Sezzle hopes it will be forever etched in the history books by becoming the ‘first pure play buy now, pay later (BNPL) company to report positive net income’, after booking its highest revenue following a seasonally strong month led by Black Friday Cyber Monday (BFCM) sales.
Sezzle (ASX:SZL) notched several records following a strong November that was driven by a big increase in sales during the annual Black Friday and Cyber Monday promotion.
The BNPL sector has been in investors’ crosshairs for the last 12 months on concerns that the industry would never become profitable. Sezzle, however, has announced a profitable month of November, as measured by Net Income and Adjusted EBTDA. For November, the company reported Net Income of US$0.2 million and Adjusted EBTDA of US$1.5 million.
Chairman and CEO Charlie Youakim attributed the company’s maiden month of positive profits to a combination of revenue growth and cost saving initiatives. In 2022, the company launched revenue and cost savings initiatives totalling US$60 million (~A$89 million)
“We are the first pure BNPL company, that we are aware of, to report positive Net Income and Adjusted EBTDA,” he noted.
Sezzle has done a significant amount of work on its cost base in 2022, while still growing its top-line (YTD, up ~9% YoY). For example, headcount has almost been cut in half in 2022, as the company retrenched for profitability.
The company is not sitting idly by on its hands and expects to launch additional revenue generating and cost savings initiatives to those already announced in 2022.
The combination of the holiday season and the revenue initiatives drove November’s revenue (US$13.3m) up 16.3% compared to October and 16.5% higher compared to the prior year’s period. As a percentage of UMS, total income reached a new high of 8.1%, a 250bps YoY improvement.
In addition to Sezzle’s revenue and cost initiatives credit quality, as measured by provision for uncollectible accounts receivable, has driven improvement in unit economics. Considered a key metric of concern for the market given the rise in interest rates, it is expected to improve in the fourth quarter compared to the prior year.
Customers seeing value
Sezzle Premium members are also rising quickly, with the company now reporting over 120,000 active subscribers.
The product was only introduced in June 2022 and Sezzle says it has been “well received”, with monthly average purchase activity significantly exceeding that of non-subscribers.
In a recent survey of 2,000 Sezzle Premium subscribers, 87% said they would recommend Sezzle Premium to friends and family.
The Premium product is an elevated version of Sezzle that provides subscribers exclusive access to features including big brands – like DoorDash, Lowe’s and Hotels.com – exclusive deals and discounts, priority customer support, and Sezzle Rewards points.
As the payments landscape continues to evolve, Sezzle is committed to expanding its suite of product features.
The fintech is in the process of rolling out its Pay-in-Full product, which offers shoppers additional payment flexibility.
Sezzle’s Pay-in-Full product will provide consumers with a more seamless checkout experience, which should lead to greater checkout conversion.
The company expects to fully launch the payment option by the end of 2022 to merchants in the US and Canada.
Award-winning BNPL
Sezzle has received several accolades this year for its innovative product line, most recently named the “Best BNPL for Payment Scheduling” by Money Under 30.
This followed close on the heels of the Wall Street Journal branding the company the “Best BNPL for Credit Building” and NewsExplorer ranking Sezzle top of its list of “Best BNPL Apps in 2022.”
Sezzle was also dubbed the “most trusted BNPL app in North America” at the Fintech Awards in early 2022.
This article was developed in collaboration with Sezzle, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions. Financial metrics reported in this article should be read in conjunction with the information and disclaimers contained in Sezzle’s November 2022 Business Update released on the ASX on 19 December 2022, in particular the reconciliation information between GAAP and non-GAAP measures.