Sezzle NASDAQ: SEZL reported first-quarter 2026 results that management said reflected strong growth, profitability, and rising consumer engagement, prompting the company to raise its full-year guidance.
Chief Executive Officer and Executive Chairman Charlie Youakim said 2025 focused on enhancing Sezzle’s consumer ecosystem, including app improvements and engagement features, while 2026 is aimed at pushing beyond checkout-centric use. “Our ambition is to serve our consumers more broadly in their everyday lives and in the way they manage everyday spending,” Youakim said, citing planned expansion across payments and adjacent products such as deposit accounts, card products, enhanced lending options, and Sezzle’s recently launched mobile plan.
Quarterly growth and profitability
Youakim said the first quarter followed a “similar and important pattern” to the first quarter of the prior year, with better-than-expected credit performance boosting margins and supporting approvals for higher volume while maintaining discipline on risk. He added that repayment strength helped drive gross merchandise volume (GMV) that “nearly matched the fourth quarter holiday period.”
According to Youakim, quarterly purchase frequency increased to 7.1x from 6.1x in the prior-year period, which he described as a meaningful indicator of higher repeat engagement. He reported GMV growth of 37.3% year-over-year and total revenue growth of 29.2%, with gross margins reaching 74% of total revenue. Sezzle generated GAAP net income of $51.3 million, representing a 37.9% profit margin, and adjusted EBITDA of $71.1 million, representing a 52.5% margin.
Chief Financial Officer Lee Brading emphasized seasonality, noting that Q1 is typically the peak quarter for revenue yield (total revenue divided by GMV) due to payments from the holiday quarter spilling into Q1, and it is also typically the best quarter for provisioning because consumers benefit from tax refunds early in the year. “While we would love to just annualize a unit economic margin of 74%, we can’t,” Brading said.
Brading said Q1 GMV was $1.1 billion, nearly surpassing Q4 GMV of $1.2 billion. Revenue yield increased sequentially to 12.2% from 11.2% due to seasonality, but declined 80 basis points year-over-year, which he attributed to merchant and virtual card mix and fewer consumer fees charged.
Subscribers, marketing, and engagement initiatives
Youakim pointed to subscriber growth as a key driver of recent momentum. He said total subscribers increased by 44,000 in the quarter to 714,000. He also noted that total “mods” declined sequentially due to lower monthly on-demand users after the holiday season, along with the company’s “renewed focus on our subscribers.”
Marketing spend increased again in the quarter, and Youakim said the company has been testing campaigns and funnels since late 2024 to improve subscriber acquisition and engagement. Despite higher spending, he said Sezzle is still seeing a payback period of less than six months. Brading noted that marketing spend more than doubled year-over-year, but Sezzle continued to leverage non-transaction-related operating expenses by 30 basis points year-over-year.
In response to an analyst question about channels, Youakim cited a mix of brand and performance marketing. He referenced the company’s Timberwolves sponsorship as a brand awareness effort and said the “usual suspects” are driving results, including web ads, social media ads, and in-app ad networks, with additional testing in connected TV. Brading added that marketing spend as a percentage of revenue was “fairly reasonable” and “slightly lower” than it was in the second quarter of the prior year, according to his comparison.
Youakim also highlighted engagement tied to the Earn tab launched in June 2025. He said it has generated 4.8 million visits, and consumers show a 55% increase in buy now, pay later (BNPL) conversion within 30 days after their first Earn tab activity.
Product expansion and AI investments
Management outlined multiple product and platform initiatives in and around the quarter. Youakim said Sezzle expanded short-term installment options with Pay in five, launched enhanced long-term lending capabilities across the BNPL suite, introduced a virtual card in Canada with select integrated merchants, and launched the Sezzle Mobile plan on AT&T’s network with an unlimited plan starting at $29.99 for Sezzle Anywhere members.
Asked to rank those initiatives by likely impact, Youakim said Pay in five would be most important, citing consumer demand and early results. He said the Canadian virtual card was “not quite fully launched” and currently “closed-end,” but could have “serious potential” once it becomes more broadly usable, while also noting Canada represents about 10% of Sezzle’s volume. He described Sezzle Mobile as designed more for retention than revenue, and said enhanced long-term lending has historically been “more of a nice sidecar” rather than a major financial driver.
AI was another major theme. Youakim said Sezzle is embedding AI across product development and operations. He said a recently launched AI support chatbot is resolving approximately 60%-70% of chats without escalation. He also said the company is testing an AI shopping assistant that is improving click-to-order conversion. Internally, he said AI is being used to analyze chargebacks, improve business intelligence and support quality, improve access to company data, and speed engineering workflows.
On product roadmap timing, Youakim said he expects the items outlined in the company’s roadmap to be “completed, launched, and scaling by the end of 2027,” while noting priorities could shift. He also said a significant portion of code development is now AI-assisted, stating “upwards of 80% of our code is now being developed by AI” with team review.
Credit performance, unit economics, and guidance raise
Brading said all three components of transaction-related costs—transaction expense, provision for credit losses, and net interest expense—moved favorably year-over-year. He attributed transaction expense improvement largely to pushing consumers toward lower-cost payment channels such as ACH. He said provision improved due to better-than-expected performance in the current portfolio and prior-year vintages, adding that the company is “not seeing any unusual strains on the consumer.” He also said net interest expense remained low at 0.3% of GMV and suggested there could be improvement as Sezzle refinances its credit facility, which matures next April.
In Q&A, Youakim and Brading reiterated expectations for provision for credit losses to move toward a 2.5%-3% of GMV range over the year, citing seasonality, estimation dynamics in quarterly provisioning, the impact of marketing-driven new user growth, and Pay in five, which Youakim said “does just logically have a slightly higher provision inherent to the idea.”
Brading said Sezzle ended the quarter with $147.4 million in cash, including $26.9 million in restricted cash, and $69 million of availability under its line of credit. He said working capital increased relative to previous quarters due to the launch of Pay in five in January. Brading also said Sezzle repurchased $24.8 million of common stock during the quarter.
Sezzle raised full-year 2026 guidance, increasing expected total revenue growth to 30%-35% from 25%-30%. Brading said the company now expects adjusted net income of $180 million and adjusted EPS of $5.10. Management said guidance does not include projections for new products currently in development, and Youakim noted Sezzle Mobile is not included in projections while Pay in five is included as part of the existing product mix.
Youakim said the company is making progress on a banking charter process and expects to submit an application mid-2026, while Brading noted Sezzle has moved beyond the discovery phase and is hiring executives and non-executive directors. Youakim framed the charter effort as driven primarily by regulatory defensibility and potential cost structure benefits over time, rather than a strict limitation on what products can be launched through bank partnerships.
About Sezzle NASDAQ: SEZL
Sezzle Inc is a financial technology company specializing in buy now, pay later (BNPL) services that enable consumers to split purchases into interest-free installment payments. By integrating its platform with e-commerce merchants, Sezzle provides shoppers with flexible payment options at checkout while merchants benefit from increased conversion rates and average order values. The company's technology is designed to offer a seamless user experience, with instant approval decisions and no hidden fees, positions it as a consumer-friendly alternative to traditional credit products.
Founded in 2016 and headquartered in Minneapolis, Minnesota, Sezzle completed its initial public offering on the Nasdaq under the ticker SEZL.
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