Q4 2024 Sezzle Inc Earnings Call
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Unknown Executive: © BF-WATCH TV 2021 Good day and welcome to the Salto Inc. Fourth Quarter Financial Results Conference Call. All participants will be in listen-only mode.
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Unknown Executive: I would now like to turn the conference over to Charlie Youakim. Please go ahead. Thank you. And good afternoon, everyone.
Speaker Change: I'd now like to turn the conference over to Charlie You again. Please go ahead.
Charlie: Thank you Andy.
Charlie: Good afternoon, everyone and welcome to subtle.
Charles Youakim: And welcome to Sezzle's 2024 fourth quarter quarter install. My name is Charlie Youakim. I'm the CEO and Executive Chairman of Sezzle. I'm joined today by our Chief Financial Officer, Karen Hartje, our Head of Corp Dev and IR, Lee Brading, and our President, Paul Fairbanks. in conjunction with this conference call. We filed our earnings announcement with the SEC and posted and the earnings presentation on our investor website at sezzle.com. Retrieve the documents, please go to the investor relations section of our website. There you will find the press release. and the earnings presentation under the investment relations section of our website.
Charlie You: For fourth quarter earnings call My name is Charlie indicators.
Charlie: I'm, the CEO and executive Chairman will struggle.
Charlie: I'm joined today by our Chief Financial Officer, Darren Heartbeat, or head of Corp, Dev and I are.
Lee: Lee breathing and our president Paul fairness.
Charlie: In conjunction with this conference call.
Lee: We filed our earnings announcement with.
Lee: With the SEC and posted.
Lee: And the earnings presentation on our Investor website.
Lee: Dot com.
Lee: Retrieve the documents. Please go to the Investor Relations section of our website.
Lee: There you'll find the press release.
Lee: And the earnings presentation.
Lee: Under the Investor Relations section of our website.
Lee: Yeah.
Lee: Please note the cautionary note on forward looking statements and the reconciliation of GAAP to non-GAAP measures.
Charles Youakim: Please note the cautionary note on forward-looking statements and the reconciliation of gap to non-gap measures included in the presentation, which also covers our statements on today's call.
Lee: Put it in the presentation, which also covers our statements on today's call.
Lee: I am very excited to share our fourth quarter and full year 'twenty 'twenty four results as well as an updated guidance for 2025.
Charles Youakim: I'm very excited to share our fourth quarter and fall 2024 results as well as an updated guidance for 2025. It's hard to imagine that 2024 was only our seventh year as a company. To say that we are in early innings is an understatement. And I mean early innings as a company and a sector. We've had executed a high level for our entire history to gain market share on our larger peers. With headstarts ranging for 5 to 20 years relative to us, almost every major competitor in our industry has raised over $1 billion in equity compared to our $120 million.
Lee: It's hard to imagine that 2024 was only our seventh year as a company.
Lee: To say that we are in early innings is an understatement and I mean early innings as a company and the sector.
Lee: We had executed at a high level for our entire history to gain market share on our larger peers.
Lee: With that starts ranging from five to 20 years relative to us almost every major competitor in our industry has raised over $1 billion of equity compared to our $120 million.
Charles Youakim: and we're still gaining share.
Lee: And we're still gaining share.
Charles Youakim: I'm not sure how familiar you are with the book and film Moneyball, but I think we might be the Oakland A's of the BMPL industry. We've had to do more with less as we don't have the luxury to blow cash. And by the way, I don't think blowing cash is a strategy. And yet here we stand outpacing most of the longer established peers in terms of profitability and growth. I'm extremely proud of our team as our success is directly connected to their creativity, dedication and hard work. Our team is a winning team, and our sector is a growth sector.
Lee: I'm not sure how familiar you are with the book and film money ball, but I think we might be the Oakland A's are the B M. P L industry.
Lee: We've had to do more with less as we don't have the luxury to blow cash and by the way I don't think blown cash as a strategy.
Lee: And yet here, we stand outpacing most of the longer established peers in terms of profitability and growth.
I'm extremely proud of our team as our success is directly connected to their creativity dedication and hard work.
Lee: Our team is a winning team and our sector as a growth sector.
Charles Youakim: It's a great combination.
Lee: It's a great combination.
Lee: It is clear that buy now pay later as a payments segment is here to stay.
Charles Youakim: It is clear that Buy Now, Pay Later as a payment segment is here to stay. Various third party reports call for the BMPL industry to continue at double digit annual growth rates for the next five to 10 years. While we continue to ride the BMTL wave, we also believe that we can continue to outpace and take share within the segment. And logically, it just makes sense why BNPL continues to grow. The BMPL product can give users greater flexibility in payments and match their payments to their budgeting needs. And in a worst case scenario, it can help users avoid the cycle of debt, because if they can't make a payment, then they aren't allowed to make another purchase.
Lee: Various third party reports call for the <unk> industry to continue at double digit annual growth rates for the next five years to 10 years.
Lee: While we continue to ride the MPL waste. We also believe that we can continue to outpace and take share within this segment.
Lee: And logically it just makes sense why the NPL continues to grow.
Lee: But the MTL product can give users greater flexibility in payments and match their payments through their budgeting needs.
Lee: And in a worst case scenario it can help users avoid the cycle of that.
Lee: Because if they can't make a payment then they aren't allowed to make another purchase.
Charles Youakim: The same can't be said for some other payment methods. Credit cards tend to be the inverse. Once a customer can't make the full payment, they become a revolver, and in many ways stuck with a balance for a period of time. We love our alignment with responsible repayment. One knock in the BMPL space has been that it doesn't enable users to build a credit history. Well, we have an answer for that. But we are unique. We have a product that consumers can opt into if they want to build their credit history, Sezzle Up. It's both free and optional for our customers.
Lee: The same can't be said for some other payment methods.
Lee: Credit cards tend to be the inverse once a customer can't make the full payment they become a revolver.
Lee: And in many ways stuck with the balance for a period of time.
Lee: We love our alignment with responsible repayment.
Lee: One knock on the BMT all space has been that it doesn't enable users to build their credit histories, well, we have an answer for that but we are unique.
Lee: We have a product that consumers can opt into if they want to build their credit history says a lot.
Lee: Both free and optional for our customers.
Charles Youakim: Please take a look at Sezzle reviews when you get a chance, you'll see how many users talking about the positive results from Sezzle Up, which we're proud of.
Lee: Please take a look at several reviews and you get a chance you'll see how many users talking about the positive results from several of which we're proud of.
Lee: Another Great example of the early innings concept is the launch of our banking partnership with Web bank at the end of September 'twenty 'twenty four.
Charles Youakim: Another great example of the early innings concept is the launch of our banking partnership with WebBank at the end of September 2024, which has positioned us well for the future. The program has lived up to our expectations and has enabled us to launch a key new product with on demand. On Demand was just introduced to consumers in Q4 after we went live with WebBank. It is still very early in its history, only a matter of months at this point, but we believe that we have succeeded with yet another initiative at the company with the launch of On Demand.
