The Sezzle Inc (ASX: SZL) share price has risen 19% over the last month. Should it be on your watchlist?
It has done ever better over the last six months, rising by 32%.
Sezzle’s win
A couple of weeks ago, Sezzle announced a key contract win.
The US-based buy now, pay later business has entered into a three-year agreement
with Target Corporation (NYSE: TGT). Sezzle has concluded its proof of concept (POC) with the huge retailer.
Under the agreement, Sezzle’s product will be used in-store and across Target’s digital platforms, providing guests access to interest-free payment plans for purchases made at Target.
Target is a gigantic retailer in the US, one of the top 10 biggest in the whole country. There’s a large amount of sales that get processed. It’s hard to say how much of that Sezzle can win over time, but even 1% would make a good difference to Sezzle’s underlying merchant sales (UMS).
March quarter
For the March quarter, UMS soared higher by 214.1% to US$375.1 million year on year. This was 16.9% quarter on quarter growth. Sezzle’s income as a percentage of UMS remained steady at 5.9%. Sezzle’s income jumped 216.2% to US$29.2 million.
Active consumers grew by 126.6% year on year to 2.6 million. It added around 400,000 active consumers during the quarter. Active merchants rose by 167.5% to 34,000.
Another highlight from the update was that it received B Corp certification status. It has joined innovative leaders across the world intent on advancing environmental, social and economic causes.
In the first quarter of 2020, less than 3% of payment dollar volume was processed through ACH. In the first quarter of 2021, over 15% of dollar volume was through ACH. The company estimates that ACH payment processing fees are approximately 150 basis points lower than traditional forms of payment.
Summary thoughts on the Sezzle share price
Sezzle is growing at a nice pace, but I’m not sure top line growth is enough to keep sending shares higher. It’s one to keep an eye on, the eventual winner of the buy now, pay later sector could make a lot of money. But I’m not sure if that will be Sezzle or others. They may all not make much profit if margins contract.
