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Retail sales in the US bounced back in August, with spending rising across 12 of 13 tracked categories. This growth was largely driven by back-to-school shopping and suggests that consumers are still willing to spend despite higher prices for essentials like gasoline.
This is a positive sign for Sezzle, which makes money by taking a small cut of every transaction it processes. Since Sezzle focuses on helping shoppers split up payments for everyday purchases, a broad rise in retail activity usually leads to more transaction volume and higher fees for the company.
Source: Bloomberg Markets and Finance
The University of Michigan's consumer sentiment index dropped to 47.8 in September, down from 51.7 in August. This index measures how optimistic people feel about their finances and the broader economy, and the current reading is back near historical lows.
When people feel less confident, they often pull back on discretionary spending. Since Sezzle makes money when people use its "buy now, pay later" service to shop, a broad slowdown in spending could lead to slower growth in the number of transactions it processes. However, some shoppers actually turn to installment plans more often when budgets are tight, so the impact on the business may not be a simple one-to-one drop.
Source: WSJ
The latest core inflation report, which tracks price changes for goods and services excluding food and energy, came in higher than analysts expected. This makes it more likely that the Federal Reserve will raise interest rates to cool the economy.
For a lender like Sezzle, higher rates can be a double-edged sword. It costs the company more to borrow the money it lends to shoppers, but it also allows them to earn more on certain fees. The main concern for long-term owners is whether these higher rates eventually make it harder for shoppers to keep up with their installment payments. So far, Sezzle has kept its loan losses low, but a prolonged period of high rates is worth watching.
Source: Bloomberg Markets and Finance
The US economy added 162,000 jobs in August, nearly triple what analysts expected. This strength makes it less likely that the Federal Reserve, the central bank that sets borrowing costs, will cut interest rates aggressively at its next meeting.
For a lender like Sezzle, higher rates are a double-edged sword. While a strong job market means its users are more likely to stay employed and pay back their loans, higher interest rates increase the cost of the money Sezzle borrows to fund those loans. If rates stay high, it could leave the company with less profit on each transaction.
Source: Proactive Investors
Sezzle has added several well-known brands to its payment network, including fitness apparel maker Gymshark, retailer Debenhams Group, and Follett Higher Education. These partnerships allow shoppers at these stores to use Sezzle’s buy-now-pay-later service, which lets them split a purchase into interest-free installments.
Adding these merchants is important because it gives Sezzle more places to earn fees and collect data on how people spend. For a company focused on turning its service into an everyday payment tool, moving into high-frequency categories like fitness and college supplies helps keep its users active and engaged.
Source: GlobeNewsWire
Eight straight quarters of large beats show a business that is consistently outrunning its own forecasts as it shifts from a startup to a high-profit operator.
| Expectation | |
|---|---|
| EPS | $1.26 |
| Revenue | $155M |