Buy now, pay later firm Sezzle sizzles on ASX debut

Sezzle shares have blazed ahead as the Afterpay Touch competitor floated on the local bourse.

Sezzle has sizzled on its ASX debut. Picture: AAP

Afterpay Touch competitor Sezzle has enjoyed a sizzling debut on the ASX following its oversubscribed $43.6 million initial public offering. At 1pm (AEST), Sezzle (SZL) shares were up 97 cents to $2.18 — a 79 per cent increase on its IPO price of $1.22 per CHESS Depository Interest.

They had traded as high as $2.44 minutes earlier when they began trading at noon (AEST).

Ord Innett underwrote the initial public offering, which was oversubscribed. “We are extremely proud to have attracted the support of our IPO investors, including many institutional investors who possess an extremely detailed understanding of the ‘buy now, pay later’ sector and the immense opportunity ahead of Sezzle,” company founder and chief executive Charlie Youakim said.

The Minneapolis, Minnesota-based company launched in August 2017 and is not profitable, with cumulative losses of $US6.5m ($9.4m) as of December 31, but has experienced tremendous growth in its core market of the US. Sezzle says it had 5048 active merchants and 429,898 active customers at June 30, up 52 per cent and 59.3 per cent, respectively, from the previous quarter. By way of comparison, Afterpay said recently it had 1.5 million active customers in the US as of May 31, with 3300 active merchants and another 1100 coming on board.

Sezzle made $US2.1m ($3m) in merchant fees on $US41.9m ($60.7m) in merchant sales for the June quarter, up 49.2 per cent and 47.9 per cent.

It had a net loss after tax of $US4.2 million ($6.1m) in 2018, up from a $US1.8 million ($2.6m) loss in 2017.

In addition to Afterpay, Sezzle says its competitors in the US include Affirm, Klarna, PayPal Credit and QuadPay.

Sezzle pays merchants in full, with customers expected to repay Sezzle by paying a third of the purchase price back every two weeks.

It makes money on merchant fees, which averaged 4.8 per cent in 2018, and a $US5 fee on its end users for rescheduling payments.

“Sezzle aims to differentiate its business to end-customers by providing a product that is simple to understand and customer friendly,” Sezzle said in its prospectus.

“This includes allowing the customer to shift their repayment schedule once per order for free, and waiving Failed Payment Fees where the End-customer corrects a failed payment within 48 hours” Mr Youakim retains ownership of 49.7 per cent of the company, with chief revenue officer Paul Paradis owning another 5.6 per cent.

AAP