The Sezzle Inc (ASX: SZL) share price has been a strong performer on Tuesday.
In morning trade the buy now pay later provider's shares are charging 20% higher to a record high of $4.88.
Why is the Sezzle share price surging higher?
While Afterpay Ltd (ASX: APT) may be stealing the headlines today with its capital raising and impressive trading update, its smaller buy now pay later rival has also released a very positive update of its own.
According to the release, Sezzle's strong form continued in the second quarter with stellar underlying merchant sales (UMS) growth.
Sezzle reported UMS of US$188 million (A$272.3 million) for the quarter. This represents a 58% quarter on quarter increase and a 349% year on year increase.
Key drivers of this growth were increases in active customers, active merchants, and usage.
At the end of the quarter there were 1.48 million active customers using its platform. This is up 28% from the last quarter and 243% from the prior corresponding period.
It was a similar story for active merchants, which rose 27% quarter on quarter to 16,112. This is an increase of 219% from the same period last year.
Management also notes its improving consumer profile. Repeat usage improved over 10 points year on year to 87.5% for June 2020 compared to 77.2% in June 2019. Pleasingly, its performance in June represents the 18th straight month of sequential improvement.
Sezzle's Executive Chairman and CEO, Charlie Youakim, commented: "In these uncertain times, we are fortunate to announce record Q2 results across a number of our key metrics. 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 eCommerce."
"Our strong performance in Q2 is reflective of an improving consumer profile combined with an accelerated adoption of eCommerce due to the pandemic. The undercurrent of organic growth that we are experiencing is exciting to see as our business matures. The gains in repeat customer usage and frequency of purchases by cohorts are key drivers to lower loss rates and greater net transaction margin (NTM)," he added.
Outlook.
Management appears confident that its strong form can continue.
It anticipates that by the end of 2020, it will have achieved an annualised run rate for UMS exceeding US$1 billion (A$1.4 billion) per annum.
