The share price of buy now, pay later competitor Sezzle Inc [ASX:SZL] is in the green today after releasing their operational update for Q4 2019.
The fintech entered the new decade on a slippery slope after issues with gaining a lending license in California.
California’s Department of Business Oversights (DBO) was concerned that Sezzle were performing ‘illegal licensed lending’ during the license application process.
SZL shares fell 35% in the first week of January as a result.
Despite the rough patch, however, Sezzle obtained the Californian lending licence on 17 January.
The news briefly pushed shares back up over the $2 mark.
Trading has been sideways since then, but today’s update pushed the Sezzle share price up 1.27%.
SZL shares are at $1.97 at time of writing.
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Key takeaways from the Q4 results include:
- 6% increase in Underlying Merchant Sales (UMS) from Q3
- Underlying Merchant Fees up 61.8% in the quarter
- Active Customers (those who have transacted with Sezzle in the past 12 months) increasing by 42% between September and December
- Active Merchants up 33.3% in the quarter, hitting the 10,000 milestone
Q4 also saw a 400% increase in Black Friday/Cyber Monday UMS compared to 2018 sales.
Sezzle added 36,000 new active customers during that four-day period alone.
Sezzle’s CEO and Executive Chairman, Charlie Youakim, noted at the time:
‘The decline in the use of credit cards and heavy utilization of mobile phones during the iconic BF/CM sales event provides further compelling evidence of the growing preference by consumers for alternative payment methods such as Sezzle.’
Youakim also highlighted the ‘series of historic achievements across several key indicators’ during Q4. He added:
‘With Net Transaction metrics [also] continuing to trend positively, we are proving the scalability of our business model with increasingly favourable unit economics.’
Is Sezzle a buy?
Sezzle is still quite a way off previous resistance at $2.70:
While the trend is up now, Sezzle’s staggered start to 2020 is less convincing than BNPL giant Afterpay Ltd [ASX:APT].
The Afterpay share price is up 20% in 2020 so far:
APT’s strong hold over the BNPL sector means they could muscle out small-cap competitors like Sezzle down the track.
Of course, the small guys could potentially see some lucrative surges before that happens.
For instance, Sezzle’s partnership with e-commerce platform BigCommerce exposes them to over 60,000 additional merchants.
But the January performance of Sezzle shows you that you need to watch the BNBL regulatory environment very closely.
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Imogen van der Meer,
For Money Morning