The Sezzle Inc (ASX: SZL) share price is charging higher this morning after the buy now, pay later (BNPL) provider reported record first-quarter results.
Sezzle, a junior competitor of Afterpay Ltd (ASX: APT), reported growth in all key metrics for the March quarter. Sezzle shares have rocketed 17.27% higher in early trade this morning to be currently sitting at $1.29.
Strong improvement in key metrics
Sezzle operates in North America and says to date, the business has seen very little negative effects from the coronavirus pandemic. The company reported a 13.6% increase in underlying merchant sales for the quarter, which grew to US$119.4 million. Year on year, underlying merchant sales have grown 321%.
Active customers grew 25.6% quarter on quarter, with customers now numbering 1,149,245. The one million customer mark was passed in early February.
Meanwhile, active merchants grew 27% to 12,715. This represents an increase in active merchants of 2,705 quarter on quarter – the largest increase in Sezzle's history.
Merchant fees were up by 17.5% quarter on quarter to US$6.8 million. Repeat usage by customers improved to 85.6% for 1Q20, up from 83.7% in 4Q19.
Coronavirus effects
The onset of coronavirus in the US and Canada has resulted in a shift away from in-store shopping to eCommerce. Sezzle says this has positioned it as a key partner for merchants looking to offer more flexible payment options to customers.
"Consumers are looking for a smarter way to budget their personal finances, and merchants are looking to add more flexible payment options to drive sales," Sezzle CEO Charlie Youakim said, "both groups are turning to Sezzle to meet their needs."
Despite a slowing in overall economic activity in the US and Canada, end customers continue to use Sezzle's payment product to budget through current difficult conditions. The company says it has not seen any impacts to its credit quality or repayments.
BNPL sector hit hard
The BNPL sector was hit hard by the coronavirus market downturn, with Afterpay shares falling nearly 80% from a February high of over $40 to a low of $8.90 in March.
Sezzle shares peaked at $1.95 in February before falling 81% to a low of 37 cents in March. But investors have since decided the correction to the BNPL sector was overdone, with Afterpay rising 120% from its lows to $19.55 currently. Sezzle has risen 249% to $1.29.
Sezzle listed on the ASX in July last year, with shares issued at $1.22. The company says proceeds from the IPO, as well as a US$100 million committed credit facility, provide ample liquidity to support its business operations.
"Our financial position remains strong, giving us the runway to weather protracted effects from the global pandemic," Youakim said.
