Sezzle share price: Everything you need to know about the Q3 update

We examine the highlights from Sezzle’s third quarter trading update.

Sezzle share price dips on Q3 report

Is the market no longer content with triple digit growth?

Posting another set of growthy quarterly results wasn’t enough to save Sezzle (ASX: SZL) from bearish investors, with the stock trending lower as Friday’s trading session wore on.

Interestingly, while the stock opened higher off the back of this Q3 release – speeding to an intraday high of $7.27 per share during the morning session; the stock slid as the session wore on, with investors bidding SZL to $6.70 per share by around 3:00PM.

The broad strokes of these results highlighted growth across the board for the young company, with stronger merchant sales, more active customer and stronger repeat usage.

'We are extremely proud of our team and what they have accomplished in 2020, but we are not done. Our product initiatives and merchant pipeline have never been better and the current quarter has gotten off to a solid start,’ said Sezzle’s CEO Charlie Youakim.

Looking forward, Mr Youakim went on to say that:

'We believe we are well-positioned, as we head into our strongest seasonal months of November and December.'

Third quarter results: Everything you need to know

Sezzle again posted a strong set of operational results as part of its Q3 release, on a year over year basis reporting:

  • Underlying merchant sales (UMS) of A$318.2 million, up 231.5%
  • Merchant fees of A$18.1 million, up 260.6% – representing 5.7% of underlying merchant sales and 84% of total income
  • Active consumers of 1.79 million, up 178% and active merchants of 20.8 thousand, up 178%

More positively still, in the September quarter the company came close to reaching its 2020 target of achieving an annualised UMS run-rate of USD$1.0 billion – reporting an annualised UMS run-rate of USD$986 million off the back of the Q3 results.

Elsewhere, Sezzle reported its 21st consecutive month of improved customer engagement/usage. Here the company reported that active customer repeat usage rose 41 basis points (on a quarter over quarter basis) to 89.0%.

Diving into the importance of those metrics, Sezzle’s CFO – Karen Hartje, said:

'We also continue to see COVID-19 hardship requests decline to negligible levels. The combination of lower hardship requests and the continued improvement in our Active Customer Repeat Usage rate have played key roles in keeping our loss rates at relatively low levels.'

Sezzle's cash position in focus

Turning to the strength of Sezzle's balance sheet, at the close of the September quarter, the company reported a total cash position (inclusive of restricted cash) of USD$117,925,000, rising from USD$55,733,00 from the 2020 quarter ending June. This improved cash position was primarily driven by Sezzle’s recent capital raise – where the company brought in USD$60.5 million.

YTD Sezzle is up over 300%.

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