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Sezzle’s share price rises on second-best monthly performance

The share price of BNPL platform Sezzle could continue to ride high on improving revenue and the popularity of its new premium product. The company is confident about achieving profitability.

Source: Bloomberg

ASX-listed BNPL platform Sezzle has seen gains in its share price on the back of one of its best monthly revenue performances in October. The fintech company says ongoing improvements to its business performance are accelerating efforts to achieve profitability. 

October Sezzle’s second-best revenue month

According to a business update released on 16 November, Sezzle’s total income increased 18.0% year-on-year (YoY) in October and 8.7% month-on-month (MoM) to reach US$11.5 million. 

Sezzle chairman and CEO Charlie Youakim said October marked the second-best revenue performance for the company, advancing it further on the path towards profitability. 

‘Our path to profitability is not just about cost cutting, but also growing revenue,’ Youakim said. 

‘We are looking forward to the upcoming holiday season and expect to reach new highs in top line performance. We are even more excited about 2023, as we expect to turn the corner in profitability and launch additional revenue generating and cost saving initiatives beyond the US$60.0M announced in 2022.'

According to the update, Sezzle’s net income and adjusted EBITDA both point to significant progress in its path towards profitability. Adjusted EBITDA was negative US$0.2 million, compared to an average monthly adjusted EBITDA of negative US$8.2 million in Q421. 

Sezzle also managed to slash losses in October, bringing them down to US$1.5 million as compared to an average monthly net loss of US$8.6 million in Q421. 

The update gave a boost to Sezzle’s share price in trading on 16 November, with a rise of 10% by mid-morning.

The strong revenue performance in October arrives following an impressive third quarter for Sezzle. 

According to the September quarter report, Sezzle’s total income was US$30.4 million in the third quarter, a 6.8% increase compared to the same period in 2021. Total income hit a record high as a percentage of underlying merchant sales (UMS), rising to 7.2% in the third quarter.

Transaction expenses fell to $9.3 million in the third quarter, for a record low 2.2% of UMS. 

Sezzle Premium enrolments leap

The BNPL platform’s Sezzle Premium subscription product has seen a strong performance since its launch in June of this year.

Sezzle Premium already has over 100,000 active subscribers who are a source of more transactions than non-subscribers. At least 78,000 consumers are also on the waitlist to join Sezzle Premium. 

Sezzle’s core offering as a BNPL platform is its ‘pay-in-four’ product that lets consumers purchase products using four interest-free instalment payments spread out over six weeks.

A key selling point for the platform is that it does not make use of FICO scores to evaluate the credit risk of consumers. It instead uses other information such as bank statements to determine whether customers can make repayments.

This has enabled Sezzle to tap the large demographic of millennial consumers who do not have strong FICO scores.

Sezzle Premium is billed as an ‘elevated version’ of Sezzle that provides exclusive access to more features and brands in exchange for a $9.99 monthly subscription fee or an $89.99 annual subscription fee. Additional features include priority customer support and exclusive deals and discounts.

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