JFrog stock rises as Cantor Fitzgerald maintains Overweight rating after strong Q2
Introduction & Market Context
Sezzle Inc. (NASDAQ:SEZL) released its second quarter 2025 earnings presentation on August 7, 2025, reporting strong revenue growth but a year-over-year decline in net income. Despite the company’s optimistic outlook, the stock tumbled 20.4% in premarket trading to $110.90, following a previous close of $139.33, suggesting investors may be concerned about the sustainability of growth and profitability.
The Buy Now, Pay Later (BNPL) provider delivered total revenue of $98.7 million, representing a 76.4% increase compared to the same period last year, while net income decreased 7.1% year-over-year to $27.6 million. This mixed performance follows a strong first quarter where the company reported net income of $36.2 million.
Quarterly Performance Highlights
Sezzle’s Q2 2025 performance showed significant growth in key metrics, with Gross Merchandise Volume (GMV) increasing 74.2% year-over-year to $927 million. Total (EPA:TTEF) revenue reached $98.7 million, representing 10.6% of GMV and a 76.4% increase compared to Q2 2024.
As shown in the following quarterly overview of performance metrics:
Net income for the quarter was $27.6 million, representing a 28.0% margin, but this marked a 7.1% decrease compared to the $29.7 million reported in Q2 2024. However, adjusted net income, which excludes certain non-recurring items, increased 91.8% year-over-year to $24.4 million. Adjusted EBITDA grew to $37.9 million with a margin of 38.4%, compared to 32.9% in the same period last year.
The company’s year-over-year progression shows improvement in several key financial metrics:
Transaction-related costs as a percentage of total revenue decreased to 38.9% in Q2 2025 from 42.4% in Q2 2024, contributing to improved profitability metrics. Total revenue less transaction-related costs as a percentage of total revenue increased to 61.1% from 57.6% a year ago.
The quarterly progression of GMV and total revenue demonstrates consistent growth over the past year:
User Growth and Engagement
Sezzle reported strong growth in user engagement metrics, with Monthly On-Demand & Subscribers (MODS) reaching 748,000, a 62% increase year-over-year. The company’s average quarterly purchase frequency increased to 6.1 transactions per user, up from 4.8 in Q2 2024.
The following chart illustrates the company’s year-over-year engagement metrics:
Active consumers grew 9.5% year-over-year to 2.86 million, while the number of unique merchants shopped at by consumers nearly doubled to 412,000. The total number of transactions increased 62.6% to 8.23 million, and repeat usage as a percentage of total orders reached 96.4%.
Consumer engagement has been driven by strategic acquisition and retention efforts, as shown in the following metrics:
The company’s subscription services continue to show strong momentum, with subscribers demonstrating significantly higher engagement than non-subscribers:
Strategic Initiatives
Sezzle’s growth strategy focuses on both acquisition and retention of consumers. The company is strategically deploying marketing spend with a six-month payback period target for each cohort, utilizing tactics such as giveaways, coupons, and discounts. For retention, Sezzle is implementing targeted offers through in-app exclusive offers, merchant offers, and additional discounts.
Recent product offerings helping accelerate growth include the Earn Tab, On-Demand services, Price Comparison tools, Browser Extension, Sezzle Balance, Products Tab, Express Checkout, Pay-in-5, and Money IQ. These initiatives are designed to drive repeat usage and increase consumer engagement.
The company has also implemented controlled underwriting practices to optimize growth and profitability, with approval rates for both repeat and new consumers increasing since Q2 2024.
Forward-Looking Statements
Despite the mixed Q2 results, Sezzle provided optimistic guidance for fiscal year 2025, projecting adjusted net income of $120 million, representing 85.8% year-over-year growth. Adjusted net income per diluted share is expected to be $3.25, an 80.6% increase from 2024.
The company’s detailed outlook for 2025 is presented below:
Total revenue is projected to grow 60-65% year-over-year, with total revenue less transaction-related costs expected to represent 60-65% of total revenue. Adjusted EBITDA is forecast to be between $170-$175 million, representing 92-98% year-over-year growth.
Market Response
Despite the company’s positive outlook and strong revenue growth, investors appeared concerned about the quarter-over-quarter decline in net income and potential challenges in maintaining growth momentum. The stock’s 20.4% premarket decline suggests the market may be focusing on the 7.1% year-over-year decrease in net income rather than the 76.4% revenue growth.
This reaction comes after Sezzle’s stock had performed exceptionally well over the past year, with a 52-week range of $16.28 to $186.74, according to the provided fundamentals data. The significant premarket drop indicates investors may be reassessing the company’s valuation in light of the mixed Q2 results.
The market’s response may also reflect concerns about increasing competition in the BNPL sector and potential regulatory changes that could impact Sezzle’s business model. However, the company’s strong user engagement metrics and growing merchant network suggest continued momentum in its core business.
Full presentation:
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