Sezzle Inc.

Sezzle Inc. intends to raise A$43.6 Mn via Chess Depository Interests: Sezzle Inc. (Proposed ASX Code: SZL) is a technology-driven, payments company based in the USA. The company provides fast, secure and easy payment system among consumers and retailers. Its payment product is a short-term, interest-free instalment plan that delivers a budgeting and financing value proposition to its customers. The platform provides end-customers to make online purchases and effectively split the payment for the purchase over four equal, interest free, payments over six weeks. The first payment is made by the customer at the time of checkout and subsequent payments can be made fortnightly. The purchase price is paid to retail merchant clients by Sezzle after deduction of the processing fee, in advance of the collection of the purchase price instalments by Sezzle from the end-customers. The technology consists of the Sezzle Application Layer; Sezzle Fraud Detection System; and Sezzle Underwriting Engine.

Revenue Model: The company earns its income primarily from interest-free lending to End-customers who purchase goods from affiliated merchants. Sezzle pays the Retail Merchant Clients the value of underlying sales net of transaction fees charged by Sezzle (Merchant Fees) for facilitating the purchases by End-customers transacted on their web sites. Merchant Fees are generated on each discrete, approved order placed by the End-customer through the Sezzle Platform. The fee is predominantly based on a percentage of the End-customer order value plus a fixed fee per sale. Merchant Fees as a percentage of Merchant Underlying Sales were 4.8% and 3.0% in FY18 and FY17, respectively.

Reschedule Fees are applied to End-customers where the shopper requests to shift their instalment schedule.Sezzle limits reschedule to two weeks from the originally scheduled date and allow End-customers to reschedule once per order for free. Additional reschedules on the order are levied a US$5.00 fee and are dependent on the shopper agreeing to that additional fee.

Offer Information: The company invites interested investors to acquire CHESS Depositary Interests (CDIs) over shares of common stock (Shares) in Sezzle Inc. (ARBN 633 327 358), a foreign company registered in Delaware. No CDIs will be issued on the basis of this Prospectus after 24 July 2020, which is 13 months from the date of this Prospectus.


Key Offer Information (Source: Company Reports)

Offer Objective: The raised funds would help the company to support its growth strategy and future growth opportunitiesalong with access to capital markets and additional funding flexibility in the future. It would also help the company to access a liquid market for CDIs and the opportunity for others to invest in its Securities.

What to expect: The company has an attractive business model, disrupting traditional short-term financing products. Its platform is scalable and can process a large volume of transactions resulting from an increase in the number of Retail merchant clients. Sezzle follows a risk-conscious approach to extend instalment payment term to the end-consumers. This approach manages Sezzle’s bad debt risk profile through a combination of current product features and technology application. Moreover, it is not incurring any direct marketing costs in client acquisition, as Retail Merchant clients are promoting its platform to potential customers.


Important Dates (Source: Company Reports)

Key Risks: The company has a very limited trading history, and like many early stage companies, it has incurred losses since its inception. The reported cumulative losses as on December 31, 2018 was reported at around US$6.5 Mn. Presently, Sezzle is in its early stage of establishing its presence in the US and Canadian markets, hence, the business is heavily dependent on transaction volumes. Any initiative towards introduction of new technology may result in additional costs and the intended outcomes might not be delivered.Moreover, the company is largely dependent on continued relationship with its Retail Merchant Clients, and there is no guarantee that the relationship will last forever. The closing date of the retail Offer is 24 July 2019, and It is expected that the shares will start trading on ASX on 1 August 2019. It is worth a watch as the company aims to use the entire funds for growth through IPO funding.

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