How the Zip (ASX:ZIP) share price convincingly beat the ASX 200 in 2025

Core Insights - Zip Co Ltd's share price outperformed the ASX 200 in 2025, rising approximately 11% compared to the index's 6.25% return, although it has dropped about one-third since October 2025 [1] Financial Performance - The FY25 report showed a total transaction value (TTV) growth of 30.3% year-on-year to $13.1 billion, with total income increasing by 23.5% to $1.08 billion [2][3] - Cash gross profit rose by 34% to $509 million, while active customers grew by 4.6% to 6.3 million, and the number of merchants increased by 7.9% to 85,500 [3] - Cash EBTDA surged 147% to $170.3 million, with the EBTDA margin improving to 15.8% from 7.9% in FY24, and the cash transaction margin increased to 3.9% from 3.8% [3] Q1 FY26 Performance - In the first quarter of FY26, TTV grew 38.7% to $3.9 billion, and total income increased by 32.8% to $321.5 million, although the revenue margin declined to 8.2% due to a larger contribution from the US market [5] - Cash EBTDA grew 98.1% to $62.8 million, with the margin improving to 19.5%, and the cash net transaction margin increased to 4% from 3.9% [6] - Customer numbers rose by 5.3% to 6.4 million, and the number of merchants jumped by 9.1% to 87,500 [6] Investment Outlook - The company continues to grow cash profit at a strong pace, making it potentially appealing for investors, provided net bad debts do not rise significantly [7] - While not the first choice for investment, Zip could be a long-term winner in the buy now, pay later sector [8]