The Zip Co Ltd (ASX: ZIP) share price has plunged 30% after the ASX buy now, pay later business announced its HY26 result.
Zip is one of the largest buy now, pay later businesses in Australia, New Zealand and the US.
Zip HY26 result
Here are the highlights from the report for the six months to 31 December 2025:
- Total transaction value (TTV) grew 34.1% to $8.4 billion
- Total income increased 29.2% to $664 million
- Cash gross profit rose 33.5% to $314.3 million
- Cash EBTDA (EBITDA explained) climbed 85.6% to $124.3 million
- Net profit from continuing operations jumped 128% to $52.4 million
What happened during this period?
The buy now, pay later business reported that its number of active customers increased by 4.1% to 6.6 million, while the number of merchants on the Zip platform increased by 10.5% to 90,600.
Those numbers show that the existing client base was a key driver of the company’s large TTV growth. The number of transactions increased 20.2% to 54.9 million.
The revenue margin declined to 7.9%, down from 8.2% in HY25, due to a higher US contribution which now represents 75% of TTV.
US revenue grew by 47% to $445 million on 44.7% TTV growth to $6.3 billion. ANZ revenue increased 3.1% to $213 million with 9.7% TTV growth to $2.07 billion.
However, while US active customers increased 9.7% to 4.63 million, ANZ active customers declined by 7.1% to 1.97 million, which is a significant negative for the business. Could that happen in the US eventually too?
Zip’s net bad debt increased to 1.7% of TTV, up from 1.6% in HY25. This was in line with management targets and strategic settings.
Its cash net transaction margin is 3.8%, the same as HY25.
Potential US listing
The business noted that it’s continuing to consider a dual listing on the US stock exchange after submitting a draft registration to the US Securities and Exchange Commission in November 2025.
It said it will continue to monitor market conditions and will only consider carrying out a dual listing when it’s in the best interests of Zip share owners.
Zip’s CEO and Managing Director Cynthia Scott intends to relocate to the US in the second half of 2026 as it looks ahead to the future growth opportunity. It notes that the US is the primary earnings driver and will “enable closer engagement with key US stakeholders”.
Outlook for the Zip share price
The buy now, pay later business said it has seen a strong start to the year and an acceleration of momentum.
It’s expecting to see US TTV growth of more than 40% (in US dollars), while balancing profitability and the credit loss performance. US TTV in January 2026 grew more than 40%.
Zip is also expecting a group revenue margin of around 8% and a group cash net transaction margin of between 3.8% to 4.2%.
It also upgraded its expected group operating margin for HY26 to be greater than 18%, up from between 16% to 19%.
The group cash EBTDA as a percentage of TTV is now expected to be greater than 1.4%, which was previously expected to be larger than 1.3%.
Cash EBTDA in the second half of FY26 is expected to be “broadly in line” with the first half’s cash EBTDA.
Overall, the company is on a promising track and the ongoing profitability suggests that its bottom line could continue to grow from here. I’ll be keeping an eye on customer growth numbers across its two key regions.
I’m not sure how large the business could become, but it could now be undervalued if it continues growing at this pace for the foreseeable future, as long as customers are able to continue repaying the amounts they are meant to.
It’s one of the ASX growth shares to watch, though not one I’m looking to buy for my own portfolio.
