Sezzle Inc. · NASDAQ:SEZL
Sezzle — Q4 2022 Earnings Presentation
29 slides from Sezzle's earnings presentation, February 2023
Slide 1: 4Q22 Earnings Presentation
4Q22 EAR NI NGS P R ES ENTATI ON 31 December 2022 This presentation has been approved by the Company’s Executive Chairman and CEO, Charlie Youakim, on behalf the Sezzle Inc. Board
Slide 2: Disclaimer
D I S C L AI ME R Cautionary Note Regarding Forward-Looking Statements This presentation (the “Presentation”) contains summary information about the activities of Sezzle as at the date of this Presentation. The information in this Presentation is of a general nature and does not purport to be comple
Slide 3: The Way Forward: Empowering the Next Generation Financially
T H E W AY F OR W AR D FIN AN CIALLY Driving Change for our Stakeholders E M P O WE R I N G TH E N E X T G E N E R ATION Certified B Corp Credit Building “ I love Sezzle for giving me the opportunity as a college student to Placing Purpose Helping Consumers build a credit score without a hassle alon
Slide 4: 4Q22 Update
4Q22 UPDATE
Slide 5: 4Q22 Performance and Financial Scorecard
4 Q2 2 P E R F OR MAN C E AN D F I N AN C I AL S C OR E C AR D TOTAL INCOME (US$ in MILLIONS) GAAP NET INCOME (LOSS) (US$ in MILLIONS) +16.2% +$26.6M 4Q22 $38.3 4Q22 $0.6 4Q21 $32.9 4Q21 ($25.9) 4Q20 $22.1 YoY 4Q20 ($16.1) YoY ADJUSTED EBITDA1 (US$ in MILLIONS) ADJUSTED EBTDA1 (US$ in MILLIONS) +$30
Slide 6: 4Q22 Engagement Scorecard
4 Q2 2 E N G AG E ME N T S C OR E C AR D ACTIVE1 CONSUMERS REPEAT USAGE AS A % OF TOTAL ORDERS (CUMULATIVE) -10.3% +131 4Q22 2,950,000 4Q22 94.2% 4Q21 3,287,000 4Q21 92.8% 4Q20 2,231,000 YoY 4Q20 89.8% Bps APP ENGAGEMENT2 AS A % OF ACTIVE CONSUMERS WEEKLY AVERAGE MARKETPLACE VOLUME AS A PERCENTAGE O
Slide 7: Exited 2022 with US$70M+ in Initiatives
E X I T E D 2 0 2 2 W I T H U S $ 70 M+ I N I N I T I AT I V E S W H AT W E T OL D T H E MAR K E T W H AT W E D E L I V E R E D Mar 2022 April 2022 July 2022 Sep 2022 US$70 MILLION Annualized Impact US$10 MILLION US$17+ MILLION US$50+ MILLION US$60+ MILLION Announced reduction Announced initiatives
Slide 8: Initiatives & Underwriting Drive Profitability
I N I T I AT I V E S & U N D E R W R I T I N G D R I V E P R OF I T AB I L I T Y 4 3 1 2 1 Provision Improvement 3 Cost Initiatives • Composed 40% of total impact from initiatives. • Composed 9% of total impact from initiatives. • Provision for uncollectible accounts reduced from 3.5% • Driven by pr
Slide 9: Improved Underwriting with New Risk Model: Prophet
I MP R OV E D U N D E R W R I T I N G W I T H N E W R I S K MOD E L PROPHET • A proprietary machine learning model designed specifically for the holiday season. MODEL • Internally developed throughout FY2022 and deployed during the 2022 holiday period. AVERAGE PROPHET SCORE (PROBABILITY OF DEFAULT)
Slide 10: Progression to Profitability
P R OG R E S S I ON T O P R OF I T AB I L I T Y 2022 2023 4Q21 4Q22 FY23 INITIATIVES (0.4%) 4.5% US$10M+ Unit Low Economics1 Strong Sezzle plans to launch Unit Economics Unit Economics several initiatives over the next 18 months 77.8% Income 61.8% Merchant Fee Streams2 Diversified Streams Initiative
Slide 11: 4Q22 Financials
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Slide 12: Total Income & UMS
T OT AL I N C OME & U MS TOTAL INCOME COMMENTARY $100.0 8.5% 8.0% 7.2% • Total Income grew 16.2% YoY to a record high of $90.0 $80.0 7.0% 7.0% 5.9% 6.1% US$38.3 million. $70.0 6.0% $60.0 5.0% $38.3 $32.9 Despite the drop in UMS compared to 4Q21, 4.0% $50.0 $40.0 $27.6 $29.3 $30.4 3.0% revenue and
Slide 13: Transaction Expense
T R AN S AC T I ON E X P E N S E COMMENTARY • Transaction Expense decreased to a record low 2.1% of UMS, representing a 37bps decrease YoY. TRANSACTION EXPENSE $16.0 5.0% • The drop in Transaction Expense is driven by $13.9 $14.0 several Company initiatives including, but not $11.8 $12.0 $10.1 4.0%
Slide 14: Provision for Uncollectible Accounts
P R OV I S I ON F OR U N C OL L E C T I B L E AC C OU N T S COMMENTARY • Sezzle’s proprietary underwriting (e.g., Prophet machine learning model) and overall diligent PROVIS ION FOR approach over the holiday period resulted in the UNCOLLECTIB LE ACCOUNTS Provision for Uncollectible Accounts reaching
Slide 15: Total Income Less Transaction Related Costs
