The Zip Co Ltd (ASX: ZIP) share price delivered a stronger performance than the ASX 200 (ASX: XJO) in 2025.
In a year when ASX growth shares were volatile, Zip managed to deliver a positive year for shareholders, rising by around 11% for the year. That compares to a return of 6.25% for the index.
However, it should also be noted that the Zip share price has dropped by around a third since October 2025, so its return was shaping up to be incredibly high until the second half of October onwards.
Strong FY25 result
The market responded very positively to the company’s FY25 report, sending the valuation closer to its 52-week high.
In that result, the company reported total transaction value (TTV) – the value of goods and services that the buy now, pay later company helped consumers fund – grew 30.3% year on year to $13.1 billion.
Zip’s total income grew 23.5% to $1.08 billion, with cash gross profit growing 34% to $509 million. Active customers grew 4.6% to 6.3 million, while the number of merchants increased 7.9% to 85,500.
On the profit side of things, cash EBTDA (that’s EBITDA but including interest) rose 147% to $170.3 million, with the EBTDA margin improving to 15.8%, up from 7.9% in FY24.
The cash transaction margin increased to 3.9%, up from 3.8% in FY24. Net bad debt was 1.5% of TTV, an improvement from 1.7% of TTV in FY24.
That was all well and good for the Zip share price, but the FY26 first quarter was not as strong as the market hoped.
FY26 first quarter
It was still a strong three months to September 2025 for Zip.
The company said that its quarterly TTV grew 38.7% to $3.9 billion and total income increased 32.8% to $321.5 million. The revenue margin declined to 8.2%, reflecting a larger contribution from the US (which has a lower margin).
Cash EBTDA grew 98.1% to $62.8 million, with the margin improving to 19.5%. The cash net transaction margin increased to 4% (up from 3.9%). Net bad debts were 1.6% of TTV, the same as the first quarter of FY25.
Customer numbers increased 5.3% to 6.4 million and merchants jumped 9.1% to 87,500.
Is the Zip share price attractive?
The business continues to grow cash profit at a very strong pace, so if it can keep that up, without seeing net bad debts rising noticeably, then it could be appealing for investors that want a piece of this buy now, pay later company.
Time will tell whether the buy now, pay later sector can continue growing profitably, but Zip is doing all the right things to grow value for shareholders.
It’s not one of the first ASX growth shares I’d buy for my own portfolio, but it could be a long-term winner.
