Can On-Demand's Popularity Continue to Help SEZL Pay Dividends?

Sezzle SEZL launched On-Demand to provide users with a flexible option to Pay-in-4 wherever Visa is accepted. This strategy succeeded in removing constraints on its direct merchant partnerships, transforming itself into a buy-now-pay-later solution available anywhere for its customers.

The motivation behind this product strategy was recognized by consumers, such that in the fourth quarter of 2024, SEZL registered 707,000 Monthly On-Demand & Subscribers (MODS). In the March quarter of this year, seasonal trends following the holiday period led to a 7% decline in MODS.

The demand surged during the recently reported quarter, wherein SEZL saw a 14% sequential increase and touched a record 748,000 MODS. The company attributes this growth to its targeted marketing initiatives, and rightfully so, as marketing spend during the second quarter of 2025 increased almost 8 times from the year-ago quarter.

On-Demand’s popularity drove gross merchandise volume 74.2% year over year in the June quarter and boosted customers' purchase frequency to 6.1 times from 4.8 times in the year-ago quarter. This led to a year-over-year top-line surge of 76.4%. Despite these positives, questions can be raised about the scalability of the product.

With marketing expenses increasing manifold, SEZL’s non-transaction-related operating expenses jumped 50.4% year over year. Despite this significant hike, the operating margin still expanded 6.8% basis points year over year to 36.6%. Given this backdrop, Sezzle’s demonstration of a scalable cost structure positions it to support On-Demand’s growth trajectory, driving its revenues in the long run.

Furthermore, a strong lifetime value of MODS due to its repetitive and recurring nature of interactions with SEZL, as stated by the CEO, Charlie Youakim, solidifies our expectation of the company's continued top-line growth.

SEZL’s Price Performance, Valuation & Estimates

The stock has skyrocketed 281.8% in the past year, significantly outperforming the industry’s 15% rally and the 19.4% rise in the Zacks S&P 500 Composite. SEZL has outperformed its industry peers, Green Dot’s GDOT 23.3% growth and OppFi’s OPFI 143.8% upsurge, respectively.

1-Year Price Performance

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From a valuation standpoint, SEZL trades at a forward price-to-earnings ratio of 22.25, above Green Dot’s 9.14, OppFi’s 6.97, and the industry’s 21.74.

P/E - F12M

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Sezzle has a Value Score of F. Green Dot and OppFi carry a Value Score of A.

The Zacks Consensus Estimate for SEZL’s earnings for 2025 is pegged at $3.27 per share, hinting at a 77.7% surge from the year-ago quarter.

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SEZL currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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