# Sezzle Inc.: Form 10-Q for the period ended Mar 31, 2026

- Company: [Sezzle Inc.](/companies/sezl.md) (CIK 1662991)
- Form: 10-Q
- Filed: 2026-05-07
- Accepted by EDGAR: May 6, 2026, 17:47 ET
- Period: 2026-03-31
- Accession: 0001662991-26-000065
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1662991/000166299126000065/szl-20260331.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1662991/000166299126000065/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-01-01 to 2026-03-31 | $73.3m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Operating income | 3 months, 2026-01-01 to 2026-03-31 | $69.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2026-01-01 to 2026-03-31 | $3.0m | us-gaap:InterestExpenseNonoperating |
| Income tax | 3 months, 2026-01-01 to 2026-03-31 | $14.7m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2026-01-01 to 2026-03-31 | $51.3m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2026-01-01 to 2026-03-31 | $1.47 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2026-01-01 to 2026-03-31 | $1.52 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2026-01-01 to 2026-03-31 | 34,932,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2026-01-01 to 2026-03-31 | $89.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2026-01-01 to 2026-03-31 | $351.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Share repurchases | 3 months, 2026-01-01 to 2026-03-31 | $25.7m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2026-03-31 | $120.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-03-31 | $411.2m | us-gaap:AssetsCurrent |
| Total assets | at 2026-03-31 | $454.3m | us-gaap:Assets |
| Current liabilities | at 2026-03-31 | $112.6m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-03-31 | $257.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2026-03-31 | $196.7m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 39,864 characters.

### RESULTS OF OPERATIONS

*The following discussion and analysis of our financial condition and results of operations should be read together with our consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. You should review the “Forward-Looking Statements”, “Factors Affecting Results from Operations”, and “Risk Factors” sections of this Form 10-Q, and the “Risk Factors” sections on this Form 10-Q and the 2025 Form 10-K for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements described in the following discussion and analysis.*

### Overview

We are a purpose-driven payments company on a mission to financially empower the next generation. Launched in 2017, we have built a digital shopping and payments platform that provides consumers a flexible alternative to traditional credit. Through our platform, we aim to give consumers control of their spending, ways to save money, and access to responsible credit. Our vision is to create a digital ecosystem benefiting all of our stakeholders—including merchants, consumers, employees, communities, and investors—while continuing to drive ethical and sustainable growth.

The Sezzle Platform offers a payments solution for consumers in the United States and Canada that has the ability to instantly extend credit at the point-of-sale, allowing consumers to purchase and receive merchandise, while paying in installments over time. Consumers pay a portion of the purchase price at the point-of-sale as a down payment, and then pay off the remaining amount over time through scheduled payments. We also offer the ability to “pay-in-full” using the Sezzle Platform.

We provide consumers access to subscription products, short-term credit products at the point of sale, which may be free or subject to fees and/or interest, and access to interest-bearing loans with our third-party partner. We make a majority of our revenue from merchants, partners, consumer fees, and through our two paid versions of the core Sezzle experience: Sezzle Premium and Sezzle Anywhere. Sezzle Premium is a paid subscription service for consumers to access large, non-integrated premium merchants for a recurring fee. Sezzle Anywhere is a paid subscription service that allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain merchant, product, goods, and service restrictions, for a recurring fee. Sezzle On-Demand allows consumers who are not subscribed to Sezzle Anywhere to use the Sezzle Platform at any merchant online or in-store (subject to the same restrictions as Sezzle Anywhere) in exchange for a finance charge, which is added to the consumer’s initial down payment. Additionally, through collaboration with a third-party partner we enable our consumers access to interest-bearing monthly fixed-rate installment-loan products at participating merchants for larger-ticket items (up to $15,000), which extend up to 48 months.

### Factors Affecting Results of Operations

The following key factors have affected our financial performance and are expected to impact our performance going forward.

### Sustainable Business Model

Our ability to profitably scale our business long-term is reliant on creating a transparent and sustainable ecosystem of products and services that add value for all of our stakeholders, including our consumers and merchants. We stand at the intersection of digital shopping and a need for credit for consumers who prefer to use credit alternatives other than credit cards or do not have access to traditional credit products. We provide consumers access to subscription products, short-term credit products at the point of sale, which may be free or subject to fees and/or interest, and access to interest-bearing loans with our third-party partner.

