Sezzle Inc.

Previous wording

As of June 30, 2025, we had 0.5 million unique consumers who had an active subscription for either Sezzle Premium or Sezzle Anywhere (“Active Subscribers”), and 0.3 million unique consumers who placed an On-Demand order during the month ended June 30, 2025. The increase in both Active Consumers and MODS is attributed to increased marketing and advertising initiatives during the current year.

Current wording

As of September 30, 2025, we had 0.6 million unique consumers who had an active subscription for either Sezzle Premium or Sezzle Anywhere (“Active Subscribers”), and 0.2 million unique consumers who placed an On-Demand order during the month ended September 30, 2025. The increase in both Active Consumers and MODS is attributed to increased marketing and advertising initiatives during the current year.

Previous wording

Transaction income also includes income from consumer fees that are related to processing orders and payments. Such fees are assessed when consumers makes a scheduled payment using a card, when a payment method fails when attempting to make an installment payment, or when consumers pay a finance charge to use Sezzle On-Demand.

Current wording

Transaction income also includes income from consumer fees that are related to processing orders and payments. Such fees are assessed when consumers makes a scheduled payment using a card, when a payment method fails when attempting to make an installment payment, or when consumers pay a finance charge to use Sezzle On-Demand. These fees are recognized at the time the fee is assessed to the extent the fee is reasonably collectible.

Previous wording

Significant judgement is required in determining whether or not our net deferred tax assets are more likely than not to be realized. We assess the realizability of our deferred tax assets by taking into account all relevant positive and negative evidence at each reporting date, including our history of taxable income adjusted for permanent book-tax differences, volatility in our earnings, impacts of the timing and reversal of temporary book-tax differences, and our projected future earnings. Our valuation allowance assessment is based on our best estimate of future results considering all available, relevant evidence.

Current wording

Significant judgment is required in determining whether or not our net deferred tax assets are more likely than not to be realized. We assess the realizability of our deferred tax assets by taking into account all relevant positive and negative evidence at each reporting date, including our history of taxable income adjusted for permanent book-tax differences, volatility in our earnings, impacts of the timing and reversal of temporary book-tax differences, and our projected future earnings. Our valuation allowance assessment is based on our best estimate of future results considering all available, relevant evidence.

Previous wording

For the three months ended June 30, 2025 and 2024, transaction income included merchant and partner income of $23.8 million and $18.8 million, respectively. For the six months ended June 30, 2025 and 2024, transaction income included merchant and partner income of $47.3 million and $38.1 million, respectively. The increase in merchant and partner income was a result of higher GMV in the current period, offset against costs related to purchasing loans from our loan originator.

Current wording

For the three months ended September 30, 2025 and 2024, transaction income included merchant and partner income of $26.0 million and $21.9 million, respectively. For the nine months ended September 30, 2025 and 2024, transaction income included merchant and partner income of $73.3 million and $59.9 million, respectively. The increase in merchant and partner income was a result of higher GMV in the current period, offset against costs related to purchasing loans from our loan originator.

Previous wording

Transaction income also increased as a result of consumer fees, which totaled $27.8 million and $10.3 million for the three months ended June 30, 2025 and 2024, respectively, and $62.5 million and $17.6 million for the six months ended June 30, 2025 and 2024, respectively. The increase in consumer fees when comparing the three months ended June 30, 2025 and 2024 was primarily driven by higher GMV in the current period, which contributed to approximately $7.5 million of the increase; the introduction of new products, which contributed to approximately $6.1 million of the increase; and the standardization of consumer fees stemming from our strategic bank partnership, which contributed to the rest of the increase. The increase in consumer fees when comparing the six months ended June 30, 2025 and 2024 was primarily driven by the standardization of consumer fees, which contributed to $23.1 million of the increase; higher GMV in the current period, which contributed to approximately $12.2 million of the increase; and the introduction of new products, which contributed to approximately $9.6 million of the increase.

