BNPL (buy now pay later) minnow Sezzle Inc [ASX:SZL] has had an upvote in shares after revealing a tidy end to fiscal 2022.
Sezzle posted a 9% uptick for its total income year-on-year from US$114.82 million in December 2021 to $125.57 million.
The fintech also managed to cut back net losses to US$38 million, as bad debts (as a percentage of underlying sales) dropped to 1.7% — a record low for the BNPL junior and all thanks to smart underwriting changes.
SZL shares were 54 cents at the time of writing, up 4.80% on Tuesday’s closing price.
The fintech is up 31% in the first two months of 2023. However, it’s still 72% down in the full year:
Source: tradingview.com
Losses are shorted, and sales are on the rise as Sezzle hits a record-low debt
Over Tuesday and Wednesday, BNPL minnow released its 2022 results, highlighting a positive year as the group managed to trim net losses 49% to US$38 million from US$75.16 million.
Revenue climbed 9% from US$114.82 million to $125.57 million, and total expenses were less than half that of those last year, having moved down from US$68.68 million down to US$28.43.
In the fourth quarter, adjusted EBITDA improved by $30 million, bringing SZL to $7 million positive, compared with its $23 million deficit in the previous comparative period.
Supported by some significant improvements for underwriting, across the year, Sezzle noticed bad debts as a percentage of underlying sales dropped to a record low of 1.7%.
Fourth quarter total income showed an improvement of 16.2% year-on-year, overturning $38.3 million — in the fourth quarter of 2021, the group reported $32.9 million in income and $22.1 million in 2020.
GAAP net income loss improved by US$26.6 million year-on-year.
The company said it increased its revenue on specific initiatives, despite working through a tough macroeconomic environment and a moderation in transaction volumes.
SZL had to renegotiate rates with merchants and partners to help increase its TTI (total transaction income) as well as diversify its revenue streams.
Charlie Youakim, Sezzle’s Executive Chairman and CEO, commented:
‘Fiscal year 2022 will go down as a watershed moment for Sezzle. We went from a Company that reported a Net Loss of US$75.2 million in fiscal year 2021 to exiting 2022 with Net Income in the fourth quarter.
‘Our team worked tirelessly towards implementing over US$70.0 million (annualized) in revenue and cost initiatives in 2022, resulting in profitability in 4Q22. We are also excited to announce that we have identified additional initiatives that we believe will drive another US$10.0 million in revenue and cost benefits to Sezzle.’
Source: SZL
Sezzle had US$69.5 million total cash on hand by the end of December 2022, but no dividends were paid or proposed in the year.
January started 2023 strong, with total income increasing 18.3% year-on-year to US$11.7 million, described as a new high as a percentage of underlying merchant sales.
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