Sezzle Inc. ((SEZL)) has held its Q4 earnings call. Read on for the main highlights of the call.
Sezzle Inc. has reported a robust performance in 2024, marked by impressive revenue growth and enhanced profitability. The earnings call conveyed a positive sentiment, highlighting the company’s successful product launches and expansion of its customer base. However, concerns were raised regarding increased credit losses and the potential impact of the On-Demand service on subscription numbers.
Record Revenue Growth
Sezzle achieved a remarkable 100% year-over-year increase in revenue for Q4 2024 and a 70% increase for the full year, reaching a total of $271 million. This significant growth underscores the company’s successful strategies in expanding its market presence and enhancing its financial performance.
Significant Profitability Improvement
The company reported an adjusted net income of $66.2 million for the year, more than tenfold compared to the previous year. Sezzle maintained an adjusted net income margin above 20% for three consecutive quarters, reflecting its strong financial health and operational efficiency.
Strong Customer Engagement
Sezzle saw a 130% year-over-year increase in the number of Monthly On-Demand & Subscriber users, reaching 707,000 by the end of Q4 2024. This surge in user engagement highlights the growing popularity and acceptance of Sezzle’s services among consumers.
Successful Product Launches
The launch of the On-Demand service and a strategic banking partnership with WebBank were pivotal in driving increased revenue and customer activation rates. These initiatives have positioned Sezzle well in the competitive financial services market.
Enterprise Merchant Signings
Sezzle successfully signed three enterprise-level merchants, including Backcountry, Bealls, and Rural King, with GMVs ranging from $700 million to over $1.5 billion. These partnerships are expected to further bolster Sezzle’s market position and revenue streams.
Increased Provision for Credit Losses
The company anticipates a provision for credit losses between 2.5% to 3% of GMV in 2025. This reflects Sezzle’s strategic decision to broaden its consumer base, accepting higher loss rates as part of its growth strategy.
Potential Decline in Subscription Numbers
There is a potential decline in subscription numbers as consumers might prefer the flexibility offered by the On-Demand service over traditional subscription products. This shift could impact Sezzle’s subscriber base, necessitating strategic adjustments.
Forward-Looking Guidance
CEO Charlie Youakim expressed optimism for 2025, forecasting double-digit revenue growth and a pre-tax net income increase of at least 55% compared to 2024. The company aims to maintain robust growth and enhance the shopper experience, despite the projected principal loss rate of 2.5% to 3%.
In summary, Sezzle Inc.’s earnings call painted a picture of a company on a strong growth trajectory, with significant achievements in revenue and profitability. While challenges such as credit losses and shifts in consumer preferences remain, Sezzle’s strategic initiatives and forward-looking guidance suggest a positive outlook for 2025.