Sezzle Stock (SEZL) Great Growth and Good Value in Q2 2025

Sezzle (NASDAQ: SEZL), the “Buy Now, Pay Later” fintech innovator, has turned heads with its explosive Q2 2025 performance, demonstrating exceptional top-line growth and strong cash generation. The growing BNPL market in North America and positive analyst projections make Sezzle a stock worth considering for investment. In this article we will dive into Sezzle recent earnings, stock performance & valuation, growth potential, and the risks investor should consider.

About Sezzle

Founded in 2016 as a purpose-driven digital payments platform, Sezzle offers flexible point-of-sale financing, enabling consumers to split purchases into installments. Over time, the company expanded its product suite with offerings like the “Pay-in-Four” model, “On-Demand” payments, virtual cards, browser extensions, Express Checkout, and more, catering to both online and in-store merchants. Its mission combines financial inclusion with responsible consumer credit. Sezzle went public via direct listing in August 2023 and has since leveraged marketing and product innovation to scale rapidly.

Sezzle Financial Performance

In Q2 2025, Sezzle reported revenue of $98.7 million, a 76.35% increase from $55.97 million in Q2 2024, while quarterly EPS came in at $0.78, down 4.88% from $0.82 a year earlier. On a trailing-twelve-month (TTM) basis, revenue reached $371.79 million, up 92.95% from $192.69 million, and EPS rose 146.46% to $2.93 from $1.19. TTM free cash flow per share jumped 376.47% to $0.81 from $0.17. Profitability remained strong, with a gross profit margin of 69.57%, net profit margin of 28.13%, and free cash flow margin of 7.73%, while return on assets stood at 46.87% and return on equity at an impressive 115.76%, supported by a debt-to-equity ratio of 1.01.

Over the past five years, Sezzle’s revenue has been growing at a 50.7% CAGR, while net income and free cash flow have also grown rapidly since last year. Sezzle has proven its ability to grow rapidly in the past and is still projected to grow rapidly in the future.

Sezzle Fiscal 2025 Financial Forecast

Looking ahead, analysts project 2025 revenue of $442.08 million, a 63.05% increase from 2024’s $271.13 million, and forecast non-GAAP EPS of $3.27, up 77.58% from $1.84 in 2024. The stock carries a consensus Strong Buy rating, with an average price target of $131.67 implying 43.95% potential upside and the highest target of $150, suggesting 64% upside potential.

SEZL Stock Price Performance and Valuation

At the time this article was written the stock was trading at $91.47 per share, Sezzle’s stock has surged 353% over the past year, dramatically outperforming the S&P 500’s 18.6% gain in the same period. Since its IPO in August 2023, the stock has climbed an impressive 576.9%, compared to the S&P 500’s 47.7% increase. 

The company trades at a P/S (TTM) ratio of 8.34 and a forward P/S of 7.09, with a non-GAAP P/E (TTM) of 31.69 and a forward non-GAAP P/E of 28.16, while its P/FCF (TTM) stands at 108.33.

Based on Fiscal.ai data, since 2024 the forward P/S, forward P/E, and P/FCF have been above the average. However, with a forward P/E of 25, the valuation still appears reasonable or even undervalued relative to Sezzle’s earnings growth, suggesting the stock may be undervalued right now.

Sezzle Growth Potential

Sezzle growth prospect remains strong, driven by several factors.

