Why Did Zip Co Limited Shares Tumble Over 35% Despite Strong Results-Can Growth Continue?
Source: Kapitales Research
Highlights:
Strong Financial Growth: Zip Co Limited (ASX: ZIP) reported an 85.6% increase in cash EBITDA to AU$124.3 million and a 34.1% rise in total transaction volume to AU$8.4 billion for 1H FY26.
Mixed Revenue Margin: The company’s revenue margin slipped to 7.9%, driven by a higher U.S. market contribution, although operating margin improved to 18.7%.
Optimistic FY26 Guidance: Zip expects continued U.S. TTV growth above 40% and has upgraded its operating margin and cash EBITDA targets for the full fiscal year.
Zip Co Limited (ASX: ZIP), a prominent player in the buy now, pay later sector, saw a dramatic 35% drop in its share price at AU$1.835 at the time of writing. This sharp decline followed the release of its first-half fiscal 2026 results, which revealed mixed outcomes amid growth in some areas.
Key Financial Results and Growth
At the time of writing, Zip reported strong financial growth in certain aspects of its business, including an impressive 85.6% increase in cash EBITDA, reaching AU$124.3 million. This growth was attributed to a 34.1% rise in total transaction volumes (TTV), which now stand at AU$8.4 billion. The company's operating margin also expanded, reaching 18.7%, compared to 13.0% in the same period the previous year. Despite these gains, Zip's revenue margin slipped to 7.9% (from 8.2% in the prior period), influenced by a higher contribution from the U.S. market, which now represents 75% of total TTV. The company reported a modest increase in net bad debts to 1.7% of TTV, a slight uptick from 1.6% a year ago.
The Road Ahead: Outlook and Strategic Focus
Zip has reiterated its FY26 guidance, expecting to see continued growth, particularly in the U.S. market, with TTV growth projected above 40%. The company also expects to achieve a revenue margin around 8% and operating margins above 16-19% for the full year. Additionally, Zip's leadership is targeting further product innovation, including the expansion of its Pay-in-Z platform and a new cash flow management experience for customers, which is expected to scale in the second half of FY26. While the immediate market reaction has been negative, Zip’s strategic focus on U.S. market expansion, product diversification, and AI-driven efficiency suggests it remains well-positioned for long-term growth.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au
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Why Did Zip Co Limited Shares Tumble Over 35% Despite Strong Results-Can Growth Continue?
Highlights:
Zip Co Limited (ASX: ZIP), a prominent player in the buy now, pay later sector, saw a dramatic 35% drop in its share price at AU$1.835 at the time of writing. This sharp decline followed the release of its first-half fiscal 2026 results, which revealed mixed outcomes amid growth in some areas.
Key Financial Results and Growth
At the time of writing, Zip reported strong financial growth in certain aspects of its business, including an impressive 85.6% increase in cash EBITDA, reaching AU$124.3 million. This growth was attributed to a 34.1% rise in total transaction volumes (TTV), which now stand at AU$8.4 billion. The company's operating margin also expanded, reaching 18.7%, compared to 13.0% in the same period the previous year. Despite these gains, Zip's revenue margin slipped to 7.9% (from 8.2% in the prior period), influenced by a higher contribution from the U.S. market, which now represents 75% of total TTV. The company reported a modest increase in net bad debts to 1.7% of TTV, a slight uptick from 1.6% a year ago.
The Road Ahead: Outlook and Strategic Focus
Zip has reiterated its FY26 guidance, expecting to see continued growth, particularly in the U.S. market, with TTV growth projected above 40%. The company also expects to achieve a revenue margin around 8% and operating margins above 16-19% for the full year. Additionally, Zip's leadership is targeting further product innovation, including the expansion of its Pay-in-Z platform and a new cash flow management experience for customers, which is expected to scale in the second half of FY26. While the immediate market reaction has been negative, Zip’s strategic focus on U.S. market expansion, product diversification, and AI-driven efficiency suggests it remains well-positioned for long-term growth.
Disclaimer for Kapitales Research
The materials provided by Kapitales Research, including articles, news, data, reports, opinions, images, charts, and videos ("Content"), are intended for personal, non-commercial use only. The primary goal of this Content is to educate and inform readers. This Content is not meant to offer financial advice, nor does it include any recommendation or opinion that should be relied upon for making financial decisions. Certain Content on this platform may be sponsored or unsponsored, but it does not serve as a solicitation or endorsement to buy, sell, or hold any securities, nor does it encourage any specific investment activities. Kapitales Research is not authorized to provide investment advice, and we strongly advise users to seek guidance from a qualified financial professional, such as a financial advisor or stockbroker, before making any investment choices. Kapitales Research disclaims all liability for any direct, indirect, incidental, or consequential damages arising from the use of the Content, which is provided without any warranties. The opinions expressed by contributors or guests are their own and do not necessarily reflect the views of Kapitales Research. Media such as images or music used on this platform are either owned by Kapitales Research, sourced through paid subscriptions, or believed to be in the public domain. We have made reasonable efforts to credit sources where appropriate. Kapitales Research does not claim ownership of any third-party media unless explicitly stated otherwise.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au