Sezzle (ASX: SZL) has revealed a business update for June 2020 in addition to its last announcement.
Sezzle update
Buy now, pay later business Sezzle gave another update with its cashflows today after the completion of its capital raising.
In the last update the company said its underlying merchant sales (UMS) rose 58% quarter on quarter to US$188 million. Active consumers rose 28% quarter on quarter to 1.48 million people and active merchants jumped 27% quarter on quarter to 16,112.
In terms of operating cashflow, the company saw a positive US$4.3 million, compared to a negative cash outflow of US$1.8 million.
Cash receipts rose 53% quarter on quarter to US$169.3 million and cash payments to merchants increased 49.2% to US$154.3 million.
In terms of other spending, its product and operating costs as a percentage of receipts from customers declined 30 basis points (0.30%) to 3.1%. It’s benefiting from its growth scale. Staff costs fell to 27.9% in the June 2020 quarter, down from 41.9% in the first quarter. Admin and corporate costs were flat, so as a percentage of merchant fees it dropped to 11%, down from 18.2% in the first quarter.
Sezzle CEO Karen Hartje said: “Our strong balance sheet at 30 June coupled with our capital raise subsequent to quarter end, positions us well to pursue our growth strategy and weather the protracted effects of COVID-19.
“Additionally, during the pandemic, we continue to see leading loss indicators improve and have been able to leverage our cost structure. These trends combined with our top-line growth are driving positive moves in our net transaction margin.”
Summary
Sezzle is doing well to grow its business whilst not burning through cash. It will be interesting to see if it can continue to be cashflow positive from here. I’m not sure I could ever personally invest in the BNPL sector, but it’s a growth sector to watch. There are other growth shares I’m interested in.
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