The Sezzle Inc (ASX: SZL) share price is storming higher in morning trade following the release of its third quarter update.
At the time of writing the buy now pay later provider’s shares are up 11% to $8.88.
How did Sezzle perform in the third quarter?
For the three months ended 30 September, the Afterpay Ltd (ASX: APT) rival reported a sizeable 231.5% year on year increase in underlying merchant sales (UMS) to US$228 million (A$318 million).
According to the release, Sezzle’s average monthly UMS reached US$76.1 million in the third quarter, up from US$62.7 million in the second quarter and US$22.9 million during the prior corresponding period.
This was driven by a 178.1% year on year increase in active customers to 1.79 million and a 178.3% lift in active merchants to 20,890.
Another positive was its repeat usage metric, which shows that Sezzle’s customers are using its platform more frequently. It reported active customer repeat usage of 89%, which is the 21st consecutive month of repeat usage growth.
Management notes that this has been a key driver of lowering its loss rates and enhancing its net transaction margin. While no loss rate data was provided with its update, the company advised that “leading loss indicators have stabilized to better than pre-COVID levels.”
Sezzle’s Executive Chairman and CEO, Charlie Youakim, was pleased with the company’s performance during the quarter.
He commented: “We are excited to produce another record quarter of results as our product offering continues to prove its resiliency as well as its necessity during these difficult times. Our strong performance in 3Q is reflective of an improving Sezzle consumer profile along with the continued acceleration of eCommerce in the marketplace.”
Outlook.
The company has reiterated its UMS guidance of achieving an annualised run rate in excess of US$1 billion by the end of 2020.
In fact, it finished the third quarter just shy of this target at US$985.9 million, so it appears highly likely that Sezzle will smash this guidance. Especially given the upcoming holiday season.
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More reading
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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