Results for Q1 2025 were stunning!
This business is on fire. The shares were hammered between November 2024 and April 2025, falling from around $80 to $25 because of a short-selling attack. I don’t even know what it was about, but it is fast becoming ancient history.
The guidance for 2025 results has skyrocketed. I don’t often say this about shares I like, but I think they look positively cheap on a prospective PE ratio around 26 for a company projecting eps rising nearly 50pc.
CEO and cofounder Charlie Youakim is bursting with confidence, as well he might be.
It’s an exciting time for the payments industry and especially buy now, pay later (BNPL), as our sector continues to grow and gain market share. Even as we’re gaining on other payment methods, we still represent less than 10% of the payments market. We believe that our sector will continue to gain share as we gain share within it. We also believe that it is a great time to be in the buy now pay later space as there is a heightened level of uncertainty in the economy.
Charles Youakim, CEO, Sezzle, Q1 2025, 7 May 2025
Consumer sentiment is dropping, and many consumers seek out flexibility in their finances in uncertain times. BNPL provides that wanted flexibility and allows payments to be matched to budgets. We have said this before, but we will say it again now, BNPL is aligned with responsible repayment. Consumers must be current with us, or they aren’t allowed to continue to use us as a payment method. BNPL is very different from a revolving line of credit on a credit card, where large overdue balances can be punted into the next cycle, accumulating large fees and high APRs, leading to a cycle of never-ending debt. We love that we’re on the right side of responsible payments.
Looking at our first quarter results, we continue to defy those who say we can’t compete with larger, better capitalized competitors. We are doing more than just competing. We are thriving and winning. It turns out that innovation and efficient operations can still produce great returns. Seasonally, the first quarter tends to be our strongest in terms of revenue as a percentage of GMV as the revenue recognition on payment plans initiated in the fourth quarter rolls into a seasonally lower GMV first quarter.
The results were amazing.
You can see how it all came together on slide three, where we provide a snapshot of our first quarter results. GMV rose 64% year-over-year, well outpacing the overall BNPL industry. Revenue increased 123% year-over-year, driven by a 77% year-over-year growth rate in our monthly on-demand users and subscribers, which we call MODS. These strong top line results, coupled with a 70.4% margin for our unit economics and our ability to continue to leverage nontransaction-related costs, led to a net income of $36.2 million for the quarter.
Charles Youakim, CEO, Sezzle, Q1 2025, 7 May 2025
Yes, as you might have guessed, we are bumping up our guidance for 2025. I don’t want to steal Karen’s thunder on our revised guidance. But as you can see here, we’re increasing our 2025 net income guidance by almost 50% to $120 million from $80.4 million and bumping up the 2025 EPS guidance from a split adjusted $2.21 per share to $3.25 per share. We continue to significantly outperform the Rule of 40 and our similar version, the Rule of 100. Actually, I think we posted a score of over 200 on that metric. We grew revenues by 123% with a gross margin of 70% and a net income margin of 34.5%. That’s a total of $227.5 million. Wow! That will be tough to beat. We’re going to keep on trying now.
The stars are aligning for Sezzle but these strong trends look set to continue.
Finally, let’s look forward. We are excited to announce that we’re raising 2025 guidance acrossn the board, increasing top line revenue growth from 20% to 30% to 60% to 65% and earnings per share from $2.21 to $3.25. I know that’s a significant adjustment, especially when you see many companies out there pulling back on guidance completely. So let me walk you through while we’re confident about the adjusted outlook.
Karen Hartje, CFO, Sezzle, Q1 2025, 7 May 2025
It’s important to start by calling out the tailwinds leading to our $36 million net income quarter. First, demand remained strong in the first quarter, which is usually one of our softer quarters. Second, credit performance surpassed our expectations with the provision for credit losses as a percentage of GMV coming in well below our stated expectations. Last, the interplay between our subscription and on-demand products has exceeded our expectations. We expected to see a balance between the cannibalization of subscription and adoption of our on demand product. Yet, our subscribers are holding up and even using the product more frequently, and non-subscribers continue to engage with our on-demand product. We expect this positive trend to continue, providing a strong tailwind for 60% plus top-line growth.
We can now think about the message in the chart. The weekly Coppock is turning higher, and the moving averages have given a buy signal. It looks like a great time to start building a position in Sezzle.
Dave is a kind of bank which gets a foot in the door with new customers by helping them with immediate liquidity problems. It caters for them thereafter by exploiting its much lower cost base than traditional banks.
Like Sezzle, Dave is on a ferocious growth charge.
They have a huge market opportunity relative to where they are.
