Zip Co Limited (ASX: ZIP), Australia’s buy now, pay later giant, just delivered its strongest-ever half-year result, record earnings, upgraded guidance, and double-digit volume growth across two continents. And the market’s response? A brutal 33% sell-off that wiped out months of gains in a single session.
It’s the kind of reaction that makes you do a double-take. But as any seasoned market watcher knows, the numbers themselves only tell part of the story.
Record Results Across Almost Every Metric
For the six months ended 31st December 2025, Zip delivered a result that, on paper, is genuinely impressive. Cash earnings before tax, depreciation and amortisation (EBTDA) hit AUD 124.3 million , an 85.6% jump on the prior corresponding period and a new record for the company.
Group total transaction volume (TTV) climbed 34.1% to AUD 8.4 billion, while total income reached AUD 664.0 million, up 29.2%. Cash gross profit grew 33.5% to AUD 314.3 million. Operating margin expanded sharply from 13.0% to 18.7% , a 569-basis-point improvement that reflects genuine operating leverage taking hold.
Key highlights at a glance:
- Cash EBTDA: AUD 124.3M, up 85.6% year on year
- Total transaction volume: AUD 8.4B, up 34.1%
- Total income: AUD 664.0M, up 29.2%
- Statutory NPAT: AUD 52.4M, up 128% year on year
- Active customers:6 million, up 4.1%
- Merchants on platform: 90,600, up 10.5%
- Net bad debts:73% of TTV, in line with management targets
 
Zip Co 1H FY26 Key Financial Metrics [Zip Co]
The US Engine Is Firing Hard
The United States business is increasingly the story within the story. US TTV surged 44.7% in AUD terms to AUD 6.3 billion and now accounts for 75% of group TTV. In USD terms, revenue grew 46.4% to USD 292.0 million.
Active US customers rose 9.7% to 4.6 million, and spend per customer jumped 31.0%. In-store transactions, a key engagement indicator, grew 69% year on year and now represent 25% of US TTV. Zip added big-name merchants, including Temu, JD Sports and GOAT Group, during the period, while the Stripe partnership added over 1,400 merchants since going live in August 2025.
CEO and Managing Director Cynthia Scott described the half as one of sustained momentum, noting the US delivered the single largest day and month of transaction volumes in Zip US history, driven by a strong holiday trading season.
ANZ Makes a Quiet Comeback
The Australia and New Zealand segment is no longer the drag it once appeared to be. ANZ TTV grew 9.7% to AUD 2.1 billion, while Australian receivables returned to growth, a development management flagged as significant. Cash earnings in ANZ surged 138.0% year on year to AUD 30.5 million, underpinned by the rollout of Zip Plus and improved funding costs.
ANZ active customers dipped 7.1% to 1.97 million, a figure worth watching, though the business added over 6,000 merchants across targeted verticals. Net bad debts in Australia hit their lowest level since FY23.
FY26 Guidance Gets a Lift
Management took the opportunity to upgrade two key FY26 targets:
- Group operating margin: upgraded to greater than 18.0% (previously guided at 16.0%–19.0%)
- Group cash EBTDA as a % of TTV: lifted to greater than 1.4% (previously greater than 1.3%)
The company reconfirmed US TTV growth above 40% in USD, group revenue margin around 8%, and group cash net transaction margin between 3.8% and 4.2%.
The kicker, and arguably the most important sentence in the entire announcement, was this: Zip expects second-half FY26 group cash EBTDA to be broadly in line with the first half.
In market parlance, that means no sequential growth. For a stock that had run more than 180% in the six months prior to the result, flat is a four-letter word.
Why Did the ZIP Share Price Sell Off So Hard?
The ZIP share price entered the results day at around AUD 2.82 per share. By mid-morning, it was trading near AUD 1.90, a fall of around 33% and the sharpest single-session drop for the stock since 2014.
The answer lies in investor expectation, not company performance. Going into results, ZIP had surged on the back of strong quarterly updates and positive broker sentiment. The market was priced for acceleration, not consolidation.
What rattled sentiment were a few specific data points:
- Revenue margin slipped to 7.9% from 8.2%, as the higher-growth but lower-margin US business now dominates the mix
- US cash net transaction margin fell to 3.4% from 3.7%, raising questions about unit economics at scale
- The 2H guidance of broadly in line cash EBTDA meant no sequential earnings growth, a signal investors read as a plateau, not a launch pad
To be clear, none of these is an existential concern. But for a stock priced at a significant premium to earnings, any hint of a slowdown in the growth rate, even a temporary one, can trigger sharp repositioning.
Innovation Pipeline and the US Listing Question
Beyond the numbers, Zip dropped two notable strategic signals. First, CEO Cynthia Scott intends to relocate from Australia to the United States in the second half of 2026. Given that the US now contributes 75% of group TTV and is the primary earnings driver, the move makes strategic sense, though it does underline how much the company’s centre of gravity has shifted.
Second, Zip confirmed it submitted a confidential draft registration statement to the US Securities and Exchange Commission in November 2025, keeping a potential dual listing on a US exchange alive. Management noted it will only proceed when in the best interests of Zip shareholders.
On the product side, the company launched Zia, an AI-powered virtual customer service agent, and rolled out Pay-in-2 to all US customers in February 2026. Some 80% of all code at Zip is now AI-assisted, and the company has joined Google’s agent payment protocol ahead of the emerging agentic commerce wave.
Balance Sheet and Capital Management
Zip’s balance sheet is in solid shape. As at 31st December 2025, the company held AUD 537.0 million in total cash, with AUD 239.0 million in available cash and liquidity, up from AUD 137.8 million six months prior.
The company completed an AUD 100 million on-market share buyback in December 2025, repurchasing 34.9 million shares at an average price of AUD 2.86. In Australia, Zip executed a new AUD 400 million rated note issuance at a weighted average margin of 1.37%, materially better than the 1.79% and 2.13% achieved on prior deals. In the US, a new USD 283.4 million warehouse facility was established with Atlas Funds Management and Victory Park Capital, lowering funding costs and adding capacity for future growth.
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Investor’s Outlook: ZIP Share Price and What Comes Next
Prior to the result, the ZIP share price had been trading at AUD 2.82 per share. The sharp post-result sell-off reflects expectation resetting rather than fundamental deterioration.
ZIP Price Chart [ASX]
The stock’s next major catalyst will be the 3Q FY26 results update, scheduled for Friday, 17th April 2026. If US TTV growth continues above 40% in USD and the bad debt trajectory remains stable, the narrative around Zip could shift again quickly.
Zip has travelled a long way from the turbulent days of 2025, when it was nursing trademark legal battles and a 46% year-to-date share price decline. The company that reported on 19th February 2026 is profitable, generating real cash, and investing purposefully in a massive US market opportunity.
Whether the sell-off proves a buying opportunity or the start of a more sustained re-rating depends heavily on what the second half delivers. But on the strength of these numbers alone, dismissing Zip would be premature.
