What Sezzle (SEZL) Said on Its Q3 Earnings Call

Key Points

• Sezzle raised its 2026 outlook after Q3 revenue increased 42.6% to $166.5 million and net income rose 79.3% to $47.8 million. It also issued a preliminary 2027 adjusted net income per diluted share forecast of $7.20.
• Growth was supported by a 68.1% increase in active subscribers to 955,000 and a 34.9% rise in transaction volume to $1.4 billion. Pay in 5 is largely rolled out, while SezzleCash showed early customer uptake and Sezzle Send remains in refinement.
• Net transaction margin reached 64.7% of revenue, near the top of Sezzle’s target range, aided in part by a $3.7 million Visa arrangement benefit. The company also applied for a national bank charter, a lengthy process with no guaranteed outcome.

Sezzle NASDAQ: SEZL raised its 2026 outlook after third-quarter revenue rose 42.6% and net income climbed 79.3%, as growth in subscriptions and transaction volume helped drive higher profitability.

The company reported revenue of $166.5 million and net income of $47.8 million for the quarter. Adjusted net income rose 89.9% to $47.7 million, while adjusted EBITDA increased 77% to $70.2 million.

Sezzle now expects full-year revenue growth of approximately 42.5%, up from its previous forecast of 35%. It raised its adjusted net income outlook to $190 million from $185 million and its adjusted net income per diluted share forecast to $5.45 to $5.50 from $5.25.

The company also introduced a preliminary 2027 forecast of $7.20 in adjusted net income per diluted share, representing growth of approximately 31% to 32% over its revised 2026 range. Chief Financial Officer Lee Brading said the estimate includes products already launched and that Sezzle expects to provide more detail on revenue and margins with its fourth-quarter results.

Subscribers and transaction volume grow

Sezzle ended the quarter with 955,000 active subscribers, up 68.1% from a year earlier. The company added 101,000 net subscribers during the quarter, compared with a record 140,000 in the second quarter.

Chief Executive Officer and Executive Chairman Charlie Youakim said Sezzle reduced marketing spending to $15.9 million from $19.4 million in the preceding quarter after testing a higher spending level. He said the company preferred the lower run rate while continuing to pursue acquisition opportunities that meet its six-month marketing payback threshold.

Total transaction volume rose 34.9% year over year to $1.4 billion. Brading said Sezzle adopted the measure as its primary volume metric during the quarter because it includes SezzleCash advances and Sezzle Send payments, which were not captured by its previous gross merchandise volume measure. Prior periods were recast for comparison.

Total transactions increased 30.1% to 12.4 million, and average quarterly transaction frequency rose to 7.8 from 6.5 a year earlier. The frequency measure now includes cash advances and money transfers as well as purchases. Average quarterly revenue per monetized user rose 28.1% to $41.

New products remain at different stages

Youakim described Pay in 5 as a successful launch and said its rollout across the business was largely complete. During the question-and-answer session, Brading said the product represented approximately 70% of Sezzle’s core buy now, pay later business.

SezzleCash, launched in June, gives eligible Anywhere subscribers access to funds for short-term needs without making a purchase. More than 15% of eligible new Anywhere subscribers made their first transaction using the product in the third quarter, Youakim said. Of those who started with SezzleCash, more than 60% also went on to make a buy now, pay later purchase.

Youakim said early SezzleCash results were encouraging but that volumes remained small relative to Sezzle’s established products. He said Sezzle Send, a person-to-person payment product that was in beta during the third quarter and opened more broadly in October, needed further refinement.

Management said the new products could help acquire customers, but cautioned that their effect on margins would depend on their growth and product mix. Brading said newer products can initially have higher provisions or loss rates.

Margins benefit from lower transaction costs

Revenue less transaction-related costs, a non-GAAP measure Sezzle calls net transaction margin, reached $107.7 million, or 64.7% of revenue, near the top of its 55% to 65% target range. Transaction-related costs fell to 4.2% of total transaction volume from 5.2% a year earlier.

Brading said the quarter included a $3.7 million benefit from an exclusive arrangement with Visa for Sezzle’s U.S. credit products. Without that benefit, net transaction margin would have been approximately 62.5% of revenue, he said.

The provision for credit losses was 2.7% of transaction volume, down from 3.1% a year earlier. Sezzle expects the full-year provision to be approximately 2.5% of transaction volume, allowing for a usual seasonal increase in the fourth quarter.

Bank charter application and capital plans

Sezzle submitted an application for a national bank charter in October, Brading said. Youakim called the process lengthy and said its outcome was not guaranteed. He also said some potential products, including checking and savings accounts, were awaiting completion of the charter process.

The company ended the quarter with approximately $239 million in liquidity, including $70.1 million in unrestricted cash and $169.3 million available under its credit line. It repurchased $28 million of stock year to date under a $100 million program.

Asked about capital allocation, Youakim said product investment remained the first priority, while the company was also considering how much cash to retain during the bank charter application process.

About Sezzle (NASDAQ:SEZL)

Sezzle Inc NASDAQ: SEZL is a financial technology company that provides buy now, pay later solutions. Its platform enables consumers to split eligible purchases into installments, generally at the time of checkout, while giving merchants payment and customer-engagement tools designed to support e-commerce sales.

The company offers installment payment services through its consumer app and merchant integrations, as well as products such as Sezzle Virtual Card and Sezzle Up. Sezzle Up is designed to provide eligible users with credit-building opportunities, while the company's merchant platform supports checkout integration, transaction management and consumer financing.

Sezzle was founded in 2016 and is headquartered in Minneapolis, Minnesota.

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