balance, usable at any merchant. The "All Access Card" will provide a persistent card number, enabling the company to tap into recurring expenses and simplifying the in-store user experience. This is part of the strategy to deepen engagement and expand into additional cash flow needs like bills and income smoothing.
Q: Regarding the US credit loss rate, should we expect a similar seasonal curve in FY27 as seen in FY26? A: Cynthia Scott (Group CEO and Managing Director) confirmed that the typical seasonality pattern is expected to continue, with losses generally increasing from Q4 into Q1. She acknowledged that this seasonality was harder to see in FY26 but expects the usual pattern to hold in FY27, which should help the market anticipate quarterly fluctuations.
Q: What is the status of the new US ABS transaction and what are the expected benefits? A: Gordon Bell (Group CFO) stated that the company has mandated underwriters for a new rated ABS transaction in the US, which will refinance the existing US$300 million warehouse. The deal has been rated by Fitch, with the AAA tranche being the majority of the issuance. He noted that the spread contraction on this deal could be around 300 basis points, similar to the journey seen in Australia, and will provide more color once the deal is priced and closed in the coming days.
Q: How is the company thinking about new customer acquisition in the US, and what has been the reception to the recent marketing campaigns? A: Cynthia Scott (Group CEO and Managing Director) indicated that while not formally guiding, management targets for US customer growth are in the high single-digit to circa 10% area, similar to last year. Joseph Heck (US CEO) added that the national brand campaign, which focuses on trust and cash flow smoothing, has been extremely well received, contributing to strong Q4 results in both TTV and customer growth.
Q: Can you provide more details on the proposed share consolidation and the additional AUD50 million on-market share buyback? A: Cynthia Scott (Group CEO and Managing Director) stated that more details on the share consolidation will be available in the notice of meeting, which will be sent out in a couple of weeks ahead of the AGM in November. Gordon Bell (Group CFO) added that the company has provided notice for an on-market share buyback of up to AUD50 million, and will continue to fund repurchases to offset equity incentive plan allocations.
Q: How is the company balancing the additional investment in the US with its operating margin guidance? A: Cynthia Scott (Group CEO and Managing Director) clarified that the additional investment in the US is within the envelope that will deliver the $340 million cash EBITDA guidance. Gordon Bell (Group CFO) added that the company takes an iterative approach to investment, ramping up where there is strong conviction and customer feedback, and there is no change to the core capitalization approach, which was roughly $20 million to $23 million in FY26.
Q: What is the current status of the Pay-in-2 product, and how is it impacting customer engagement and acquisition? A: Cynthia Scott (Group CEO and Managing Director) noted that Pay-in-2 is still early in its evolution, representing 1% of TTV across the year but 3% in Q4. Joseph Heck (US CEO) added that while it is not currently used specifically for customer acquisition, it is expected to be leveraged that way as more experience is gained. The product is seen as crucial for scaling recurring expenses like "My Bills" and deepening overall engagement.
Q: Can you provide an update on the ANZ business performance and its strategic focus? A: Soraya Alali (ANZ CEO) highlighted that FY26 was a step change for ANZ, with cash earnings almost doubling and operating margin expanding by more than 750 basis points. The business returned revenue and Australian receivables to growth. She also mentioned the orderly wind down of the New Zealand business to focus on investing in the Australian market, and the launch of ZMobile, the first capital-light product, which creates new opportunities to deepen customer relationships.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
