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Sezzle (ASX:SZL) share price charges higher on Q3 update

the words buy now pay later on digital screen, afterpay share price
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The Sezzle Inc (ASX: SZL) share price is on course to end the week with a bang.

In morning trade the buy now pay later provider’s shares are up 3% to $7.12.

Why is the Sezzle share price shooting higher today?

Investors have been buying Sezzle’s shares following the release of its third quarter update this morning.

Like rivals Afterpay Limited (ASX: APT) and Zip Co Limited (ASX: Z1P), Sezzle has continued its strong growth during the recent quarter.

For the three months ended 30 September, the company reported a 231.5% increase in underlying merchant sales (UMS) to US$228.2 million. This was also up 21.4% quarter on quarter.

And based on its UMS for the month of September, the company achieved an annualised UMS run-rate of US$986 million. This means Sezzle almost achieved its annualised run-rate goal of US$1 billion a quarter earlier than planned.

Also growing strongly was its merchant fees, which rose 260.6% year on year to US$13 million. This represents 5.7% of UMS, an improvement of 46 basis points since this time last year.

Pleasingly, the trend of lower year on year net transaction losses as a percentage of UMS continued in the third quarter.

What were the drivers of its growth?

Sezzle’s growth was driven by a combination of merchant growth, customer growth, and increasing repeat usage.

The company added 4,778 active merchants to its platform, bringing its total to 20,890. This was an increase of 178% over the prior corresponding period.

Sezzle’s active consumers hit 1,792,681 at the end of September. This was an increase of 21.5% since 30 June and 178.1% year on year.

Finally, active consumer repeat usage increased to 89%, which was the 21st consecutive month of improvement in this metric.

Sezzle’s CFO, Karen Hartje, commented: “Our strong balance sheet position at 30 September allows us to pursue our growth strategies and weather the protracted effects of COVID-19. We also continue to see COVID-19 hardship requests decline to negligible levels. The combination of lower hardship requests and the continued improvement in our Active Consumer Repeat Usage rate have played key roles in keeping our loss rates at relatively low levels.”


Pleasingly, the company’s Executive Chairman and CEO, Charlie Youakim, revealed that the fourth quarter has started strongly.

He commented: “We are extremely proud of our team and what they have accomplished in 2020, but we are not done. Our product initiatives and merchant pipeline have never been better and the current quarter has gotten off to a solid start.”

“We believe we are well-positioned, as we head into our strongest seasonal months of November and December,” he concluded.

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Returns as of 6th October 2020

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.

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