Zip (ASX:ZIP) share price crashes 30% despite 128% profit growth in HY26 result

Core Insights - Zip Co Ltd's share price dropped 30% following the announcement of its HY26 results, indicating market concerns about its performance and outlook [1] Financial Performance - For the six months ending December 31, 2025, Zip reported a 34.1% increase in total transaction value (TTV) to $8.4 billion, with total income rising by 29.2% to $664 million [8] - Cash gross profit increased by 33.5% to $314.3 million, while cash EBITDA climbed 85.6% to $124.3 million, and net profit from continuing operations surged 128% to $52.4 million [8] - The revenue margin declined to 7.9%, down from 8.2% in HY25, primarily due to a higher contribution from the US market, which now accounts for 75% of TTV [3] Customer and Merchant Growth - The number of active customers grew by 4.1% to 6.6 million, and the number of merchants on the Zip platform increased by 10.5% to 90,600, highlighting strong client base engagement [2] - However, while US active customers rose by 9.7% to 4.63 million, active customers in ANZ fell by 7.1% to 1.97 million, raising concerns about customer retention in the ANZ market [3] US Market Focus - Zip is considering a dual listing on the US stock exchange and has submitted a draft registration to the US Securities and Exchange Commission [5] - The CEO plans to relocate to the US in the second half of 2026 to enhance engagement with US stakeholders, as the US is identified as the primary earnings driver [6] Future Outlook - The company anticipates US TTV growth exceeding 40% in US dollars, with a group revenue margin expected around 8% and a cash net transaction margin between 3.8% to 4.2% [7] - The expected group operating margin for HY26 has been upgraded to greater than 18%, indicating positive adjustments in financial forecasts [9] - Overall, the company is on a promising track with ongoing profitability suggesting potential for continued growth [10]