Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2021 | Jul. 31, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 000-56267 | |
Entity Registrant Name | SEZZLE INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-0971660 | |
Entity Address, Address Line One | 251 N 1st Avenue | |
Entity Address, Address Line Two | Ste. 200 | |
Entity Address, City or Town | Minneapolis | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55401 | |
Country Region | +1 | |
City Area Code | 651 | |
Local Phone Number | 504 5402 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 203,031,834 | |
Entity Central Index Key | 0001662991 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Balance Sheets (un
Consolidated Balance Sheets (unaudited) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Current Assets | ||
Cash and cash equivalents | $ 58,184,476 | $ 84,285,383 |
Restricted cash, current | 1,822,467 | 4,798,520 |
Deferred origination fees, net of costs | 99,720,294 | 80,807,300 |
Other receivables, net | 1,941,455 | 1,403,306 |
Prepaid expenses and other current assets | 3,093,766 | 1,705,919 |
Total current assets | 164,762,458 | 173,000,428 |
Non-Current Assets | ||
Internally developed intangible assets, net | 738,904 | 537,046 |
Property and equipment, net | 505,308 | 375,186 |
Operating right-of-use assets | 186,251 | 145,576 |
Restricted cash, non-current | 20,000 | 20,000 |
Other assets | 42,394 | 32,537 |
Total Assets | 166,255,315 | 174,110,773 |
Current Liabilities | ||
Merchant accounts payable | 88,926,109 | 60,933,272 |
Operating lease liabilities | 142,992 | 142,743 |
Accrued liabilities | 9,687,325 | 6,680,870 |
Other payables | 2,810,124 | 615,839 |
Total current liabilities | 101,566,550 | 68,372,724 |
Long Term Liabilities | ||
Long term debt | 250,000 | 1,470,332 |
Line of credit, net of unamortized debt issuance costs of $1,468,324 and $173,773, respectively | 19,531,676 | 39,826,227 |
Other non-current liabilities | 0 | 4,483,073 |
Total Liabilities | 121,348,226 | 114,152,356 |
Stockholders' Equity | ||
Common stock, $0.00001 par value; 750,000,000 and 300,000,000 shares authorized, respectively; 198,613,882 and 197,078,709 shares issued, respectively; 198,320,795 and 196,926,674 shares outstanding, respectively | 1,978 | 1,970 |
Additional paid-in capital | 128,254,422 | 112,640,974 |
Stock subscriptions: 37,017 and 64,000 shares subscribed, respectively | (43,993) | (69,440) |
Treasury stock, at cost: 293,087 and 152,035 shares, respectively | (1,656,685) | (875,232) |
Accumulated other comprehensive income | 997,956 | 494,505 |
Accumulated deficit | (82,646,589) | (52,234,360) |
Total Stockholders' Equity | 44,907,089 | 59,958,417 |
Total Liabilities and Stockholders' Equity | $ 166,255,315 | $ 174,110,773 |
Common stock authorized (shares) | 750,000,000 | 300,000,000 |
Consolidated Statements of Fina
Consolidated Statements of Financial Position (unaudited) (Parentheticals) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Unamortized debt issuance costs | $ 1,468,324 | $ 173,773 |
Common stock par value (in usd per share) | $ 0.00001 | $ 0.00001 |
Common stock authorized (shares) | 750,000,000 | 300,000,000 |
Common stock issued (shares) | 198,613,882 | 197,078,709 |
Common stock outstanding (shares) | 198,320,795 | 196,926,674 |
Stock subscriptions (shares) | 37,017 | 64,000 |
Treasury stock at cost (shares) | 293,087 | 152,035 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income | ||||
Total income | $ 27,845,669 | $ 12,614,031 | $ 53,876,426 | $ 20,782,921 |
Operating Expenses | ||||
Personnel | 15,363,215 | 6,049,657 | 27,665,389 | 9,812,403 |
Transaction expense | 9,572,408 | 5,205,388 | 18,497,334 | 8,706,879 |
Third-party technology and data | 1,118,438 | 466,551 | 2,269,630 | 857,063 |
Marketing, advertising, and tradeshows | 1,852,240 | 546,833 | 3,376,009 | 824,548 |
General and administrative | 3,905,806 | 826,811 | 6,289,322 | 1,722,817 |
Provision for uncollectible accounts | 13,847,205 | 2,300,977 | 22,424,183 | 5,134,589 |
Total operating expenses | 45,659,312 | 15,396,217 | 80,521,867 | 27,058,299 |
Operating Loss | (17,813,643) | (2,782,186) | (26,645,441) | (6,275,378) |
Other Income (Expense) | ||||
Net interest expense | (1,226,108) | (1,048,633) | (2,579,727) | (1,855,539) |
Other income and expense, net | 3,134 | 3,475 | (53,905) | (54,011) |
Loss on extinguishment of line of credit | 0 | 0 | (1,092,679) | 0 |
Loss before taxes | (19,036,617) | (3,827,344) | (30,371,752) | (8,184,928) |
Income tax expense | 22,255 | 8,375 | 40,477 | 8,375 |
Net Loss | (19,058,872) | (3,835,719) | (30,412,229) | (8,193,303) |
Other Comprehensive Income | ||||
Foreign currency translation adjustment | 368,520 | 3,875 | 503,451 | 9,885 |
Total Comprehensive Loss | $ (18,690,352) | $ (3,831,844) | $ (29,908,778) | $ (8,183,418) |
Net Losses per Share: | ||||
Basic loss per common share (in usd per share) | $ (0.10) | $ (0.02) | $ (0.15) | $ (0.05) |
Diluted loss per common share (in usd per share) | $ (0.10) | $ (0.02) | $ (0.15) | $ (0.05) |
Net Losses per Share: | ||||
Basic weighted average shares outstanding (shares) | 197,770,409 | 179,286,985 | 197,433,425 | 179,110,131 |
Diluted weighted average shares outstanding (shares) | 197,770,409 | 179,286,985 | 197,433,425 | 179,110,131 |
