“On‑Demand is probably just a better tool around the fringes … on the consumer side, we really just want to lean back into subscription,” Executive Chairman and CEO Charlie Youakim told analysts.
Youakim argued the U.S. buy now, pay later (BNPL) market still has a long runway. “It’s pretty obvious that a lot of consumers out there prefer to use BNPL over a credit card,” he said, adding that customers “view us as a budgeting tool,” and that Sezzle aims to keep lending “in total alignment with responsible spending.”
Two balance‑sheet moves framed that strategy. First, Sezzle is exploring an industrial loan company charter (ILC), hiring outside counsel and consultants; an ILC “is the right long‑term path for us” because it “doesn’t subject us to becoming a bank holding company,” and if the company applies, it anticipates doing so in 2026.
Second, Sezzle exercised a $75 million accordion to lift its revolving credit facility to $225 million, a step timed “as we head into the holidays.” The facility increase was finalized Oct. 30.
On consumer credit, management pushed back on worries surfacing elsewhere in lending. “We haven’t seen any deterioration as consumer activity continues to perform in line with our expectation,” the CFO Karen Hartje said, noting the short duration of BNPL loans gives Sezzle room to adjust quickly. Third‑quarter credit losses were 3.1% of gross merchandise volume (GMV) and are trending toward the lower half of the company’s 2025 target range of 2.5%-2.75% of GMV.
Guidance points to a stronger finish to the year. Sezzle reaffirmed its full‑year top‑line growth outlook and raised 2025 profit targets: GAAP EPS to $3.52, adjusted EPS to $3.38, and adjusted EBITDA to $175 million-$180 million. It also introduced 2026 adjusted EPS guidance of $4.35. Management said those figures don’t assume future product launches highlighted on the call.
Top‑line results underscored the pivot. GMV rose 58.7% year over year to $1 billion, and total revenue climbed 67% to $116.8 million — an 11.2% take rate. Net income increased to $26.7 million (GAAP EPS $0.75), and adjusted EBITDA reached $39.6 million. Sezzle added 36,000 Monthly On‑Demand & Subscribers (MODS) in the quarter, bringing total MODS to 784,000, with the increase “largely driven by” subscriptions. Purchase frequency rose to 6.5x from 5.4x a year earlier.
The strategy from here is clear: Use On‑Demand selectively to court large merchants, but push most consumers toward subscriptions — even if that means a little less GMV — to lift revenue and earnings over time. “The better decision from a lifetime‑value standpoint is to go straight to offering subscription,” Youakim said.