We earn fees from our merchants predominately based on a percentage of the GMV value plus a fixed fee per transaction, collectively called a “merchant processing fee.” We generally pay our merchants the full transaction value upfront, net of the merchant processing fee owed to us, and assume all costs associated with consumer payment processing, fraud, and payment default. We also earn income from partners, including interchange fees through our virtual card solution, promotional incentives with third parties, and marketing revenue earned from affiliates. Our merchants have access to a toolkit we provide that can assist in the growth of their businesses. This toolkit includes marketing placements, co-branded marketing, exclusive promotions for consumers using Sezzle, and Sezzle Capital, which facilitates access to small business loans issued by third-party lender.

### Acquisition, Monetization, and Retention of Consumers

Our ability to profitably scale our business relies on the acquisition, monetization, and retention of consumers on the Sezzle Platform. Changes in our consumer base have had, and will continue to have, an impact on our results of operations. The success of our business depends on a consumer base that actively engages with the Sezzle Platform. It is costly for us to acquire consumers; therefore, we aim to provide offerings to our consumers that keep them engaged within our ecosystem, such as our in-app product marketplace, price comparison feature, Payment Streaks, Earn tab, and Sezzle Up. High turnover in our consumer base could result in higher than anticipated overhead costs. There is a risk that we may lose consumers for a variety of reasons, including consumers shifting to competitors or other payment options, changes in the general macroeconomic climate, or changes in our underwriting.

Additionally, our results of operations are significantly impacted by our success in monetizing our consumer base who use the Sezzle Platform. A majority of our revenue is earned through consumers using the Sezzle Platform as a payment method when making purchases, especially when using the Sezzle Virtual Card, or when consumers choose to enroll in either of our optional, paid subscription services. There is a risk that we may be unable to successfully monetize consumers who actively engage with the Sezzle Platform, which could adversely impact our results of operations.

### Product Innovation

Our expanding product suite enables us to further promote our mission of financially empowering the next generation, and the adoption of these products by our consumers is expected to drive operating and financial performance.

In 2025, we launched price comparison, the Earn tab, and Sezzle Balance. Price comparison is a feature in our product marketplace that provides consumers the ability to compare the price of a product across a variety of different merchants and receive notifications if the price drops. The Earn tab allows consumers the ability to save money through coupons, discounts, and playing games. Sezzle Balance allows consumers to preload funds into a digital wallet for a simplified repayment process.

In 2026, we launched Sezzle Mobile, a mobile phone plan embedded directly within the Sezzle app that offers unlimited talk, text, and 5G data on AT&T’s network, to our consumers.

We continue to seek out new partners to adopt our existing products and strategize on new products to complement our platform and core products, which we believe will have an impact on the continued growth of our business.

### Credit Risk Management

A critical component of our business model is the ability to effectively manage the repayment risk inherent in allowing consumers to pay over time, as we absorb the costs of all credit losses on the credit we extend to our consumers. The provision for credit losses is a significant component of our operating expenses, and excessive exposure to consumer repayment failure may impact our results of operations. To that end, a team of Sezzle engineers and risk specialists oversee our proprietary systems, identify transactions with an elevated risk of fraud, assess the credit risk of the consumer, assign spending limits, and manage the ultimate receipt of funds. Because our consumers settle a portion of the purchase value upfront at the point of sale, we believe repayment risk is more limited relative to other traditional forms of unsecured consumer credit.

We believe our systems and processes are currently effective and allow for predominantly accurate, real-time decisions in connection with the consumer transaction approval process. As the availability of data on consumer repayment behavior grows, we believe we can better optimize our systems and ability to make real-time consumer repayment capability decisions over time. Optimizing repayment capacity decisions of our current and future consumer base is a critical component of our operations, and the optimization of our risk management strategy may influence both our profitability and our provision for credit losses and related charge-offs. We also have a collection strategy where we utilize third-party collection agencies, in addition to our internal collections process, which further helps us lower our loss rates and manage credit risk.

### Maintaining our Capital-Efficient Strategy

Maintaining our funding strategy and efficient use of capital is important for the ability to grow our business. We have designed a funding strategy that we believe allows us to scale our business and drive rapid growth. Due to the short-term nature of our products, we are able to recycle capital quickly and create a multiplier effect on our committed capital. We primarily rely on revolving credit facilities to fund our receivables over time, and do not currently require additional equity contributions to directly fund product growth.

