Sezzle Inc.'s (ASX:SZL) Shift From Loss To Profit

With the business potentially at an important milestone, we thought we'd take a closer look at Sezzle Inc.'s (ASX:SZL) future prospects. Sezzle Inc. operates as a technology-enabled payments company in United States, Canada, India, and Europe. The AU$1.5b market-cap company announced a latest loss of US$32m on 31 December 2020 for its most recent financial year result. Many investors are wondering about the rate at which Sezzle will turn a profit, with the big question being “when will the company breakeven?” Below we will provide a high-level summary of the industry analysts’ expectations for the company.

Check out our latest analysis for Sezzle

Consensus from 3 of the Australian IT analysts is that Sezzle is on the verge of breakeven. They anticipate the company to incur a final loss in 2022, before generating positive profits of US$57m in 2023. The company is therefore projected to breakeven around 2 years from today. How fast will the company have to grow each year in order to reach the breakeven point by 2023? Working backwards from analyst estimates, it turns out that they expect the company to grow 66% year-on-year, on average, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.

Given this is a high-level overview, we won’t go into details of Sezzle's upcoming projects, however, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

One thing we would like to bring into light with Sezzle is its relatively high level of debt. Generally, the rule of thumb is debt shouldn’t exceed 40% of your equity, which in Sezzle's case is 69%. A higher level of debt requires more stringent capital management which increases the risk in investing in the loss-making company.

Next Steps:

This article is not intended to be a comprehensive analysis on Sezzle, so if you are interested in understanding the company at a deeper level, take a look at Sezzle's company page on Simply Wall St. We've also compiled a list of essential aspects you should further examine:

1. Historical Track Record: What has Sezzle's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Sezzle's board and the CEO’s background.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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