Nov 5, 2023

Sentiment: Bearish

Type of Trade: High Growth

Industry: BNPL

Sector: Financials, Information Technology

As per September Quarter CY23

Sezzle an award winning BNPL financing institution that offers technology driven payment platform as similar to ZIP and Block. It also allows customers to split their payments into four instalments and pay over 6 weeks with only first payment due at the time of purchase. The company’s mission supports the next generation with various stakeholders.

Sezzle reports its 5th straight quarter of profitability on its underlying operations.

The company has received number of awards and recognition from various media and sources as one of the best BNPL platform for students and flexible payments.

Key Services and Partnering Brands

Sezzle partner with key brands across North America and other markets, also continue to test non-traditional BNPL verticals such as Travel sector, business services, food and bev, education services, medical care and hardware tools. (nevertheless we don’t see it as competitive advantage).

✅ Growing Merchant Network has also been increasing, but not at the pace of 2020.

The key service that Sezzle offers to its consumers are:

  • Credit Building
  • Long-term installments
  • Marketplace enhancements
  • Omnichannel Offering
  • Loyalty Program (Future expansion opportunity)
  • Premium Subscription (Future expansion opportunity)
  • Pay-in-two and pay-now (Future expansion opportunity)
  • Physical Card (Future expansion opportunity)

Market Opportunity and Repeated Usage

✅ Sezzle continue to improve its active consumers with most key fundamental metrics needed for sustainable growth, well improved during 1H FY23 result released with highlight to Net Income positive.

]September 2023 Business Update

Sezzle reports its 5th straight quarter of profitability on its underlying operations

✅ Sezzle has started trading on NASDAQ.

✅ Total Income increased to US$14.4 million (A$22.3 million2) in September 2023, representing a 36.0% YoY and 2.8% MoM increase. Total Income as a percentage of Underlying Merchant Sales (UMS) increased 123 bps YoY to 8.9%.

✅ In September 2023, Sezzle recorded GAAP Net Income and Adjusted EBITDA (a non-GAAP financial measure) of $0.6 million and $3.0 million, respectively.”

✅ As of 30 September 2023, Sezzle had US$66.8 million in cash on hand (US$1.7 million of which is restricted) and US$75.9 million drawn from its US$100.0 million credit facility.”

✅ As of 30 September 2023, notes receivable (net) and merchant accounts payable amounted to US$102.5 million and US$68.2 million, respectively. The merchant interest program represented US$51.9 million of the merchant accounts payable balance.

Path to Profitability

In FY22, Sezzle still reporting huge NLAT, we believe that Sezzle, however, it was well improved from the previous year. We believe that we could see NLAT near zero in this Financial Year, which the company is set to report in January/February. If that is confirmed, we are likely to see a rapid rally in the stock price.

Once again, Sezzle reports its 5th straight quarter of profitability on its underlying operations and 4th quarter of EBTDA positive. It doesn’t means the company will be NPAT, however it shows a huge fundamental improvement during high interest rates environment. It is important to see the full year report and what will be the non-recurrent costs related to the FY23 business operations.

🚩 The September Quarter update however shows lack of Standardisation, note that non-GAAP measure are not standardised and can vary in between companies, making it difficult for us to compare financial performance across different companies.

🚩 Macroeconomics for BNPL in general is still tricky posing high risk to majority of the businesses since rising interest rates has been narrowing already thin margins. Sezzle profitability will also depend on the borrowing rates being much lower than the fees charged to merchants for their services.

🚩 High interest rates environment is not favourable for growth stocks such as BNPL, although we have seen 94% stock price decline in the last 18 months and 43% stock price decline in the last two months, (ASX: SZL) should move together with the whole sector. The key catalyst for Sezzle is interest rates.

✅ On the other hand, although soaring inflation and concerns about a possible recession are making consumers more apprehensive about purchasing the expensive items best suited for extended payments, lower liquidity in the market could accelerate of BNPL use for small shoppings due its flexibility of payments.

Technical Analysis

If you have invested on (ASX: SZL) 52 weeks ago, you would be down by 21%, the stock price has stabilised and it is currently trading sideways within a tradable range, from $15 to $27. Negative macro economic metrics such as lower economic growth and high unemployment rates should benefit the stock price moving forwards, specially if interest rates cut comes into place in a foreseeable future.

We have recently traded Sezzle and exit at $24 level using BGS 20 Strategy, we believe that we could see similar action in the upcoming weeks, since the stock is currently trading at technically discounted price.

Since most BNPL moves as many cryptocurrencies, (ASX: SZL) is loved stock among retail investors as quick money type of the stock, nevertheless if not used an effective strategy the loss can be massive, (ASX: SZL) should be only bought at technically discounted prices not only for the short term but also for the long term due the nature of the risks associated to the currently multidimensional facts.


  • Capital Flow into the stock
  • Entry Prices
  • Risks
  • Targets BGS20 and BG Trading, Stop loss.
  • Shareholders trend.

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