### General Economic Conditions and Regulatory Climate

Our business depends on consumers transacting with merchants, which is affected by changes in general economic conditions. For example, the retail sector is affected by macroeconomic conditions such as unemployment, interest rates, consumer confidence, economic recessions, public health crises, or extended periods of uncertainty or volatility—all of which may influence consumer spending, and suppliers’ and retailers’ focus and investment in outsourcing solutions. This may subsequently impact our ability to generate income. Additionally, in weaker economic environments, consumers may have less disposable income to spend, and may be less likely to purchase products by utilizing our services. This could also cause our credit losses to increase due to consumers’ failure to repay the loans originated on the Sezzle Platform. Our industry is further impacted by numerous consumer finance and protection regulations, both domestic and international, and the prospects of new regulations, including the cost to comply with such regulations, that have an ongoing impact on our results of operations and financial performance.

### Seasonality

We experience seasonality as a result of the spending patterns of our consumers. Total revenue and GMV in the fourth quarter have historically been strongest for us, in line with consumers generally spending more during the holiday shopping season. These seasonal volumes have typically been accompanied by increased charge-offs when compared to the prior three quarters. Increased charge-offs accompanying higher seasonal volumes typically result in an increase in the provision for credit losses on an absolute basis and as a percentage of GMV.

### Key Operating Metrics

### Gross Merchandise Volume

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Gross Merchandise Volume (“GMV”) | $1,110,407 | $808,682 | $301,725 | 37.3% |

GMV is defined as the total value of sales made by merchants based on the purchase price of each confirmed sale where a consumer has selected the Sezzle Platform as the applicable payment option. GMV does not represent revenue earned by us, is neither a component of our income, nor included within our financial results prepared in accordance with U.S. GAAP. However, we believe that GMV is a useful operating metric to both us and our investors in assessing the volume of transactions that take place on the Sezzle Platform, including our Sezzle Premium and Sezzle Anywhere products, which is an indicator of the utilization and strength of the Sezzle Platform.

The increase in GMV was driven by increased usage of our subscription products and On-Demand as well as our focus on consumer acquisition, engagement, and retention through increased marketing and advertising initiatives.

### Active Consumers and Monthly On-Demand Users and Subscribers

*(in thousands, except percentages)*

|  | As of March 31, 2026 | December 31, 2025 | Change #% |  |
| --- | ---: | ---: | ---: | ---: |
| Active Consumers | 3,105 | 3,049 | 56 | 1.9% |
| Monthly On-Demand Users and Subscribers | 887 | 918 | (31) | (3.3%) |

“Active Consumers” is defined as unique consumers who have placed an order with us within the last twelve months. Monthly On-Demand Users and Subscribers (or “MODS”) is defined as unique consumers who have placed at least one On-Demand order during the month ended March 31, 2026, plus consumers with an active subscription for either Sezzle Premium or Sezzle Anywhere as of the end of the period.

As of March 31, 2026, we had 0.7 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 March 31, 2026. The increase in Active Consumers is attributed to increased marketing and advertising initiatives, as well as new product releases. The decrease in MODS is attributed to seasonality, as more consumers utilized On-Demand during the holiday season compared to the first quarter of 2026.

### Components of Results of Operations

### Total Revenue

Our total revenue is classified into three categories: transaction income, subscription revenue, and income from other sources.

#### Transaction Income

Transaction income is comprised of all income earned from merchants, consumers, and other third parties that relate to placing and processing orders on the Sezzle Platform. This includes merchant processing fees, partner income, and consumer fees.

We earn income from fees paid by merchants in exchange for our payment processing services. These merchant processing fees are applied to the underlying sales of consumers passing through our platform and are predominantly based on a percentage of the GMV plus a fixed fee per transaction. For orders that result in a financing receivable, merchant processing fees are recognized over the loan’s duration using the effective interest method. For orders that do not result in a financing receivable, merchant processing fees are recognized at the time the sale is completed and not deferred over the life of the loan.

We also earn income from partners on consumer transactions. This income includes interchange fees through our virtual card solution and promotional incentives with third parties. Virtual card interchange income related to loans we purchase is recognized at the time the underlying order is placed. Promotional incentives are recognized in the period we fulfil our contractual obligations with third-party platforms for directing traffic or volume to specific merchants or brands.

Transaction income also includes income from consumers who pay a fee to use Sezzle On-Demand, which is recognized over the loan’s duration using the effective interest method. Additionally, we earn fees from consumers when they make a scheduled payment using a card or when their payment method fails when attempting to make an installment payment. These fees are recognized at the time the fee is assessed to the extent the fee is reasonably collectible.

