The Sezzle Inc (ASX: SZL) share price has declined by 24% during May 2021. With how much the buy now, pay later business has fallen – is it now a buy?
A few weeks ago the company released its FY21 first quarter update to the market. Investors got a chance to see how the company is tracking in 2021.
First quarter update
The business reached new highs in the first quarter for underlying merchant sales (UMS), active consumers, active merchants and repeat usage.
UMS for the first quarter increased 214.1% year on year to US$375.1 million. March's UMS exceeded December's by 30%.
Sezzle income as a percentage of UMS remained steady year on year at 5.9%.
The company added 400,000 active customers during the quarter, the total went up 126.6% year on year to 2.6 million consumers. Active merchants increased 167.5% year on year to 34,000.
The business continues to win over larger enterprises, including Market America Worldwide and Lamps Plus. Market America is the owner of the e-commerce site shop.com.
Sezzle's consumer profile keeps improving every quarter. Active consumer repeat usage increased to 90.7%, which was the 27th consecutive month of improvement. The top 10% of Sezzle's consumers, on average, transact four times a month.
The business has seen a positive shift of more than 10 percentage points year on year to the automated clearing house (ACH) as a payment method, which comes with lower costs.
Sezzle has also been busy behind the scenes with other initiatives. On 30 March 2021, it announced it has received the certification required to achieve B Corp status, which is for businesses intent on advancing environmental, social and economic causes.
It also intends to file a registration statement with the Securities and Exchange Commission in the US for a proposed initial public offering (IPO). The number of shares, the use of the proceeds and the price have not yet been determined.
The company is in the early stages of growth in Canada, India and Europe. It's now looking to expand into Brazil.
Is the Sezzle share price a buy?
Ord Minnett was impressed by the Sezzle quarterly update, beating expectations. UMS, average usage and income were all better than expected. The broker is also excited by the idea of an IPO in the US.
The broker's price target for the buy now, pay later company is $11.90. That suggests a potential upside of over 60% over the next 12 months, if the prediction becomes true.