Sezzle income | ||||
Income | ||||
Total income | $ 24,149,057 | $ 10,848,916 | $ 46,401,446 | $ 17,887,117 |
Account reactivation fee income | ||||
Income | ||||
Total income | $ 3,696,612 | $ 1,765,115 | $ 7,474,980 | $ 2,895,804 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders’ Equity (unaudited) - USD ($) | Total | Common Stock | Additional Paid-in Capital | Stock Subscriptions | Treasury Stock, At Cost | Accumulated Other Comprehensive Income | Accumulated Deficit |
Beginning balance (shares) at Dec. 31, 2019 | 178,931,312 | ||||||
Beginning balance at Dec. 31, 2019 | $ 27,314,316 | $ 1,789 | $ 47,154,147 | $ 0 | $ 0 | $ 0 | $ (19,841,620) |
Equity based compensation | 1,501,263 | 1,501,263 | |||||
Stock option exercises (shares) | 456,888 | ||||||
Stock option exercises | 37,105 | $ 4 | 37,101 | ||||
Restricted stock issuances and vesting of awards (shares) | 25,000 | ||||||
Restricted stock issuances and vesting of awards | 38,687 | 38,687 | |||||
Stock subscriptions receivable related to stock option exercises (shares) | 180,416 | ||||||
Stock subscriptions receivable related to stock option exercises | 0 | $ 2 | 8,473 | (8,475) | |||
Stock subscriptions collected related to stock option exercises | 8,475 | 8,475 | |||||
Repurchase of common stock (shares) | (343,750) | ||||||
Repurchase of common stock | (2,234) | $ (3) | (2,231) | ||||
Foreign currency translation adjustment | 9,885 | 9,885 | |||||
Net Loss | (8,193,303) | (8,193,303) | |||||
Ending balance (shares) at Jun. 30, 2020 | 179,249,866 | ||||||
Ending balance at Jun. 30, 2020 | 20,714,194 | $ 1,792 | 48,737,440 | 0 | 0 | 9,885 | (28,034,923) |
Beginning balance (shares) at Mar. 31, 2020 | 179,111,728 | ||||||
Beginning balance at Mar. 31, 2020 | 23,571,265 | $ 1,791 | 47,771,143 | (8,475) | 0 | 6,010 | (24,199,204) |
Equity based compensation | 892,740 | 892,740 | |||||
Stock option exercises (shares) | 456,888 | ||||||
Stock option exercises | 37,105 | $ 4 | 37,101 | ||||
Restricted stock issuances and vesting of awards (shares) | 25,000 | ||||||
Restricted stock issuances and vesting of awards | 38,687 | 38,687 | |||||
Stock subscriptions collected related to stock option exercises | 8,475 | 8,475 | |||||
Repurchase of common stock (shares) | (343,750) | ||||||
Repurchase of common stock | (2,234) | $ (3) | (2,231) | ||||
Foreign currency translation adjustment | 3,875 | 3,875 | |||||
Net Loss | (3,835,719) | (3,835,719) | |||||
Ending balance (shares) at Jun. 30, 2020 | 179,249,866 | ||||||
Ending balance at Jun. 30, 2020 | 20,714,194 | $ 1,792 | 48,737,440 | 0 | 0 | 9,885 | (28,034,923) |
Beginning balance (shares) at Dec. 31, 2020 | 196,926,674 | ||||||
Beginning balance at Dec. 31, 2020 | 59,958,417 | $ 1,970 | 112,640,974 | (69,440) | (875,232) | 494,505 | (52,234,360) |
Equity based compensation | 4,513,291 | 4,513,291 | |||||
Stock option exercises (shares) | 817,300 | ||||||
Stock option exercises | 251,421 | $ 8 | 251,413 | ||||
Restricted stock issuances and vesting of awards (shares) | 624,606 | ||||||
Restricted stock issuances and vesting of awards | 1,449,791 | 1,449,791 | |||||
Conversion of liability-classified incentive awards to stockholder's equity | 9,293,035 | 9,293,035 | |||||
Stock subscriptions receivable related to stock option exercises (shares) | 93,267 | ||||||
Stock subscriptions receivable related to stock option exercises | 0 | $ 0 | 105,918 | (105,918) | |||
Stock subscriptions collected related to stock option exercises | 131,365 | 131,365 | |||||
Repurchase of common stock (shares) | (141,052) | ||||||
Repurchase of common stock | (781,453) | (781,453) | |||||
Foreign currency translation adjustment | 503,451 | 503,451 | |||||
Net Loss | (30,412,229) | (30,412,229) | |||||
Ending balance (shares) at Jun. 30, 2021 | 198,320,795 | ||||||
Ending balance at Jun. 30, 2021 | 44,907,089 | $ 1,978 | 128,254,422 | (43,993) | (1,656,685) | 997,956 | (82,646,589) |
Beginning balance (shares) at Mar. 31, 2021 | 197,392,208 | ||||||
Beginning balance at Mar. 31, 2021 | 51,129,281 | $ 1,972 | 115,430,181 | (61,925) | (1,282,666) | 629,436 | (63,587,717) |
Equity based compensation | 2,329,702 | 2,329,702 | |||||
Stock option exercises (shares) | 614,950 | ||||||
Stock option exercises | 180,837 | $ 6 | 180,831 | ||||
Restricted stock issuances and vesting of awards (shares) | 333,617 | ||||||
Restricted stock issuances and vesting of awards | 976,680 | 976,680 | |||||
Conversion of liability-classified incentive awards to stockholder's equity | 9,293,035 | 9,293,035 | |||||
Stock subscriptions receivable related to stock option exercises (shares) | 37,017 | ||||||
Stock subscriptions receivable related to stock option exercises | 0 | $ 0 | 43,993 | (43,993) | |||
Stock subscriptions collected related to stock option exercises | 61,925 | 61,925 | |||||
Repurchase of common stock (shares) | (56,997) | ||||||
Repurchase of common stock | (374,019) | (374,019) | |||||
Foreign currency translation adjustment | 368,520 | 368,520 | |||||
Net Loss | (19,058,872) | (19,058,872) | |||||
Ending balance (shares) at Jun. 30, 2021 | 198,320,795 | ||||||
Ending balance at Jun. 30, 2021 | $ 44,907,089 | $ 1,978 | $ 128,254,422 | $ (43,993) | $ (1,656,685) | $ 997,956 | $ (82,646,589) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Operating Activities: | |||||