#### Subscription Revenue

We offer our consumers the ability to subscribe to two paid services: Sezzle Premium and Sezzle Anywhere. Sezzle Premium allows consumers to shop at select large, non-integrated premium merchants, along with other benefits, for a recurring fee. Sezzle Anywhere allows consumers to use their Sezzle Virtual Card at any merchant online or in-store, subject to certain merchant, product, goods, and service restrictions, for a recurring fee. Subscription fees are recognized straight-line over the subscription period.

#### Income from Other Sources

Income from other sources includes all other incomes earned from merchants, consumers, and other third parties not included in transaction income or subscription revenue. This includes late payment fees, reschedule fees, Sezzle Balance load fees, gateway fees, and marketing revenue earned from affiliates. Late payment fees are applied to principal installments that are delinquent, subject to regulations within specific state jurisdictions. Late payment fees are recognized at the time the fee is charged to the consumer to the extent the fee is reasonably collectible.

### Personnel

Personnel primarily comprises all compensation paid to employees, contractor payments, employer-paid payroll taxes and employee benefits, equity- and incentive-based compensation, and other employee-related expenses.

### Transaction Expense

Transaction expense primarily comprises processing fees paid to third parties to process debit, credit and ACH payments received from consumers, merchant affiliate program and partnership fees, and consumer communication costs. We incur merchant affiliate program and partnership fees when consumers make purchases with merchants who either were referred by another merchant or are associated with partner platforms with which we have a contractual agreement. We incur consumer communication costs when we notify the consumer about the transaction status and upcoming payments. Communications are primarily made via text message and email directly to the consumer.

### Third-Party Technology and Data

Third-party technology and data primarily includes cloud-based infrastructure, fraud prevention, obtaining underwriting data that resulted in failed loan applications, and consumer engagement.

### Marketing, Advertising, and Tradeshows

Marketing, advertising, and tradeshows primarily comprises costs related to marketing, sponsorships, advertising, attending tradeshows, promotions, and co-marketing the Sezzle brand with our merchants.

### General and Administrative

General and administrative expenses are primarily comprised of professional service fees, depreciation and amortization, insurance premiums, travel, meals, and entertainment costs. Professional service fees include legal, compliance, audit, tax, and consulting services to support the growth of our company.

### Provision for Credit Losses

We maintain an allowance for credit losses at a level necessary to absorb expected credit losses on notes receivable from consumers. The allowance for credit losses is determined based on our current estimate of expected credit losses over the remaining contractual term and incorporates evaluations of known and inherent risks in our portfolio, historical credit losses, and current economic conditions. In estimating the allowance for credit losses, we utilize a roll rate analysis of delinquent and current notes receivable. A roll rate analysis is a technique used to estimate the likelihood that a loan progresses through various stages of delinquency and eventually charges off. We segment our notes receivable into delinquency statuses and semi-monthly vintages for the purpose of evaluating historical performance and determining the future likelihood of default. We regularly assess the adequacy of our allowance for credit losses and adjust the allowance as necessary to reflect changes in the credit risk of our notes receivable. Any adjustment to the allowance for credit losses is recognized in net income through the provision for credit losses on our consolidated statements of operations and comprehensive income. While we believe our allowance for credit losses is appropriate based on the information available, actual losses could differ from our estimate.

### Net Interest Expense

We incur interest expense on a continuous basis as a result of draws on our revolving line of credit to fund consumer notes receivable as well as our Delayed Settlement Incentive Program, whereby merchants may delay their payments owed by us in exchange for daily incentive payments. The interest paid on borrowings under our line of credit is based on SOFR. Daily incentives paid to merchants under the Delayed Settlement Incentive Program are based on a fixed interest rate.

### Income Tax Expense

Income tax expense consists of income taxes in various jurisdictions, primarily U.S. federal and state income taxes, and also the other foreign jurisdictions in which we operate. Tax effects of transactions reported in the consolidated financial statements consist of taxes currently due. Additionally, we record deferred taxes related primarily to differences between the basis of receivables, property and equipment, equity based compensation, and accrued liabilities for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.

