Sezzle Inc.

Sezzle Inc. operates in the buy-now, pay-later (BNPL) segment of the point-of-sale financing market, an emerging product within the financing services sector that has recently become subject to increased regulatory scrutiny by regulators in various jurisdictions, including the United States and Canada. The company is a purpose-driven payments company launched in 2017 that has built a digital shopping and payments platform providing consumers a flexible alternative to traditional credit, focusing on a young consumer base that is tech-savvy, with approximately 81% of consumers who placed orders during the year ended December 31, 2025 comprised of Gen Z and Millennial generations (ages 18–48). Sezzle operates in the United States and Canada and is currently winding down and exiting operations in India and certain countries in Europe.

Sezzle operates in a highly competitive and dynamic industry, facing competition from a variety of players including other BNPL service providers, traditional credit cards, contactless virtual cards, digital wallets, and legacy payment methods. The company considers its main competitors in the U.S. market to be Affirm, Afterpay (a subsidiary of Block, Inc.), Klarna, PayPal's 'Pay Later,' and Zip, and in the Canadian market, Klarna, Affirm, and Afterpay. Sezzle aims to differentiate its business by providing a product that is more simple, accessible, and consumer-friendly than its competitors, including offering its product to consumers with little-to-no credit history, allowing consumers to shift their repayment schedule, and waiving late payment and failed payment fees when the consumer qualifies for its hardship program.

Sezzle generates revenue primarily from merchants, partners, subscription revenue, and consumer fees. The company's primary sources of revenue are from merchants and third-party affiliates, subscription revenue, and fees from consumers. Merchant and partner income comprised 29% and 37% of total revenue for the years ended December 31, 2025 and 2024, respectively. Subscription revenue comprised 22% and 30% of total revenue for the years ended December 31, 2025 and 2024, respectively. The Sezzle Platform may be free or charge fees or interest, and the company assumes all costs associated with consumer payment processing and credit risk.

The Sezzle Platform offers a payments solution for consumers that instantly extends credit at the point-of-sale, allowing consumers to purchase and receive merchandise while paying in installments over time. The flagship product is 'pay-in-four,' which allows consumers to pay a fourth of the purchase price up front, and then another fourth every two weeks thereafter over a total of six weeks. The company also offers 'pay-in-full,' 'pay-in-two,' and a 'pay-in-five' beta product piloted in 2025. Additionally, Sezzle offers customized installment terms with select enterprise merchants, such as a four payment, three month product. A substantial majority of the short-term credit products available on the Sezzle Platform are originated by the company's originating bank partner, WebBank, an FDIC-insured Utah state-chartered industrial bank.

Sezzle offers several subscription and on-demand products. Sezzle Premium, launched in 2022, is a paid subscription service that allows consumers to access large, non-integrated 'premium merchants' for a recurring fee, along with other benefits including exclusive deals and discounts, the ability to earn Sezzle Spend back on purchases, and one additional free reschedule per order. Sezzle Anywhere, launched in 2023, is a paid subscription service that allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain restrictions, for a recurring fee, and includes all benefits of Sezzle Premium as well as earning cash back in Sezzle Spend on pay-in-full transactions. Sezzle On-Demand, launched in 2024, allows consumers who are not subscribed to Sezzle Anywhere to use the Sezzle Platform at any merchant online or in-store (subject to restrictions) in exchange for a finance charge added to the consumer's initial down payment, and is only available in select states. In 2025, the company launched Sezzle Balance, a stored-value product that allows consumers to maintain funds within their Sezzle account for use toward eligible purchases or make payments on the Sezzle Platform. Through collaboration with third-party lenders, Sezzle enables consumers access to interest-bearing monthly fixed-rate installment-loan products for larger-ticket items (up to $15,000 ¹), which extend up to 60 months.

During the year ended December 31, 2025, Sezzle repurchased approximately $50.0 million ² of its common stock in the open market, and on December 15, 2025, received approval from its Board of Directors to repurchase an additional $100.0 million ³ of its common stock. On March 28, 2025, the company performed a 6-for-1 stock split of its common stock, effected through a stock dividend. On October 30, 2025, the company increased the borrowing capacity of its 2024 Credit Agreement from $150.0 million ⁴ to $225.0 million ⁵ by exercising an available $75.0 million ⁶ of additional funding. On June 9, 2025, Sezzle filed a lawsuit against Shopify, Inc. asserting federal and state antitrust violations. On August 7, 2025, the company elected to forego recertification as a B Corporation and no longer holds B Corporation certification. The company has initiated a process to evaluate whether to pursue an industrial loan company (ILC) bank charter, though no application has been submitted.

