Sezzle booms in race for customers

Buy-now-pay-later platform Sezzle has posted a wider loss, despite a major increase in sales and customers, but a looming expansion and India and Europe has set seeds to future growth.

Growth has continued unabated by the pandemic for buy-now-pay-later operator Sezzle, which has launched forays into India and Europe as part of a battle for market share.

The ASX-listed America based provider of finance posted a 143.9 per cent boom in customer numbers for the half.

Total active Sezzle customers now stands at 2.2m, a number expected to grow in the coming months.

The surge in customers helped drive total income across the business up 272.1 per cent.

Underlying merchant sales now stands at US$856m.

But costs also grew at Sezzle as the business added customers, with the US$31.8m loss after tax growing 144 per cent on the same time last year.

This was well up on the US$13m loss Sezzle posted the year before.

No dividend will be paid.

The company is flagging a strong second half with continued customer growth on the back of expansion of Sezzle to more retailers.

Sezzle forecast underlying merchant sales of US$2.5bn by the end of 2021.

Chief executive Charlie Youakim said the results reflected an exciting momentum for Sezzle, noting “2021 is off to a good start”.

But Mr Youakim was most excited about the move by Sezzle to launch virtual cards for instore use.

“This solution makes it very easy for any merchant that accepts credit cards today to accept Sezzle,” he said.

Sezzle, which largely operates in the United States, recently made an expansion to Canada, a venture company Mr Youakim expects will soon reap dividends for the business.

The business recently secured a US$250m receivables funding facility with Goldman Sachs Bank USA and Bastion Funding IV LLC to support its expansion in the US and Canada.

The 28 month facility expands Sezzle’s borrowing and maturity into 2023.

Sezzle now has 1500 Canada-based merchants and seen an 800 per cent growth in users in the country.

The buy-now-pay-later platform also made two expeditions out of North America, opening up offices for an expansion into India and Europe.

“While these markets are not material yet we are pleased with both those regions,” Mr Youakim said.

“Both teams are still in the early stages setting up the appropriate infrastructure.”

The buy now pay later market has experienced massive growth in recent years, but the threat of regulation was not missed by Mr Youakim, who noted the buy-now-pay-later industry’s worst threat was a “bad actor” that brought the hammer down.

“If we set standards together we can all work towards raising the bar for the future interest of our customers,” he said.

ASX buy-now-pay-later stablemate Zip recently announced plans to dual list in the United States, but Mr Youakim said Sezzle, while open to the possibility, had no plans to do the same.

“We try to think about every type of lever we have in our control and what it might do to impact our growth forward,” he said.

Market analysts welcomed the Sezzle result, with RBC Capital Markets noting the strong outlook for the business.

RBC holds an outperform, speculative risk rating on the business with an $11 price target.

But shares in the company fell on opening, down 9 per cent by late in the day.