Sezzle Inc.: history, ownership, mission, how it works & makes money

A Brief History of Sezzle Inc.

Sezzle Inc. was founded in 2016, aiming to provide consumers with a flexible payment solution that allows them to make purchases and pay for them over time. The company operates in the buy now, pay later (BNPL) sector, which has seen substantial growth in recent years, fueled by changing consumer behaviors and preferences for manageable payment options.

In its early years, Sezzle initiated partnerships with various e-commerce platforms, facilitating access to its services for both merchants and consumers. By 2019, Sezzle reported an active user base of over 750,000 users, with more than 2,000 merchants utilizing its payment solutions.

The company went public on the Australian Securities Exchange (ASX) in 2019, raising approximately A$30 million (equivalent to about $21 million USD at that time) to fund its expansion plans. This IPO marked a significant milestone as Sezzle aimed to enhance its presence in North America and scale its operations.

By 2020, Sezzle had attracted significant attention in the financial markets. In the first quarter of 2020, the company processed over $300 million in underlying sales, reflecting a remarkable year-over-year growth. The total revenue for the fiscal year 2020 was around $10.5 million, more than double the previous year’s revenue.

The COVID-19 pandemic further accelerated the adoption of e-commerce, which positively impacted Sezzle's business. The company reported a record performance in Q2 2020, with an increase in active users exceeding 1.5 million and gross merchandise volume (GMV) soaring to approximately $800 million for the year.

In 2021, Sezzle continued to expand its market reach, achieving over 2.5 million active users and collaborating with more than 8,000 merchants. The company reported an impressive revenue increase to approximately $25 million and a GMV of around $1.5 billion in the same fiscal year.

Sezzle made strides in diversifying its service offerings by introducing new tools for merchants, including enhanced analytics and marketing initiatives aimed at improving conversion rates. The company also focused on increasing its customer retention through loyalty programs.

By the close of 2022, Sezzle reported approximately 3 million active users, with its merchant base reaching 10,000. Revenue for the year surged to about $40 million with a GMV of $2 billion, showcasing the sustained demand for BNPL services amid ongoing shifts in retail payment preferences.

As of 2023, Sezzle continues to innovate within the BNPL space, exploring partnerships and technological advancements to enhance user experience and merchant offerings. The company's growth trajectory reflects the increasing acceptance of alternative payment solutions as an essential part of modern commerce.

A Who Owns Sezzle Inc.

Sezzle Inc. is a publicly traded company listed on the Nasdaq under the ticker symbol SEZL. As of the end of the third quarter of 2023, the ownership structure of Sezzle is distributed among institutional investors, individual shareholders, and company insiders.

According to the latest filings, approximately 43% of Sezzle's shares are held by institutional investors. Notable institutional shareholders include:

Insider ownership also plays a significant role in the company's governance. As of September 2023, insiders reportedly own around 16% of Sezzle's total shares. Notable insiders include:

Public float, which represents the portion of shares available for trading by the public, stands at approximately 41%. The company has seen fluctuations in its stock price, with a 52-week range from $0.68 to $1.75. The current market capitalization of Sezzle is around $150 million.

Sezzle's financial performance showcases its growth trajectory. For the second quarter of 2023, the company reported total net revenue of $12.3 million, a year-over-year increase of 45%. The net loss for the same period was approximately $4.5 million, reflecting ongoing investments in marketing and technology.

Overall, Sezzle's ownership structure, combined with its ongoing financial developments and strong institutional support, positions it as a noteworthy player in the buy now, pay later (BNPL) sector.

Sezzle Inc. Mission Statement

Sezzle Inc. is a fintech company dedicated to providing simple and responsible payment solutions. The mission statement emphasizes the commitment to empowering consumers with flexible purchasing options while ensuring financial wellness. The aim is to make e-commerce accessible to everyone, especially by enabling consumers to buy now and pay later.

As of Q3 2023, Sezzle reported that its total revenue was approximately $12.7 million, reflecting a year-over-year growth of 21%. The company’s focus on responsible spending is underscored by its default rate, which remained low at 6.5%, illustrating its commitment to consumer protection.

Sezzle’s mission statement is not just a declaration; it reflects key operational strategies. The company's platform is designed to minimize the barriers to entry for consumers. As of September 2023, Sezzle's average order value (AOV) was reported at $100, indicating that consumers show a preference for manageable increments when committing to purchases.

The company’s commitment to consumer empowerment is also evident in its customer-centric policies, including a transparent fee structure. For instance, Sezzle eliminates late fees for consumers who pay on time, promoting responsible financial decisions. In Q3 2023, only 10% of consumers incurred any late fees, showcasing the effectiveness of this model.

Furthermore, Sezzle's focus on inclusivity is highlighted by its diverse demographic reach. Approximately 40% of its user base is under the age of 30, suggesting a strong appeal to younger consumers who are increasingly valuing financial flexibility.