For the year ended December 31, 2025, total revenue was $450.279 million ⁷, compared to $271.128 million ⁸ in the prior year, representing an increase of 66.1% ⁹. Net income was $133.130 million ¹⁰ for 2025, compared to $78.522 million ¹¹ for 2024. Diluted earnings per share was $3.72 ¹² for 2025 versus $2.19 ¹³ for 2024. Operating income was $176.789 million ¹⁴ for 2025, compared to $82.246 million ¹⁵ for 2024. The provision for credit losses was $89.298 million ¹⁶ for 2025, compared to $55.015 million ¹⁷ for 2024. Net cash provided from operating activities was $209.907 million ¹⁸ for 2025, compared to $130.648 million ¹⁹ for 2024.

A key growth vector for Sezzle is the continued expansion of its product suite and platform enhancements. In 2025, the company launched a variety of platform enhancements including a price comparison tool, auto-couponing, express checkout, customer wishlist, and the Sezzle 'Earn' tab. The 'Earn' tab allows users to accumulate Sezzle Spend by completing activities such as playing mobile games, engaging with financial literacy modules through Money IQ (powered by Zogo), accessing offers on purchases like gas, dining, and groceries, using the browser extension, and receiving referral bonuses. The company also launched Sezzle Balance, a stored-value product, and piloted a 'pay-in-five' beta product in 2025. The company continuously strategizes on new products and additional features that would complement its platform and add additional value for its stakeholders, and has partnered with a bank sponsor, WebBank, to expand the suite of products it is able to offer consumers. The company has also initiated a process to evaluate whether to pursue an industrial loan company (ILC) bank charter, engaging external advisors, though no application has been submitted.

Another significant growth vector is the expansion of the company's subscription and on-demand services. As of December 31, 2025, Sezzle had 0.7 million unique consumers who had an active subscription for either Sezzle Premium or Sezzle Anywhere (Active Subscribers), and 0.2 million unique consumers who placed an On-Demand order during the month ended December 31, 2025. Monthly On-Demand Users and Subscribers (MODS) grew 29.8% ²⁰ to 918,000 ²¹ as of December 31, 2025, compared to 707,000 ²² as of December 31, 2024. The company expects subscription revenue to represent a key component of its total revenue in the future, and its ability to grow subscription revenue depends on retaining existing subscribers and attracting new subscribers through the attractiveness, functionality, and relative value of the benefits included in its subscription products. The company has adjusted, and may continue to adjust, its subscription pricing from time to time.

Sezzle's margin and cost outlook is influenced by several factors. The provision for credit losses was 19.8% ²³ and 20.3% ²⁴ of total revenue for the years ended December 31, 2025 and 2024, respectively. The company expects that increases in GMV and revenue will likely result in higher absolute amounts of credit losses, and changes in its underwriting strategy will affect the amount of credit losses as a percentage of total revenue. The company's effective income tax rate for the years ended December 31, 2025 and 2024 was 18.3% ²⁵ and (16.6%) ²⁶, respectively. The change in the effective tax rate was primarily driven by a release of the majority of the valuation allowance during the year ended December 31, 2024. The company plans to continue investing in the growth of its business, including enhancing technology infrastructure and platform capabilities, developing and launching new consumer products and services, expanding its merchant network, and increasing sales and marketing efforts, which may increase operating expenses and capital requirements in the near term.

Sezzle's operational outlook involves continued investment in its technology infrastructure and platform capabilities. The company uses a widely-adopted risk quantification model to identify, measure and prioritize cybersecurity and technology risks and develops related security controls and safeguards. It engages external auditors to annually assess internal controls, conduct a payment card industry data security standard review, and perform third-party penetration testing. As of December 31, 2025, the company had 201 employees across the United States and Canada, with additional workers contracted through professional employer organizations (PEOs) and/or independent contractors in Colombia and Mexico. The company operates in a primarily remote-first working environment with only a modest in-office presence of hybrid workers. The company's corporate headquarters is located in Minneapolis, Minnesota where it leases 11,498 square feet of office space pursuant to a lease agreement that expires in June 2029.

Sezzle's capital allocation strategy focuses on maintaining a capital-efficient funding model. The company primarily relies on revolving credit facilities to fund its receivables over time and does not currently require additional equity contributions to directly fund product growth. As of December 31, 2025, the company had an unused borrowing capacity on its line of credit of $73.5 million ²⁷. During the year ended December 31, 2025, the company repurchased approximately $50.0 million ²⁸ of its common stock in the open market, and on December 15, 2025, received approval from its Board of Directors to repurchase an additional $100.0 million ²⁹ of its common stock. The company has never declared nor paid cash dividends on its common stock and currently has no intention to pay cash dividends in the near term. Capitalized internal-use software additions totaled $2.040 million ³⁰ for the year ended December 31, 2025.

