News from the Wire

Sezzle reports third quarter 2024 results

Friday, November 08, 2024 — 13:19:17 (EST)

Minneapolis, MN, Nov. 07, 2024 (GLOBE NEWSWIRE) -- Sezzle Inc. (NASDAQ:SEZL) (Sezzle or Company) // Purpose-driven digital payment platform, Sezzle, is pleased to update the market on key financial metrics for the quarter ended September 30, 2024.

“This quarter has been transformative for the Company. In addition to outperforming our expectations, we were able to successfully launch a banking program with WebBank,” stated Charlie Youakim, Sezzle Chairman and CEO. “The banking program marks an exciting new chapter for our Company, enabling us to expand access to innovative financial solutions to a broader audience. These developments fuel our optimism as we approach the seasonal year-end holiday period and close out FY2024.”

Third Quarter 2024 Highlights

Underlying Merchant Sales (UMS) jumped 40.6% YoY to reach $659.9 million, exceeding the previous quarterly high recorded in 4Q23. The YoY growth was driven by greater consumer engagement, with overall consumer purchase frequency climbing to 5.4 times in 3Q24 compared to 4.1 times during the same period in 2023.

The top 10% of consumers, as measured by UMS, transacted 77 times per year on average during the rolling twelve-month period ended September 30, 2024.

Fueled by subscriber growth and consumer engagement, Total Revenue increased 71.3% YoY to $70.0 million. Total Revenue as a percentage of UMS reached 10.6%, surpassing the previous all-time high of 10.5% set in 2Q24.

As of September 30, 2024, Sezzle had 529,000 Active Subscribers (rounded to the nearest thousand) enrolled across Anywhere and Premium (US and CA).

In 3Q24, Total Operating Expenses rose 38.4% YoY to $49.1 million. The Company continues to scale efficiently, reflected in a YoY reduction in Total Operating Expenses as a percentage of UMS and Total Revenue by 0.2 and 16.7 percentage points, respectively, to 7.4% and 70.2%.

Transaction Related Costs[1] as a percentage of UMS increased YoY from 4.4% to 4.8%, driven by a higher Provision for Credit Losses associated with the Company’s controlled expansion of underwriting. This increase was partially offset by decreases in both Transaction Expense and Net Interest Expense as a percentage of UMS.

Non-transaction Related Operating Expenses1 rose 11.0% YoY to $21.0 million, however, as a percentage of Total Revenue, Non-transaction Related Operating Expenses reached a new Company low, declining 16.2 percentage points YoY to 30.0%. This improvement underscores the Company’s commitment to top-line growth while optimizing operating efficiency.

The Company’s management of operating expenses and top-line growth led to a 289.6% YoY increase in Operating Income in 3Q24, reaching a new high of $20.8 million. This represents a 16.7 percentage point increase in Operating Margin to 29.8% in 3Q24 from 13.1% in 3Q23.

Total Revenue Less Transaction Related Costs1 improved 91.5% YoY to $38.5 million. As a percentage, the metric reached 5.8% of UMS and 55.0% of Total Revenue, marking increases of 1.5 and 5.8 percentage points, respectively, over the prior year.

Net Income reached $15.4 million, resulting in Net Income per Diluted Share of $2.62 for 3Q24, compared to $0.23 for 3Q23. Net Income as a percentage of Total Revenue was 22.1%, an 18.9 percentage point increase from the prior comparable period in 2023.

Adjusted Net Income1 for the quarter totaled $17.3 million, representing 24.7% of Total Revenue and setting a new quarterly high. Per Diluted Share, Adjusted Net Income equated to $2.92, compared to $0.21 in 3Q231.

For the quarter ended September 30, 2024, Adjusted EBITDA1 was at $22.5 million, amounting to 32.2% of Total Revenue, resulting in a 13.7 percentage point gain from the prior comparable period in 2023.

Balance Sheet and Liquidity

As of September 30, 2024, Sezzle had $88.3 million of cash and cash equivalents, $8.3 million of which was restricted. The Company had an outstanding principal balance of $95.0 million on its $150.0 million credit facility as of the quarter end. Initiatives Update

On August 26, 2024, Sezzle announced it entered a five-year banking program with WebBank, a Utah-chartered industrial bank. The banking program launched at the end of September 2024, with WebBank serving as the exclusive lender to originate certain finance products (i.e., Pay-in-4 and Pay-in-2). The Company expects several benefits from its partnership with WebBank, including unified fees, a more streamlined regulatory framework, and opportunities for future product innovations.