Lee: What's just position us well for the future.
Lee: Program has lived up to our expectations and has enabled us to launch key new products with on demand.
Lee: On demand was just introduced consumers in Q4 after we went live with Webex.
Lee: It is still very early in its history only a matter of months at this point, but we believe that we have succeeded with yet another initiative at the company with the launch of on demand.
Lee: We've added the other products that we know our customers want.
Charles Youakim: We've added another product that we know our customers want, and our improved activation rates support that idea. We will provide further details later in the presentation.
Lee: And our improved activation rates support that idea.
Lee: We will provide further details later in the presentation.
Lee: As we look back at 2024, it was fulfilling to see the fruits of our labors turn up in our financial performance.
Charles Youakim: As we look back at 2024, it was fulfilling to see the fruits of our labors turn up in the financial performance. In 2024, net income increased more than tenfold compared to 2023 on a top line that outpaced the industry. As we look forward to 2025, we anticipate another year of industry outperformance as we expect double digit revenue growth, with our pre-tax net income rising at least 55% compared to 2024. Meanwhile, we remain focused on enhancing the shopper experience and launching new products that consumers want and need. Although we have several future product offerings under consideration, our near-term focus is on maximizing our on-demand launch and improving the shopping experience and engagement in our app.
Lee: And 'twenty 'twenty four net income increased more than tenfold compared to $20 three on the topline that outpaced the industry.
Lee: As we look forward to 2025, we anticipate another year of industry outperformance as we expect double digit revenue growth with our pretax net income rising at least 55% compared to 24.
Lee: Meanwhile, we remain focused on enhancing the shopper experience and launching new products that consumers want and need.
Although we have several products future product offerings under consideration our near term focus is on maximizing our ondemand launched and improving the shopping experience and engagement in our app.
Lee: We will touch on these topics in greater depth in the presentation. So let's go to slide three where we can start to dive into the quarterly and annual results.
Charles Youakim: We will touch on these topics in greater depth in the presentation.
Charles Youakim: So let's go to slide three, where we can start to dive into the quarterly and annual results. In 2024, we exceeded expectations on the top and bottom line. In Q4, we experienced heavy engagement during the holiday season with our revenue growing more than 100% year over year. We met the rule of 40 and our own rule of 100 on revenue growth alone for the fourth quarter. It's also great to see us delivering a strong margin at the net income level as well, not to mention a healthy return on equity for shareholders.
Lee: In 2024, we exceeded expectations on the top and Bottomline and.
Lee: In Q4, we experienced heavy engagement during the holiday season, with our revenue growing more than 100% year over year.
Lee: We met the rule of 40, and our own rule of 100 on revenue growth alone for the fourth quarter.
Lee: It's also great to see us delivering a strong margin at the net income level as well not to mention a healthy return on equity for shareholders.
Lee: This quarter because of the successful bond demand, we're introducing a new concept mods.
Charles Youakim: This quarter, because of the success of On Demand, we're introducing a new concept, mods. which stands for monthly on demand and subscriber users. In December, we had 707,000 mods at the quarter end. That represents a 130% year-on-year increase and an increase of 178,000 users since the end of the third quarter. We are excited by this increase in activity as on-demand was live on a limited basis in the quarter because we were still rolling it out to all users. We tend to roll out products gradually as we launch them, and we're a bit more cautious about new products in the fourth quarter when some users tend to overspend.
Lee: Which stands for monthly on demand and subscriber users.
In December we had 707000 Mas at the quarter end.
Lee: That represents a 130% year on year increase and an increase of 178000 users since the end of the third quarter.
Lee: We are excited by this increase in activity as on demand was live on a limited basis in the quarter, because we were still rolling it out to all users we tend to rollout products gradually as we launch them and we're a bit more cautious about new products in the fourth quarter when some users tend to overspend.
Lee: One other item on 'twenty 'twenty four.
Charles Youakim: One other item on 2024. Back at the end of the second quarter, we gave guidance of a mid twos for principal loss rate as a percentage of GMV for the back half of the year, which we nailed. We believe that 2025 principal loss rate will be in the range of 2.5 to 3% as we continue to prioritize growth. Newer user groups have higher loss rates. And now that we have built a better mousetrap, we want to put it As discussed earlier, we are highly focused on improving shopper engagement in the app.
Lee: Back at the end of the second quarter, we gave guidance of a mid teens for principal loss rate as a percentage of G. M. B for the back half of the year, which email.
Lee: We believe that 2025 principal loss rate will be in the range of 2.5% to 3% as we continue to prioritize burrows.
Lee: Newer user groups have higher loss rates and now that we have built a better mousetrap, we wanted to put it to use.
Lee: As discussed earlier, we are highly focused on improving shopper engagement in the app.
Charles Youakim: Slide four represents some of the initiatives we're working on. Many enhancements are recent or just launching, so we have yet to see the full potential of the Our products marketplace continues to gain momentum as orders placed there averaged a growth rate of 39% month over month growth during 2024. I'm also very excited about couponing. Who doesn't want to take advantage of discounts on purchase? I'm sure even investors on this call use Koupon. But I'm certain that our typical customer uses them heavily, and in many cases needs them to stretch their paycheck. We believe this product will solve a need for our customers, increasing their retention and loyalty to us.
Lee: Slide four represents some of the initiatives we're working on.
Lee: Many enhancements our recent are just launching so we have yet to see the full potential of the offerings.
Lee: Our products marketplace continues to gain momentum as orders place their average the growth rate of 39% month over month growth during 2024.
Lee: Yeah.
Lee: I'm also very excited about couponing, who doesn't want to take advantage of discounts on purchases.
Lee: I'm sure even investors on this call use couponing apps.
But I'm certain that our typical customer uses them heavily and in many cases need them to stretch their paycheck.
Lee: We believe this product will solve a need for our customers increasing their retention and loyalty to us.
Charles Youakim: all while we pull in adjacent customer groups that we can introduce buy now pay later. We are just starting to roll out couponing and other shopping features. So likely be until Q3 or Q2 that we see the full benefit from the increased shopper activity.
All while we pull in adjacent customer groups that we can introduce introduce buy now pay later too.
Lee: We are just starting to roll off couponing and other shopping features so likely be until Q3 or Q2 that we see the full benefit from the increased shopper activity.
Lee: But now let's talk further about a key product that was launched on demand shown on slide five.
Charles Youakim: But now let's talk further about a key product that was launched on demand, shown on slide five. We couldn't have launched this paying for product without the banking partnership. On-demand fills the need as it allows customers to use pay-and-for everywhere Visa is accepted, even if the shopper doesn't have Sezzle Premium or anywhere. When we launched the product, there were two areas that we felt it would help. First, it would make us more competitive for enterprise merchants as we could pass on some of the costs to the consumer at the checkout. Enterprise merchants love lowering their costs, and this design helps scratch that edge.
