Ann: 3Q FY26 Results Update, page-2

Here is a 2c from AI:

The headline: guidance upgrade fixes the February problem

The single biggest catalyst for the 33-38% crash on 19 Feb was the "broadly in line" 2H cash EBTDA commentary. Today they've replaced that with a hard upgrade to ≥$260.0m (previously implied ~$248.6m from "broadly in line with 1H26 of $124.3m"). On a constant currency basis, ≥$271.0m. That's a materially different tone and should be the primary driver of sentiment today.

3Q26 vs 3Q25 — the scorecard

	Metric	3Q26	3Q25	Change	Verdict
Cash EBTDA	$65.1m	$46.0m	+41.5%	Record quarter
Operating margin	19.4%	16.5%	+292bps	Above >18% guide
US TTV (USD)	US$2,122.7m	US$1,483.7m	+43.1%	Above >40% guide
Revenue margin	8.4%	8.6%	-20bps	Still above ~8% guide
Cash NTM	3.9%	3.9%	Flat	Mid-range of 3.8-4.2%
Group net bad debts	1.93%	1.64%	+29bps	The bear case number
US net bad debts	1.86%	1.36%	+50bps	But steady QoQ and within 1.5-2.0% target
Active customers	6.5m	6.25m	+3.5%	US +9.0%, ANZ -7.4%
Merchants	93.9k	83.3k	+12.7%	Strong

What's genuinely good

The operating leverage story is accelerating. Cash EBTDA grew 41.5% on only 20.2% revenue growth — that's real margin expansion, not volume-driven. Operating margin at 19.4% is above the upgraded >18% target and up from 16.5% pcp. US TTV growth at 43.1% in USD has actually reaccelerated from 40.2% in 3Q25 — that's counter to the deceleration narrative the bears were pushing in February. US active customers at 4.6m (+9.0% YoY, +375k) beat the 4.63m that disappointed at the half. Merchants +17.9% in the US is a strong sign of platform adoption through Stripe.

The forward credit guidance is also constructive — they're forecasting US losses to decline below 1.75% of TTV in 4Q26, which if delivered would show the credit cycle turning in their favour.

What's not great

Group net bad debts at 1.93% of TTV is the highest level on the chart and up meaningfully from 1.64% a year ago. In absolute USD terms, US net bad debts written off were US$39.4m vs US$20.1m pcp — nearly doubled. They've contextualised this as Pay-in-8 seasoning (now ~19% of TTV) with losses having peaked and trending down, but the optics are poor year-on-year. ANZ active customers continuing to decline (-7.4% YoY) is a structural concern, though the business is pivoting to engagement depth over breadth (spend per customer +18.2%, transactions per customer +19.4%). Revenue margin compression continues — 8.4% vs 8.6% — as US mix increases. That's structural and expected, but it means the revenue line grows slower than TTV indefinitely.