Net Loss | $ (19,058,872) | $ (3,835,719) | $ (30,412,229) | $ (8,193,303) | |
Adjustments to reconcile net loss to net cash (used for) provided from operating activities: | |||||
Depreciation and amortization | 339,060 | 184,638 | |||
Provision for uncollectible accounts | 13,847,205 | 2,300,977 | 22,424,183 | 5,134,589 | $ 19,587,918 |
Provision for other uncollectible receivables | 2,505,818 | 931,549 | |||
Equity based compensation and restricted stock vested | 5,963,082 | 1,539,950 | |||
Amortization of debt issuance costs | 310,475 | 208,527 | |||
Impairment losses on long-lived assets | 0 | 5,287 | |||
Loss on extinguishment of line of credit | 0 | 0 | 1,092,679 | 0 | |
Changes in operating assets and liabilities: | |||||
Notes receivable | (41,177,192) | (24,598,927) | |||
Other receivables | (3,043,228) | (939,749) | |||
Prepaid expenses and other assets | (1,394,247) | 65,510 | |||
Merchant accounts payable | 27,836,978 | 25,908,695 | |||
Other payables | 2,197,599 | 198,454 | |||
Accrued liabilities | 7,806,819 | 2,110,300 | |||
Operating leases | (40,496) | (28,149) | |||
Net Cash (Used for) Provided from Operating Activities | (5,590,699) | 2,527,371 | |||
Investing Activities: | |||||
Purchase of property and equipment | (308,873) | (71,328) | |||
Internally developed intangible asset additions | (363,419) | (174,723) | |||
Net Cash Used for Investing Activities | (672,292) | (246,051) | |||
Financing Activities: | |||||
Proceeds from long term debt | 0 | 1,220,332 | |||
Payments on long term debt | (1,220,332) | 0 | |||
Proceeds from line of credit | 26,666,667 | 27,650,000 | |||
Payments to line of credit | (45,666,667) | (12,100,000) | |||
Payments of debt issuance costs | (1,697,705) | 0 | |||
Payment of debt extinguishment costs | (1,000,000) | 0 | |||
Proceeds from stock option exercises | 251,421 | 37,105 | |||
Stock subscriptions collected related to stock option exercises | 131,365 | 8,475 | |||
Repurchase of common stock | (781,453) | (2,234) | |||
Net Cash (Used for) Provided from Financing Activities | (23,316,704) | 16,813,678 | |||
Effect of exchange rate changes on cash | 502,735 | 13,509 | |||
Net (decrease) increase in cash, cash equivalents, and restricted cash | (29,579,695) | 19,094,998 | |||
Cash, cash equivalents, and restricted cash, beginning of year | 89,103,903 | 36,624,618 | 36,624,618 | ||
Cash, cash equivalents, and restricted cash, end of period | $ 60,026,943 | $ 55,733,125 | 60,026,943 | 55,733,125 | $ 89,103,903 |
Noncash investing and finance activities: | |||||
Lease liabilities arising from obtaining right-of-use assets | 142,597 | 0 | |||
Conversion of long-term incentive compensation from liability to equity | 9,293,035 | 0 | |||
Supplementary disclosures: | |||||
Interest paid | 2,579,591 | 1,653,730 | |||
Income taxes paid | $ 4,575 | $ 0 |
Significant Accounting Policies
Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies These unaudited consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) applicable to interim financial statements. While these consolidated financial statements and the accompanying notes thereof reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These consolidated financial statements and their accompanying notes should be read in conjunction with the consolidated financial statement disclosures in our 2020 annual consolidated financial statements. Operating results reported for the three and six months ended June 30, 2021 might not be indicative of the results for any subsequent period or the entire year ending December 31, 2021. Sezzle Inc. (the “Company” or “Sezzle”) uses the same accounting policies in preparing quarterly and annual consolidated financial statements. The consolidated financial statements include all the accounts and activities of Sezzle Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions are eliminated during consolidation. Sezzle operates as a single segment that consists primarily of lending to consumers located in the United States and Canada who purchase goods from its affiliated merchants. The Company currently has startup operations in India and Europe. While distinct geographic locations, the operations in both countries are still in an early growth stage. Sezzle’s income and assets are primarily related to operations in North America. None of the recent accounting pronouncements issued by the Financial Accounting Standards Board during the six months ended June 30, 2021 are within scope for the Company; therefore, it does not expect any of the recent accounting pronouncements issued to have a material effect on the Company’s consolidated financial statements. The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet as of June 30, 2021 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued. Certain prior period amounts have been reclassified to conform with the current period presentation format. Notably, (a) balances previously reported as ‘Cost of income’ are now classified as ‘Transaction expenses’ and reported within operating expenses, (b) the Company has removed Gross profit from the consolidated statements of operations and comprehensive loss, and (c) the Company has