### Results of Operations

### Total Revenue

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Transaction income | $65,723 | $58,166 | $7,557 | 13.0% |
| Subscription revenue | 33,197 | 23,428 | 9,769 | 41.7% |
| Income from other sources | 36,619 | 23,318 | 13,301 | 57.0% |
| **Total revenue** | **$135,539** | **$104,912** | **$30,627** | **29.2%** |

For the three months ended March 31, 2026 and 2025, transaction income included merchant and partner income of $27.6 million and $23.5 million, respectively. The increase in merchant and partner income was a result of higher GMV on our virtual card products in the current period.

Transaction income also increased as a result of consumer fees, which totaled $38.1 million and $34.7 million for the three months ended March 31, 2026 and 2025, respectively. The increase in consumer fees was driven by higher fee prices in the current period, resulting in an increase of approximately $9.0 million, offset against a decrease in the number of fees charged in the current period, resulting in a decrease of approximately $5.5 million.

The increase in subscription revenue was primarily driven by the overall growth in our Active Subscribers.

The increase in income from other sources was largely derived from consumer fee income. The increase in consumer fees was primarily driven by a higher number of fees charged in the current period, contributing approximately $12.8 million of additional income. Consumer late payment fees totaled $23.1 million and $16.8 million for the three months ended March 31, 2026 and 2025, respectively. The increase in late payment fees was primarily driven by a higher number of orders becoming past due as a result of GMV growth. Increases in affiliate and advertising revenue also contributed to the increase in income from other sources.

### Personnel

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Personnel | $14,667 | $15,048 | $(381) | (2.5)% |

The decrease in personnel was a result of lower bonus expense in the current period, offset against higher contract labor. Recorded within personnel, equity based compensation totaled $1.3 million for both the three months ended March 31, 2026 and 2025.

### Transaction Expense

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Payment processing costs | $17,455 | $14,167 | $3,288 | 23.2% |
| Affiliate and partner fees | 619 | 822 | (203) | (24.7)% |
| Other transaction expense | 446 | 328 | 118 | 36.0% |
| **Transaction expense** | **$18,520** | **$15,317** | **$3,203** | **20.9%** |

The increase in payment processing costs was primarily driven by higher GMV. GMV growth outpaced the increase in payment processing expenses as a result of more efficient processing strategies in place in the current period.

Affiliate and partner fees are incurred by us when consumers make purchases with merchants who either were referred by another merchant or are associated with partner platforms with which we have contractual agreements. The decrease was from lower GMV on such partner platforms.

Other transaction expense is comprised of consumer communication costs and consumer and merchant support–related costs.

### Third-Party Technology and Data

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Third-party technology and data | $4,415 | $3,374 | $1,041 | 30.9% |

The increase in expense was driven by higher utilization of cloud-based infrastructure and other third-party services to support the scaling of the Sezzle Platform as a result of higher GMV and our expanded suite of product offerings.

### Marketing, Advertising, and Tradeshows

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Marketing, advertising, and tradeshows | $11,246 | $5,346 | $5,900 | 110.4% |

The increase in marketing, advertising, and tradeshow costs was driven by the continued expansion of initiatives to promote consumer acquisition, retention, and engagement.

### General and Administrative

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| General and administrative | $3,980 | $3,131 | $849 | 27.1% |

The increase was primarily from higher professional service fees related to the overall growth of the business.

### Provision for Credit Losses

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Provision for credit losses | $13,675 | $12,801 | $874 | 6.8% |

The increase in the provision for credit losses is primarily driven by higher GMV in the current period. GMV growth outpaced growth in the provision for credit losses primarily as a result of better expected performance on the current year portfolio compared to prior year, as well as better than originally expected performance on prior year vintages recognized in the current year.

As a percentage of total revenue, the provision for credit losses was 10.1% and 12.2% for the three months ended March 31, 2026 and 2025, respectively.

We expect that increases in GMV and revenue will likely result in higher absolute amounts of credit losses. Additionally, we expect changes in our underwriting strategy to affect the amount of credit losses as a percentage of total revenue. However, tightening or loosening our credit standards that apply to our consumers may impact both total revenue and credit losses to different extents, potentially causing changes in credit losses as a percentage of total revenue. Our underwriting strategy continues to evolve and, therefore, it is challenging to predict the effect changes in our underwriting would have on the amount of future credit losses as a percentage of total revenue.

### Net Interest Expense

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Net interest expense | $3,015 | $2,914 | $101 | 3.5% |

Net interest expense remained relatively flat, as higher outstanding borrowings on our line of credit during the three months ended March 31, 2026 were offset against higher interest income.