T OT AL I N C OME L E S S T R AN S AC T I ON R E L AT E D C OS T S COMMENTARY • In 4Q22, Sezzle delivered a record Total Income less Transaction Related Costs of $20.2 million, T OT AL I N COM E exceeding the previous all-time high by nearly L E S S T R AN S ACT I O N R E L AT E D COS T S 1 50%. 6.0
Slide 16: Non-Transaction Related Operating Expenses
N ON - T R AN S AC T I ON R E L AT E D OP E R AT I N G E X P E N S E S COMMENTARY • 4Q22 Non-Transaction Related Expenses decreased significantly to US$18.6 million, representing a decrease of 21.4% YoY and a NON-TRANS ACTION RELATED 41.0% reduction versus the peak in 1Q22. OPERATING EXPENS ES The
Slide 17: Closed the Gap
C L OS E D T H E G AP GAAP NET INCOME (LOSS) $60.0 $20.0 COMMENTARY $58.9 $50.0 $55.6 $10.0 $4.3 $40.0 $44.3 $0.6 $0.0 • GAAP Net Income remained positive in 4Q22, $30.0 $32.9 $29.3 $30.4 $38.3 $37.6 ($10.0) reaching US$0.6 million as a result of the full $27.6 $20.0 ($15.1) $26.1 impact of FY22 rev
Slide 18: Capitalization
C AP I T AL I Z AT I ON COMMENTARY Select Balance Sheet Data Unaudited 1 Unaudited1 • As of 31 December 2022, Sezzle had total cash on US$000's 30-Sep-2022 31-Dec-2022 hand of US$69.5 million, consisting of US$68.3 Cash and cash equivalents $57,875 $68,280 million of bank balances and US$1.2 million
Slide 19: January '23 Update
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Slide 20: Key Statistics for January
K E Y S T AT I S T I C S F OR J AN U AR Y COMMENTARY • Total Income for January rose 18.3% YoY to TOTAL INCOME US$11.7 million as FY22 initiatives continue to push revenue higher YoY. Total Income as a U S $ 1 1 . 7M 18.3% YoY percent of UMS reached 10.0%. • Average Daily UMS is up 8.0% through 25 G
Slide 21: Appendices
APPENDICES
Slide 22: Appendix I: Reconciliation of GAAP to Non-GAAP Measures
APPENDIX I: RECONCILIATION OF GAAP TO NON-GAAP MEASURES T OT AL I N C OME L E S S T R AN S AC T I ON R E L AT E D C OS T S For the three months ended December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 December 31, 2020 Total income $ 38,276 $ 30,408 $ 29,252 $ 27,634
Slide 23: Appendix II: Reconciliation of GAAP to Non-GAAP Measures
APPENDIX II: RECONCILIATION OF GAAP TO NON-GAAP MEASURES N ON -T R AN S AC T I ON R E L AT E D OP E R AT I N G E X P E N S E S For the three months ended (in $US thousands) December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 Operating expenses $ 33,534 $ 23,909 $ 42,8
Slide 24: Appendix III: Consolidated Balance Sheets
APPENDIX III: CONSOLIDATED BALANCE SHEETS As of December 31, 2022 December 31, 2021 Assets Current Assets Cash and cash equivalents $ 68,279,539 $ 76,983,728 Restricted cash, current 1,223,119 1,886,440 Notes receivable, net 93,358,404 133,986,583 Other receivables, net 2,532,710 5,084,099 Prepaid e
Slide 25: Appendix III: Consolidated Statements of Operations and Comprehensive Loss
APPENDIX III: CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the years ended December 31, 2022 December 31, 2021 Total income $ 125,570,441 $ 114,816,635 Operating Expenses Personnel 51,217,083 56,831,368 Transaction expense 40,776,825 43,476,143 Third-party technology and data 8,1
Slide 26: Appendix III: Consolidated Statements of Cash Flows
APPENDIX III: CONSOLIDATED STATEMENTS OF CASH FLOWS For the years ended December 31, 2022 December 31, 2021 Operating Activities: Net loss $ (38,093,756) $ (75,168,363) Adjustments to reconcile net loss to net cash provided from (used for) operating activities: Depreciation and amortization 847,126
Slide 27: Appendix III: Consolidated Statements of Cash Flows (Cont.)
APPENDIX III: CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT.) For the years ended December 31, 2022 December 31, 2021 Financing Activities: Payments on long term debt — (1,220,332) Proceeds from line of credit 71,155,556 174,666,667 Payments to line of credit (84,955,556) (135,866,667) Payments of deb
Slide 28: Non-GAAP Financial Measures
N ON - G AAP F I N AN C I AL ME AS U R E S To supplement our operating results prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), we present the following non-GAAP financial measures: Total income less transaction related costs; adjusted earnings befo
Slide 29: Sezzle: The way forward
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