Sezzle Inc (ASX: SZL) could be one of the sleeper ASX growth shares to watch in 2020. It is a US based, buy-now-pay-later (BNPL) fintech that has seen its share price rise by 489% since 23 March. Sezzle has a number of benefits over its BNPL stablemate Afterpay Ltd (ASX: APT). 

About Sezzle

Sezzle’s location as a United States-based fintech immediately exposes it to the largest potential BNPL market in the world. With a US$5.4 trillion dollar retail market, the US makes Australia’s trading environment look like small beer. In addition, as a US-based operator, Sezzle doesn’t have to deal with the continual regulatory threats that Afterpay faces.

Afterpay is also up against stiff opposition from Klarna, a Commonwealth Bank of Australia (ASX: CBA) backed competitor. In the US and Canada there is no single entity with the size or relative scale the Commonwealth Bank has in Australia.  

Sezzle boasts 1.3 million users and 14.9 thousand merchants. It has also secured a credit facility worth US$100 million. In addition, the company is already looking northward to the US$460 billion Canadian retail market. 

Afterpay holds prime position on the ASX with a market cap of over $12 billion. Yet both of Sezzle’s markets are larger than the Australian market. 

BNPL fintech demographics

Like fellow BNPL fintechs Afterpay and Zip Co Ltd (ASX: Z1P), Sezzle also targets the Gen Z and Millennial consumer demographics. These groups are tech savvy and make up the largest slice of all age demographics in the US. Sezzle estimates Gen Z will hold 25% of total spending power in 2020. 

The company allows this demographic to control their spending, while giving them access to goods and services they would be unable to purchase with limited disposable income. 

Foolish takeaway

The fintech sector has seen some of the fastest growing ASX shares this year. I believe a number of our best performing shares over the next decade will also be in this sector. Sezzle has a number of natural advantages over its much larger rival, Afterpay, and therefore I think this company deserves a place on your watchlist.

More reading

• How bankable are the big four ASX bank shares in 2020?
• Why Nearmap’s share price surged by 50% in May
• Openpay share price surges 29% higher after BNPL provider reports record month
• Real wealth from 3 roaring mid caps in May
• Afterpay share price rockets 50% in May, is it in the buy zone?

Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. 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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The S&P/ASX 200 Index (ASX: XJO) has seen some strong share price gains over the past month. General market sentiment continues to rise. The Aussie tech sector, in particular, Nearmap Ltd (ASX: NEA) performed strongly with its share price surging 50% higher in May.

Other strong performers include Afterpay Ltd (ASX: APT) which has seen its share price up by 54% and Pushpay Holdings Ltd (ASX: PPH) which saw a massive 69% share price rise.

However, few ASX tech shares have managed to grow at such phenomenal rates.

So, what is behind the recent strong growth of Nearmap’s share price?

Nearmap’s strong subscriber growth continues

Nearmap has performed well during the last few months, as it continues to grow its subscriber base at a solid rate. In addition, its average revenue subscription continues to improve. This is further improving its overall margins. In particular, it has been growing strongly in the North American market.

A series of positive market updates in April and May, in particular, has encouraged investors.

In a May update, the company informed the market that its recent business performance has been very solid.

Month-to-month recent sales growth has been strong across its key market segments. This is despite challenging market conditions.

Actual cash value (ACV) for Nearmap’s overall portfolio was reported to be over $102 million. A strong result.

There has been some downward sales growth momentum. This is due to some customers delaying their purchasing decisions. However, the overall impact on its sales pipeline has been negligible.

Customer churn has pleasingly been declining. It was reported to now be below 10% on a 12-month rolling basis. This is down from 11.5% at the end of last year.

New artificial intelligence (AI) product set to launch this month

In another positive market update, Nearmap indicated that its new artificial intelligence (AI) product would be launched this month.

The AI product will target a range of industries including insurance, utility and local government. This follows the successful launch of its 3D and rooftop geometry products.

On track to reach break-even target

In a previous market announcement in April, Nearmap indicated a number of cash-management initiatives. These are aimed at reducing operating and capital costs by 30% and achieving a break-even target by the end of June.

In its latest update last week, Nearmap indicated that it is currently on track to achieve this goal. This also seems to have pleased the share market.

More reading

• How bankable are the big four ASX bank shares in 2020?
• This ASX fintech share is up 489% since March
• Openpay share price surges 29% higher after BNPL provider reports record month
• ASX 200 up 0.6%: NAB charges higher, ACCC investigates Qantas acquisition
• Real wealth from 3 roaring mid caps in May

Motley Fool contributor Phil Harpur owns shares of AFTERPAY T FPO and Nearmap Ltd. The Motley Fool Australia owns shares of and has recommended Nearmap Ltd. and PUSHPAY FPO NZX. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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The Openpay Group Ltd (ASX: OPY) share price jumped as much as 29.07% in morning trade today after the company announced a new funding facility and record results for the month of May.

Openpay is a small-cap buy now, pay later (BNPL) provider that made its debut on the ASX in December 2019. If offers payment plans up to $20,000 over 2 to 24 month periods.

Where rival Afterpay Ltd (ASX: APT) focuses on the retail sector, Openpay targets 3 verticals that historically lacked BNPL solutions – automotive, healthcare and home improvement. Leading merchants offering Openpay include Bupa, Bunnings Warehouse, Spotlight, Smiggle and Repco.

New funding facility

This morning, Openpay announced it has secured a £25 million debt funding facility with Global Growth Capital. From this, Openpay will immediately have £10 million available to support its fast-growing UK business. The UK business is currently operating online in the retail vertical and recently achieved a major milestone after launching with JD Sports in mid-May.

This new UK funding facility is on top of the company’s existing $75 million debt facilities, of which $45 million remains undrawn.

Commenting on the new funding facility, CEO Michael Eidel said:

“Openpay UK is emerging as a significant contributor to our Total Transaction Value. This funding facility with Global Growth Capital adds strength to our strong balance sheet and provides us with ample funding to support the delivery of our current growth objectives in the UK.”

Record month of May

Openpay also provided a trading update this morning following its Q3 FY20 results released in April. The company declared May 2020 as its strongest month in history, with key highlights including:

• Active plans totalling 739,000, up 220% from 231,000 in May 2019;
• 293,000 active customers, up 131% from from 127,000 in May 2019;
• 2,096 active merchants, up 50% from 1,396 in May 2019; and
• Total transaction value (TTV) of $170 million year to date, up 95% from $87 million in May FY19 year to date.

Growth in active plans, active customers and TTV were all record results. This performance was primarily driven by ‘OpenMay’, a month of special promotions with merchant partners across all industry verticals.

Importantly, the company noted its underlying loan book credit quality remains strong, while the number of weekly COVID-19 hardship requests continues to decline. Additionally, the incidence of fraud is also continuing its downward trend as a result of recent technology upgrades to Openpay’s platform.

At the time of writing, the Openpay share price is sitting 15.5% higher for the day at $1.49, taking its current year-to-date gains to 19.2%.

More reading

• This ASX fintech share is up 489% since March
• Why Nearmap’s share price surged by 50% in May
• Real wealth from 3 roaring mid caps in May
• Afterpay share price rockets 50% in May, is it in the buy zone?
• Why these 3 ASX 200 blue chips could be set for growth this week

Motley Fool contributor Cathryn Goh owns shares of AFTERPAY T FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. 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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