Zip Co stock holds FY27 guidance as US fraud hits earnings

Zip Co reaffirmed its fiscal 2027 cash EBTDA guidance after an external fraud event in the United States raised operating costs and pushed US bad debts higher. Morningstar reported the assessment on Friday, October 30, 2026, while noting that the underlying growth trend remains intact.

The company is still targeting AUD 340 million in fiscal 2027 cash EBTDA. First-quarter cash EBTDA rose 3% to AUD 65 million, although the result would have been nearly 20% higher without AUD 10 million of fraud costs, according to Morningstar.

US Growth Meets Higher Credit Risk

The fraud involved coordinated individuals who used legitimate credentials to open accounts and execute transactions that were not repaid. Zip tightened controls in response, which slowed US transaction volumes and customer additions during July and August.

Morningstar said transaction volume growth recovered to 41% in September and continued into October. US bad debts reached 1.93% of transaction value, at the upper end of Zip's 1.5% to 2.0% target range. The company expects the ratio to decline in the second quarter.

Morningstar maintained its AUD 3.50 fair value estimate and described Zip's shares as materially undervalued, while also identifying fraud, credit performance, funding costs and regulation as risks to the investment case. The assessment is an analyst view rather than company guidance.

Zip Co stock traded at 1.13 euros on Lang & Schwarz at 18:38 CET on Friday, October 30, 2026. Investors can follow the real-time quote of Zip Co stock.

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Morningstar published the analysis on October 30, 2026.