Sezzle Inc. (ASX: SZL) has reported its half year result to 30 June 2019, sending its share price higher by 7% in early trade.
Sezzle is a US based and incorporated business, which provides an interest-free instalment payment solution. It has been operating since 2017 and is now in 12 countries. It listed on the ASX with an initial public offering price of $1.22 per share/CDI. Sezzle does not charge interest or initiation fees, however it does charge failed payment fees of US$10.
Sezzle’s Fast Growth In HY19
Sezzle reported that its underlying merchant sales grew to $70.2 million, up from $4.5 million from the six months to 30 June 2018 (prior corresponding period (pcp)).
Active customers increased to 430,000, up from 26,724 at the end of the pcp. At 31 July 2019, active customers had grown further to 496,000. Active merchants increased to 5,048 at June 2019, up from 815 at the end of the pcp. At the end of July 2019, active merchants had grown to 5,793.
Sezzle income for the half year was $3.6 million, up from $0.2 million. Total income to June 2019 was $4.3 million, compared to $0.3 million for the pcp.
Transaction losses were 1.5% for the June 2019 half year, an improvement from 2.1% from the pcp. The net transaction margin was negative 0.3%, compared to 1.2% for the pcp – this change was due to a mix in method of payment by customers, where it began accepting credit & debit cards which have higher processing costs.
That’s why Sezzle reported that its loss after tax worsened by 365% to $4.75 million.
The company recently launched into the Canadian market, where it said it has matched the early trajectory of its US launch. However, management are pleased with how Canadian merchants are engaging with Sezzle.
Sezzle also said that it has engaged a third party to review its anti money laundering policy, even though AML provisions don’t actually apply to Sezzle.
Is Sezzle A Buy?
Sezzle has obviously revealed impressive growth in percentage terms. However, it’s concerning to see that its net transaction margin turned negative, hopefully that turns around soon.
I’m not sure how successful Sezzle can be against other competitors like Afterpay Touch Group Ltd (ASX: APT), but the opportunity may be large enough for several players.
Even so, it’s too early for me to think about Sezzle shares, there’s a lot of growth priced into the current share price and I’m not generally a fan of the buy now, pay later industry anyway. I prefer the idea of the growth shares revealed for free in the report below.
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