Sezzle Inc. Q4 FY2025 earnings call

2025 was a year of focus for Sezzle on product, execution, and capital deployment. Launched and scaled features like Earn tab, browser extension, and price comparison tools. Pivoted marketing emphasis to subscription products with subscribers growing 30% year-over-year and 18% sequentially. Utilizing AI to improve consumer experience and scale efficiently. Maturation of FinTech, evolving infrastructure, and product improvement create tailwinds. Celebrated 10 years since founding, completed stock split, expanded capital return program, and received recognition from various outlets. Sezzle is evolving into an all-in-one consumer app, with plans for Sezzle Mobile launch, exploring new products like deposit accounts and expanded credit offerings. Disciplined marketing strategy with focus on measured returns and improving spend efficiency. AI being used to build proprietary engines, automating high friction areas.

Total revenue grew 32.2% for the fourth quarter, bringing 2025 total revenue growth to 66.1%. Net income reached 42.7 million in the fourth quarter and 133.1 million for the full year. Return on equity for the full year 2025 exceeded 100%. Quarterly purchase frequency increased 20% year over year and mods increased by 211,000 year over year. For the rule of 40, the quarter score was 77.1 and the year score was 107.8. For the rule of 100, the quarter score was 129.4 and the year score was 158.1. 2025 total revenue was $450.3 million, adjusted net income was $128.4 million for the full year. GMV crossed 1.16 billion in the fourth quarter, up 35.3% year over year, and full-year GMV was 3.94 billion, up 55.1% compared to 2024. Transaction-related costs fell from 44.3% of total revenue in 2024 to 37.6% in 2025, and to 35.7% in the fourth quarter. Provision for credit losses finished the quarter at 2% of GMD, net interest expense was 0.3% of GMV.

Raising 2026 adjusted EPS from $4.35 to $4.70. Providing 2026 guidance of 25 to 30% total revenue growth and $170 million of adjusted net income. Guidance reflects expectation to scale platform while maintaining disciplined cost structure and strong unit economics. 2025 results were bolstered by mid-2024 credit risk expansion and web bank partnership, and 2026 guidance does not bake in projections for new products currently in development.

Concerns about state regulations affecting BNPL companies, with New York regulations mimicking CFPB guidance with slight differences. Potential impact of states jumping in and wanting to regulate products, possibly heading towards a situation like the EU. Antitrust suit is ongoing and cannot be discussed. Banking charter discovery process is long and non-guaranteed.

Q: Mike Grondahl with Northland Securities asked about New York regulations, 2026 guidance details, and de-emphasizing on-demand product.

A: New York regulations not a big impact this year, 2026 guidance leaves gross margin range up to interpretation, de-emphasizing on-demand was due to transition to subscription for better commitment.

Q: Raina Kumar with Oppenheimer asked about quarterly cadence, merchant count, and clarity on quarterly metrics.

A: Seasonality affects GMV and margins, merchant count may stabilize, quarterly metrics have seasonality factors.

Q: Hal Getch with B Riley securities asked about tightening decision, operating expenses growth, and banking charter.

A: Tightening due to consumer concern, operating expenses growth related to personnel and marketing, banking charter to strengthen national presence.

Q: Huang Nguyen with TD Cohen asked about provision guidance, tax refund season, and credit product appetite.

A: Provision guidance based on gross margin range, tax refund season business as usual, pay-in-five product has trade-offs but appetite increased.

Q: Kyle Peterson with Needham & Company asked about credit product appetite, capital allocation, and mobile plan.

A: Pay-in-five product has appetite due to consumer love, capital allocation balanced between organic investment, buybacks, etc., mobile plan to save consumers money and bring in adjacent customers.