Since last Friday, shares of fintech company Sezzle (SEZL) rose nearly 54% as of 12:40 p.m. ET Friday. The company reported impressive first-quarter earnings earlier in the week.
Significant Earnings and Forecast
The buy-now-pay-later (BNPL) company reported first-quarter profits exceeding $36 million on revenue of almost $105 million. Net income increased approximately fourfold year-over-year, while revenue more than doubled, surpassing analyst estimates according to Zacks consensus.
Additionally, management increased profit expectations for the full year 2025 by 50%, now anticipating $120 million in net income. Revenue is projected to grow 60% to 65% during the year, compared to previous guidance of 25% to 30%.
Sezzle’s chairman and CEO, Charlie Youakim, stated that investments in innovation and consumer experience led to new highs in engagement and performance in the first quarter. Stronger consumer activity and better-than-expected repayment trends drove quarterly earnings beyond expectations.
Analysts at B. Riley Securities mentioned in a research note that subscriber growth bolstered merchant sales following the holiday season, a period typically marked by slowing sales. They noted that the increase in guidance was one of the largest observed recently.
BNPL Industry Volatility
Sezzle reported an outstanding quarter, resulting in significant share price appreciation. Currently, Sezzle trades at approximately 26 times forward earnings, and the stock can be volatile. BNPL companies rely heavily on consumer spending and may face challenges if the economy enters a recession, which is considered likely this year. Therefore, it might be prudent to consider only a small, speculative investment for now.
Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Sezzle.