Guess which ASX BNPL company just achieved profitability for the first time (hint: not Zip)

Move over Zip Co Ltd (ASX: ZIP), another ASX buy now, pay later (BNPL) share has beat the former market darling to the profit pie.

All Ordinaries Index (ASX: XAO) constituent Sezzle Inc (ASX: SZL) has officially posted what could be the sector’s first monthly profit.

Here’s how the smaller ASX BNPL share has performed compared to Zip as of late. As the chart below shows, Sezzle stock has dumped a whopping 82% over the last 12 months.

While that might appear disastrous, it’s a better performance than that posted by Zip shares. They’ve plunged 85% in that time.

For comparison, the All Ordinaries Index has slipped 4% since this time last year.

Let’s take a look at today’s news from the smaller ASX BNPL company.

Another ASX BNPL share beats Zip to profitability

It’s been a big year for ASX BNPL shares. Former favourite Afterpay was taken off the market, all but one member of Humm Group Ltd (ASX: HUM)’s board stormed out, and Zip proposed then cancelled a plan to acquire Sezzle.  

And with just eight trading days left on the year, the former takeover target has dropped another bombshell – its maiden monthly profit.

Sezzle posted US$200,000 of net income and US$1.5 million of adjusted earnings before tax, depreciation, and amortisation (EBTDA) for the month of November. That’s up from respective average monthly losses of US$8.6 million and US$8.2 million in the fourth quarter of 2021.

“To say we are excited is an understatement,” said Sezzle chair and CEO Charlie Youakim, continuing:

[T]his puts us in a strong position entering 2023.

We believe we are the first in our segment to reach profitability, but one month does not make a trend. Our goal for 2023 is to achieve positive net income and Adjusted EBTDA.

The smaller BNPL provider’s total income came to $19.9 million in November – leaving its total income as a percentage of underlying merchant sales at a record 8.1%.

The Zip share price lifted 1.6% in late October on the back of the larger BNPL company’s latest earnings. Its revenue reached $163.2 million over the three months ended 30 September – up 19% quarter-on-quarter.

Zip CEO Larry Diamond also recently told investors the company is expecting to operate in the EBTDA cash flow green by the first half of financial year 2024.

The post Guess which ASX BNPL company just achieved profitability for the first time (hint: not Zip) appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Here are the 10 most shorted ASX shares
• Why Bendigo Bank, Endeavour, TPG, and Zip shares are dropping today
• Why Chalice Mining, Fortescue, Mincor, and Zip shares are dropping today
• Why is the Zip share price sinking 8% today?
• Why this one top fund manager is optimistic about 2023, and one little-known IPO that has hit it out of the park

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Zip Co. The Motley Fool Australia has recommended Humm Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/bTMlwSZ