Sezzle Profit Jumps 79% as Credit Costs Ease: Rapid Earnings Reaction

Sezzle(NASDAQ:SEZL) grew third-quarter net income 79% to $47.8 million, or $1.38 per diluted share. Shares rose about 10% in after-hours trading. The bigger story is cost: Sezzle now earns far more on each dollar it handles, because revenue is growing faster than volume while the costs tied to each loan barely grow.

Key Numbers

• Total transaction volume: $1.4 billion, up 34.9% year over year.

• Revenue: $166.5 million, up 42.6%.

• Active subscribers: 955,000, up 68.1%.

• Provision for credit losses: 2.7% of volume, down from 3.1%.

What It Means

Subscribers drive the model. They pay a monthly fee on top of the merchant fees Sezzle collects on each purchase, and they shop with it more often. Average transaction frequency hit a company high of 7.8 per quarter.

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The cost side did the heavy lifting. Credit losses, processing fees, and interest rose just 9.8% combined, far slower than volume. Repeat subscribers with a payment record are easier to judge, which helps keep losses down. But part of the processing savings came from a payment network incentive, and that may not recur.

Management raised its full-year outlook for the fourth time and set a first 2027 target of $7.20 in adjusted earnings per share. The release notes that older guidance wasn't recast for a change in tax treatment, so the raises aren't directly comparable.

What to Watch Next

Watch whether credit losses hold near the new target of about 2.5% of volume through the holiday quarter. SezzleCash cash advances are a newer, less proven product, and their growth will test that number.

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