Sezzle (NASDAQ:SEZL) used its fourth-quarter 2025 earnings call to highlight a year of rapid revenue growth, record profitability, and expanding engagement across its consumer app as the buy now, pay later (BNPL) market continues to mature in the U.S. financial ecosystem.
Fourth-quarter and full-year results
CEO and Executive Chairman Charlie Youakim said 2025 was “a year of focus” on product execution and allocating capital to initiatives with the highest expected returns, particularly subscription users. He pointed to growth in both revenue and engagement as evidence Sezzle benefited from a “tailwind” from BNPL’s increasing acceptance in everyday commerce.
- Total revenue: up 32.2% year-over-year in the fourth quarter; full-year 2025 revenue of $450.3 million, up 66.1% versus 2024.
- GAAP net income: $42.7 million in the fourth quarter; $133.1 million for the full year.
- Adjusted net income: $42.8 million in the quarter; $128.4 million for the year.
- Adjusted EBITDA: $58.3 million in the fourth quarter (44.9% margin); $187.7 million for the full year.
- GMV: $1.16 billion in the fourth quarter (up 35.3% year-over-year); $3.94 billion for the full year (up 55.1%).
- Take rate: 11.2% in the fourth quarter; 11.4% for the full year.
Youakim also said quarterly purchase frequency increased 20% year-over-year, reaching 6.6x per quarter, while “mods” (Monthly On-Demand & Subscribers) increased by 211,000 year-over-year. Repeat usage, he added, was “nearly 97%.”
The company also emphasized “scoreboard” measures it tracks internally. For the fourth quarter, management cited a Rule of 40 score (revenue growth plus EBITDA margin) of 77.1 and a full-year score of 107.8. Under its “rule of 100” (revenue growth plus gross margin percentage plus net income percentage), Sezzle reported scores of 129.4 for the quarter and 158.1 for the year.
Margin expansion and credit performance
New CFO Lee Brading said Sezzle’s year-over-year progression showed “incredible operating leverage,” highlighting both improved unit economics and disciplined overhead growth.
In the fourth quarter, total revenue less transaction-related costs—management’s non-GAAP proxy for gross margin—was 64.3% of total revenue, a nine-point improvement from the prior year period. For the full year, gross margin was $281 million, or 62.4% of total revenue.
Brading attributed the improvement to lower variable costs and increased efficiency from proprietary tools. Transaction-related costs (a non-GAAP measure combining transaction expense, provision for credit losses, and net interest expense) fell to 35.7% of total revenue in the fourth quarter and 37.6% for the full year, down from 44.3% in 2024.
On credit, Sezzle reported provision for credit losses of 2% of GMV in the fourth quarter, which Brading said was “better than we anticipated,” citing stronger repayment rates and “record repayment performance” on the third and fourth payments. He also said underwriting was tightened ahead of the holiday season to reduce the risk of consumer overextension, which had “a pronounced impact” on loss rates. Net interest expense remained low at 0.3% of GMV, and Brading noted the company expanded its credit facility to $225 million.
In Q&A, management said it tightened one model in late summer/early fall amid broader concerns about consumer health, and also launched new models that performed better. Brading suggested that, in hindsight, the company might have preferred to “get some more consumers through the pipeline and probably increase GMV,” and added that provision guidance implies potential to “open further to help drive more GMV and more users.”
Product roadmap: from BNPL toward a broader consumer app
Youakim framed Sezzle’s strategy as moving beyond a Pay-in-Four product into an “all-in-one consumer app” for value-focused consumers, aiming for daily usage. He highlighted product features such as the Earn tab, browser extension, and price comparison tools, and said the Earn tab was driving revenue of more than $1 million per month.
Management also discussed a receipt scanning and rewards feature currently in testing that “far surpassed expectations,” achieving an adoption rate higher than any prior Sezzle feature launch, according to Youakim.
Looking to early 2026, Youakim said Sezzle Mobile is expected to launch “in the next month.” He cited J.D. Power data that U.S. consumers pay $141 per month for cellular service and said Sezzle believes it can save consumers money, improving retention through more frequent touch points and drawing in adjacent audiences. Later in Q&A, Youakim said Sezzle’s carrier partner is AT&T, working through an intermediary, and described the mobile offering as both a retention tool and a potential customer acquisition funnel. Management said the 2026 guidance does not include projections for new products currently in development, including Sezzle Mobile.
Beyond mobile, Youakim said the company is exploring deposit accounts, expanded credit offerings such as secured credit cards, and additional post-purchase capabilities, including enhanced split payment experiences.
Marketing shift toward subscriptions and use of AI
On growth strategy, Youakim said Sezzle pivoted marketing emphasis back toward subscription products after concluding that On-Demand did not serve as the “perfect bridge” into subscription as originally expected. He said leading with subscription—particularly Anywhere Premium—improved outcomes, and the company reported subscribers grew 30% year-over-year and 18% sequentially in the fourth quarter. Management said it continues to target roughly a six-month payback period on these marketing investments.
Sezzle also emphasized broad adoption of AI internally, with Youakim describing efforts to scale output without proportional headcount increases. Management said the company has moved from using external AI vendors toward building proprietary tools, including an AI chargeback agent, embedded personalization models, and internal data access via a database interface called SIA. It also said it is preparing to launch an AI shopping assistant and support chatbot to handle increased volume without a corresponding increase in support costs.
Balance sheet, buybacks, regulation, and 2026 guidance
Sezzle ended the year with $102.6 million in total cash, including $38.5 million of restricted cash tied primarily to reserves under its WebBank partnership. Notes receivable rose to $254.9 million, and the company drew $141.3 million on its line of credit, leaving $73.5 million of unused capacity at year-end following the facility expansion to $225 million. Brading said net cash provided for operations was $209.9 million for the year.
On capital allocation, management highlighted completion of a $50 million share repurchase and authorization of an additional $100 million repurchase program in December. In response to investor questions, management described buybacks as opportunistic and said the company also prioritizes funding internal projects; it noted Sezzle has historically favored building rather than acquiring, though it is “not against” M&A if valuations and dynamics change.
On regulation, Youakim said proposed New York rules were not expected to have a meaningful impact this year and largely mirrored CFPB guidance with “relatively insignificant” differences. He added that state-level involvement is a broader concern and reiterated Sezzle’s interest in pursuing an industrial loan company (ILC) charter, in part to strengthen its national posture. Brading said the company is in the discovery phase for its banking charter effort, supported by external consultants and attorneys, and anticipates submitting an application in the first half of 2026, while noting the process is long and not guaranteed.
For 2026, Sezzle guided to 25% to 30% total revenue growth and $170 million of adjusted net income, translating to adjusted EPS of $4.70, which management said would be a 30.9% increase over 2025 results. The company said this outlook reflects confidence in core business momentum and continued cost discipline, and does not assume contributions from new products in development.
About Sezzle (NASDAQ:SEZL)
Sezzle Inc is a financial technology company specializing in buy now, pay later (BNPL) services that enable consumers to split purchases into interest-free installment payments. By integrating its platform with e-commerce merchants, Sezzle provides shoppers with flexible payment options at checkout while merchants benefit from increased conversion rates and average order values. The company’s technology is designed to offer a seamless user experience, with instant approval decisions and no hidden fees, positions it as a consumer-friendly alternative to traditional credit products.
Founded in 2016 and headquartered in Minneapolis, Minnesota, Sezzle completed its initial public offering on the Nasdaq under the ticker SEZL.
