Shares of Sezzle (SEZL 41.90%) were on fire today as the buy-now, pay-later (BNPL) platform delivered strong results in its first quarter and raised its guidance.
The quarter is the latest evidence of strong momentum in the business, and the stock was up 51% as of 1:24 p.m. ET.
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Sezzle soars
The fintech company said that gross merchandise volume (GMV), or spend on the platform, jumped 64.1% to $808.7 million, with customer purchase frequency up to 6.1 times in the quarter from 4.5 in the quarter a year ago.
That drove revenue up a whopping 123.3% to $104.9 million, which crushed estimates at $64.8 million.
The company had 658,000 users in the quarter, and delivered strong results on the bottom line as well. Operating income jumped 260.6% to $49.9 million, giving it an operating margin of 47.6%. Generally accepted accounting principles (GAAP) earnings per share jumped from $0.22 to $1.00, which was miles ahead of the consensus at $0.32.
CEO Charlie Youakim said, “Our investments in innovation and consumer experience drove new highs in engagement and performance in the first quarter. Stronger consumer activity and better-than-expected repayment trends propelled quarterly earnings above our expectations. These positive developments give us the confidence to raise our 2025 net income guidance by nearly 50% to $120 million.”
What’s next for Sezzle?
Sezzle is clearly gaining market share rapidly in the fragmented BNPL space, and has some key differences from other BNPLs, including that it gives users the option to choose whether their data is reported to credit bureaus, meaning it appeals to users who don’t want to risk hurting their credit scores.
The model appears to be resonating, given the skyrocketing growth, and management raised its guidance as well, calling for total revenue growth for the year of 60%-65%, up from 25%-30%. It expects earnings per share to reach $3.25, up from a previous level of $2.21.
Based on that forecast, Sezzle still looks very reasonably valued at a price-to-earnings ratio of just 25. The stock could easily move higher from here if its rapid growth continues.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sezzle. The Motley Fool has a disclosure policy.
