US buy now pay later platform Sezzle (ASX:SZL) has started trading on the ASX following the completion of an oversubscribed A$43.6M Initial Public Offering (IPO).
The Minneapolis-based tech company’s latest figures show the number of active merchants rose to 5,021 in June, a gain of 52% from the March quarter.
By way of comparison, Afterpay said recently it had 1.5 million active customers in the US as of May 31, with 3,300 active merchants and another 1,100 coming on board.
At 12:13 AEST, Sezzle shares were up 97 cents to $2.20 – a 79.5 per cent increase on its IPO price of $1.22 per CHESS Depository Interest.
They had traded as high as $2.44 minutes earlier when they began trading at 12:00 AEST.
Sezzle, founded by Charlie Youakim and Paul Paradis, launched in August 2017 and is not profitable, with cumulative losses of $US6.5 million ($A9.4m) as of December 31, but has experienced tremendous growth in its core market of the US.
It had a net loss after tax of $US4.2 million ($A6.1m) in 2018, up from a $US1.8 million ($A2.6m) loss in 2017.
“We are extremely proud to have attracted the support of our IPO investors, including many institutional investors who possess an extremely detailed understanding of the ‘buy now, pay later’ sector and the immense opportunity ahead of Sezzle,” company founder and chief executive Charlie Youakim said.
In addition to Afterpay, Sezzle says its competitors in the US include Affirm, Klarna, PayPal Credit and QuadPay.
Sezzle pays merchants in full, with customers expected to repay Sezzle by paying a third of the purchase price back every two weeks.
It makes money on merchant fees, which averaged 4.8 per cent in 2018, and a US$5 fee on its end users for rescheduling payments.
“Sezzle aims to differentiate its business to end-customers by providing a product that is simple to understand and customer friendly,” Sezzle said in its prospectus.
“This includes allowing the customer to shift their repayment schedule once per order for free, and waiving Failed Payment Fees where the End-customer corrects a failed payment within 48 hours”
Mr Youakim retains ownership of 49.7 per cent of the company, with chief revenue officer Paul Paradis owning another 5.6 per cent.
Sezzle is the fast-growing emerging payment solution in the US and, last month, the company expanded into Canada.