Sezzle released its Q4 2022 and FY2022 financial update. The company recorded a net income of USD 0.6 million in Q4 FY2022 and an FY2022 net loss of USD 38 million, a strong improvement from FY2021’s USD 75 million loss. This was backed by a reduction in non-transaction related expenses by 21% YoY to USD 19 million in FY2022, given reductions in workforce and cuts to third-party spending.

The company reported a 19% YoY drop in underlying merchant sales (UMS, platform spend) to USD 452 million in Q4 FY2022 given transitions to recent revenue initiatives and its proprietary machine learning-backed underwriting model. Active merchants in Q4 FY2022 fell 9% YoY to 42,000, with active consumers falling 10% YoY to ~3 million. Customer retention improved slightly to 94% in Q4 FY2022 from 93% in the previous FY, with weekly marketplace volume as a percentage of UMS rising to 29% from 11% in FY2021.

Sezzle’s total income rose in Q4 FY 2022 to a record high of USD 38 million rising by 16% YoY, implying a take rate (total income as a % of UMS) of 8.5% compared with 5.9% in Q4 FY2021, with its provision for uncollectible accounts receivable as a percentage of UMS falling significantly to 1.2% in Q4 FY2022 from 3.5% in Q4 FY2021 given tighter underwriting standards. Merchant fees accounted for 62% of total income compared to 78% in FY2021, with Sezzle stating that it would look to introduce affiliate payment models and a pay-per-click model in FY2023 to further diversify its revenue streams.