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Sezzle share price rockets 7% on boost in active users

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The Sezzle Inc (ASX: SZL) share price is charging higher today, up 7.3% in early trade.

Sezzle shares closed yesterday at 82 cents and are currently trading for 88 cents.

The ASX buy now, pay later (BNPL) company has released its first-quarter results (Q1 FY22) for the three months ending 31 March. Let’s take a look at the highlights.

What happened in Q1 to boost the Sezzle share price?

The Sezzle share price is soaring after the company reported a 6.2% increase in total income during the quarter compared to Q1 FY21, with income reaching US$27.6 million.

That was largely attributable to a 20.1% year-on-year boost in underlying merchant sales (UMS), which hit US$450.5 million in the first quarter. 80% of the total income was generated by merchant fees.

Other key growth figures included a 43.1% increase in the number of active merchants (48,700) using Sezzle’s payment platform. Meanwhile, active consumer numbers hit 3.5 million, up 31.6% from the previous corresponding period.

The Sezzle share price may also be getting a lift after the company reported that more than 4.1 million people had downloaded its payment app as at 31 March.

With fewer payments being made through the Automated Clearing House, Sezzle said transaction expenses as a percentage of UMS increased “slightly”.

What’s next?

In the current quarter (Q2 FY22), Sezzle expects to launch its partnership with Bread Financial Holdings Inc (NYSE: BFH). The company said that would allow it to expand its long-term instalment loan offering to its small and medium-sized business (SMB) base, which could offer further tailwinds for the Sezzle share price.

It’s also continuing to streamline operations by reducing its workforce, scaling back its European operations, pulling out of India, and spinning off its Brazilian operations, in which it will retain a minority stake.

Sezzle forecasts annual cost savings from these measures of at least US$17 million.

What did management say?

Commenting on the quarterly results, Sezzle CEO Charlie Youakim said:

Our 1Q22 results continued to demonstrate our product acceptance with merchants and our alignment with consumer needs. We have also taken decisive actions to move toward profitability and free cash flow as expeditiously as possible.

With over US$98.0 million in liquidity, between cash on hand and availability on our line of credit, Sezzle is well funded for current operations and future growth opportunities.

Sezzle share price snapshot

Today’s big lift aside, it’s been a rough ride for Sezzle shareholders of late, with the ASX BNPL share down 68% year-to-date.

Over the past 12 months, the Sezzle share price has lost 84%. That compares to a gain of 4% over the same period posted by the All Ordinaries Index (ASX: XAO).

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