Sezzle reported earnings yesterday with an impressive result. Revenue came in at 104.9M which is up 123% yoy and an acceleration from Q4 which was 98.2M and the strongest season because of the holiday. Adj EBITDA was 51.4M and up 244% yoy. Somehow analysts only projected 65M of revenue in Q1 as I guess they had not factored in the strong Q4 and were predicting a lot of seasonality.
The company raised it’s full year guidance from 80.4M to 120M on net income, and revenue growth rate for the full year was switched from 25-30% up to 60-65%. The main catalyst seems to be this partnership with WebBank which brings a unified fee structure across states. Additionally, it seems like customers really like the subscription feature and the different ways to build their credit.
There was a lot to like with the report and the stock was up over 50% at one point today. For more details on the report, here is the breakdown video I did of their earnings,
@Mess7777 Yep fortunately I am back in the positive with +5% YTD returns. The Sezzle results certainly helped a lot, although it was a mixed earnings season overall for my portfolio. I sold GeneDx and Ardelyx after both had what I considered to be poor reports. Some companies like Astera Labs and Reddit had what I thought were decent results but muted reactions from the market.
I believe a lot of the power of Saul’s approach is that we do not need all our companies to do well to get good results. With high growth companies a lot of the time when they over-perform it outweighs the results of the losers. For example, my gains in Sezzle more than cover for the downturns in GeneDx and Ardelyx.
Adding on Sezzle specifically, the next quarter prediction from analysts is 93M of revenue, a sequential decline. There are only two analysts covering the stock, but it shows the expectations on what the company can achieve are low.
I kinda wish Saul was still visiting us regularly. My gut says that your quote is WAY more Fooldom than it is Sauldom. Saul didn’t tolerate a loser; he cut bait and moved on quickly. That is what got him in hot water around most of the Fool boards. He did not hold a loser to find out if winners would outpace the losses. I do not recall him holding ANY loser for more than one earnings period, and then it was only to see if he was right about the numbers going back to where he expected.
Some notes from the knowledge base:
Not accepting that an investment could be a mistake as it continues to go down is a dangerous error , and could be very expensive.
Sometimes you have to sell . You can adopt the MF mantra that if you just hold on it will come back in time, and maybe it will. But I hope to employ that money in much more profitable ways than watching a stock go down and then hoping it will start to come back.
Why hold on to your failed positions? They have little going for them except that you are already in them.
I think that what Saul would say is…don’t dwell on your losers, take the money and put it somewhere better. Pretty sure he never said hold your losers because your winners will make it ok.
I wrote above that “I sold GeneDx and Ardelyx after both had what I considered to be poor reports.” I’m not sure where you are seeing anywhere I was suggesting to hold on to companies which are posting disappointing results?
I could have been more clear to say that our winners more than compensate for our losers which get sold. In the example above, Sezzle is up about 200% since early April. While the companies that I sold such as GeneDx were down 35% after earnings and Ardelyx was down 20% after earnings.
The point I was looking to get across is that we are not going to have 100% accuracy in our picks. We are inevitably going to select companies which do poorly resulting in us selling them. That lines up exactly with Saul’s approach.
@stocknovice It looks like the WebBank partnership was announced back in August 2024. I learned it is a “5 year strategic partnership” which is encouraging they are planning for the longer term.
The 25-30% guidance on revenue was released on their Q4 2024 press release which took place on Feb 25, 2025.
That does make me wonder if they had not seen the full benefits of the WebBank partnership in Q4 yet, and it took till Q1 for the integration to really ramp up. The other possibility is the business is accelerating not primarily due to the WebBank partnership but other factors. I’m guessing management factored in seasonality to their Q1 guide, but when that didn’t happen they had to revise up the guidance significantly.
Here’s an article with some details of the WebBank partnership,
Then, this made me wonder whether the management just lacked of visibility into their business… Most board members here started with SaaS style companies, so we may be very used to seeing our companies consistently beating guidances. But maybe for some other types of businesses, they just could not give accurate guidance. (thinking of ELF here…)
The unpredictable nature could be an additional risk in investing in Sezzle.
Some comments on advantages and disadvantages of the exclusivity of the Web Bank relationship.
Gray
Sezzle’s exclusive partnership with WebBank, established in August 2024, designates WebBank as the sole originator and financier of Sezzle’s core financial products, including Pay-in-2 and Pay-in-4 installment plans, subscription services, and card offerings . While this exclusivity streamlines operations and offers regulatory advantages, it also presents potential limitations regarding Sezzle’s exposure and expansion opportunities with other banking institutions.
Advantages of the Exclusive Partnership
Regulatory Streamlining: By collaborating exclusively with WebBank, a federally regulated institution, Sezzle benefits from a more unified regulatory framework. This arrangement simplifies compliance processes and reduces the complexity associated with managing multiple banking relationships .[
Operational Efficiency: A single banking partner allows for cohesive integration of services, facilitating the launch of new products like Sezzle On-Demand, which enables consumers to utilize Pay-in-4 options wherever Visa is accepted .[
Financial Performance: The partnership has coincided with significant financial growth for Sezzle. In the third quarter of 2024, the company reported a net income of $15.4 million, a substantial increase from the previous year, indicating improved profitability and operational success .[
Potential Limitations
Restricted Banking Relationships: The exclusivity agreement may limit Sezzle’s ability to collaborate with other banks, potentially hindering diversification of financial products and services. This could affect Sezzle’s adaptability in a rapidly evolving financial landscape.
Dependence on a Single Partner: Relying solely on WebBank introduces concentration risk. Any disruptions in WebBank’s operations or changes in strategic direction could directly impact Sezzle’s service offerings and financial stability.
Constraints on Innovation: The exclusive nature of the partnership might limit Sezzle’s flexibility to explore innovative financial solutions that could be facilitated through collaborations with other banking institutions.
Conclusion
While Sezzle’s exclusive partnership with WebBank offers operational and regulatory benefits that have contributed to its financial growth, it also imposes certain constraints on the company’s ability to diversify banking relationships and innovate. Balancing the advantages of a streamlined partnership with the need for flexibility and diversification will be crucial for Sezzle’s sustained expansion and resilience in the competitive financial technology sector.