Lee: We couldn't have watched this painful products without the banking partnership.
Lee: On demand fills the need is it allows customers to use Pam four everywhere visa is accepted even if the shopper doesn't have several premium or anywhere.
Lee: When we launch the product there were two areas that we felt that would help.
Lee: It would make us more competitive for enterprise merchants as we can pass on some of the costs to the consumer at the checkout.
Lee: Enterprise merchants love lowering their costs and this design help scratch that ish.
Charles Youakim: Second, it would create a greater customer activation within the purchase funnel as non-subscribers can choose to incur a one-time service fee at the point of sale instead of signing up for a subscription to shop anywhere Visa is accepted. On Demand has a much lower barrier to entry than our subscription products, and over time, we believe it will become a bridge into subscription. I'm happy to say that our initial thesis was correct. In Q4, we signed three enterprise-level merchants, backcountry, Beals, and Rural King, with GMBs ranging from approximately $700 million to over $1.5 billion. Meanwhile, the activation rates of users downloading our mobile app to placing an order have risen 35% from September to January.
Lee: Second it would create a greater customer activation within the purchase funnel as non subscribers can choose to incur a onetime services at the point of sale instead of signing up for a subscription to shop anywhere visa is accepted odd.
Lee: On demand has a much lower barrier to entry that our subscription products and over time, we believe it will become a bridge into subscriptions.
Lee: I'm happy to say that our initial thesis was correct in Q4, we signed three enterprise level merchants back country deals in rural King with <unk>, ranging from approximately 700 million to over $1 5 billion.
Lee: Meanwhile, the activation rates of users downloading our mobile app to placing an order have risen 35% from September to January.
Charles Youakim: Again, just getting started, but early indications are positive.
Lee: Again, just getting started but early indications are positive.
Charles Youakim: Don't just take our word for it. Look at the NPS scores from consumers. A 61 for On Demand. It's clearly a great complimentary product with Premium and Anywhere, which has similar MPS scores of 57 and 67 respectively. We noted last quarter that we expect to see a tradeoff from subscription to on demand as consumers will have more options when shopping with Sezzle. We even noted that the interplay between on-demand and our subscription products could even cause subscriber count to decline. Nonetheless, we believe on-demand is a win-win, as we expect it will lead to a successful long-term consumer conversion and higher LTV shoppers, which ultimately leads to greater financial performance for Sezzle.
Lee: Don't just take our word for look at the NPS scores from consumers Ah 61 drawn demand.
Lee: It's clearly a great complementary products with premium at anywhere which have similar NPS scores are 57, and <unk> 67, respectively.
Lee: We noted last quarter that we expect to see a tradeoff from subscription to on demand as consumers will have more options. When she was shocked when shopping with subtle we've.
Lee: We even noted that the interplay between on demand and our subscription products could even cause subscriber count to decline. Nonetheless, we believe ondemand is a win win as we expect it will lead to a successful long term consumer conversion and higher LTV shoppers, which ultimately leads to greater financial performance for subtle.
Lee: Based on what we're seeing early on it looks like the average topline revenue from an on demand user is very similar to a premium user which makes us even more confident in our approach.
Charles Youakim: Based on what we're seeing early on, it looks like the average top line revenue from an on-demand user is very similar to a premium user, which makes us even more confident in our approach.
Lee: Speaking of engagement and performance. Please turn to slide site slide six where everything is green.
Charles Youakim: Speaking of engagement and performance, please turn to slide six, where everything is green. We're experiencing strong year over year engagement across the platform. We have talked a lot about our performance from the viewpoint of the consumer. What's great to see here is that consumers are also shopping at a much higher number of merchants with Sezzle than they have in the past. During the year, consumers shopped at 598,000 different merchants. While we are integrated directly with over 20,000 merchants, with our on-demand and subscription products, it doesn't matter, as those users can shop pretty much anywhere, and it shows in the number of unique merchants shopped by consumers in our results.
Lee: We are experiencing strong year over year engagement across the platform.
Lee: We have talked a lot about our performance from the viewpoint of the consumer.
Lee: It's great to see here is that consumers are all shop are also shopping at a much higher number of merchants with subtle than they have in the past.
Lee: During the year consumers shopped at 598000 different merchants.
Lee: While we are integrated directly with over 20000 merchants with our on demand as subscription products. It doesn't matter as those users can shop pretty much anywhere and it shows in the number of unique merchants shopped at by consumers and our results.
Lee: The year over year comparisons are impressive, but we're also seeing incredible sequential growth as shown on slide seven across mods active consumers and unique merchants shopped.
Charles Youakim: The year over year comparisons are impressive.
Charles Youakim: But we are also seeing incredible sequential growth as shown on slide seven across mods, active consumers, and unique merchants shop.
Charles Youakim: With that, I'm happy to turn the call over to our CFO, Karen Hartje, who will go over our quarterly and yearly financial results in greater detail. Thanks and happy birthday, Charlie.
Lee: With that I'm happy to turn the call over to our CFO, Karen Heartbeat, who will go over our quarterly and yearly financial results in greater detail.
Lee: Sure.
Speaker Change: Thanks, and happy birthday Charlie.
Karen Hartje: Hello to all.
Lee: Hello to all.
Karen Hartje: On to slide eight. I feel a little bit like a broken record for the last several quarters as we keep reaching new highs, but that's a problem I will happily accept, as it is always great to share a performance when the results are this good. The strong holiday season plus the bank program launch led to a 100% year-over-year increase in revenue for the fourth quarter compared to the prior year's period. Our outperformance for the quarter drove total revenue for the year to $271 million, a 70% increase from 2024. As a reminder, we have provided adjusted numbers to remove the non-recurring items, which can mostly be attributable to the release of the valuation allowance previously recorded on our deferred tax assets.
Lee: Slide eight I feel a little bit like a broken record and for the last several quarters as they keep reaching new highs, but that's a problem I will happily accept as it is always great to hear performance when the results said that's good.
Lee: A strong holiday season, plus the bank program lines led to a 100% year over year increase in revenue for the fourth quarter compared to the prior year's period.
Our outperformance for the quarter drove total revenue for the year to 271 million is 70% increase from 'twenty to 'twenty four.
As a reminder, we have provided adjusted numbers to remove the nonrecurring items, which can mostly be attributed follow up to the release of the valuation allowance previously recorded on our deferred tax assets.
Karen Hartje: We believe this provides a more reflective run rate of the company's results and will be useful as we report in 2025 for comparison purposes. Adjusted net income was $26.5 million for the quarter and $66.2 million for the year. Each is up approximately 10 times or more compared to the prior year's period. The significant gains year over year were driven by revenue growth, unit economic gains, and our ability to further leverage non-transaction operating expenses.
Lee: We believe this provides and more reflective run rate and the company's results and will be useful as we report in 2025 for comparison purposes.
