In the ever-evolving “Buy Now,
Pay Later” (BNPL) fintech space, Sezzle (NASDAQ:SEZL) has quietly been
delivering standout growth and turning the corner toward profitability. With Q3
2025 results revealing significant year-over-year leaps, the stock appears to
be at an interesting inflection point: high growth meets improving fundamentals.
In this article we will dive into Sezzle recent earnings, stock performance
& valuation, growth potential, and the risks investor should consider.
About Sezzle
Sezzle is a fintech company
specializing in Buy Now, Pay Later (BNPL) and digital payment solutions,
allowing consumers to split purchases into manageable installments. Founded in
2016 and publicly listed in August 2023, Sezzle connects millions of shoppers
with a wide range of merchants through its platform. The company emphasizes
responsible credit use and financial empowerment, has rapidly expanded its user
and merchant base, and successfully transitioned into profitability, setting
itself apart from many loss-making fintech peers.
Sezzle Financial Performance
Sezzle reported outstanding
quarter, demonstrating strong growth in both revenue and profitability. For Q3
2025, the company generated $116.8 million in revenue, up 66.95% from $69.96
million in Q3 2024. Earnings per share (EPS) also rose sharply to $0.75, an
increase of 70.45% from $0.44 in the prior-year quarter. On a trailing
twelve-month (TTM) basis, revenue reached $418.63 million, representing an 88.74%
increase from $221.81 million in Q3 2024, while EPS surged to $3.24, up 104.61%
from $1.58 a year earlier. Free cash flow per share (TTM) strengthened to $1.57,
growing 124.29% compared to $0.70 last year, reflecting Sezzle’s ability to
generate solid cash returns from its operations. The company’s profitability
metrics remain robust, with a gross profit margin of 71.65%, net profit margin
of 27.66%, and free cash flow margin of 13.37%. Sezzle also boasts exceptional
efficiency, recording a return on assets (ROA) of 48.9% and a return on equity
(ROE) of 107.03%, supported by a healthy debt-to-equity ratio of 0.76.
Over the past five years, Sezzle
has grown its revenue at a 51.2% CAGR, while net income and free cash
flow turned positive in 2024 and continue to grow rapidly. Sezzle has
proven to be a fast-growing company in the past and is still projected to
maintain strong growth in the future.
Sezzle Fiscal 2025 Financial
Forecast
Looking ahead, analysts forecast 2025
revenue of $449.16 million, representing a 65.66% increase from 2024’s $271.13
million, and project non-GAAP EPS of $3.38, an 83.36% improvement from $1.84 in
2024. Wallstreet analysts have assigned Sezzle a “Strong Buy” rating with an average
price target of $108.50, implying an 83.15% potential upside, and the highest
price target reaching $202, suggesting a 241% upside potential from current
levels.
SEZL Stock Price Performance
and Valuation
At the time this article was written the stock was trading at $59.24 per share, Sezzle has delivered outstanding performance, gaining 41.9% over the past year and significantly outperforming the S&P 500’s 12.6% increase during the same period. Over the last five years, Sezzle’s stock has surged 338.3%, far exceeding the S&P 500’s 53.7% gain, highlighting the company’s strong growth trajectory and investor confidence.
Despite this impressive rally, Sezzle’s valuation remains
attractive relative to its fundamentals. The stock trades at a price-to-sales
(P/S) ratio of 4.79 and a forward P/S of 4.5, which are reasonable considering
its rapid revenue growth and high profitability. Its non-GAAP price-to-earnings
(P/E) ratio stands at 18.92, with a forward P/E of 17.53, suggesting the market
has not fully priced in future earnings potential. Meanwhile, the price-to-free-cash-flow
(P/FCF) ratio is 36.15.
Based on Fiscal.ai data, the
forward P/S and forward P/E ratios have been below the average since 2024. This
indicates potential undervaluation, as Sezzle is still projected to grow
rapidly in the coming years.
Sezzle Growth Potential
Sezzle growth potential remains
strong, driven by several factors.