Current wording

Transaction income also increased as a result of consumer fees, which totaled $33.5 million and $14.5 million for the three months ended September 30, 2025 and 2024, respectively, and $96.0 million and $32.1 million for the nine months ended September 30, 2025 and 2024, respectively. The increase in consumer fees when comparing the three months ended September 30, 2025 and 2024 was driven by the introduction of new products, contributing to approximately $7.2 million of the increase; a higher count of fees charged in the current period, primarily due to higher GMV, contributing to approximately $6.8 million of the increase; and the standardization of consumer fees stemming from our strategic bank partnership, which contributed to the remainder of the increase. The increase in consumer fees when comparing the nine months ended September 30, 2025 and 2024 was driven by a higher number of fees charged in the current period, contributing to approximately $41.7 million of the increase; the introduction of new products, contributing to approximately $16.8 million of the increase; and the standardization of consumer fees stemming from our strategic bank partnership, which contributed to the remainder of the increase.

Previous wording

For the three and six months ended June 30, 2025 and 2024, the increase in income from other sources was driven by higher consumer fee income as a result of the standardizing of consumer fees, as well as a higher absolute number of orders becoming past due, largely driven by higher GMV. Consumer late payment fees totaled $15.7 million and $4.0 million for the three months ended June 30, 2025 and 2024, respectively, and $32.4 million and $6.7 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

For the three and nine months ended September 30, 2025 and 2024, the increase in income from other sources was largely driven by higher consumer fee income as a result of the standardizing of consumer fees, as well as a higher absolute number of orders becoming past due because of higher GMV. Increases attributable to fee standardization and the count of fees assessed contributed to approximately $10.2 million and $7.4 million, respectively, of the increase when comparing the three months ended September 30, 2025 and 2024. Increases attributable to fee standardization and the number of fees assessed contributed to approximated $22.5 million and $23.7 million, respectively, of the increase when comparing the nine months ended September 30, 2025 and 2024. Consumer late payment fees totaled $21.0 million and $6.8 million for the three months ended September 30, 2025 and 2024, respectively, and $53.4 million and $13.5 million for the nine months ended September 30, 2025 and 2024, respectively. Marketing and other revenue from affiliates also contributed to the increase in income from other sources for the three and nine months ended September 30, 2025 and 2024.

Previous wording

Recorded within personnel, equity based compensation totaled $1.5 million for the three months ended June 30, 2025 and 2024, and $2.8 million and $2.4 million for the six months ended June 30, 2025 and 2024, respectively.

Current wording

The increase in personnel was driven by higher headcount during the three and nine months ended September 30, 2025 when compared to the three and nine months ended September 30, 2024. Recorded within personnel, equity based compensation totaled $2.4 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively, and $5.2 million and $3.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

The increase in payment processing costs was primarily driven by higher GMV during the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024. GMV growth outpaced the increase in payment processing expenses as a result of more efficient processing strategies in place in the current year.

Current wording

The increase in payment processing costs was primarily driven by higher GMV during the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024. GMV growth outpaced the increase in payment processing expenses as a result of more efficient processing strategies in place in the current year.

Previous wording

The increase in marketing, advertising, and tradeshow costs was from expanding initiatives to promote consumer acquisition and co-market the Sezzle brand during the three and six months ended June 30, 2025.

Current wording

The increase in marketing, advertising, and tradeshow costs was from expanding initiatives to promote consumer acquisition and co-market the Sezzle brand during the three and nine months ended September 30, 2025.

Previous wording

The increase was primarily from higher professional service fees during the three and six months ended June 30, 2025, when compared to the three and six months ended June 30, 2024, related to the scaling of our business. Costs related to the partnership with our loan originator also contributed to the increase.

Current wording

The increase was primarily from higher professional service fees during the three and nine months ended September 30, 2025, when compared to the three and nine months ended September 30, 2024, related to the scaling of our business. Costs related to the partnership with our loan originator also contributed to the increase.

Previous wording

The increase in credit losses was a result of higher GMV during the three and six months ended June 30, 2025 when compared to the three and six months ended June 30, 2024, as well as changes to consumer underwriting to promote consumer acquisition and retention.

Current wording

The increase in credit losses was a result of higher GMV during the three and nine months ended September 30, 2025 when compared to the three and nine months ended September 30, 2024, as well as changes to consumer underwriting to promote consumer acquisition and retention.