Lee: Adjusted net income was 26.59 for the quarter and $66 2 million for the year.
Lee: It is up approximately 10 times or more compared to the prior year's period.
Lee: Significant gains year over year were driven by revenue growth unit economic gains and our ability to further elaborate non transaction operating expenses.
Lee: We will jump into the details in each of these beginning on slide nine.
Karen Hartje: We will jump into the details of each of these beginning on slide 9. For the year and fourth quarter year over year revenue growth outpace the rise in GMV driven by subscription growth and fee unification because of the bank program. As a result, revenue reached a new high of 11.5% for the quarter and 10.7% for the year.
Lee: Right here in fourth quarter year over year revenue growth outpaced the rise in can be driven by subscription growth and even if a case and because of the bank program.
Lee: As a result revenue reached a new high of 11, 5% for the quarter and 10, 7% for the year.
Karen Hartje: We have bundled our transaction-related costs of transaction expense, provision for credit losses, and net interest expense on slide 10. Each of these have behaved as anticipated. Transaction expense, which is primarily payment processing, was flat sequentially at 1.9% of GMB. We continue to believe we can maintain a level around 2%. Net interest expense continued its downward trend as we benefited from the lower cost facility that we entered last April. We have the opportunity to further lower our net interest expense by the end of 2025 as our facility can be refinanced in October without any early prepayment penalties.
Lee: We have bundled our transaction related costs and transaction expense provision for credit losses, and net interest expense on slide 10.
Lee: Each of these have behaved as anticipated.
Lee: <unk> expense, which is primarily payment processing was flat sequentially at one 9% and G&A. We continue to believe we can maintain a level around 2%.
Lee: Net interest expense continued its downward trend as we benefited from the lower cost facility that we entered last April.
Lee: We have the opportunity to further lower our net interest expense by the end of 'twenty 'twenty five as their facility can be refinance in October without any early prepayment penalties.
Karen Hartje: Last but not least, our provision for credit losses performed in line with our expectations and the guidance we gave to the market back in second and third quarters that our provision will be in the mid 2024.
Lee: Last but not least our provision for credit losses performed in line with our expectations and the guidance, we gave to the market back in second and third quarter that up here based on will be in the mid <unk>.
Lee: At 'twenty 'twenty four.
Lee: Note the reason for the increase in the second half relative to the first half was twofold first natural seasonality is that provision typically reaches its high point in the fourth quarter.
Karen Hartje: Note the reason for the increase in the second half relative to the first half was twofold. First, natural seasonality as the provision typically reaches its high point in the fourth quarter. And second, and more importantly, we made a conscious decision to open up the funnel to more consumers given the confidence we have in our underwriting models. As Charlie mentioned, we expect provision to be between two and a half to three percent of GMB in 2025.
Lee: And second and more importantly, we made a conscious decision to open up the financing move more consumers given the confidence we have in our underwriting models as Charlie mentioned, we expect provision to be between 2.5% to 3% of D. N V in 2020 five.
Lee: Let's quickly review, our summary, and settles underwriting ecosystem on slide 11.
Karen Hartje: Let's quickly review a summary of Sezzle's underwriting ecosystem on slide 11. Amongst our many proprietary machine learning models, we have specific models for new customers to Sezzle and returning consumers. Our models are strong predictors of consumer performance and enable us to properly set spending power levels for consumers. We are currently developing the fifth generation model for existing consumers, which will take into consideration our recent fourth quarter launch of On Demand. However, we believe that our underwriting models have allowed us to do so judiciously. The chart on the right shows that we have increased the balances for non-delinquent customers while keeping average balances for delinquent customers in check.
Lee: Amongst our many proprietary machine learning models, we have specific models for new customers, just said, though and returning consumers.
Lee: Our motto fish strong predictors of consumer performance and enable us to properly set spending power levels for consumers.
Lee: We are currently developing our fifth generation model for existing consumers, which would take into consideration our recent fourth quarter launch of our on demand.
But let's see how we put our money where our mouth is on slide 12.
Lee: Again to remind you that our goal is to optimize not only our growth, but also our profitability and you can see from the graph on the left late in second quarter. We began in creasing approval rates for both repeat customers and new customers, which correlates with that having a higher provision in this.
Lee: Second half.
Lee: However, we believe that our underwriting models have allowed us to do so judiciously.
Lee: The chart on the right shows that we have increased the balances for a non delinquent customers, while keeping average balances for delinquent customers in check.
Karen Hartje: Our ability to separate performing versus non-performing customers is crucial to us opening the funnel per se.
Lee: Our ability to just separate performing versus nonperforming customers is crucial to us.
Lee: Opening the funnel per se.
Lee: For further proof of our financial performance bears out or any actions on slide 13, you can see that our transaction related costs inclusive of the provision for credit losses declined in the quarter, both sequentially and year over year.
Karen Hartje: For further proof, our financial performance bears out our actions.
Karen Hartje: On slide 13, you can see that our transaction-related costs, inclusive of the provision for credit losses, declined in the quarter, both sequentially and year over year.
Karen Hartje: To come full circle, turn to slide 14. Throughout the year, we have provided guidance that our total revenue less transaction related costs would be 55% for the year. I'm happy to report that we were ahead of that number as we achieved 55.7%, which includes our provision for credit losses.
Lee: To come full circle I'll turn to slide 14 throughout the year. We had provided provided guidance that our total revenue less transaction related costs would be 55% for the year.
Lee: I'm happy to report that we were ahead of that number as we achieved 55, 7%, which includes a provision for credit losses.
Lee: Now, let's move on from a unit economic discussion and turning to slide 15, which internally we have finally come to call Charlie slide quite.
Karen Hartje: Now let's move on from our unit economic discussion and turn to slide 15, which internally we have fondly come to call Charlie's slide. Quite simply, in terms of financial performance, our goal is to make the green line on the right outpace the red line below it. As a technology-driven company, we believe we should be able to continue to leverage our operations, and we look forward to widening the gap. The main components of non-transaction-related operating expenses are personnel, data, and third-party tech, marketing, and G&A. The wildcard, so to speak, among these is marketing and advertising. That said, we are very focused on payback and return on CAC.
Lee: Quite simply in terms of financial performance. Our goal is to make the green line on the right outpaced the growth and the Red line below it.
Lee: As a technology driven company, we believe we should be able to continue to leverage our operations and we look forward to widening the gap.
Lee: The main components of non transaction related operating expenses are personnel data and third party tech marketing and G&A. The wildcard so to speak and my days is marketing and advertising that said, we are very focused on payback and return on CAC generally we target a six.
Karen Hartje: Generally, we target a six-month payback.
Lee: Month payback.
Lee: All of this translated to a strong performance on the bottom line as shown on slide 16 for both net income and adjusted net income we've been able to post adjusted net income margin above 20% for three straight quarters. We've also been able to generate an EBITDA margin in excess of 30% for <unk>.
