Sezzle (SEZL) - 2024 Q3 - Quarterly Report

Forward-Looking Statements This section provides cautionary statements regarding future events and financial performance, emphasizing inherent risks and uncertainties PART I. FINANCIAL INFORMATION This part presents Sezzle Inc.'s unaudited consolidated financial statements, management's discussion, market risk disclosures, and controls and procedures Item 1. Financial Statements (unaudited) This section presents Sezzle Inc.'s unaudited consolidated financial statements, including balance sheets, statements of operations, equity, and cash flows, with detailed notes on accounting policies and financial instruments Consolidated Balance Sheets This statement provides a snapshot of Sezzle's financial position, detailing assets, liabilities, and stockholders' equity as of September 30, 2024, and December 31, 2023 Consolidated Balance Sheet Highlights | Metric | Sep 30, 2024 (unaudited) | Dec 31, 2023 (audited) | | :----- | :----------------------- | :--------------------- | | Total Assets | $252,869,272 | $212,645,283 | | Total Liabilities | $191,731,258 | $190,550,959 | | Total Stockholders' Equity | $61,138,014 | $22,094,324 | | Cash and cash equivalents | $80,062,505 | $67,624,212 | | Notes receivable, net | $132,787,268 | $130,632,641 | | Line of credit, net (current) | $0 | $94,380,906 | | Line of credit, net (long term) | $93,937,724 | $0 | Consolidated Statements of Operations and Comprehensive Income This statement reports Sezzle's financial performance, including revenue, expenses, operating income, and net income for the three and nine months ended September 30, 2024 and 2023 Consolidated Statements of Operations and Comprehensive Income Highlights | Metric | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total revenue | $69,957,691 | $40,844,201 | $172,904,830 | $110,455,297 | | Total operating expenses | $49,116,520 | $35,494,456 | $121,529,622 | $95,922,330 | | Operating Income | $20,841,171 | $5,349,745 | $51,375,208 | $14,532,967 | | Net Income | $15,446,241 | $1,294,400 | $53,155,127 | $4,158,724 | | Basic EPS | $2.79 | $0.23 | $9.46 | $0.75 | | Diluted EPS | $2.62 | $0.23 | $8.94 | $0.74 | Consolidated Statements of Stockholders' Equity This statement details changes in Sezzle's stockholders' equity, including net income, equity-based compensation, and stock repurchases, from January 1 to September 30, 2024 Stockholders' Equity Changes (January 1, 2024 to September 30, 2024) | Metric | Balance at Jan 1, 2024 | Balance at Sep 30, 2024 | | :----- | :--------------------- | :---------------------- | | Total Stockholders' Equity | $22,094,324 | $61,138,014 | | Accumulated Deficit | $(157,519,880) | $(115,141,842) | | Equity based compensation | — | $2,532,644 | | Net income | — | $53,155,127 | | Repurchase and retirement of common stock | — | $(19,984,947) | | Repurchase of common stock | — | $(2,182,294) | Consolidated Statements of Cash Flows This statement summarizes Sezzle's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023 Consolidated Statements of Cash Flows (Nine Months Ended September 30) | Cash Flow Activity | 2024 | 2023 | | :--------------------------------------- | :----------- | :----------- | | Net Cash Provided from (Used for) Operating Activities | $39,928,625 | $(10,675,166) | | Net Cash Used for Investing Activities | $(1,058,150) | $(1,037,709) | | Net Cash (Used for) Provided from Financing Activities | $(21,213,116) | $9,205,604 | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $17,657,359 | $(2,507,271) | | Cash, cash equivalents, and restricted cash, end of period | $88,343,129 | $66,812,698 | Notes to the Consolidated Financial Statements These notes provide detailed explanations of Sezzle's accounting policies, financial statement line items, and other disclosures essential for understanding the financial report Note 1. Significant Accounting Policies This note outlines the basis of presentation, principles of consolidation, fair value measurement hierarchy, and recent accounting pronouncements, noting Sezzle operates as a single segment - Sezzle operates as a single operating segment with no significant geographical concentrations[23] - Warrant liabilities were reclassified from a liability to stockholders' equity during the nine months ended September 30, 2024, due to delisting from ASX and amending warrant agreements to reference Nasdaq common stock price[20] Recently Issued Accounting Guidance, Not Yet Adopted | Standard | Date of Planned Adoption | Effect on Consolidated Financial Statements | | :------- | :----------------------- | :------------------------------------------ | | ASU 2023-07, Segment Reporting Improvements to Reportable Segment Disclosures | January 1, 2024 (annual), January 1, 2025 (interim) | No material impact expected; will disclose information about significant segment expenses and performance assessment in 2024 annual consolidated financial statements on a retrospective basis | | ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures | January 1, 2025 | No material impact expected; will include enhanced disclosure requirements in 2025 annual consolidated financial statements on a prospective basis | Note 2. Total Revenue This note disaggregates Sezzle's total revenue into transaction income, subscription revenue, and income from other services, detailing significant growth drivers and recognition criteria Total Revenue by Category | Revenue Category | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | YoY Change (%) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | YoY Change (%) | | :--------------- | :-------------------------- | :-------------------------- | :------------- | :-------------------------- | :-------------------------- | :------------- | | Total Revenue | $69,957,691 | $40,844,201 | 71.3% | $172,904,830 | $110,455,297 | 56.5% | | Transaction Income | $36,397,294 | $27,046,209 | 34.6% | $92,096,322 | $78,870,463 | 16.8% | | Subscription Revenue | $22,857,165 | $8,554,947 | 167.2% | $57,377,021 | $17,768,953 | 222.9% | | Income from Other Services | $10,703,232 | $5,243,045 | 104.1% | $23,431,487 | $13,815,881 | 69.6% | - Merchant processing fees decreased due to a higher concentration of UMS volume transacted with subscription products, but overall transaction income grew due to increases in partner income and consumer fees[111] - Subscription revenue growth was primarily driven by the overall growth in Active Subscribers[112] [Note 3. Notes Receivable and Allowance for Credit Losses](index=15&type=section&id=Note%203.%20Notes%20Receivable%20and%20Allowance%20for%20Credit%20Losses