Sezzle Stock (SEZL) Great Growth and Undervalue (Q4 2024 Earnings)

In the fast-evolving financial technology sector, Sezzle Inc. (NASDAQ:SEZL) has emerged as a standout player in the "Buy Now, Pay Later" (BNPL) industry. With a mission to provide consumers with flexible and interest-free payment solutions, Sezzle has experienced tremendous growth over the past year. The company’s Q4 2024 earnings report showcases impressive financial results, including a substantial increase in revenue, profitability, and free cash flow. Despite its meteoric rise, Sezzle remains an undervalued stock with strong growth potential. This article delves into Sezzle's recent financial performance, stock valuation, future growth prospects, and why it presents an attractive investment opportunity.

About Sezzle

Founded in 2016 by Charlie Youakim, Paul Paradis, and Killian Brackey in Minneapolis, USA, Sezzle Inc. is a financial technology company that offers alternative payment solutions to traditional credit. The company's flagship product, the Sezzle Platform, enables consumers to purchase merchandise and pay in interest-free installments over time, thereby enhancing purchasing power and promoting responsible budgeting. Beyond its core BNPL services, Sezzle offers products such as Sezzle Virtual Card, Sezzle Anywhere, Sezzle Premium, and Sezzle Up, catering to diverse consumer needs

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Sezzle Financial Performance

According to Stockanalysis, Sezzle's financial performance in Q4 2024 reflects significant growth and operational efficiency, showcasing the company's strong momentum. The company reported quarterly revenue of $98.22 million, marking a substantial 100.86% increase from $48.9 million in Q4 2023, driven by new product innovations and strategic partnerships. Earnings per share (EPS) for the quarter stood at $4.17, representing a remarkable 723.68% rise from $0.51 in the same period last year. On a trailing twelve-month (TTM) basis, Sezzle achieved revenue of $271.13 million, a 70.14% increase from $159.36 million in 2023, while EPS surged 950.4% to $13.13 from $1.25 in the prior year. Additionally, the company's free cash flow per share (TTM) improved significantly, rising to $6.83 from -$4.54 in Q4 2023, reflecting better cash management and operational efficiency. Looking ahead, Sezzle projects revenue growth of 25-30% for 2025, with net income expected to reach approximately $80 million, slightly up from $78.52 million in 2024.

SEZL Stock Performance and Valuation

Sezzle's stock has experienced extraordinary growth over the past year, significantly outperforming the broader market. As of the latest data, the company's share price stands at $286.12, reflecting a remarkable 394.16% increase over the past 12 months. This surge far surpasses the S&P 500’s 15.41% gain in the same period, highlighting Sezzle's exceptional performance and strong investor confidence in its business model.

Despite this substantial appreciation, Sezzle remains an attractive investment based on its valuation metrics. The company's price-to-sales (P/S) ratio on a trailing twelve-month (TTM) basis stands at 5.93, with a forward P/S ratio of 5.18, suggesting continued revenue expansion at a reasonable price. Its price-to-earnings (P/E) ratio (TTM) is 21.79, while the forward P/E ratio is 21.59, indicating that the stock is still fairly valued relative to its earnings growth. Additionally, the price-to-free cash flow (P/FCF) ratio (TTM) is 39.4, reflecting Sezzle’s improved cash flow generation and financial stability.

Given its rapid revenue and earnings growth, strong market position, and reasonable valuation, Sezzle remains a compelling investment opportunity. The company’s ability to expand its market share in the thriving Buy Now, Pay Later (BNPL) sector, coupled with strategic partnerships and operational efficiencies, supports a positive long-term outlook. While the stock has already seen significant gains, its valuation metrics suggest there is still room for further appreciation, making it an attractive option for growth-focused investors.

Sezzle Growth Potential

Several factors contribute to Sezzle's promising growth prospects:

• Market Expansion: The BNPL industry is experiencing robust growth, with consumers increasingly seeking flexible payment options. Sezzle's user-friendly platform positions it well to capitalize on this trend.
• Strategic Partnerships: Collaborations with major retailers such as Amazon, Walmart, and Target have expanded Sezzle's reach, attracting a broader customer base and increasing transaction volumes.
• Product Diversification: The introduction of new products and services, including the Sezzle Virtual Card and Sezzle Premium, caters to diverse consumer needs, enhancing customer retention and engagement.
• Geographical Expansion: Sezzle's operations in the United States and Canada, coupled with potential entry into new markets, offer avenues for sustained growth.

Risks to Consider

While Sezzle presents a compelling investment opportunity, potential investors should be mindful of certain risks:

• Regulatory Environment: The fintech industry, particularly the BNPL sector, is subject to evolving regulations. Changes in regulatory frameworks could impact Sezzle's operations and profitability.
• Competition: The BNPL market is becoming increasingly competitive, with new entrants and established financial institutions vying for market share. Sezzle must continue to innovate to maintain its competitive edge.
• Consumer Credit Risk: As Sezzle extends credit to consumers, there is an inherent risk of defaults, which could affect financial performance. However, the company's robust underwriting processes help mitigate this risk.

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Conclusion

Sezzle Inc. has demonstrated remarkable growth and resilience in the dynamic fintech landscape. With a strong financial performance in Q4 2024, strategic partnerships, and a commitment to innovation, the company is well-positioned for continued success. While mindful of potential risks, the company's valuation and growth prospects make Sezzle an attractive consideration for investors seeking exposure to the expanding BNPL sector.