The Sezzle Inc (ASX: SZL) share price is pushing higher on Monday after the release of its second quarter business update.
At the time of writing the buy now pay later provider’s shares are up 2% to $8.03.
How did Sezzle perform in the second quarter?
During the second quarter, the Afterpay Ltd (ASX: APT) rival delivered underlying merchant sales (UMS) of US$188 million. This was a 57.5% increase on the first quarter and a 348.6% lift on the prior corresponding period.
This was driven by a 28.4% quarterly increase in active consumers to 1,475,235 and a 26.7% quarterly rise in active merchants to 16,112. Both metrics were up over 200% compared to the second quarter of FY 2019.
Sezzle’s merchant fees rose 54.8% over the first quarter and 397.1% over the prior corresponding period to US$10.6 million. As a percentage of UMS, merchant fees improved 55bps year on year to 5.6%, but declined 10bps from the first quarter.
Sezzle’s Executive Chairman and CEO, Charlie Youakim, was pleased with the quarter.
He said: “Our strong 2Q20 performance, improving consumer profile, and successful capital raise, position us to achieve our annualized run rate target of US$1 billion in UMS by the end of 2020. The shift to online retail has positioned Sezzle as a key partner for merchants, as 2Q20 represented the top 3 periods of monthly UMS in the Company’s history.”
“The gains in frequency of purchases by cohorts and repeat customer usage are encouraging to see as our business matures. We are excited about the brand loyalty that is building, as each cohort is outpacing the previous cohort at a similar point in time,” Mr Youakim added.
Strong balance sheet.
Operating cash flows for the quarter were a positive US$4.3 million, leaving Sezzle with US$55.7 million of cash and cash equivalents.
The company’s CFO, Karen Hartje, commented: “Our strong balance sheet at 30 June coupled with our Capital Raise subsequent to quarter end, positions us well to pursue our growth strategies and weather the protracted effects of COVID-19.”
“Additionally, during the pandemic, we continue to see leading loss indicators improve and have been able to leverage our cost structure. These trends combined with our top-line growth are driving positive moves in our Net Transaction Margin,” Hartje concluded.
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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Sezzle Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.