Sezzle targets $US1bn in merchant sales by year-end
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Buy now, pay later (BNPL) platform Sezzle (ASX:SZL) reckons it’s firmly on track to hit US$1bn (~$1.4bn) in merchant sales by the end of this year as June quarter revenues take off.
The company said its key operating metric — underlying merchant sales (UMS) came in at $US188m for the three months ended June 30, up 57.5 per cent from the June quarter.
Those sales generated quarterly revenue for Sezzle of $US10.6m, up by around 55 per cent for the quarter.
In line with the growth rates that have made BNPL stocks an investor favourite in recent months, the company said June quarter revenues were up by around 400 per cent on an annual basis.
Extrapolating the quarterly UMS figure across 12 months, Sezzle CEO Charlie Youakim said the company remains on track “to achieve our annualised run rate target of US$1bn in UMS by the end of 2020”.
Shares in Sezzle edged higher in morning trade to around $8, as the stock holds it gains after climbing by around 1,900 per cent from its March lows of less than 40c.
Youakim also highlighted growth in repeat customer transactions, which rose by 87.5 per cent, as an important metric for the business in the year ahead.
“We are excited about the brand loyalty that is building, as each cohort is outpacing the previous cohort at a similar point in time,” Youakim said.
The company said its active customer base rose by 325,990 to 1.476 million, while active merchants crossed above the 16,000 mark.
Sezzle CFO Karen Hartje said the company had also been focused on driving growth while managing its cost base to boost its net margin per customer transaction.
The company’s 4C filing showed cash flows from operations turned positive in Q2 with a $4.3m gain, following a loss of $1.8m in the March quarter.
On the back of strong growth, the company’s recent $86m cap raise “positions us well to pursue our growth strategies and weather the protracted effects of COVID-19”, Hartje said.
“We continue to see leading loss indicators improve and have been able to leverage our cost structure. These trends combined with our top-line growth are driving positive moves in our net transaction margin.”
Sezzle said product and processing costs rose to $US5.2m in the June quarter from $US3.8m in March, mainly due to payment processing fees. However, that top line figure was around 3 per cent lower when measured as a percentage of receipts from customers.