- Record Gross Merchandise
Volume Achievement and Transaction Frequency Growth
Sezzle achieved a historic milestone by surpassing $1 billion in quarterly Gross Merchandise Volume (GMV) for the first time in Q3 2025, reaching $1,047.3 million with 58.7% year-over-year growth. This achievement demonstrates the platform's capacity to scale and its resonance with consumers during a challenging macroeconomic environment. Equally significant is the acceleration in consumer purchase frequency, which increased to 6.5x in Q3 2025 from 5.4x in the prior year period.
This metric reveals that Sezzle customers are not making occasional purchases but rather integrating the platform into their regular shopping habits, indicating strong product-market fit and increasing consumer reliance. The combination of transaction volume growth and frequency improvement signals sustainable business expansion beyond one-time user acquisition, positioning Sezzle to capture a larger share of consumer spending over time. - Subscription-Led Profitability
Model with Superior Unit Economics
Sezzle’s shift to subscription products like Premium and Anywhere has transformed its profitability and unit economics. Subscribers place about 10 times more orders than non-subscribers, with the top 10% making an outstanding 36 orders in 90 days. By Q3 2025, Sezzle grew its Monthly On-Demand & Subscribers (MODS) base to 784,000, driven mostly by subscriptions rather than lower-margin on-demand services.
This pivot fueled strong financial results: net income hit $26.7 million with a 22.8% net margin, and adjusted net income rose 52.6% to $25.4 million. Marketing resources focus more on subscriptions, signaling confidence in their higher lifetime value, retention, and payment behaviors. This evolution positions Sezzle for ongoing profitability and expanding margins as its subscription base continues to grow. - Strategic Market Positioning
Within the Expanding BNPL Ecosystem
The global Buy Now, Pay Later (BNPL) market is projected to grow from $560.1 billion in 2025 to $911.8 billion by 2030, at a 10.2% compound annual growth rate. Sezzle stands out in this expanding market by focusing on short-term credit with a 42-day payment plan, enabling quicker portfolio turnover and better credit risk management. In Q3 2025, Sezzle expanded its merchant partnerships by adding premium retailers like Cato Fashions, SCHEELS, Dermstore, and entered digital content via Whop.
Early data showed Sezzle customers at Cato Fashions nearly doubled the retailer's average order value, proving the platform’s merchant value. As BNPL gains adoption, especially among Gen Z and millennials favoring flexible installments over credit cards, Sezzle’s market presence and innovative model strongly position it to capture ongoing growth in this segment.
Risks to Consider
While Sezzle stock looks like a
compelling investment opportunity, we should be mindful of potential risks.
- Industry Competition
Sezzle faces intense competition in the crowded Buy Now, Pay Later (BNPL) market, competing with dominant players like Afterpay, Affirm, and Klarna. This rivalry puts pressure on margins and poses risks of losing market share, especially as larger competitors hold significant portions of the BNPL landscape. With Sezzle’s smaller scale, maintaining growth and relevance requires navigating this competitive landscape carefully to avoid margin compression and shrinking user adoption. - Regulatory Changes
BNPL providers, including Sezzle, face rising regulatory scrutiny primarily from agencies like the Consumer Financial Protection Bureau (CFPB). New rules slated for around 2026 will require stricter creditworthiness and affordability checks to protect consumers, leading to higher compliance and operational costs. Non-compliance risks fines and penalties, which could cut profitability by 10-20%. These regulations aim to balance consumer protection with industry innovation but may increase costs and reduce growth momentum. - Market Conditions
Economic factors like inflation and recession risks play a crucial role in shaping consumer spending habits and influence loan default rates, which are vital to Sezzle’s revenue and financial health. Inflation can reduce consumers' disposable income, while recession fears may cause caution in spending and borrowing. These factors collectively impact Sezzle’s credit loss provisions and overall stability, making economic conditions a significant risk to monitor for sustained performance.
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Conclusion
Sezzle Inc. stands out as a
high-growth fintech company that has successfully transitioned to profitability
while maintaining impressive revenue and earnings momentum. With strong
financial performance, expanding margins, and robust analyst forecasts, the
company continues to demonstrate significant growth potential. Despite its
strong share price gains, Sezzle’s valuation remains attractive relative to its
fundamentals. Supported by increasing consumer adoption and operational
efficiency, Sezzle appears well-positioned to deliver long-term value and
remains a compelling investment opportunity.
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