Previous wording

Of the $10.6 million increase when comparing the three months ended June 30, 2025 and 2024, approximately $7.5 million was attributable to the increase in GMV. The rest of the increase was a result of changes in consumer underwriting. Of the $18.2 million increase when comparing the six months ended June 30, 2025 and 2024, approximately $10.6 million was attributable to the increase in GMV. The rest of the increase was a result of changes in consumer underwriting.

Current wording

Of the $16.8 million increase when comparing the three months ended September 30, 2025 and 2024, approximately $9.0 million was attributable to the increase in GMV. The rest of the increase was a result of changes in consumer underwriting. Of the $35.0 million increase when comparing the nine months ended September 30, 2025 and 2024, approximately $20.0 million was attributable to the increase in GMV. The rest of the increase was a result of changes in consumer underwriting.

Previous wording

As a percentage of total revenue, the provision for credit losses was 20.9% and 18.0% for the three months ended June 30, 2025 and 2024, respectively, and 16.4% and 14.8% for the six months ended June 30, 2025 and 2024, respectively.

Current wording

As a percentage of total revenue, the provision for credit losses was 27.5% and 22.0% for the three months ended September 30, 2025 and 2024, respectively, and 20.5% and 17.7% for the nine months ended September 30, 2025 and 2024, respectively.

Previous wording

The increase in net interest expense when comparing the three months ended June 30, 2025 and 2024 was primarily from higher outstanding borrowings on our line of credit during the three months ended June 30, 2025. The decrease in net interest expense when comparing the six months ended June 30, 2025 and 2024 was from entering into a new line of credit on April 19, 2024, which carries a lower interest rate than our previous line of credit.

Current wording

The increase in net interest expense was primarily from higher outstanding borrowings on our line of credit during the three and nine months ended September 30, 2025 when compared to the three and nine months ended September 30, 2024. Net interest expenses remained flat when comparing the nine months ended September 30, 2025 and 2024, as the higher borrowing were offset by entering into a new line of credit on April 19, 2024, which carries a lower interest rate than our previous line of credit.

Previous wording

Our effective income tax rate for the three months ended June 30, 2025 and 2024 was 15.5% and (118.7%), respectively. Our effective income tax rate for the six months ended June 30, 2025 and 2024 was 20.0% and (71.6%), respectively. The change in the effective tax rate for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 was primarily driven by a release of the majority of our valuation allowance during the three and six months ended June 30, 2024.

Current wording

Our effective income tax rate for the three months ended September 30, 2025 and 2024 was 15.7% and 12.3%, respectively. Our effective income tax rate for the nine months ended September 30, 2025 and 2024 was 18.8% and (34.3%), respectively. The change in the effective tax rate for the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily driven by the impact of discrete tax items, including excess tax benefits for equity based compensation. The change in the effective tax rate for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily driven by a release of the majority of our valuation allowance.

Previous wording

Additionally, for the three and six months ended June 30, 2025 we recorded discrete tax benefits of $3.1 million and $4.0 million, respectively, related to excess tax benefits on stock based compensation.

Current wording

Additionally, for the three and nine months ended September 30, 2025 we recorded discrete tax benefits of $2.5 million and $6.9 million, respectively, primarily related to excess tax benefits on stock based compensation.

Previous wording

We assess all relevant positive and negative evidence to determine if our existing deferred tax assets can be realized at each reporting date. As of June 30, 2025 and December 31, 2024, we maintained a $4.1 million and $3.7 million valuation allowance against our foreign net deferred tax assets, respectively.

Current wording

We assess all relevant positive and negative evidence to determine if our existing deferred tax assets can be realized at each reporting date. As of September 30, 2025 and December 31, 2024, we maintained a $4.0 million and $3.7 million valuation allowance against our foreign net deferred tax assets, respectively.

Previous wording

For the six months ended June 30, 2025 and 2024, our net income was $63.8 million and $37.7 million, respectively. We have historically financed our operating and capital needs primarily through private sales of equity, our capital raises on the Australian Securities Exchange (ASX), and our revolving line of credit. As of June 30, 2025, our principal sources of liquidity were cash, cash equivalents, restricted cash, the unused borrowing capacity on our line of credit, and certain cash flows from operations.

