Sezzle's profit is outpacing sales. Subscriptions help explain why.
Paid subscriptions brought in $41.3 million in the quarter. A Visa incentive also helped margins as Sezzle raised its annual sales-growth target.
Sezzle lifted its annual revenue-growth forecast to approximately 42.5%, from the 35% target it issued in August. Its third-quarter operating profit grew even faster than sales as subscriptions expanded and transaction costs consumed a smaller share of revenue.
The buy-now, pay-later company reported $64.3 million of operating profit, up 80.7% from a year earlier, on revenue growth of 42.6%. The operating margin, or the share of revenue left after operating expenses, rose to 38.6% from 30.4%.
| Quarter ended September 30 | 2026 | 2025 |
|---|---|---|
| Revenue | $166.5 million | $116.8 million |
| Operating profit | $64.3 million | $35.6 million |
| Net income | $47.8 million | $26.7 million |
Subscriptions are doing more of the work
Subscription revenue rose to $41.3 million from $24.3 million. Sezzle ended September with about 955,000 active Premium or Anywhere subscribers, up 68.1% from a year earlier. The filing also points to more consumer fees and higher virtual-card activity, alongside promotional incentive revenue.
Management is putting subscriptions at the center of its customer strategy. On the earnings call, it said the older on-demand offering had not converted as many occasional users into subscribers as it originally expected. The company now sees that offering more as a way to win merchants.
Newer products are contributing, but management said SezzleCash advances and Sezzle Send transfers still have small volumes compared with the established business. Pay-in-5, which lets users spread payments across more installments, is further along.
A network incentive helped the margin
A $3.7 million payment-network incentive lowered transaction expense. Management linked it to an exclusive Visa arrangement for U.S. credit products. That benefit is separate from the promotional incentives recorded in revenue.
Costs continued to rise, but more slowly than sales. Marketing expense was $15.9 million, down from $19.4 million in the second quarter but above $8.8 million a year earlier. Management said the earlier quarter tested a higher spending level and that it preferred the lower run rate.
The charge for expected credit losses rose to $37.7 million from $32.2 million. It fell as a share of transaction volume, with both years measured on Sezzle's updated definition. Management expects the usual seasonal decline in revenue earned per dollar of volume in the fourth quarter. It also said newer lending products can carry lower margins and higher initial loss rates.
Growing receivables absorb cash
Operating cash flow for the first nine months rose to $227.9 million from a restated $139.3 million. Sezzle used $142.3 million for net purchases and originations of consumer receivables, recorded in investing activities, as well as cash for technology investment and net debt repayment.
At September 30, unrestricted cash and cash equivalents were $70.1 million. The company had $104 million drawn on its $300 million receivables facility, with $169.3 million of actual unused borrowing capacity based on eligible collateral.
Sezzle also issued new adjusted earnings targets using an updated tax treatment. The August earnings forecast was not restated on that basis. The Sezzle company profile explains those targets, its funding arrangements and the pending bank application.