They have a winning strategy built for a technological age.
This is producing spectacular results.
More on the opportunity.
I’d say we’re at 2.5 million MTMs [monthly transacting members] at this point. We feel the TAM [total addressable market] is still massive of that half of America, roughly 150 million people that could use a product like ExtraCash and/or our free checking account.
Jason Wilk, co-founder & CEO, Dave Inc., Q1 2025, 8 May 2025
So we feel like there’s just still a lot of room to run and it was another impressive quarter of acquiring over 0.5 million new members at a very efficient CAC [customer acquisition cost] . On the advance origination size going up per member, it wouldn’t reduce the amount of advances people would take because effectively, it’s still due on your next paycheck date. And so all we’re doing is, I think, with the increase, giving people more flexibility of how they can utilize ExtraCash. They can use it more for things like rent or for larger purchases versus our previous limits were lower, so tended to only be used for gas and groceries. As far as where we go from here, we do believe our members aspire for more duration on ExtraCash. And so that’s where sort of new products could enter the market for us, which we’re excited to talk about in future quarters.
Natural Grocers is a retail chain that does what it sounds like. Like the shares, the business shows signs of taking off.
Sales growth remained robust in the second quarter and we continue to believe that the quality, breadth and longevity of our sales performance are extraordinary for grocery retail. Daily average comparable store sales increased 8.9% and accelerated to 16.4% on a two-year basis. The transaction count comp increase of 5.9% marked our ninth consecutive quarter with positive traffic. The transaction size comp increased 2.8% and was our fifth consecutive quarter with an increase in items per basket and modest inflation.
Additionally, sales performance was strong across vintages. Remarkably, stores five years and older had an 8.5% comp for the quarter, underscoring the strong competitive position of our stores. We are also very pleased with the performance of the newer vintages. We believe the quality breadth and duration of our sales performance are indicators of the overall strength of our business model and productivity of our initiatives.
For the second quarter, our focus on operational execution, including effective promotions and store productivity initiatives, combined with expense leverage from higher sales resulted in an operating margin improvement of 150 basis points and a 60% increase in diluted earnings per share. Based on the strong second quarter results, we are increasing our fiscal 2025 outlook for daily average comparable store sales growth and diluted earnings per share.
Kemper Iseley, co-president, Natural Grocers, Q2 2025, 9 May 2025
They are riding a strong trend towards healthy eating and saving the planet.
Second quarter sales remained strong across product categories, with our highest comparable store sales growth in our most differentiated offerings. These include meat, in which we are committed to offering humanely raised and sustainably sourced meats, fish and seafood produce which is 100% organic and our dairy category, which includes 100% pasture-raised dairy and a minimum egg standard of free range.
Kemper Iseley, co-president, Natural Grocers, Q2 2025, 9 May 2025
The group has solid plans for future growth.
During fiscal 2025, we plan to open three to four new stores and relocate or remodel two to four stores. In the future, we plan to open six to eight new stores per year.
Kemper Iseley, co-president, Natural Grocers, Q2 2025, 9 May 2025
You might imagine they could grow faster, but nothing wrong with the tortoise that catches the hare.
Together we are spreading our parents’ dream of igniting a good4u revolution across the country… and the world. What started out as a Colorado-based company, has now grown to over 169 stores and counting in 21 states, thanks to customers like you.
News from Natural Grocers
A longer-term chart suggests something important is happening with a massive push into all-time high ground.
Share Recommendations
Sezzle. SEZL
Dave. DAVE
Natural Grocers by Vitamin Cottage. NGVC
Strategy – Disruptors On The March
Arguably, the most extraordinary story here is that of banking disruptor Dave Inc., led and co-founded by a super-charismatic guy named Jason Wilk. The market value fell from $4bn at the IPO to $50m and has since recovered to nearly $3bn. It was under $1bn when we first recommended the shares. Talk about, don’t give up. These guys have balls of steel and deserve every bit of their success.
These are three appealing shares in exciting businesses, and starting buying programmes now should deliver excellent results.
This weekly candlestick chart of Amazon shows buy signals going back to 2000. There are 29 in 25 years, so roughly one a year. Amazon shares are a buy whenever the weekly Coppock is below the blue line (i.e. negative). The shares rose on the latest tariff news.
Amazon is perfectly placed with its online retail, membership and cloud infrastructure businesses to capitalise on the growth of the US and global economy. It would also benefit dramatically from improved access to global markets outside the US, like Europe, India and China. It is hard to complain about America’s latest tariff moves when everybody else plays the protectionist game. Many US companies are not allowed to operate in China at all.
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