Karen Hartje: All of this is translated to a strong performance on the bottom line as shown in slide 16 for both net income and adjusted net income. We've been able to post adjusted net income margin above 20% for three straight quarters. We've also been able to generate an EBITDA margin in excess of 30% for four straight quarters as shown on slide 17.
Lee: Four straight quarters as shown on slide 17.
Karen Hartje: Our improved profitability has strengthened our balance sheet and our liquidity is reflected on slide 18. At year-end, we had $98.3 million in cash on the balance sheet and $39 million of unused borrowing capacity available. 25.1 million of the cash balance is restricted with 20.3 million designated as long-term restricted cash, which is required to be maintained as a reserve account under the terms of our marketing and servicing agreement with our originating partner, WebBank.
Lee: Our improved profitability has strengthened our balance sheet and our liquidity is reflected on slide 18.
Lee: At year end, we had $98 3 million in cash on the balance sheet and 39 million of unused borrowing capacity available.
Lee: $25 1 million of the cash balance is restricted with 23 million designated as long term restricted cash which is required to be maintained as a reserve account under the terms of our marketing and servicing agreement with our originating partner Web bank.
Lee: I'm guessing by this point, you've already reviewed slide 19, before even listening to our presentation.
Karen Hartje: I'm guessing by this point you've already reviewed slide 19 before even listening to our presentation. Let me highlight a couple of items before turning it over to Q&A. Prior to today, the only numeric guidance we have given for 2025 was an EPS of $12 for both net income and adjusted net income. We are bumping up our 2025 EPS guidance to $13.25. For 2025, we will continue to present an adjusted number for comparison purposes and to remove non-recurring items. Further, we have provided additional metrics for 2025 that we have traditionally given for previous periods. An important call out is that we will be provisioning for a full tax burden in 2025.
Lee: Let me highlight a couple of items before turning it over to Q&A prayer.
Lee: Prior to today, the only numeric guidance, we've given for 2025 was an E. P. S at $12 for both net income and adjusted net income we are bumping up our 2025 EPS guidance to $13.25.
Lee: For 2025, we will continue to present, an adjusted number for comparison purposes and to remove nonrecurring items.
Lee: There we have provided additional metrics for 2025 that we had traditionally give them for for previous periods and important call out is that we will be provisioning for a full tax burden in 2025, I guess, that's the penalty for being profitable.
Karen Hartje: I guess that's the penalty for being profitable, which is why we've added the note at the bottom. 2025 guidance implies pre-tax net income growth in excess of 55%.
Lee: Which is why we've added a note at the bottom 2025 guidance implies pretax net income growth in excess of 55%.
Unknown Executive: With that, I would like to turn the call over to the operator as we are ready to answer your questions. Operator, will you please open the lines for Q&A? Thank you. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.
Lee: With that I would like to turn the call over to the operator as we are ready to answer your questions. Operator will you. Please open the lines for Q&A.
Lee: Thank you.
Speaker Change: Ask a question you May press Star then one on your Touchstone fun, if youre using a speakerphone. Please pick up your handset before pressing the keys that any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Mike Grondahl: First question comes from Mike Grondahl with Atlas.
Mike Grondahl: First question comes from Mike Grondahl with Northland. Please go ahead. Hey guys, congratulations on a very strong finish to the year. My first question, the year-over-year revenue growth in 3Q was 71%, and that accelerated to 100% revenue growth in 4Q. What were the biggest drivers of that? If you could kind of rank them in order, that would be great.
Speaker Change: Heartland. Please go ahead.
Mike Grondahl: Hey, guys congratulations on a very strong finish to the year.
Speaker Change: My first question the year over year revenue growth and three Q.
Speaker Change: 71% and that accelerated to a 100% revenue growth in four Q.
Speaker Change: What were the biggest drivers of that.
Speaker Change: If you could kind of rank them in order that would be great. Thank you.
Charles Youakim: Thank Oh, thanks, Mike. I think one of the biggest drivers was there's probably two big ones. The first being the partnership with WebBank, as we had mentioned to a number of are our investors prior to the WebBank partnership. One of the key elements of the WebBank partnership was allowing us to basically unify our fee structure across the United States. In many states, we were going state by state with state licenses, and some of those state licenses basically restricted us to, you know, basically no penalty fees or late fees whatsoever, which basically made our model non-ideal in a number of states.
Mike Grondahl: Oh, Thanks, Mike I think one of the biggest drivers was there was probably two big ones. The first being the Partnership's Web Inc.
Speaker Change: I mentioned to a number of.
Speaker Change: Our investors prior to the web bank partnership.
Speaker Change: One of the key elements of living partnership was allowing us to basically unify our fee structure across the United States.
Speaker Change: In many states, we were willing to state by state with state licenses and some of those state licenses basically restricted us to basically.
Speaker Change: No no penalty fees or late fees whatsoever, which bits are basically made our our model not ideal in a number of states. So that was one element I would say is by going along with web banking to find the fee structure. It led to increased revenue increased gross margin.
Karen Hartje: So that was one element, I would say, is by going live with WebBank, unifying the fee structure, it led to increased revenue, increased trust margin. And then more to the bottom line. And then additionally, allowing us to launch a new product with, you know, saw the number with mods going up to $707,000 over the quarter. It created basically another growth metric or another growth factor for us as a company, which really helped out in terms of driving revenue.
Speaker Change: And then more to the bottom line and then additionally, allowing us to launch new product listening I saw the number with modest going up to 707000 over the quarter.
It created basically another growth metric or another growth vector for us the company, which which really helped out in terms of driving revenue Karen anything else to add to that.
Karen Hartje: Karen, anything else to add to that? No, you took the words right out of my mouth.
Karen Heartbeat: No you took the words right out of my mouth.
Speaker Change: Charlie just as a follow up to that I don't know what holiday season would be the third driver with that acceleration I'm trying to understand where just you know seasonality comes into play too.
Mike Grondahl: Charlie, just as a follow up to that. Um, I don't know what holiday season be the third driver with that acceleration. I'm trying to understand where just, you know, seasonality comes into play. Not necessarily because it's year on year. I guess if you're going quarter on quarter, that's true. But we're going year on year results, though, in terms of the growth rates. So 100% increase over year on year, it's still holiday season, holiday season. I guess on demand being another, like, quote, unquote, anywhere product, it allows people to shop at more places. Before we had our anywhere products are, you know, more open network products, we were restricted to our directly integrated merchants.
Speaker Change: Not necessarily because it's a year on year or I guess I still go on quarter on quarter, that's true, but we're growing year on year results, though in terms of the growth rates, so 600% increase over year on year, So holiday season, the holiday season.
Speaker Change: I guess on demand being another.
Speaker Change: Quote unquote anywhere product it allows people to shop in more places before we had our anywhere products are more open network products, we were restricted to our directly integrated merchants and in prior years. If you go back and look at our results from like four years ago November would be like our peak or peak.