disaggregated selling, general, and administrative expenses to reflect the primary components included within this line item, including: Personnel; Third-party technology and data; Marketing, advertising, and tradeshows; and General and administrative. These reclassifications had no effect on operating loss or total comprehensive loss. The components of operating expenses are comprised of the following: • Personnel includes all salaries and wages paid to employees, contractor payments, payroll taxes, employee benefits, and stock and incentive–based compensation; • 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. Sezzle incurs merchant affiliate program and partnership fees when consumers make purchases with merchants that either were referred by another merchant or are associated with partner platforms with which Sezzle has a contractual agreement. Sezzle incurs customer communication costs when Sezzle notifies the consumer about the transaction status and upcoming payments. Communications are primarily made via text message directly to the consumer; • Third-party technology and data primarily includes costs incurred related to fraud prevention, other cloud-based computing services, and costs of failed loan applications. Underwriting costs incurred that result in successfully originated loans are an element of Sezzle Income and recognized as a reduction of the overall income and, therefore, these costs are not included in third-party technology and data; • Marketing, advertising, and tradeshows includes costs related to marketing, sponsorships, advertising, attending tradeshows, promotional product expenses, and costs to co-market Sezzle’s brand with its merchants; • General and administrative primarily includes legal, compliance, audit, tax, and other consultation costs; third-party implementation fees; and charitable contributions; and • Provision for uncollectible accounts on notes receivable is calculated on an expected-loss basis. Sezzle maintains an allowance for uncollectible accounts at a level necessary to absorb estimated probable losses on principal and reschedule fee receivables from consumers. Any amounts delinquent after 90 days are charged-off with an offsetting reversal of the allowance for doubtful accounts through the provision for uncollectible accounts. Additionally, amounts identified as no longer collectible—such as when a consumer becomes deceased or bankrupt—are charged off immediately. Sezzle uses its judgment to evaluate the allowance for uncollectible accounts based on current economic conditions and historical performance of consumer payments. |
Fair Value
Fair Value | 6 Months Ended |
Jun. 30, 2021 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value Fair values are based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (i.e. an exit price). Fair value measurements are reported in one of three levels reflecting the valuation techniques used to determine fair value. The three levels of the fair value hierarchy are as follows: • Level 1 - Unadjusted quoted prices for identical assets or liabilities in active markets; • Level 2 - Inputs other than quoted prices in active markets for identical assets and liabilities that are observable either directly or indirectly for substantially the full term of the asset or liability; and • Level 3 - Unobservable inputs for the asset or liability, which include management’s own assumption about the assumptions market participants would use in pricing the asset or liability, including assumptions about risk. The Company measures the value of its money market securities on a regular basis. The fair value of its money market securities, totaling $2,000,019 and $9,996,155 as of June 30, 2021 and December 31, 2020, respectively, are based on Level 1 inputs and are included within cash and cash equivalents on the consolidated balance sheets. |
Total Income
Total Income | 6 Months Ended |
Jun. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Total Income | Total Income Sezzle Income Sezzle receives its income primarily from fees paid by merchants in exchange for Sezzle’s payment processing services. These fees are applied to the underlying sales to consumers passing through the Company’s platform and are predominantly based on a percentage of the consumer order value plus a fixed fee per transaction. Consumer installment payment plans typically consist of four installments, with the first payment made at the time of purchase and subsequent payments coming due every two weeks thereafter. Additionally, consumers may reschedule their initial installment plan by delaying payment for up to two weeks, for which Sezzle earns a rescheduled payment fee. The total of merchant fees and rescheduled payment fees, less note origination costs, are collectively referred to as Sezzle income within the consolidated statements of operations and comprehensive loss. Note origination costs are comprised of costs paid to third-parties to obtain data for underwriting consumers which result in a successful transaction. Such costs which result in a declined order are recorded in third-party technology and data within operating expenses in the consolidated statements of operations and comprehensive loss. Sezzle income is initially recorded as a