Current wording

For the nine months ended September 30, 2025 and 2024, our net income was $90.4 million and $53.2 million, respectively. We have historically financed our operating and capital needs primarily through private sales of equity, our capital raises on the Australian Securities Exchange (ASX), and our revolving line of credit. As of September 30, 2025, our principal sources of liquidity were cash, cash equivalents, restricted cash, the unused borrowing capacity on our line of credit, and certain cash flows from operations.

Previous wording

As of June 30, 2025, we had cash and cash equivalents of $88.9 million, compared to $73.2 million as of December 31, 2024. Our cash and cash equivalents were held primarily for working capital requirements and the continued investment in our business. As of June 30, 2025 and December 31, 2024, we had restricted cash of $31.0 million and $25.1 million, respectively.

Current wording

As of September 30, 2025, we had cash and cash equivalents of $104.1 million, compared to $73.2 million as of December 31, 2024. Our cash and cash equivalents were held primarily for working capital requirements and the continued investment in our business. As of September 30, 2025 and December 31, 2024, we had restricted cash of $30.5 million and $25.1 million, respectively.

Previous wording

As of June 30, 2025 and December 31, 2024, we had working capital of $222.7 million and $151.9 million, respectively. Additionally, as of June 30, 2025 and December 31, 2024 we had an unused borrowing capacity on our line of credit of $4.0 million and $39.0 million, respectively.

Current wording

As of September 30, 2025 and December 31, 2024, we had working capital of $235.8 million and $151.9 million, respectively. Additionally, as of September 30, 2025 and December 31, 2024 we had an unused borrowing capacity on our line of credit of $32.0 million and $39.0 million, respectively.

Previous wording

During the six months ended June 30, 2025, net cash provided from operating activities totaled $22.5 million, driven by our $63.8 million net income adjusted for $48.1 million of non-cash adjustments such as credit losses, equity based compensation, deferred income taxes, and depreciation and amortization, and offset against cash outflows of $89.3 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $53.8 million increase in our notes receivable related to higher transaction volume during the six months ended June 30, 2025, as well as timing of consumer repayments in the current year, resulting in decreased cash receipts from consumers during the current year. Cash outflows were also driven by an $11.6 million increase in prepaid assets and other assets related to the timing of receipts from taxing authorities and payments to vendors, an $8.9 million increase in other receivables related to higher late payment fees assessed in the current period not yet collected, and an $8.9 million decrease in merchant accounts payable related to the timing of payments to merchants. During the six months ended June 30, 2025, cash payments for personnel-related expenses totaled $29.7 million, cash payments for processing costs totaled $31.2 million, cash interest payments totaled $7.0 million, and cash paid for income taxes totaled $25.2 million.

Current wording

During the nine months ended September 30, 2025, net cash provided from operating activities totaled $55.6 million, driven by our $90.4 million net income adjusted for $96.4 million of non-cash adjustments such as credit losses, equity based compensation, deferred income taxes, and depreciation and amortization, and offset against cash outflows of $131.3 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $85.2 million increase in our notes receivable related to higher transaction volume and timing of consumer repayments, and a $24.6 million increase in our other receivables related to higher delinquency fees assessed in the current period not yet collected, both of which resulted in decreased cash receipts from consumers during the current year. Cash outflows were also driven by an $11.4 million increase in prepaid assets and other assets related to the timing of receipts from taxing authorities and payments to vendors, and an $11.4 million decrease in accounts payable related to the timing of payments to merchants. During the nine months ended September 30, 2025, cash payments for personnel-related expenses totaled $40.7 million, cash payments for processing costs totaled $47.7 million, cash interest payments totaled $11.2 million, and cash paid for income taxes totaled $25.3 million.