• Revenue Diversification and Strategic Product Portfolio
  Sezzle’s revenue diversification is a key growth driver, highlighted by a 76.4% year-over-year revenue jump to $98.7 million in Q2 2025. Moving beyond its traditional buy-now-pay-later (BNPL) model, Sezzle partnered with WebBank to launch the On-Demand product, enabling consumers to use Sezzle anywhere Visa is accepted. This strategic shift greatly expands Sezzle’s addressable market by moving beyond merchant dependency to universal payment acceptance. Subscription-based offerings like Sezzle Premium and the highly profitable "Anywhere" product also contribute robust, high-margin revenue streams, driven by strong usage and engagement.
  This diversification lowers reliance on traditional merchant partnerships and positions Sezzle to capture more consumer spending across all retail channels. Additionally, the WebBank collaboration standardizes fees and streamlines regulatory compliance, boosting operational efficiency and laying the groundwork for future product innovation and sustainable profitability.
• Customer Engagement and Retention Excellence
  Sezzle’s outstanding customer engagement highlights strong long-term growth prospects. In Q2 2025, users averaged 6.1 purchases per quarter, up 27% from 4.8 a year earlier, demonstrating the platform’s increasing role in consumers’ financial lives. Monthly On-Demand & Subscribers (MODS) grew 62% year-over-year, reaching 748,000 users, reflecting effective acquisition and retention efforts. A Net Promoter Score of 75 for the 30 days ending June 30, 2025, indicates high customer satisfaction and loyalty.
  Sezzle’s innovative features like the Earn Tab, Price Comparison tools, Sezzle Balance, and auto-couponing foster a comprehensive financial ecosystem that drives frequent usage and strengthens customer ties. These strong engagement figures correlate directly with revenue growth by boosting transaction volumes and increasing customer lifetime value, laying a solid foundation for sustained expansion and profitability ahead.
• Market Leadership in a High-Growth Industry
  Sezzle operates within the rapidly growing global buy-now-pay-later (BNPL) market, projected to reach $560.1 billion in 2025 with an annual growth rate of 13.7%. The North American BNPL market is expected to expand 12.2%, reaching $122.26 billion this year. Sezzle’s strategic advantage lies in its focus on financial wellness through the Sezzle Up credit-building feature, which allows users to report on-time payments to credit bureaus.
  This important differentiator offers value beyond simple payment flexibility, appealing especially to younger consumers seeking to build credit history. The company’s leadership position is further validated by its inclusion in CNBC’s World's Top Fintech Companies 2025 list. Despite this, Sezzle currently holds less than 1% of North America’s BNPL market, which accounts for only 2% of total commerce, highlighting significant growth potential and market share opportunity.

Risks to Consider

Although Sezzle stock looks like a compelling investment opportunity, we should be mindful of potential risks.

• Industry Competition
  The Buy Now, Pay Later (BNPL) industry is highly competitive, featuring major players like Afterpay, Affirm, and Klarna. Sezzle currently holds a modest 2.7% share of the U.S. BNPL market as of Q3 2023. This crowded marketplace creates significant pressure on Sezzle’s margins and market share, challenging the company's ability to grow and maintain profitability amid strong competition from well-established rivals.
• Regulatory Changes
  Heightened regulatory scrutiny, particularly from agencies such as the Consumer Financial Protection Bureau (CFPB), poses significant risks to companies like Sezzle. This increased oversight may result in higher compliance costs and operational difficulties as the company adjusts to evolving rules. Additionally, there is an increased risk of fines and penalties for non-compliance. These regulatory pressures could ultimately reduce profitability by increasing expenses and complicating business operations.
• Financial and Credit Risks
  Sezzle primarily lends to high-risk consumers, leading to increased credit loss provisions. The company carries a high debt-to-equity ratio and borrows at costly interest rates of approximately 12-16%, which may strain cash flow if default rates rise. Furthermore, Sezzle’s rapid growth is partly driven by expanding its credit risk exposure, intensifying financial vulnerabilities and potentially impacting the company’s overall financial stability and profitability in the long term.

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Conclusion

Sezzle’s Q2 2025 results highlight exceptional revenue growth, expanding profitability, and robust cash flow, backed by strong analyst forecasts and a solid market position in the BNPL space. Despite a massive share price rally, valuation remains reasonable given the company’s growth trajectory, high margins, and strong return metrics. While risks such as competition and regulatory scrutiny exist, Sezzle’s innovative offerings, operational efficiency, and industry tailwinds position it well for continued success, making it an attractive long-term growth investment opportunity.