In terms of market competition, Sezzle operates in a rapidly growing sector, with the BNPL (Buy Now, Pay Later) market projected to reach $680 billion by 2025. Sezzle's strategic goals include expanding its footprint in this market by enhancing partnerships with various retailers and optimizing its technology platform.

How Sezzle Inc. Works

Sezzle Inc. is a financial technology company that provides a buy now, pay later (BNPL) service to consumers and merchants. Founded in 2016 and headquartered in Minneapolis, Minnesota, Sezzle aims to simplify payments while enhancing consumer financial wellness.

Sezzle’s core offering allows consumers to make purchases and pay for them over a period of time, typically across four interest-free payments. This model appeals to consumers who prefer to budget their expenditures without incurring interest charges or fees, provided they make payments on time.

Business Model

The company generates revenue primarily through merchant fees and late fees. When consumers choose to check out with Sezzle, merchants pay a percentage of the transaction amount, which typically ranges between 6% to 7%. In the fiscal year 2022, merchant fees contributed approximately $29.3 million to Sezzle’s revenue.

Consumer Engagement and Growth

As of Q2 2023, Sezzle reported having over 3 million active consumers and partnered with over 47,000 merchants. The platform has seen consistent user growth across various demographics, particularly among younger consumers who favor the flexibility of BNPL options.

Financial Performance

In its most recent earnings report for Q2 2023, Sezzle reported a revenue of $8.2 million, a decrease of 18% year-over-year. The gross merchandise volume (GMV) processed by Sezzle decreased by 20%, totaling approximately $165 million for the quarter.

Key Financial Metrics

Risk Management and Compliance

Sezzle employs various risk management strategies, including robust fraud detection systems and compliance frameworks to adhere to regulatory standards. The company is registered with the Consumer Financial Protection Bureau (CFPB) and is committed to responsible lending practices.

Market Trends

The BNPL market has been expanding significantly, projected to grow at a compound annual growth rate (CAGR) of 22% from 2023 to 2028. Sezzle competes with other major players in the BNPL sector, including Affirm and Afterpay, which have also seen substantial growth.

By leveraging technology and consumer data insights, Sezzle aims to enhance its product offerings and improve user experience, with plans to introduce new features such as loyalty programs and personalized recommendations to drive consumer engagement.

Future Outlook

For the remainder of 2023, Sezzle expects to implement aggressive marketing strategies to attract new merchants, predicting a growth in revenue by 10% to 15% for the upcoming quarters. The company’s focus on enhancing its algorithm for risk assessment and consumer credit evaluation is crucial to sustaining its market position.

How Sezzle Inc. Makes Money

Sezzle Inc. operates in the burgeoning field of buy now, pay later (BNPL) services, offering consumers the ability to make purchases and pay for them over time. The company's revenue model primarily revolves around three main components: merchant fees, consumer fees, and interest income.

Merchant Fees

Sezzle charges participating merchants a fee per transaction, which typically ranges from 6% to 7%. This fee compensates Sezzle for processing payments and providing its BNPL services. According to the company’s latest earnings report, Sezzle reported revenue of $49.1 million for the full year 2022, with a significant portion derived from merchant fees.

Consumer Fees

While Sezzle promotes a zero-interest payment plan for consumers, it also generates revenue through late fees and additional payment plan options. For instance, if a consumer fails to pay on time, Sezzle may charge a late fee of up to $10 per missed payment. In 2022, late fees accounted for approximately 13% of Sezzle's total revenue, translating to about $6.4 million.

Interest Income

Sezzle offers a feature called Sezzle Up, which allows consumers to pay for purchases using a credit line. Interest income from this product contributes another layer to Sezzle’s revenue structure. As of Q2 2023, Sezzle reported an average interest rate of 15% on outstanding balances, with total interest income reaching $2.5 million in the same quarter.

Operational Metrics

To understand Sezzle’s overall performance, it is helpful to look at key operational metrics:

Sezzle's growth trajectory can also be gauged by its transaction volume, which has seen a robust increase of 38% year-over-year as recorded in Q2 2023. This growth reflects increased adoption of BNPL solutions among both merchants and consumers, indicating a steady market demand.

Strategic Partnerships

Sezzle has entered into various strategic partnerships with major e-commerce platforms, such as Shopify and WooCommerce, thereby expanding its reach. This approach not only enhances visibility but also drives transaction volume significantly, further bolstering its revenue base.

Market Position

As of October 2023, Sezzle holds a market capitalization of approximately $125 million. The company competes against larger players like Affirm and Afterpay, which hold a significant market share. However, Sezzle has carved a niche by focusing on low and no-cost payment alternatives, appealing to budget-conscious consumers.

Financial Outlook

Looking forward, analysts project a revenue growth rate of 25% annually for Sezzle, driven by increased consumer adoption of BNPL services and expanded merchant partnerships. The company’s strategic initiatives and investment in technology are expected to enhance user experience and operational efficiency, potentially leading to improved profitability.