Sezzle Shares Surge 15% After Hours on Q4 Adjusted EPS Beat

Sezzle Inc. (NASDAQ:SEZL) shares skyrocketed nearly 15% in after-hours trading on Feb. 25, following the company's release of strong fourth-quarter 2024 results. The digital payment platform reported an earnings surprise of 328.5%, with earnings per share (EPS) of $4.21 significantly surpassing the consensus estimate of $0.98. Revenue also came in above expectations, reaching $98.2 million, up 56.4% year-over-year (YoY).

Several factors contributed to Sezzle's impressive performance and the subsequent surge in its share price:

1. Strong Revenue Growth: Sezzle's revenue growth was driven by a 100.9% YoY increase in total revenue, reflecting strong holiday shopping performance, an expanded and more engaged subscriber base, and the positive impact of the company's WebBank partnership. This robust revenue growth is a clear indicator of Sezzle's financial health and potential for future growth.
2. Improved Operating Margin: Sezzle's operating margin strengthened to 31.4% in Q4 2024, a 15.7-point improvement from the prior year. This improvement was driven by the company's ability to scale efficiently, as evidenced by the decline in total operating expenses as a percentage of total revenue, which fell to 68.6% from 84.3% in the prior year.
3. Expansion of Underwriting: Sezzle's strategic expansion of underwriting led to a rise in the provision for credit losses, which in turn contributed to an increase in transaction-related costs as a percentage of GMV. However, this increase was offset by declines in transaction expense and net interest expense as a percentage of GMV, indicating that the company is effectively managing its risk while continuing to grow.
4. Launch of Sezzle On-Demand: As part of its WebBank partnership, Sezzle launched Sezzle On-Demand, which allows consumers who are not subscribers to use the Sezzle platform at any merchant online or in-store in exchange for a one-time service fee. This new offering has the potential to attract first-time users and convert them into subscribers, further driving customer acquisition and retention.
5. Positive Guidance: Sezzle's strong financial performance and positive guidance for the future indicate that the company is well-positioned for continued success. The company expects to increase 2025 pre-tax net income by more than 55% compared to 2024, further boosting investor confidence.

Sezzle's impressive Q4 results and the subsequent surge in its share price demonstrate the company's strong financial performance and potential for continued growth. The company's ability to scale efficiently, manage costs effectively, and expand its user base through strategic partnerships and product launches has positioned Sezzle for success in the expanding buy now pay later market. As Sezzle continues to execute on its growth strategy, investors can expect the company to maintain its momentum and deliver strong returns.