Sezzle faces several structural headwinds and execution risks. The BNPL industry has become subject to increased regulatory scrutiny, and the company may become subject to additional legal or regulatory requirements if laws, regulations, or industry standards evolve. The company is subject to the regulatory, supervisory, and enforcement authority of the CFPB, and the CFPB has imposed, and may continue to impose, certain requirements and restrictions on lending practices. The company also faces risks related to its reliance on its originating bank partner, WebBank, which originates a substantial majority of the loans facilitated by the Sezzle Platform. The agreement with WebBank is subject to early termination or suspension upon certain events, and WebBank does not prohibit WebBank from working with competitors. Macroeconomic conditions may adversely impact the ability and willingness of consumers to fulfill their obligations, and the company's success is subject to macro-economic conditions that have an impact on consumer spending and consumer credit.

Additional constraints flagged by management include the highly competitive nature of the industry, which may require the company to reduce merchant fees, increase incentives, or otherwise modify its pricing. The company may not be able to sustain its total revenue growth rate or its growth rate of related key operating metrics in the future. The company's ability to attract and retain consumers enrolled in its subscription products is critical, and if it fails to maintain, enhance, or expand the benefits offered through its subscription products, it may fail to attract new subscribers or retain existing ones. The company also faces risks related to its ability to maintain adequate access to capital, as its current lending facility matures on April 19, 2027 ³¹, and there can be no assurance that such financing will be extended on favorable terms or at all.

The BNPL industry has become subject to increased regulatory scrutiny, and Sezzle may become subject to additional legal or regulatory requirements if laws, regulations, or industry standards evolve, which could impose significant additional compliance costs, restrict expansion, or make it economically unfeasible to continue operations. The company relies on its originating bank partner, WebBank, to originate a substantial majority of the loans facilitated by the Sezzle Platform, and the agreement is subject to early termination or suspension upon certain events; if this relationship is successfully challenged or deemed impermissible, the company could be found in violation of licensing, interest rate limit, lending, or brokering laws and face penalties, fines, litigation, or regulatory enforcement. Loans facilitated through the platform involve a high degree of financial risk as they are not secured, guaranteed, or insured, and consumer bad debts are a major component of expenses; the provision for credit losses was $89.298 million ³² for 2025, representing 19.8% ³³ of total revenue. The company operates in a highly competitive industry with a low barrier to entry, facing competition from Affirm, Afterpay, Klarna, PayPal, and Zip, and may need to reduce merchant fees, increase incentives, or modify pricing to stay competitive. The company's Chief Executive Officer and Chairman, Charles Youakim, holds approximately 44.2% ³⁴ of all shares of common stock outstanding and can exert significant influence over the company, including in relation to the election of directors and the potential outcome of matters submitted to stockholders, and a large percentage of his common stock is subject to a pledge agreement with an institutional lender, which could result in foreclosure and sale of pledged shares.

Management's message emphasizes the company's mission to financially empower the next generation through a purpose-driven payments platform that provides a flexible alternative to traditional credit. The key themes include the company's focus on creating a digital ecosystem benefiting all stakeholders—merchants, consumers, employees, communities, and investors—while driving ethical and sustainable growth. Management highlights the company's competitive advantage from its stakeholder approach and its status as a Delaware public benefit corporation, which it believes offers advantages including clear differentiation in a crowded industry, enhanced ability to become an employer of choice, and opportunities to conduct business with sustainability-focused brands. The strategic priorities emphasized for the period ahead include continuing to invest in product innovation, such as the launch of platform enhancements including a price comparison tool, auto-couponing, express checkout, customer wishlist, and the Sezzle 'Earn' tab, as well as the Sezzle Balance stored-value product and the 'pay-in-five' beta product. Management also emphasizes the importance of maintaining a capital-efficient funding strategy, relying on revolving credit facilities to fund receivables over time without requiring additional equity contributions to directly fund product growth. The company has initiated a process to evaluate whether to pursue an industrial loan company (ILC) bank charter, engaging external advisors, though no application has been submitted. Management also notes the company's ongoing evaluation of corporate governance and sustainability initiatives, as evidenced by the decision to forego recertification as a B Corporation on August 7, 2025.