Sezzle share price soars 22% as BNPL company eyes profit target by year-end

The Sezzle Inc (ASX: SXL) share price is surging today after a business update from the company.

Sezzle shares are currently trading 17% higher at 85 cents after touching an intraday high of 93 cents apiece this morning. In contrast, the S&P/ASX 200 Index (ASX: XJO) is down 0.27% at the time of writing.

So what did the ASX buy now, pay later (BNPL) share report to the market?

July update

Key points of Sezzle’s July business update include:

• Underlying merchant sales (UMS) surged 9.5% on the previous month to US$141.2 million
• Total income lifted 4% on the previous month to US$10.2 million
• 64,000 subscribers to Sezzle Premium as at 16 August 2022
• July cash burn fell to US$1.8 million

Sezzle’s UMS growth was driven by more volume in the Sezzle Premium program and long-term value-boosting 100% month on month.

Total income as a percentage of UMS lifted higher than 7%. The company said this came about due to higher uptake of Sezzle Premium, offboarding unprofitable merchants and renegotiating merchant and network partner contracts.

Sezzle highlighted a range of measures expected to deliver US$40 million revenue and cost savings every year. The BNPL company said these initiatives were helping to drive the company towards profit and free cash flow.

They include reducing the workforce, ending payment processing in India, lowering third-party spend and scaling back Brazil and Europe efforts. Sezzle also launched the premium subscription product.

In addition, Sezzle is planning to launch a “convenience fee” for US customers using a debit or credit card for instalment payments. This will be fully launched towards the end of the fourth quarter.

Management comment

Commenting on the July update, Sezzle chairman and CEO Charlie Youakim predicted Sezzle could be profitable by the end of the year.

July’s results demonstrate the progress and success of our initiatives in Sezzle’s evolution
to be a profitable and positive free cash flow business by year end.

We understand the impact these initiatives have on growth, so teams are moving expeditiously to achieve profitability before refocusing efforts back to growth

Sezzle share price snapshot

It’s been a challenging year for the Sezzle share price, which has lost 72% since January and fell to a 52-week low of 19 cents in July.

Sezzle shares have clawed back some losses over the past month, however, to lift a hefty 329% over that timeframe.

Sezzle has a market capitalisation of about $170 million based on the current share price.

The post Sezzle share price soars 22% as BNPL company eyes profit target by year-end appeared first on The Motley Fool Australia.

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• Why is the Sezzle share price surging 8% on Wednesday?
• Friend or foe? Could inflation give ASX BNPL shares a new lease on life?
• Sizzle, fizzle, pop! What’s with the Sezzle share price on Monday?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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