### Income Tax Expense

*(in thousands, except percentages)*

|  | For the three months ended March 31, 2026 | 2025 | Change $% |  |
| --- | ---: | ---: | ---: | ---: |
| Income tax expense | $14,686 | $10,842 | $3,844 | 35.5% |

Our effective income tax rate for the three months ended March 31, 2026 and 2025 was 22.3% and 23.1%, respectively. Income tax expense includes $1.7 million and $0.8 million of excess tax benefits recorded on equity based compensation for the three months ended March 31, 2026 and 2025, respectively.

We assess all relevant positive and negative evidence to determine if our existing deferred tax assets can be realized at each reporting date. As a result of the positive trends in our net income, during the three months ended March 31, 2026 and 2025 we concluded that it was more likely than not that our U.S. federal and state deferred tax assets are realizable.

### Liquidity and Capital Resources

For the three months ended March 31, 2026 and 2025, our net income was $51.3 million and $36.2 million, respectively. As of March 31, 2026, 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.

As of March 31, 2026, we had cash and cash equivalents of $120.4 million, compared to $64.1 million as of December 31, 2025. Our cash and cash equivalents were held primarily for working capital requirements and the continued investment in our business. As of March 31, 2026 and December 31, 2025, we had restricted cash of $26.9 million and $38.5 million, respectively.

As of March 31, 2026 and December 31, 2025, we had working capital of $298.6 million and $262.1 million, respectively. The increase in working capital was primarily a result of the growth in cash and cash equivalents, as well as notes receivable, net, driven by higher GMV. Additionally, as of March 31, 2026 and December 31, 2025 we had an unused borrowing capacity on our line of credit of $69.0 million and $73.5 million, respectively.

We believe that our existing cash, cash equivalents, restricted cash, our unused borrowing capacity on our line of credit, and certain cash flows from operations will be sufficient to meet our working capital and investment requirements beyond the next twelve months.

### Factors Affecting Liquidity and Capital Resources

While we believe that our business will be able to generate enough cash flow from operations and that future borrowings will be available to us in an amount sufficient to enable us to fund our liquidity needs, we cannot provide any assurance. Our ability to meet these needs depends on current economic conditions and other factors, many of which are beyond our control. Material factors that could affect our liquidity and capital resources are consumer delinquencies and defaults, declines in consumer purchases, an inability to access fundraising, macroeconomic conditions, material changes in interest rates, and instability of financial institutions. If our capital is insufficient to satisfy our liquidity requirements, we will need to seek additional equity or debt financing. In an increasing interest rate environment, our ability to raise equity or incur debt could be limited, our borrowing costs could increase, we could be subject to tighter covenants, or we could be required to pledge additional collateral as security. If we are unable to raise additional capital or generate the necessary cash flows, our results of operations and financial condition could be materially and adversely impacted.

### Cash Flows

The following table summarizes our cash flows:

*(in thousands)*

|  | For the three months ended March 31, 2026 | 2025 |
| --- | ---: | ---: |
| Net Cash Provided from Operating Activities | $88,978 | $52,479 |
| Net Cash (Used for) Provided from Investing Activities | (22,493) | 6,050 |
| Net Cash Used for Financing Activities | (21,495) | (36,114) |
| Net increase in cash, cash equivalents, and restricted cash | $44,990 | $22,415 |

### Operating Activities

Our largest source of operating cash is receipts from consumers, and our largest use of operating cash is payments to merchants. Other primary uses of cash from operating activities are for personnel, payment processing costs, and interest payments.

During the three months ended March 31, 2026, net cash provided from operating activities totaled $89.0 million, driven by our $51.3 million net income adjusted for $20.1 million of non-cash adjustments such as credit losses, equity based compensation, deferred income taxes, and depreciation and amortization, and cash inflows of $17.6 million from changes in our operating assets and liabilities. Our cash inflows from changes in our operating assets and liabilities were driven by a $15.1 million increase in other accounts payable related to the timing of payments to taxing authorities and a $6.3 million increase in accrued liabilities related to the collection of consumer down payments on unpurchased originating partner receivables. These were offset against a $5.4 million increase in our other assets related to higher delinquency fees assessed in the current period not yet collected, which resulted in decreased cash receipts from consumers, as well as timing of receipts from partners and taxing authorities. Cash inflows were also driven by a $1.3 million increase in merchant accounts payable related to the timing of payments to merchants. During the three months ended March 31, 2026, cash payments for personnel-related expenses totaled $16.9 million, cash payments for processing costs totaled $16.7 million, cash interest payments totaled $3.8 million, and cash paid for income taxes totaled $0.1 million.

