Sezzle thrives in the pandemic

Sezzle shares soared after it said it was poised to capitalise on record quarterly results, as consumers shift to e-commerce.

Founders of buy now, pay later company Sezzle (L-R) CEO Charlie Youakim and Chief Revenue Officer Paul Paradis.

Shares in Sezzle shot up nearly 25 per cent on Tuesday after the buy-now, pay-later platform told the market it’s poised to capitalise from its pivot to e-commerce in North America as the shutdown resulting from the COVID-19 pandemic continues.

Active consumers using the platform jumped 28 per cent to 1.48 million for the quarter to June 30, while active merchants jumped 27 per cent compared to the prior quarter, Sezzle said in a quarterly update to the ASX.

The Afterpay competitor said it now expects underlying merchant sales to reach an annualised pace of $US1bn ($1.43bn) by the end of 2020.

“In these uncertain times, we are fortunate to announce record quarter two results across a number of our key metrics,” executive chairman and chief executive Charlie Youakim said.

“Our performance reaffirms our product’s utility to consumers looking for a smarter way to budget their personal finances and the overall market shift to e-commerce.”

Nearly 100 per cent of Sezzle’s transactions occur via e-commerce, making the company “well-positioned” for the increasing online retail trend.

“Our strong performance in the second quarter is reflective of an improving consumer profile combined with an accelerated adoption of e-commerce due to the pandemic,” Mr Youakim said.

“The undercurrent of organic growth that we are experiencing is exciting to see as our business matures.”

Sezzle shares surged 24.6 per cent to $5.07 each on Tuesday, following the announcement.

Royal Bank of Canada analyst Tim Piper said that the flagged underlying merchant sales figure of an annualised pace of $US1bn by the end of this calendar year was ahead of the bank’s estimates.

“Sezzle appears to be tracking ahead of our expectations as current structural tailwinds benefit, while there remains the possibility of a further stimulus package in the US, which would likely again bolster short-term consumer spending,” he said in a note to clients.

“We have seen strong trends in app download data and other lead indicators and believe the update well represents early trends.”

The company last year made what was seen as an unusual decision for a US outfit to list on the ASX.

In March, the group said it would double down on merchant fees and branding in a bid to fend off rival Afterpay, which is revving up its own US expansion.

Of the fees Sezzle charges, more than 80 per cent of them are to merchants.

The company has also recently undertaken a brand overhaul in an attempt to align itself with the values of Generation Z and Millennials, in an attempt to differentiate itself from Afterpay.