Sezzle sizzles in coronavirus shutdown

Buy now, pay later provider and Afterpay rival Sezzle says it tripled its merchant sales in the first quarter.

Founders of buy now, pay later company Sezzle (L-R) CEO Charlie Youakim and chief revenue officer Paul Paradis.

Buy now, pay later provider Sezzle says it has sizzled in the coronavirus lockdown, with the company tripling its merchant sales in the first quarter.

Afterpay’s US-based rival has also experienced a share price surge, with its ASX-listed stock up 16.5 per cent to $2.20 in early trade, before settling back to $2.03.

The positive response by investors followed a business update, with Sezzle posting a 321 per cent first quarter rise in underlying merchant sales compared to the same period last year, to $US119.4m.

In addition, April set a new monthly record of $US57.9m, with a surge in sales for leisure, electronics, hobby and medical items.

Afterpay and Sezzle are competing for a bigger slice of the emerging North American buy now, pay later market.

Afterpay on May 1, announced Chinese telecommunication giant Tencent had emerged as a substantial shareholder, taking a 5 per cent stake in the company.

The Australian understands Tencent’s backing of approximately $300m has been driven by Afterpay’s continued expansion into the US.

Swedish fintech heavyweight Klarna, which entered the Australian payment landscape in partnership with Commonwealth Bank earlier this year, is also eyeing further expansion in the US.

Sezzle chief executive Charlie Youakim said a probable recession spurred on by the economic impacts caused by COVID-19 was likely to be favourable to instalment payment schemes.

“We believe that instalments will become even more prevalent during a recession,” Mr Youakim said.

“People need credit, especially in downturns, so we anticipate the demand for our product rising and, because of the short-term nature of our product and low order values, we believe we will be able to adapt to the situational changes faster than others.”

Mr Youakim notes Sezzle is still within the innovation stage of its lifestyle and a recessionary period could fast track the adoption of it BNPL technology as budgeting tool.

April was also a record month for Sezzle’s active customers – up 114,400 – while 1100 merchants were also added over the month.

Sezzle said its cash liquidity position as at March 31 was $US36.6m, while total debt was $US25.9m.

Hardship measures have been implemented, with the company expanding fee forgiveness and payment flexibility programs.