During the three months ended March 31, 2025, net cash provided from operating activities totaled $52.5 million, driven by our $36.2 million net income adjusted for $22.5 million of non-cash adjustments such as deferred income taxes, credit losses, equity based compensation, and depreciation and amortization, and offset against cash outflows of $6.2 million from changes in our operating assets and liabilities. Our cash outflows from changes in our operating assets and liabilities were driven by a $3.6 million decrease in merchant accounts payable related to the timing of payments to merchants and a $0.9 million decrease in our accrued liabilities related to the timing of payments to vendors and personnel, both of which resulted in increased cash payments to third parties in the current period. Our other receivables also increased by $4.4 million related to higher delinquency fees assessed in the current period not yet collected, which resulted in decreased cash receipts from consumers in the current period. During the three months ended March 31, 2025, cash payments for personnel-related expenses totaled $18.0 million, cash payments for processing costs totaled $15.9 million, cash interest payments totaled $3.2 million, and cash paid for income taxes totaled $0.1 million.

### Investing Activities

Net cash (used for) provided from investing activities was ($22.5) million and $6.1 million for the three months ended March 31, 2026 and 2025, respectively. Cash outflows for investing activities were from purchases and originations of notes receivable, net of repayments; purchasing computer equipment; and payments of salaries to employees who create capitalized internal-use software.

### Financing Activities

Net cash used for financing activities during the three months ended March 31, 2026 and 2025 was $21.5 million and $36.1 million, respectively.

Our net cash used for financing activities during the three months ended March 31, 2026 was primarily driven by repurchases of common stock totaling $25.7 million, offset against net proceeds from our line of credit totaling $4.2 million. $24.8 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.

Our net cash used for financing activities during the three months ended March 31, 2025 was comprised of net payments to our line of credit totaling $34.2 million and repurchases of common stock totaling $2.4 million, offset against proceeds from stock option exercises totaling $0.5 million.

### Line of Credit

Refer to Note 7. Line of Credit on the accompanying Notes to the Consolidated Financial Statements for discussion about our lines of credit.

### Loan Commitments

Refer to Note 8. Commitments and Contingencies on the accompanying Notes to the Consolidated Financial Statements for discussion about our direct obligation to purchase loans from our originating partner.

### Critical Accounting Policies and Estimates

The discussion and analysis of our financial condition and results of operations are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. These principles require us to make certain estimates and judgments that affect the amounts reported in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that management believes to be reasonable. Our actual results may differ materially from our estimates because of certain accounting policies requiring significant judgment. To the extent that there are material differences between our estimates and actual results, our future consolidated financial statements will be affected.

We evaluate our significant estimates on an ongoing basis, including, but not limited to, estimates related to our allowance for credit losses. We believe this estimate has the greatest risk of affecting our consolidated financial statements; therefore, we consider this to be our critical accounting policy and estimate. Refer to Note 1. Principal Business Activity and Significant Accounting Policies within the Notes to Consolidated Financial Statements and “Critical Accounting Policies and Estimates” within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2025 Annual Report on Form 10-K for a complete discussion of our significant accounting policies and critical accounting estimates.

### New Accounting Pronouncements

Refer to Note 1. Significant Accounting Policies on the accompanying notes to our consolidated financial statements for discussion about recent accounting pronouncements.

### Off Balance Sheet Arrangements

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, that would have been established for the purpose of facilitating off balance sheet arrangements (as that term is defined in Item 303(a)(4)(ii) of Regulation S-K) or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in those types of relationships. We enter into guarantees in the ordinary course of business related to the guarantee of our performance and the performance of our subsidiaries.

## Market risk

As filed, 4,277 characters.

We are exposed to market risks during our ordinary course of business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices, interest rates, and foreign currency exchange rates. Our primary risk exposure is the result of fluctuations in interest rates and foreign currency exchange rates. Management establishes policies and programs around our investing and funding activities in order to mitigate market risks. We continuously monitor risk exposures.

