Since last Friday, shares of the fintech company Sezzle have increased by nearly 54%, as of 12:40 p.m. ET Friday. This surge followed the company’s announcement of impressive first-quarter earnings results earlier in the week.
### Big Beat and Raise
The buy-now-pay-later (BNPL) company reported first-quarter profits exceeding $36 million, with revenue approaching $105 million. Net income grew approximately fourfold year-over-year, while revenue more than doubled, surpassing analyst expectations according to Zacks consensus estimates.
Additionally, Sezzle’s management has raised profit expectations for the full year of 2025 by 50%, now anticipating $120 million in net income. Revenue is projected to grow between 60% and 65% during the year, an increase from the previous guidance of 25% to 30%.
In an earnings statement, Sezzle’s chairman and CEO, Charlie Youakim, attributed the company’s performance to investments in innovation and consumer experience, which led to new highs in engagement and performance. Stronger consumer activity and better-than-expected repayment trends exceeded the company’s quarterly earnings expectations.
Analysts at B. Riley Securities remarked in a research note that subscriber growth contributed to increased merchant sales following the holiday season, a period typically marked by slowing sales. They also noted that the increase in guidance was among the largest they had observed in some time.
### BNPL Can Be a Volatile Business
Sezzle’s reported quarter was undeniably successful, justifying the significant appreciation in its share price. However, with this reflected in the current valuation, Sezzle now trades at about 26 times forward earnings. The stock can be volatile because BNPL companies rely on consumer spending, which may be negatively impacted if the economy experiences a recession, a possibility anticipated this year. As a result, some investors may consider maintaining smaller, more speculative positions in the stock.
Bram Berkowitz, who authored the original analysis, holds no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Sezzle and adheres to a disclosure policy.
