Sezzle (SEZL)

Buy-now-pay-later service Sezzle (NASDAQCM:SEZL) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 67% year on year to $116.8 million. Its GAAP profit of $0.75 per share was 15.4% above analysts’ consensus estimates.

Company Overview

Founded in 2016 as an alternative to traditional credit cards for younger shoppers, Sezzle (NASDAQ:SEZL) provides a payment platform that allows consumers to split purchases into four interest-free installments over six weeks at participating retailers.

Personal loan providers offer unsecured credit for various consumer needs. The sector benefits from digital application processes, increasing consumer comfort with online financial services, and opportunities in underserved credit segments. Headwinds include credit risk management in unsecured lending, regulatory oversight of lending practices, and intense competition affecting margins from both traditional and fintech lenders.

Sezzle competes in the increasingly crowded buy-now-pay-later space against larger players like Affirm (NASDAQ:AFRM), Block's Afterpay (NYSE:SQ), Klarna, and PayPal's Pay in 4 (NASDAQ:PYPL), as well as traditional credit card companies expanding into installment payment options.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Luckily, Sezzle’s revenue grew at an incredible 54.2% compounded annual growth rate over the last five years. Its growth beat the average financials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Sezzle’s annualized revenue growth of 67.8% over the last two years is above its five-year trend, suggesting its demand was strong and recently accelerated. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Sezzle reported magnificent year-on-year revenue growth of 67%, and its $116.8 million of revenue beat Wall Street’s estimates by 11.5%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For Personal Loan companies, we look at pre-tax profit rather than the operating margin that defines sectors such as consumer, tech, and industrials.

This is because for financials businesses, interest income and expense should be factored into the definition of profit but taxes - which are largely out of a company's control - should not.

Over the last four years, Sezzle’s pre-tax profit margin has fallen by 95.9 percentage points, going from negative 62.7% to 33.2%. It has also expanded by 29.9 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

Sezzle’s pre-tax profit margin came in at 27.1% this quarter. This result was 1.9 percentage points better than the same quarter last year.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Sezzle has averaged an ROE of negative 15.6%, a bad result not only in absolute terms but also relative to the majority of firms putting up 25%+. It also shows that Sezzle has little to no competitive moat.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Sezzle currently has $118 million of debt and $155.3 million of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.9×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 3.5× for a financials business.

We were impressed by how significantly Sezzle blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. Zooming out, we think this quarter featured some important positives. The stock traded up 15.4% to $76.46 immediately after reporting.

Updated: November 13, 2025 at 11:39 PM EST

Are you wondering whether to buy Sezzle or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Sezzle isn’t a terrible business, but it doesn’t pass our bar. Although its revenue growth was exceptional over the last five years, it’s expected to deteriorate over the next 12 months and its relatively low ROE suggests management has struggled to find compelling investment opportunities.

Sezzle’s P/E ratio based on the next 12 months is 13.7x. Beauty is in the eye of the beholder, but our analysis shows the upside isn’t great compared to the potential downside. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $108.50 on the company (compared to the current share price of $52.80).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.