#### Interest Rate Risk

We are exposed to interest rate risk primarily from our revolving line of credit. As of March 31, 2026 and December 31, 2025, we had a revolving line of credit facility of $225 million available to us. We are obligated to pay interest on borrowing under our line of credit as well as other customary fees, including an unused commitment fee. Borrowings under our line of credit bear interest at a floating rate based on the U.S. Federal Reserve’s Secured Overnight Financing Rate (“SOFR”); therefore, we are exposed to risks related to fluctuations in SOFR to the extent of our outstanding borrowings. As of March 31, 2026 and December 31, 2025, we had $145.5 million and $141.3 million, respectively, outstanding under our line of credit. For the three months ended March 31, 2026, a 100 basis point hypothetical adverse change in SOFR during the year would have resulted in an additional $0.3 million of interest expense recorded within net interest expense on our consolidated statements of operations and comprehensive income, based on actual borrowings on our line of credit during the three months ended March 31, 2026.

Interest rates may also adversely impact our consumers’ spending levels and ability to repay outstanding amounts owed to us. Higher interest rates could lead to larger payment obligations for consumers under other lenders, such as mortgages and credit cards, which may reduce our consumers’ ability to remain current on their installment plans with us. This may lead to increased delinquencies, charge-offs, and credit losses on our notes receivable, which would have an adverse effect on our net income.

#### Foreign Currency Risk

During the ordinary course of business, we enter into certain transactions denominated in the Canadian dollar, which exposes us to foreign currency exchange rate risk. We have experienced and will continue to experience fluctuations in our net income as a result of transaction gains or losses related to revaluing monetary assets and liabilities that are denominated in currencies other than the functional currency of the entities in which they are recorded. We considered historical trends in foreign currency exchange rates and concluded it was reasonably possible that a 10% change in exchange rates could occur in the near term. If a hypothetical 10% foreign currency exchange rate change was applied to total monetary assets and liabilities denominated in currencies other than the functional currency of the entities in which they were recorded at the balance sheet date, it would not have a material impact on our financial results. At this time, we have not entered into derivatives or other financial instrument transactions in an attempt to hedge our foreign currency exchange risk due to its immaterial nature. In the future, we may enter into such transactions should our exposure become more substantial.

We are also subject to foreign currency exchange risk related to translation, as a number of our subsidiaries have functional currencies other than the U.S. Dollar. Translation from these foreign currencies to the U.S. Dollar is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate for the period. Resulting translation adjustments are reported as a component of accumulated other comprehensive loss on the consolidated balance sheets. A hypothetical adverse 10% change in all of our subsidiaries’ functional currencies against the U.S. Dollar compared to the exchange rate during the three months ended March 31, 2026 and 2025 would have resulted in an additional foreign currency translation adjustment of approximately $1.5 million.

## Controls and procedures

As filed, 3,708 characters.

### Evaluation of Disclosure Controls and Procedures

As of March 31, 2026, Sezzle conducted an evaluation, under supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934, as amended (Exchange Act).

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level, due to the material weakness described in Management’s Annual Report on Internal Control over Financial Reporting as disclosed in the Company’s 2025 Form 10-K. Disclosure controls and procedures are defined by Rules 13a-15(e) and 15d-15(e) of the Exchange Act as controls and other procedures that are designed to ensure that information required to be disclosed by us in reports filed with the SEC under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed under the Exchange Act is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Management previously identified a material weakness in internal control over financial reporting as we did not design and maintain effective controls to evaluate the appropriate classification of the cash flows related to our notes receivable. This material weakness resulted in the restatement of our Consolidated Statement of Cash Flows for the year ended December 31, 2024, as well as a material misclassification of the Consolidated Statements of Cash Flows for and for the three months ended March 31, 2025 and 2024, six months ended June 30, 2025 and 2024, and nine months ended September 30, 2025 and 2024. If not remediated, this material weakness could result in misstatements of the aforementioned cash flow statements or related disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.

### Remediation Plan

To remediate the material weakness in its internal control over financial reporting related to the classification of notes receivable in our Consolidated Statements of Cash Flows, we have introduced enhancements to the design of our disclosure controls and procedures as they relate to the classification of our notes receivable.

### Changes in Internal Control Over Financial Reporting

As of March 31, 2026, our management, with the participation of our Principal Executive Officer and Principal Financial Officer, evaluated our internal control over financial reporting. Based on that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that no changes in our internal control over financial reporting occurred during the three months ended March 31, 2026 have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 170 characters.

There have been no material changes to the risk factors described in Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2025.

Filed May 7, 2026.
Source: SEC EDGAR, the filing index for accession 0001662991-26-000065. Last ingested by Listed: Nov 4, 2026, 16:35 ET. No prices; not investment advice.