Charles Youakim: And in prior years, if you go back and look at our results from like four years ago, November would be like our peak, our peak month, because that's when a lot of people did a lot of online shopping. But now that we have these anywhere products, it actually turns out that, you know, we become more December weighted, in terms of our volumes, which I think also helps. So the more anywhere products helps to, you know, basically carry the momentum through all of the quarter, rather than waited to the early half of the quarter where people were shopping online only.
Speaker Change: Months, because that's when a lot of people did a lot of online shopping but now that we have these anywhere products. It actually turns out that we become more December weighted in terms of our volumes, which I think also helps the more anywhere product self stuff, you'll basically carry that momentum through all of the quarter rather than.
Speaker Change: Weighted to the early half of the quarter, where people are shopping online or only.
Speaker Change: Got it and then you know congratulations on the 707000 subscribers the March number now.
Mike Grondahl: Got it.
Mike Grondahl: And then, you know, congratulations on the 707,000 subscribers, the mods number now. You know, clearly it sounds like On Demand was pretty strong and successful. Any comments specifically on Anywhere or Premium? You know, I know those two were 529,000 at the end of September. I know you're not breaking the three out, but any just high-level comments on Anywhere and Premium and how they operated in 4Q? Well, basically, we maintained subscriber numbers. pretty well throughout the quarter. But the real focus, you know, besides, you know, restrictions on introducing anywhere, or sorry, on demand to new consumers, when we could introduce consumers to a product, we were tending to lean towards on demand, because we knew that it had kind of better activation rates, because of the lower barrier to entry.
Speaker Change: You know clearly it sounds like on demand was pretty strong and successful.
Speaker Change: Any comments, specifically on anywhere or premium.
Speaker Change: No. Those two were 529000 at the end of September I know, you're not breaking the three out but any just high level comments on anywhere in premium and how they operate it and <unk>.
Speaker Change: Well basically we maintained subscriber numbers.
Speaker Change: Pretty well throughout the quarter, but the real focus besides no restrictions on introducing anywhere or sorry on demand to meet consumers when we could introduce consumers to our products in Europe tend to lean towards on demand because we knew that it had kind of better activation rates because of the lower barrier to entry.
Speaker Change: We're really playing into our strategy early get customers through a lower friction.
Charles Youakim: And we're really playing into our strategy early, get customers through a lower friction, barrier, lower barrier entry first, get them into on demand when we can. And then over time, our viewpoint is that it's as the customer transacts frequently with on demand, they'll start to make the decision that I might be better off with a subscription product. We're starting to lead a little bit more into this new strategy. But of course, with existing subscribers, we don't introduce on demand, they already have the products that they need. So we don't even really talk about it with existing subscribers.
Speaker Change: Lower barrier entry first to get them into on demand when we can and then overtime. Our viewpoint is that there's such as the customer transact frequently with on demand they'll start to make the decision that I might be better off with a subscription product and we're starting to leave a little bit more into this new strategy.
Speaker Change: But of course with existing subscribers, we don't introduce onto that they already have the products that they need. So we don't want you didn't really talk about it with existing subscribers. So.
Charles Youakim: So, you know, our viewpoint is, you know, through 2025, we're probably going to continue to lead with on demand, and then watch the customer utilize that product, and then probably start to introduce them to subscription again, you know, kind of like how Uber works. For many people, I'm sure a lot of people on the call use Uber, getting introduced to I think it's called Uber one, the subscription product. I think that's kind of like how we'll start to evolve with our subscriptions. And as we mentioned in the call, you know, we're seeing right now in the top line revenue side on demand looks pretty similar to premium already.
Speaker Change: Our viewpoint is through 2025, we're probably going to continue to lead with on demand and then watch the customer utilize their product and then probably start to introduce them to subscription again, you know kind of like Uber works for many people and I'm sure a lot of people on the call use Uber getting introduced I think it's called Hooper one the subscription products.
Speaker Change: I think that's kind of like how we'll start to evolve with our subscriptions and as we mentioned in the call you know what we're seeing right now in the top line revenue side on demand looks pretty similar to premium already. So you can start to kind of get the idea that some of these customers are transacting enough was ondemand, which where they might be better off moving into subscription.
Charles Youakim: So you can start to kind of get the idea that some of these customers are transacting enough with on demand, which where they might be better off moving into subscription. So we just think it's gonna take some time for that to evolve, probably the next year, for us to kind of, you know, mix the whole batter together. So, you know, over time, we think it becomes the bridge that we were predicting it to.
Speaker Change: So we just think it's going take some time for that to evolve probably the next year for.
Speaker Change: For us to kind of mix the whole batter together.
Speaker Change: Over time, we think it becomes the bridge that we were predicting it to be.
Speaker Change: Got it and lastly, the press release talks about the enhanced product market place.
Charles Youakim: Got it. And lastly, the press release talks about the enhanced product market place. kind of, you know, driving consumer engagement, and it said orders grew by an average of 39% month over month, average session activity increased 70%. Can you talk and describe a little bit about what that is and what you're trying to create? We just want to make the app really the go to for these customers. And the reason you're seeing this month on month growth rate is that You know, we're, we're very tech oriented company. And, you know, if people have followed tech oriented companies or have been involved with them, we're very, we have a lot of releases throughout the year.
Kind of you know driving.
Speaker Change: Consumer engagement and it said orders grew by an average of 39% month over month.
Speaker Change: Average session activity increased 70% can you talk and describe a little bit about what that is in and what you're trying to create there.
Speaker Change: We just want to make the App really the go to for these customers.
Speaker Change: And the reason you're seeing this.
Speaker Change: One five months growth rate is that.
Speaker Change: You know were.
Speaker Change: We're very tax oriented company and if people if all of the tech oriented companies, who have been involved with them.
Speaker Change: We're very we have a lot of releases throughout the year I mean.
Charles Youakim: I mean, hundreds, maybe around 1000 per year, I don't know the exact numbers, but we basically believe in these like micro releases of improvements to our apps and to our systems. And so as the, as the products improving over the year, as customers keep on coming into our app, they keep on seeing more and more features. And, you know, many customers use this for a couple months, they come back in, they're impressed by what they're seeing, the new options available to them. And our view is that we're going to keep on doing this through 2025 to 2026, really focusing on the shopping side.
Speaker Change: Hundreds maybe.
Speaker Change: Around 1000 per year I don't know the exact numbers, but we basically believe music micro releases of improvements to our apps into our systems and so as the as the products improving over the year as customers keep on coming into our App you keep on seeing more and more features and many customers use us for a couple of months they come back in they are impressed.
Speaker Change: By what they are seeing.
Speaker Change: The new options available to them and our view is that we're going to keep on doing this through 2025 to 226 really focusing on the shopping side.
Speaker Change: And over time, we believe that will draw more eyeballs into our App, but also I think even maybe more importantly, create a stronger retention from cost for customers that have been introduced and I think the app engagement and what you're seeing in terms of the the purchase activity and the App is really showing that it's starting to work.
