Sezzle share price: where next as underlying sales pass $100 million?

We examine some of Sezzle’s key operational milestones revealed as part of the company’s latest Q4 results.

Fourth quarter results at a glance

Sezzle (ASX: SZL) – a fast-growing BNPL company with operations primarily focused in North America and Canada – continues to move from strength to strength, this week reporting a strong set of Q4 results to the market.

As part of these results, Sezzle saw Underlying Merchant Sales (UMS) break past the US$100 million mark for the first time, hitting US$105.1 million specifically – representing a 52.6% increase – on a quarter over quarter basis.

On an annualised basis, this takes Sezzle’s UMS to an impressive US$420 million or ~AUD$625.05 million. For reference, Sezzle currently has a market capitalisation of AUD$349.86 million.

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Besides impressive underlying sales growth, Sezzle also reported that users had increased 42% during the quarter – hitting 914,886 overall. In step with that user growth, it’s unsurprising that the company also reported a 33.3% increase in active merchants – now standing at 10,010.

Looking at the impact of this growth on traditional financial metrics, Sezzle reported that Fees from underlying merchant sales totalled US$5.8 million during the quarter. Moreover, the company noted that Net Transaction Losses and Net Transaction margins continued to exhibit positive trends during Q4.

The company has also seen its cash position increase in recent times, with US$36.6 million in cash on hand by the end of December 31. The company also currently has access to a US$100 million debt facility.

Interestingly, these growthy metrics didn’t seem to attract the enthusiasm of investors this week – with Sezzle’s (ASX: SZL) share price trading flatly over the last five sessions.

Sezzle’s share price currently trades at the $1.965 mark – some ways off its 52-week high – though well ahead of recent lows related to perceived, but ultimately quashed, regulatory risks.

CEO commentary in focus

Speaking of the company's fourth quarter results, Charlie Youakim, Sezzle's visionary CEO, noted that:

'Sezzle broke new ground in the December Quarter with a series of historic achievements across several key indicators, namely Underlying Merchant Sales and Active Merchants. Active Customer growth was equally impressive, a reflection of consumers enthusiastically embracing the payments ecosystem we are building on the Sezzle platform.'

Mr Youakim further pointed out that 'with Net Transaction metrics continuing to trend positively, we are proving the scalability of our business model with increasingly favourable unit economics.'

Finally, and looking at Sezzle’s proactive approach to engaging with regulators, the company pointed out that:

'In October 2019, Sezzle executives initiated open dialogue with members of the US Consumer Federal Protection Bureau to give their team an overview of the Company's consumer-friendly product and apprise the of the burgeoning US BNPL sector.

Watch this space.

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