Previous wording

During the six months ended June 30, 2024, net cash provided from operating activities totaled $34.2 million, which was primarily related to our $37.7 million of net income adjusted for $5.7 million of non-cash adjustments such as deferred income taxes, credit losses, equity based compensation, and depreciation and amortization, offset against cash outflows of $9.2 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $4.1 million increase in our notes receivable related to higher transaction volume during the six months ended June 30, 2024, as well as timing of consumer repayments. This resulted in a decrease of cash receipts from consumers during the six months ended June 30, 2024. Offset against these, we had a $3.3 million increase in accrued liabilities related to the timing of payments to vendors and personnel, which resulted in a decrease of cash payments during the six months ended June 30, 2024. During the six months ended June 30, 2024, cash payments for personnel-related expenses totaled $23.7 million, cash payments for processing costs totaled $20.3 million, and cash interest payments totaled $7.1 million.

Current wording

During the nine months ended September 30, 2024, net cash provided from operating activities totaled $39.9 million, which was primarily related to our $53.2 million of net income adjusted for $27.1 million of non-cash adjustments such as deferred income taxes, credit losses, equity based compensation, and depreciation and amortization, offset against cash outflows of $40.3 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $33.0 million increase in our notes receivable related to higher transaction volume during the nine months ended September 30, 2024, as well as timing of consumer repayments. Cash outflows from changes in our operating assets and liabilities were also driven by a $7.2 million increase in other receivables related to increased late payment fees assessed in the current period and the timing of consumers paying such fees. These both resulted in a decrease of cash receipts from consumers during the nine months ended September 30, 2024. Offset against these, we had a $5.0 million increase in other payables as a result of the timing of payments received from consumers on receivables owned by our originating partner that we have not yet purchased, which resulted in an increase in cash receipts from consumers during the nine months ended September 30, 2024. During the nine months ended September 30, 2024, cash payments for personnel-related expenses totaled $33.6 million, cash payments for processing costs totaled $31.3 million, cash interest payments totaled $10.5 million, and cash paid for income taxes totaled $3.5 million.

Previous wording

Net cash used for investing activities was $1.3 million and $0.8 million for the six months ended June 30, 2025 and 2024, respectively. Cash outflows for investing activities were used for purchasing computer equipment and payments of salaries to employees who create capitalized internal-use software.

Current wording

Net cash used for investing activities was $2.1 million and $1.1 million for the nine months ended September 30, 2025 and 2024, respectively. Cash outflows for investing activities were used for purchasing computer equipment and payments of salaries to employees who create capitalized internal-use software.

Previous wording

Net cash used for financing activities during the six months ended June 30, 2025 and 2024 was $0.8 million and $40.0 million, respectively. Our net cash used for financing activities during the six months ended June 30, 2025 was driven by repurchases of common stock totaling $30.7 million, offset against net proceeds from our line of credit totaling $26.3 million and proceeds from stock option exercises totaling $3.6 million. $23.5 million of our common stock repurchases were made under our stock repurchase plan, with the remaining repurchases representing withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vested restricted stock units issued under our equity incentive plans.

Current wording

Net cash used for financing activities during the nine months ended September 30, 2025 and 2024 was $18.0 million and $21.2 million, respectively. Our net cash used for financing activities during the nine months ended September 30, 2025 was driven by repurchases of common stock totaling $34.6 million, offset against net proceeds from our line of credit totaling $13.0 million and proceeds from stock option exercises totaling $3.7 million. $23.5 million of our common stock repurchases were made under our stock repurchase plan, with the remaining repurchases representing withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vested restricted stock units issued under our equity incentive plans.

Previous wording

Net cash used for financing activities during the six months ended June 30, 2024 was comprised of net payments to our line of credit totaling $25.0 million, repurchases of common stock totaling $14.3 million, and payments of debt issuance costs totaling $1.0 million. $12.8 million of our common stock repurchases were made under our stock repurchase plan, with the remaining repurchases representing withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vested restricted stock units issued under our equity incentive plans. These cash outflows were offset against proceeds from stock option exercises totaling $0.3 million.

Current wording

Net cash used for financing activities during the nine months ended September 30, 2024 was comprised of repurchases of common stock totaling $22.2 million and payments of debt issuance costs totaling $1.1 million. $20.0 million of our common stock repurchases were made under our stock repurchase plan, with the remaining repurchases representing withheld shares of common stock from employees to cover minimum statutory withholding tax obligations owed for vested restricted stock units issued under our equity incentive plans. These cash outflows were offset against proceeds from stock option and warrant exercises totaling $2.0 million.