The Sezzle Inc (ASX: SZL) share price is down 7% after the company reported its FY20 half year result.
Sezzle’s HY20 result
Sezzle saw underlying merchant sales (UMS) grew 338% to US$307.4 million and total income grew by 384% to US$20.8 million with merchant fees being 84% of total income.
The net transaction margin (NTM) was US$5.1 million in the first half of FY20, representing a margin of 1.7%, compared to a negative US$0.2 million in the first half of FY19 (which was a margin of negative 0.3%).
At 30 June 2020, active consumers grew by 243% year on year to 1.5 million and active merchants rose by 219% year on year to 16,100.
In July 2020 active consumers rose 7.1% month on month to 1.6 million and active merchants grew by 9.3% month on month to 17,600.
Sezzle reported that active repeat consumers represented 88.1% of the total in July 2020, which was another improvement. In July 2020 UMS was US$71.8 million which was a record month and 14.6% higher than the average monthly pace for the second quarter of 2020 (the June quarter).
After 30 June 2020, Sezzle raised US$58.3 million in a capital raising, net of costs, to accelerate its growth and strengthen its balance sheet.
Summary
The company re-iterated its guidance that it expects to achieve an annualised run rate of more than US$1 billion by the end of 2020.
Sezzle is growing strongly and it could be one to watch over the coming years. But there’s a lot of competition in the form of Afterpay Ltd (ASX: APT), Zip Co Ltd (ASX: Z1P) and so on. Can they all be profitable? Will they maintain their margins? What’s fair buying price?
I don’t know, particularly at these high share prices, that’s why I’m focused on other ASX growth shares like Pushpay Holdings Ltd (ASX: PPH).