Charles Youakim: And over time, we believe that'll draw more eyeballs into our app. But also, I think even maybe more importantly, create a stronger retention for customers that have been introduced. And I think that app engagement and what you're seeing in terms of the purchase activity in the app is really showing that it's starting to work.
Speaker Change: Great Hey, Thanks, a lot.
Mike Grondahl: Great. Hey, thanks a lot.
Speaker Change: Excellent.
Speaker Change: Once again, if you have a question. Please press Star then one.
Unknown Executive: Once again, if you have a question, please press star and one.
Harold Goetsch: The next question comes from Harold Goetsch with B-Rally. Please go ahead. Thank you, Charlie and team. Congratulations on a great year. My question is about the funnel for mid-market merchants and maybe even enterprise merchants. It seems like the fine athlete or field is going to be a handful of players, maybe five to six, and you're one of them. And I'm just wondering when – and you guys buy a little deeper, have a lot of features. I'm just wondering how your funnel is shaping up for signing up more small, middle market, regional, and even national accounts now.
Speaker Change: Next question comes from how good with B Riley. Please go ahead.
Speaker Change: Hey, Thank you Hey, Charlie and team congratulations on a great year and my question about the <unk>.
Speaker Change: Final for mid market merchants, maybe even enterprise merchants.
Speaker Change: It seems like the pineapple later field is going to be a handful of players the five to six and you're one of them.
Speaker Change: And I'm just wondering when you guys buy a little deeper there are a lot of features I was just wondering how your funnel is shaping up for signing up more small middle market regional and even national accounts now.
Speaker Change: It's still strong I think our view is that and probably improving from what we've been seeing over the last few months and I think that's not even including the idea that on demand is basically a newer idea.
Charles Youakim: It's still strong. You know, I think, you know, our view is that and probably improving from what we've been seeing over the last few months. And I think that's not even including the idea that on demand is basically a newer idea. We mentioned in the, you know, the call here, but maybe just to clarify for investors following the company. Before we used to go to merchants, we basically just talk about our core product, which was installing Sezzle on your website, no fees at all passed on to the customer, basically, the merchant would have to subsidize the entire transaction.
Speaker Change: We mentioned in the call here, but maybe just to clarify for investors following the company.
Speaker Change: Before we used to go to merchants. We are basically just talk about our core product, which was installing settle on your website no fees at all passed onto the customer basically the merchant would have to subsidize the entire transaction.
Charles Youakim: And that worked for a number of merchants. But as you get into larger and larger mid to enterprise merchants, many of them are very cost constrained in terms of what they want to do with processing products. And in some in some cases, when you go into an enterprise or mid market merchant, they have you talk to their process. and their processing team is very focused on cost. Now, sometimes you get into their marketing teams focused on driving traffic, sometimes you get into their processing teams, driven on cost, I think as you get bigger and bigger, into bigger and bigger merchants, it tends to be more towards the processing team.
Speaker Change: That worked for a number of merchants, but as you get into larger and larger bid to enterprise merchants many of them are.
Speaker Change: Barry cost constrained in terms of what they want to do with processing products and in some in some cases when you go into an enterprise or mid market merchants. They have you talked to their processing team and their processing team is very focused on costs.
Speaker Change: The times you get into the marketing teams focused on driving traffic, sometimes you get into their processes teams driven on costs I think as you get bigger and bigger and bigger and bigger merchants it tends to be more towards the processing too.
Charles Youakim: And so when they're looking at costs, they're comparing you to payment processing, credit card processing, which is around 2% or so. And we came in, you know, early days with, with buy now pay later, we were charging six plus 30. Actually, that's our, our rack rate today for SMBs, for our small to medium sized businesses, but of course, enterprise merchants scoff at that. They want to keep their processing costs low. So with on demand, we can pass on a lot of the fee structure to the consumer now in terms of a service fee, even in the merchant checkout, and that's a new product that has just started to help us build up more of the pipeline on the enterprise side.
Speaker Change: So when they're looking at costs, they're comparing you to payment processing.
Speaker Change: Credit card processing, which is around 2% or so and we came in early days with was buying albeit later, we were charging six plus 30 actually that's our our rack rate today for Smbs for small to medium size businesses. Both force enterprise merchants scoff at that they want to keep their processing costs low so with on demand we can.
Pass on a lot of the fee structure to the consumer now in terms of a service fee even in the merchant checkout and that's a new product that has just started to help us build up more of the pipeline on the enterprise side. So we've been having some good momentum as we saw that it was mentioned we did have three nice signings here in the fourth quarter, but we think that it's going to continue.
Charles Youakim: So we've been having some good momentum. As you saw the, you know, as we mentioned, we did three nice signings during the fourth quarter, but we think that it's going to continue to improve in quality as we have introduced on demand into more and more situations. Okay, so you're saying those three merchants you signed, that's more of an on demand where the consumer pays? No, in those cases, In those cases, no. But you know, I think we've already had just through execution, we've had some good growth in terms of enterprise merchant signings with those three.
Speaker Change: To improve in quality as we have introduced on demand and its more and more situations.
Speaker Change: Okay.
Speaker Change: You're saying those three merchant side, that's more of an on demand.
Speaker Change: There were.
Speaker Change: No it's in those cases.
Speaker Change: In those cases, no, but you know I think we've already I just.
Speaker Change: Through execution, we've had some good growth in terms of enterprise merchant signings with those three but we think that we have a chance to add even more now that we have on demand in the mix, but it takes a while to create the pipeline with enterprise. So it's not like Oh.
Charles Youakim: But we think that we have a chance to add even more now that we have on demand in the mix, but it takes a while to create the pipeline with enterprise. It's not like a, you know, two month activity, it's usually a few months.
Speaker Change: Two months activity, it's usually a few months.
Speaker Change: And the last last two from me real quick.
Charles Youakim: And last two for me real quick, you know, is there is there a monetization in couponing you can do and then two on the on the capital allocation, you know, if you generate another 80 million adjusted net income, and you're basically turning Ford, really not even needing a warehouse line, you know, what are your plans when you generate that kind of cash with the warehouse line down a year from now? Thanks. Yeah, so in terms of the generating cash, I think the great thing is about being a strongly profitable company is it just creates a lot of options for you.
Speaker Change: Is there a is there a monetization in couponing you can do and then two on the on the capital allocation.
Speaker Change: You generate another $80 million and adjusted net income and you basically training.
Speaker Change: We're really not even needing a warehouse line.
Speaker Change: What are your plans when you generate that kind of cash.
Speaker Change: With a warehouse line down a year from that thanks.
Speaker Change: Yeah. So in terms of the generating cash I think the great news about being a strong and profitable company as it just creates a lot of options for you.
