By now, investors are familiar with the big winners over the last couple of years, like Nvidia and Palantir, but there's one little-known buy-now, pay-later (BNPL) stock that has crushed the returns of both of those popular artificial intelligence (AI) stocks.
I'm talking about Sezzle (SEZL 0.37%), a fast-growing fintech that was just a small-cap company until recently. After soaring more than 800% over the last year, Sezzle has a market cap of roughly $4.5 billion, meaning the stock could easily be a multibagger from here.
The company also recently rewarded investors with a 6-for-1 stock split in March. That doesn't change any fundamentals about the business, but it is a reflection of management's confidence in future growth, and investors tend to respond positively to stock splits.
Image source: Getty Images.
What is Sezzle?
Sezzle was founded in 2016, led by CEO and co-founder Charlie Youakim, who had experience in the payments industry after co-founding the mobile parking payments app Passport.
After moving on from Passport, Youakim decided to target a larger corner of the payments sector, setting his sights on retail. Since it came after larger BNPL companies like Afterpay (now owned by Block), Affirm, and Klarna were well-established, Sezzle has had to be scrappy to get to where it is today.
The company initially raised capital and went public in Australia before eventually going public through a direct listing in the U.S. It then delisted its Australian listing.
In an interview with The Motley Fool, Youakim said the company, which recently filed a lawsuit against Shopify, has overcome a great deal of adversity in growing to where it is today. He said Shopify "was basically blocking us on its site" when the e-commerce platform made up 80% of revenue. After previously cutting headcount from 580 to 240 and making some other tough decisions, Sezzle has turned profitable and is growing rapidly. It's also diversified its merchant partners, and today, Shopify makes up less than 5% of its revenue.
Sezzle by the numbers
An 800% surge in a stock doesn't just happen, and Sezzle has the numbers to back that monster growth.
In the first quarter of 2025, revenue jumped 123% year over year to $104.9 million, benefiting from increased adoption of subscription programs and several quarters of accelerating momentum. In fact, Sezzle's revenue growth has accelerated for five quarters in a row, and its profits have also soared.
In Q1, operating income jumped 260.6% to $49.9 million, an operating margin of nearly 47.6%, and earnings per share surged from $0.22 in the quarter to $1.00.
Its total of monthly on-demand and subscription customers jumped 77.4% in the quarter to 658,000. The company is seeing increased purchase frequency, and gross merchandise volume (GMV) jumped 64% over the prior year, showing that increased spending with Sezzle is driving most of the growth.
Sezzle's secret
Like most BNPL operators, Sezzle makes money on sales from the merchant, which pays a 6% processing fee plus $0.30 on transactions.
However, Sezzle's subscription products have helped drive growth, including Sezzle Anywhere, which allows users to use Sezzle virtually anywhere Visa is accepted.
The company has launched other popular products as well, like auto-couponing, which automatically finds coupons the customer can use, and its Sezzle Up feature allows users to establish a credit history with Sezzle. Most of its users are young adults and have low to medium income levels.
Additionally, the company has a rewards program called payment streaks, which gives customers points every time they make an on-time payment.
Sezzle has also managed credit risks by cutting off customers when they miss payments, essentially preventing them from continuing to borrow and spend on the platform. That's a meaningful difference from credit cards that allow users to rack up debt they often struggle to pay.
Is Sezzle a buy?
Sezzle stock exploded following the company's first-quarter report, though the stock has cooled off this month as other high-flying growth stocks have pulled back in what could be a market rotation.
There's a long runway of growth ahead for Sezzle and other BNPL operators if they can continue to take market share from credit and debit cards in the massive payments market.
The company seems to have found the right mix of user-friendly product features and a lean business model capable of delivering wide profit margins. Investors should expect the company's revenue growth to moderate, but it looks like a good bet to outperform over the long term.
Youakim aims for Sezzle to become a daily use app for 70% of Americans. He envisions it becoming something of a super-app with more banking services.
That's a bold goal, but the company doesn't have to get to that level for it to be successful. At its current valuation, investors seem to be betting on its growth to moderate soon. If Sezzle can continue to outgrow its peers, however, the stock should be a winner.
