The buy now, pay later sector has experienced volatility over the last few years as new regulations have been introduced.

However, Zip Co Ltd (ASX: ZIP) has seemingly navigated these murky waters over the last two years.

The Zip share price was one of the strongest performers on the ASX 200 in 2024, with a 363% gain. 

Nonetheless, Zip got off to a rough start in 2025 on the back of its second-quarter results for the three months to 31 December (2Q FY 2025).

The company is scheduled to release its FY25 half-year results next Tuesday, 25 February.

What to look for in Zip's half-year results

Unlike many ASX 200 companies, Zip does not currently pay dividends to investors, so dividends won't be on the agenda for its half-year results. 

However, its previous report (2Q FY25 Results) showed a slight dip in the company's revenue margin. 

Some positives from the previous report included: 

• Cash EBITDA of $35.3m (up 50.2% vs 2Q24)
• Revenue of $269.4m (up 20.5% vs 2Q24)
• Increase in the active number of customers

Should you buy the "dip" in Zip

It seems holders of Zip shares took their profits at the start of 2025, following a stellar year before.

Zip shares have now dropped approximately 14% since the start of this year, despite some strong results over the last half-year. 

After its previous report was released on January 30, the stock plunged 25.4% on the day. 

However, analysts seem to have optimism around the future of the company. 

Earlier this month, The Motley Fool's Bernd Struben reported the consensus view of nine analysts on Zip shares. They had a minimal estimate of $2.70 and a maximum estimate of $4.20. The average share price target was $3.50.

With the share price at $2.50 at the time of writing, this suggests an upside of 40%.