At the end of September, Sezzle began to test On-Demand selectively, followed by a broader roll out in October. On-Demand, Sezzle’s first product by WebBank, provides consumers the flexibility to Pay-in-4 wherever Visa is accepted. Consumers simply request a single-use purchase amount and, upon approval, pay the 25% downpayment plus a service fee at the point of purchase. Sezzle On-Demand is currently available to select US consumers but is expected to gradually expand to a broader base of consumers in the coming months.

On August 12, 2024, Sezzle was named the Official Jersey Patch Partner of the Minnesota Timberwolves as a part of a multi-year partnership. The partnership is inclusive of the Minnesota Lynx and entails prominent in-arena signage, in-game & on-court promotions, community events, concourse activations, and digital content. Updated FY2024 Guidance

The Company is raising several components of its FY2024 guidance due to: 1) continued sustained growth, and 2) the inclusion of the newly launched banking program with WebBank, which was not accounted for in previous guidance. Net Income: $71.5 million versus $55.0 million provided with 2Q24 earnings. Net Income per Diluted Share: $12.05 versus $9.25 provided with 2Q24 earnings. Total Revenue Growth: 55% versus 35%-40% provided with 2Q24 earnings. Total Revenue Less Transaction Related Costs as a percentage of Total Revenue: No change to the 55% provided with 2Q24 earnings. Additionally, updating the FY2024 guidance for the following metrics that adjust for certain significant gains, losses, and charges that may not directly correlate to the underlying performance of the Company’s business: Adjusted Net Income[2]: $58.0 million versus $40.0 million provided with 2Q24 earnings. Adjusted Net Income per Diluted Share2: $9.80 versus $6.75 provided with 2Q24 earnings. The Company expects a mid-single digit annualized effective tax before consideration of discrete tax items for 4Q24.

FY2025 Guidance

The Company is providing preliminary FY2025 guidance of $12.00 Adjusted Net Income per Diluted Share with the expectation of being a full corporate taxpayer throughout the year (20%-25% effective tax rate). Equity Capital Management

On July 9, 2024, Sezzle completed its $15.0 million stock repurchase plan announced on June 20, 2024. Management will continue to evaluate capital return options for shareholders including, but not limited to, dividends, incremental share repurchases, or a combination of both. Awards and Accolades

The Company continued to earn reputable accolades in 3Q24, making both CNBC’s World’s Top 250 Fintech Companies for 2024 and Worth’s Impact 150 list, which honors companies excelling in business while making significant contributions to sustainability and social impact. Upcoming Events

Sezzle Management will participate in the upcoming investor conferences: November 13-14, 2024: 2024 KBW Fintech Conference. December 3-4, 2024: Wells Fargo’s 8th Annual TMT Summit. December 12, 2024: Northland Growth Conference. Quarterly Conference Call and Presentation

The Company will host its third quarter earnings conference call on November 7, 2024, at 5:00pm ET.

To register for the call, please navigate to: dpregister.com/sreg/10193861/fdcca5b749

Upon registration, participants will receive the dial-in number. Those without internet access or unable to pre-register may dial in by calling: 1-866-777-2509 (US/CA toll free) or 1-412-317-5413 (international toll). A replay will be available until November 14, 2024. To access the replay dial 1-877-344-7529 (US toll free) or 1-412-317-0088 (International toll). Replay access code: 6005027.

In conjunction with the earnings call, the Company will release its presentation on the Sezzle Investor Relations website before the call. Please navigate to the Sezzle Investor Relations website for the presentation that management will review on the call.

Investors should be aware that generally accepted accounting principles prescribe when a company may reserve for particular risks, including litigation exposures. Accordingly, results for a given reporting period could be significantly affected if and when we establish reserves for one or more contingencies. Also, our regular reserve reviews may result in adjustments of varying magnitude as additional information regarding claims activity becomes known. Reported results, therefore, may be volatile in certain accounting periods.

Contact Information

Lee Brading, CFA

Investor Relations

+1 651 240 6001

InvestorRelations@sezzle.com Erin Foran

Media Enquiries

+1 651 403 2184

About Sezzle Inc.

Sezzle is a fintech company on a mission to financially empower the next generation. Sezzle’s payment platform increases the purchasing power for millions of consumers by offering interest-free installment plans at online stores and select in-store locations. Sezzle’s transparent, inclusive, and seamless payment option allows consumers to take control over their spending, be more responsible, and gain access to financial freedom.

For more information visit sezzle.com.

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Source: Company press release.