Sezzle Inc (ASX: SZL) shares could be one to follow today after reporting sizzling growth in the fourth quarter of 2020.
Sezzle is a US-based buy now, pay later provider.
What happened in the fourth quarter of 2020?
Sezzle reported that each month in the fourth quarter represented new records for underlying merchant sales (UMS), active consumers, active merchants and repeat usage.
In the fourth quarter of 2020, UMS rose by 205.4% year on year to US$320.8 million – this represented 40.6% growth quarter on quarter. December’s UMS exceeded November’s UMS by 0.4% with an annualised UMS run rate of US$1.36 billion. I think the December UMS number is impressive considering November includes the Black Friday to Cyber Monday weekend sales.
Average monthly UMS was US$106.09 million in the fourth quarter, up from US$76.1 million in the third quarter and US$35 million in the fourth quarter of FY19.
Merchant fees as a percentage of UMS was 5.4% in the fourth quarter of 2020, compared to 5.5% in the fourth quarter of 2019. This slight decline reflects the expansion into large enterprise. Some large merchants include GameStop (the largest retailer of video games) and PureHockey (the largest hockey retailer).
Merchant fees, rose 195.6% year on year to US$17.2 million.
Active consumers went up 143.9% year on year to 2.2 million, this was growth of 24.5% quarter on quarter. Active merchants surged 166.6% to 26,690 – this was an increase of 27.8% quarter on quarter.
Finally, active consumer repeat usage rose to 89.8%, which was the 24th consecutive month of improvement. This is a key factor for lower loss rates.
Management comments
Sezzle Executive Chairman and CEO Charlie Youakim said: “We are extremely excited by the strong momentum in our business. December’s UMS outpaced November’s (unlike last year) even with Cyber Monday moving from December in 2019 to November this year.
“Our large enterprise and international expansion efforts are paying dividends as evidenced by our recent addition of GameStop and the growth rates we are experiencing in Canada and India that are exceeding the US.”
Summary thoughts
Considering Sezzle is so much smaller than some of its ASX competition, I think Sezzle could be one to watch over the coming years. Growth in Canada and India is very encouraging. I’d certainly prefer to buy Sezzle over Afterpay Ltd (ASX: APT) shares today.
But in the payments space, there are other ASX growth shares I’d prefer to buy even more such as EML Payments Ltd (ASX: EML) and Pushpay Holdings Ltd (ASX: PPH).