Charles Youakim: You know, one of the options is yeah, we could we could basically drive down to the point, you know, maybe not in the next 12 months, but in the next 12 to 24 months, where if you know, depending on your growth rate versus your margins, you could basically you know, deplete the need for a line of credit. It also gives you the opportunities for buybacks for dividends, or M&A. You know, I think that's the nice thing about being a profitable company is it gives you lots of options. And it's not like we're in a rush on any of these fronts.
Speaker Change: One of the options is yeah, we could we can basically drive down to the point you know maybe not in the next 12 months, but in the next 12 to 24 months, where if you know the funding your growth rate versus your margins.
Speaker Change: You can basically.
Speaker Change: Deplete the need for a line of credit.
Speaker Change: But it also gives us opportunities for buybacks or dividends or.
Speaker Change: M&A you know I think that's the nice thing about being a profitable company that gives you lots of options and necessarily if we're in a rush on any of these fronts. We just think that keep on executing and keep on doing a great job keep on building up the cash and then we can evaluate the options as they come.
Charles Youakim: We just think that keep on executing, keep on doing a great job, keep on building up the cash, and then we can evaluate the options as they come.
Charles Youakim: And then, by the way, first question, just to remind me. Is there any monetization potential on the coupon? Oh, for couponing, for couponing. Yes, basically, with all the shopping side of the activities, there are monetization channels. What we're trying to think about now is the trade-off. how much of it did we give to the customer to create attraction and retention versus how much of it we retain. And so we'll probably be experimenting with that. But I mean, these are definitely you know, when you talk we talked about kind of honey for mobile as like the way we kind of, you know, talk about the new productization within the company.
Speaker Change: And then by the way.
Speaker Change: First question just to remind me.
Speaker Change: Is there any monetization potential on the coupon for couponing for couponing.
Speaker Change: With all the shopping side of the activities there are monetization channels.
Speaker Change: What we're trying to think about now is the trade off.
Speaker Change: How much of it do we give to the customer to create attraction and retention.
Speaker Change: Versus how much of it we retain and so we'll probably be experimenting with that but I mean these are definitely you know when you talked we talked about kind of a honey for mobile is liked the way we kind of.
Speaker Change: <unk> talked about the new product position within the company I mean honey was a profitable company. So you can definitely monetize on these on these items for US is just like.
Charles Youakim: I mean, honey was a profitable company. So you can definitely monetize on these, on these items. For us, it's just like thinking about as he launched these features. How much do we give? How much do we keep with us? But they're definitely profitable. It's definitely a profitable business in its own right. But we're looking at a little bit differently. Maybe we're looking at more for attraction and retention, because we've got this great money making machine with our buy now pay later product set. So we'll probably be experimenting with that a bit. Okay. Thanks, guys. Thanks, Al.
Speaker Change: Bob as you launch these features.
Speaker Change: How much do we give how much do we keep with us, but they're definitely profitable.
Profitable business in its own right, but we're looking at a little bit differently, maybe they were looking at more for attraction and retention because we've got this great moneymaking machine with our buy now pay later product set.
Speaker Change: So, we'll probably be experimenting with that a bit.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Excellent thanks, guys.
Thanks Al.
Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Charlie you Kim for any closing remarks. Please go ahead.
Charles Youakim: This concludes the question and answer session. I would like to turn the conference back over to Charles Youakim for any closing remarks. Please go ahead. Thank you, operator. Again, I'd like to thank the Sezzle team. We continue to make tremendous strides in our business. And I know our team will continue to lead the way. I know the business school books never talk about a team as a competitive advantage, but I disagree. I know our team creates a competitive advantage. And that's why we're winning with Moneyball.
Charlie You: Thank you operator.
Charlie You: Again I'd like to thank the subtle team, we continue to make tremendous strides in our business and I know our team will continue to lead the way.
Speaker Change: I know the business school books never talked about a team is a competitive advantage, but I disagree.
I know our team creates a competitive advantage and that's why we're winning with money ball.
Charles Youakim: And in closing, I don't have a Charlie Munger quote this time around, but even better, I have a Charlie Munger story, all in his own words. He says. Back in the late 80s, we started buying Coca-Cola stuff. Not a complicated decision. Here's a company selling sugar water all over the world. got a brand stronger than Fort Knox, and people aren't going to stop drinking at any time. We picked up shares at a decent price, about $600 million worth by 1988 or so. People thought we were nuts paying that much for a soda company. Analysts said it was overvalued.
Speaker Change: And in closing I don't have a Charlie Munger quote this time around but even better I have of Charlie Munger story, all in his own words.
Speaker Change: He says.
Speaker Change: Back in the late eighties, we started buying Coca Cola stock.
Speaker Change: Not a complicated decision here's a company selling sugar water all over the world.
Speaker Change: Got a brand stronger than Fort Knox and people aren't going to stop drinking it anytime soon.
Speaker Change: We picked up shares at a decent price about $600 million worth by 1988 or so.
Speaker Change: People thought we were nuts paying that much for a soda company.
Speaker Change: Analysts said it was overvalued market was jittery.
Charles Youakim: Market was jittery. All the usual noise. What did we do? We sat on it. Didn't trade it. Didn't tinker. didn't listen to the chatter, just held the damn stock. Why? because it was a business that we understood, run by people who knew what they were doing, with a moat wider than the Mississippi. Fast forward a couple decades. By the 2000s, that $600 million turned into billions. Today it's worth over 20 billion. And that's not counting the dividends we've collected along the way, which are millions every year now. The trick wasn't in some fancy footwork. We didn't outsmart the market with clever thinking or clever timing or slick moves.
Speaker Change: All the usual no noise.
What do we do we sat on it.
Speaker Change: Trade it didn't tinker.
Speaker Change: Didn't listen to the chatter.
Speaker Change: Just held the damn stock.
Speaker Change: Why.
Speaker Change: Because it was a business that we understood run by people, who knew what they were doing with our moat wider than the Mississippi.
Speaker Change: Fast forward a couple of decades by the two thousands that 600 million turned into billions.
Speaker Change: Today, its worth over $20 billion and that's not counting the dividends we've collected along the way which are millions every year now.
Speaker Change: The trick wasn't in some fancy footwork.
Speaker Change: We didn't know smart the market with clever thinking.
Speaker Change: However, timing or slip moves we just bought it and forgot about it led the company to do its job.
Charles Youakim: We just bought it and forgot about it. Let the company do its job. People think investing is about action. But the big money's in the waiting. You find something good, you park your ass, and you don't budge unless the story changes. That's it.
Speaker Change: People think investing is about action, but the big monies in the waiting.
Speaker Change: Do you find something good you Park your <expletive>.
Speaker Change: Budged unless the story changes that's it.
Speaker Change: I couldn't agree more with Charlie Munger.
Unknown Executive: I couldn't agree more with Charlie Munger. Have a great evening, everyone. And thanks, operator, we can end the call. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect. © BF-WATCH TV 2021 © BF-WATCH TV 2021
Speaker Change: Have a great evening, everyone and thanks, operator, we can end the call.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change: [music].