Sezzle share price on watch after explosive first half growth

The Sezzle Inc (ASX: SZL) share price will be on watch this morning following the release of its half year results.

How did Sezzle perform in the first half of FY 2020?

For the six months ended 30 June 2020, the buy now pay later provider reported underlying merchant sales (UMS) growth of 338% to US$307.4 million.

This led to the Afterpay Ltd (ASX: APT) rival’s total income growing 384% over the prior corresponding period to US$20.8 million.

A key driver of this growth was a significant increase in customer numbers. At the end of the period, the company had 1,475,235 active customers, which was up 243% on the prior corresponding period.

This was supported by the growing adoption of its platform by merchants. Active merchants grew 219% on the prior corresponding period to 16,112 merchants.

Also improving was its loss rates. The company’s net transaction loss came in at 0.7% of UMS (down from 1.5% a year earlier), leading to a net transaction margin of 1.7% (up from negative 0.3% a year ago).

At the end of the half, Sezzle had US$55.7 million of cash and cash equivalents, with total debt of US$38.47 million.

How has Sezzle performed since the end of the half?

Pleasingly, Sezzle’s strong growth has continued since the end of June. In fact, July was a record month for the company.

Active consumers reached 1.6 million (up 7.1% month on month), active merchants rose to 17,600 (9.3% MoM), and UMS climbed to US$71.8 million. The latter represents a record month and 14.6% above the average monthly pace for the second quarter.

Another positive was its repeat usage, with active customer repeat usage improving to 88.1%. This was the 19th straight month of sequential improvement.

Sezzle’s Executive Chairman and CEO, Charlie Youakim, commented: “We are fortunate to be able to provide merchants and consumers the payment flexibility they need in this unprecedented global pandemic of our lifetime. The utility of Sezzle is evident in our record 1H20 performance and strong start to 3Q20 in July.”

Outlook.

Following the strong first half and its positive start to the second, the company has reiterated its guidance for FY 2020.

It expects to achieve an annualised UMS run rate in excess of US$1 billion by the end of 2020.

Looking ahead, the company is testing its offering in India and exploring opportunities in Europe.

Mr Youakim concluded: “Sezzle’s strong recent performance, improving consumer profile and confidence in reaching annualized UMS of US$1 billion by the end of 2020 allows us to be uniquely positioned to further expand through a number of near-term growth initiatives.”

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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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