reduction to notes receivable, net, within the consolidated balance sheets. Sezzle income is then recognized over the average duration of the note using the effective interest rate method. Total Sezzle income to be recognized over the duration of existing notes receivable outstanding was $4,356,929 and $3,458,222 as of June 30, 2021 and December 31, 2020, respectively. Total Sezzle income recognized was $46,401,446 and $17,887,117 for the six months ended June 30, 2021 and 2020, respectively, and $24,149,057 and $10,848,916 for the three months ended June 30, 2021 and 2020, respectively. Account Reactivation Fee Income Sezzle also earns income from consumers in the form of account reactivation fees. These fees are assessed to consumers who fail to make a timely payment. Sezzle allows a 48-hour waiver period where fees are dismissed if the installment is paid by the consumer. Account reactivation fees are recognized at the time the fee is charged to the consumer, less an allowance for uncollectible amounts. Account reactivation fee income recognized totaled $7,474,980 and $2,895,804 for the six months ended June 30, 2021 and 2020, respectively, and $3,696,612 and $1,765,115 for the three months ended June 30, 2021 and 2020, respectively. |
Notes Receivable
Notes Receivable | 6 Months Ended |
Jun. 30, 2021 | |
Receivables [Abstract] | |
Notes Receivable | Notes Receivable Sezzle’s notes receivable comprise outstanding consumer principal and account reschedule fees that Sezzle reasonably expects to collect from its consumers. As of June 30, 2021 and December 31, 2020, Sezzle’s notes receivable, related allowance for uncollectible accounts, and deferred net origination fees are recorded within the consolidated balance sheets as follows: As of June 30, 2021 December 31, 2020 Notes receivable, gross $ 120,548,203 $ 95,398,668 Less allowance for uncollectible accounts: Balance at beginning of year (11,133,146) (3,461,837) Provision (22,424,183) (19,587,918) Charge-offs, net of recoveries totaling $1,220,773 and $648,799, respectively 17,086,349 11,916,609 Total allowance for uncollectible accounts (16,470,980) (11,133,146) Notes receivable, net of allowance 104,077,223 84,265,522 Deferred origination fees, net of costs (4,356,929) (3,458,222) Notes receivable, net $ 99,720,294 $ 80,807,300 Sezzle maintains an allowance for uncollectible accounts at a level necessary to absorb estimated probable losses on principal and reschedule fee receivables from consumers. Any amounts delinquent after 90 days are charged-off with an offsetting reversal of the allowance for doubtful accounts through the provision for uncollectible accounts. Additionally, amounts identified as no longer collectible—such as when a consumer becomes deceased or bankrupt—are charged off immediately. Principal payments recovered after the 90 day charge-off period are recognized as a reduction to the allowance for uncollectible accounts in the period the receivable is recovered. Sezzle has not changed the methodology for estimating its allowance for uncollectible accounts during the six months ended June 30, 2021. The following table summarizes Sezzle’s gross notes receivable and related allowance for uncollectible accounts as of June 30, 2021 and December 31, 2020: As of June 30, 2021 December 31, 2020 Gross Receivables Less Allowance Net Receivables Gross Receivables Less Allowance Net Receivables Current $ 97,958,633 $ (3,394,809) $ 94,563,824 $ 79,673,073 $ (2,692,254) $ 76,980,819 Days past due: 1–28 11,447,731 (4,294,204) 7,153,527 9,574,902 (3,616,327) 5,958,575 29–56 5,540,414 (3,954,254) 1,586,160 3,576,255 (2,646,627) 929,628 57–90 5,601,425 (4,827,713) 773,712 2,574,438 (2,177,938) 396,500 Total $ 120,548,203 $ (16,470,980) $ 104,077,223 $ 95,398,668 $ (11,133,146) $ 84,265,522 Deferred origination fees, net of costs are comprised of unrecognized merchant fees and consumer reschedule fees net of direct note origination costs, which are recognized over the duration of the note with the consumer and are recorded as an offset to Sezzle income on the consolidated statements of operations and comprehensive loss. Sezzle’s notes receivable had a weighted average days outstanding of 34 days, consistent with the prior year’s duration. |
Other Receivables
Other Receivables | 6 Months Ended |
Jun. 30, 2021 | |
Receivables [Abstract] | |
Other Receivables | Other Receivables As of June 30, 2021 and December 31, 2020, the balance of other receivables, net, on the consolidated balance sheets is comprised of the following: As of June 30, 2021 December 31, 2020 Account reactivation fees receivable, net $ 1,264,720 $ 804,060 Receivables from merchants 676,735 599,246 Other receivables, net $ 1,941,455 $ 1,403,306 Account reactivation fees receivable, net, is comprised of outstanding account reactivation fees that Sezzle reasonably expects to collect from its consumers. As of June 30, 2021 and December 31, 2020, Sezzle’s account reactivation fees receivable and related allowance for uncollectible accounts are recorded within the consolidated balance sheets as follows: As of June 30, 2021 December 31, 2020 Account reactivation fees receivable, gross $ 2,419,001 $ 1,875,648 Less allowance for uncollectible accounts: Balance at start of period (1,071,588) (483,518) Provision (2,050,636) (2,347,733) Charge-offs, net of recoveries totaling $291,478 and $71,110, respectively 1,967,943 1,759,663 Total allowance for uncollectible accounts (1,154,281) (1,071,588) Account reactivation fees receivable, net $ 1,264,720 $ 804,060 Sezzle maintains the allowance at a level necessary to absorb estimated probable losses on consumer account reactivation fee receivables. Any amounts delinquent after 90 days are charged-off with an offsetting reversal of the allowance for doubtful accounts through the provision for uncollectible accounts. Additionally, amounts identified as no longer collectible—such as when a consumer becomes deceased or bankrupt—are charged off immediately. Payments recovered after the 90 day charge-off period are recognized as a reduction to the allowance for uncollectible accounts in the period the receivable is recovered. Sezzle has not changed the methodology for estimating its allowance for uncollectible accounts during the six months ended June 30, 2021. Receivables from merchants primarily represent merchant fees charged, but not yet paid, to the Company. Additionally, during the six months ended June 30, 2021 and 2020, the Company recorded direct write-downs of $455,182 and $164,313, respectively, for uncollectible receivables from merchants, which is included in the provision for uncollectible other receivables. Such write-downs for the three months ended June 30, 2021 and 2020 were $110,546 and $145,399, respectively. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Leases | Leases Sezzle is currently entered into operating leases for its corporate office spaces in the United States and Canada. Total lease expense incurred for the six months ended June 30, 2021 and 2020 was $275,427 and $186,969, respectively. Total lease expense incurred for the three months ended June 30, 2021 and 2020 was $138,246 and $88,193, respectively. Lease expense is recognized within general and administrative expenses on the consolidated statements of operations and comprehensive loss. During the six months ended June 30, 2021, Sezzle renewed a portion of its operating leases in the United States and Canada, which it had previously determined it was unlikely to renew. As a result, Sezzle recorded an increase in its operating right-of-use assets and its corresponding lease liabilities of $142,597. The expected maturity of the Company’s operating leases as of June 30, 2021 is as follows: 2021 $ 77,008 2022 70,388 Interest (4,404) Present value of lease liabilities $ 142,992 The weighted average remaining term of the Company’s operating leases is 1.0 years and its weighted average discount rate for all operating leases is 4.75%. As of June 30, 2021, Sezzle has not entered into any lease agreements that contain residual value guarantees or financial covenants. |
Internally Developed Intangible
Internally Developed Intangible Assets, Property, and Equipment | 6 Months Ended |
Jun. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Internally Developed Intangible Assets, Property, and Equipment | Internally Developed Intangible Assets, Property, and EquipmentThe Company reviews the carrying value of long-lived assets, which includes property, equipment, and internally developed intangible assets, for impairment whenever events and circumstances indicate that the assets’ carrying value may not be recoverable from the future cash flows expected to result from its use and eventual disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of assets. The factors considered by management in performing this assessment include current operating results, trends, and prospects; the manner in which the asset is used; and the effects of obsolescence, demand, competition, and other economic factors. No such impairment losses were incurred during the three and six months ended June 30, 2021 and 2020. |
Merchant Accounts Payable
Merchant Accounts Payable | 6 Months Ended |
Jun. 30, 2021 | |
Payables and Accruals [Abstract] | |
Merchant Accounts Payable | Merchant Accounts Payable Sezzle offers its merchants an interest bearing program in which merchants may defer payment from the Company in exchange for interest. Merchant accounts payable in total were $88,926,109 and $60,933,272 as of June 30, 2021 and December 31, 2020, respectively, as disclosed in the consolidated balance sheets. Of these amounts, $78,970,860 and $53,528,501 were recorded within the merchant interest program balance as of June 30, 2021 and December 31, 2020, respectively. Deferred payments retained in the program bear interest at the LIBOR daily (3 month) rate plus three percent (3.0%) on an annual basis, compounding daily. The weighted average annual percentage yield was 3.26% and 6.85% for the six months ended June 30, 2021 and 2020, respectively, and 3.24% and 6.27% for the three months ended June 30, 2021 and 2020, respectively. Interest expense associated with the program totaled $1,046,067 and $621,196 for the six months ended June 30, 2021 and 2020, respectively, and $583,332 and $379,462 for the three months ended June 30, 2021 and 2020, respectively. Deferred payments are due on demand, up to $250,000 during any seven day period, at the request of the merchant. Any request larger than $250,000 is honored after 7 days. Sezzle reserves the right to impose additional limits on the program and make changes to the program without notice or limits. These limits and changes to the program can include but are not limited to: maximum balances, withdrawal amount limits, and withdrawal frequency. |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Line of Credit | Line of Credit On February 10, 2021, Sezzle entered into an agreement with Goldman Sachs Bank USA (the ‘Class A’ senior lender) and Bastion Funding IV LLC (the ‘Class B’ mezzanine lender) for a $250,000,000 receivables funding facility. The funding facility has a maturity date of June 12, 2023 (a 28-month term from the agreement date). Fifty percent of the total available funding facility ($125,000,000) is committed while the remaining fifty percent is available to the Company for expanding its funding capacity. The loan agreement is subject to both affirmative and negative covenants. The Company had an outstanding line of credit balance of $21,000,000 as of June 30, 2021 and is recorded within line of credit, net, as a non-current liability on the consolidated balance sheets. The agreement is secured by the Company’s consumer notes receivable it chooses to pledge. Borrowings are generally based on 90% of eligible notes receivable pledged, or 85% if the weighted average FICO scores of the pledged receivables fall below 580. Eligible notes receivable are defined as notes receivable from consumers in the United States or Canada that are less than 15 days past due. As of June 30, 2021, Sezzle had pledged $116,283,313 of its notes receivable. Sezzle had an unused borrowing capacity of $56,763,483 as of June 30, 2021. The funding facility carries an interest rate of 3-month LIBOR+3.375% and 3-month LIBOR+10.689% (the LIBOR floor rate is set at 0.25%) for funds borrowed from the Class A and Class B lender, respectively. As of June 30, 2021, the weighted average interest rate was 5.250%. Interest on borrowings is due on collection dates as specified in the loan agreement, typically fortnightly. For the three and six months ended June 30, 2021, interest expense relating to the utilization of the line of credit was $318,083 and $987,331, respectively. Additionally, any unused daily amounts incur a facility fee at a rate of .50% per annum until May 11, 2021. Beginning May 11, 2021, the facility fee rate becomes variable, dependent on the percentage of the line of credit utilized. If less than one-third of the facility is used, the rate is .65% per annum; if between one-third and two-thirds of the facility is used, the rate is .50% per annum; and if more than two-thirds of the facility is used, the rate is .35% per annum. In the event of a prepayment due to a broadly marketed and distributed securitization transaction with a party external to the agreement, an exit fee of 0.75% of such prepaid balance will be due to the lender upon such transaction. Additionally, the Company paid a $1,000,000 termination fee to exit its previous loan agreement. |
Long Term Debt
Long Term Debt | 6 Months Ended |
Jun. 30, 2021 | |
Debt Disclosure [Abstract] | |
Long Term Debt | Long Term Debt On April 14, 2020, the Company received loan proceeds in the amount of $1,220,332 under the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The PPP, established as part of the CARES Act, provides loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. PPP loans are uncollateralized and guaranteed by the SBA, and are forgivable after a “covered period” (eight or twenty-four weeks) as long as the borrower maintains its payroll levels and uses the loan proceeds for eligible expenses, including payroll, benefits, rent, and utilities. The forgiveness amount will be reduced if the borrower terminates employees or reduces salaries and wages more than 25% during the covered period. Any unforgiven portion of the PPP loan is payable over two years at an interest rate of 1% with payments deferred until the SBA remits the borrower’s loan forgiveness amount to the lender, or, if the borrower does not apply for forgiveness, ten months after the end of the covered period. PPP loan terms provide for customary events of default including payment defaults, breaches of representations and warranties, and insolvency events and may be accelerated upon the occurrence of one or more of these events of default. Additionally, the PPP loan terms do not include prepayment penalties. On June 24, 2021, the Company repaid the loan in full, comprising $1,220,332 in principal and $14,779 in accrued interest. The SBA reserves the right to audit any PPP loan, regardless of size. These audits may occur after forgiveness has been granted or the loan has been repaid in full. In accordance with the CARES Act, all borrowers are required to maintain their PPP loan documentation for six years after the PPP loan was forgiven or repaid in full and to provide that documentation to the SBA upon request. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Merchant Contract Obligations The Company has entered into several agreements with third-parties in which Sezzle will reimburse these third-parties for co-branded marketing and advertising costs. During the three and six months ended June 30, 2021, the Company entered into agreements that stipulate that Sezzle will commit to spend up to approximately $35 million in marketing and advertising spend. Certain agreements also contain provisions that may require payments by the Company and are contingent on Sezzle and/or the third party meeting specified criteria, such as achieving volume targets and implementation benchmarks. Expenses incurred relating to these agreements totaled $2,459,562 and $333,566 for the six months ended June 30, 2021 and 2020, respectively, and $1,353,626 and $325,743 for the three months ended June 30, 2021 and 2020, respectively. These expenses are included within marketing, advertising, and tradeshows expenses in the consolidated statements of operations and comprehensive loss. Sezzle had approximately $231,000 and $211,000 recorded as a prepaid expense in the consolidated balance sheets as of June 30, 2021 and December 31, 2020, respectively. |
Short and Long-Term Incentive P
Short and Long-Term Incentive Plans | 6 Months Ended |
Jun. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Short and Long-Term Incentive Plans | Short and Long–Term Incentive Plans In May 2020, the Company adopted a short-term incentive compensation program for its employees and executives. The program is based on achievements where individuals will be compensated for Company-wide and individual and/or team performance for the fiscal year. Measurement of compensable amounts is determined at the end of the year and payouts to individuals will be made in the form of restricted stock units in the following year. As of June 30, 2021, the Company has accrued a total of $3,508,023 for this program, compared to $2,133,806 as of December 31, 2020, which is recorded in accrued liabilities on the consolidated balance sheets. The Company also adopted a long-term incentive plan (LTIP) for its executive team in May 2020. The LTIP comprises grants of market priced stock options under the 2019 Equity Incentive Plan, with vesting subject to required levels of Comparative Total Shareholder Return (TSR) tested over three years, and subject to continued employment for a three-year period ending January 1, 2023. Both the market and service vesting conditions must be met in order for the grantee to vest at the end of the three year measurement period. Each of the executive and designated senior officers of the Company was awarded a long term incentive stock option grant to purchase shares on May 22, 2020. The stock options have an exercise price of A$2.10 per share, based on the closing sale price of CHESS Depository Interests (CDIs) on the Australian Securities Exchange (ASX) on May 21, 2020, the trading day prior to the date of grant. The amount of each award is equal to 300% of the individual’s salary in effect as of May 22, 2020 (100% for each of the three years in the performance period and pro-rated for start date). The Company’s stock price performance will be measured based on its volume weighted average price relative to other companies included within the S&P/ASX All Technology Index. The number of long term incentive stock option grants were calculated based on a fair value of $0.64 per option, determined under the Monte Carlo Simulation valuation method. Total expense recognized related to compensation under the LTIP program was $2,612,089 and $4,857,121 for the three and six months ended June 30, 2021, respectively, and $575,000 for the three and six months ended June 30, 2020. The compensable amounts under the LTIP to executive board members are subject to shareholder approval. On June 10, 2021, the Company received shareholder approval to grant the LTIP awards to executive board members. Upon this approval, the Company remeasured the fair value of the awards and reclassified the awards from other long-term liabilities to stockholder’s equity. The total fair value reclassified from liability to stockholder’s equity was $9,293,035 as of June 10, 2021. |
Net Loss Per Share
Net Loss Per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per ShareThe computation for basic net loss per share is established by dividing net losses for the period by the weighted average shares outstanding during the reporting period, including repurchases carried as treasury stock. Diluted net loss per share is computed in a similar manner, with the weighted average shares outstanding increasing from the assumed exercise of employee stock options (including options classified as liabilities) and assumed vesting of restricted stock units (if dilutive). Given the Company is in a loss position, the impact of including assumed exercises of stock options and vesting of restricted stock units would have an anti-dilutive impact on the calculation of diluted net loss per share and, accordingly, diluted and basic net loss per share were equal for the three and six months ended June 30, 2021 and 2020. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent EventsOn July 14, 2021, Sezzle agreed to issue Discover Financial Services LLC (“Discover”) $30,000,000 of the Company’s common stock at a price of $6.58 per share (A$8.83), which was completed on July 19, 2021. The Company and Discover are finalizing a definitive commercial agreement, in which the parties propose to enter into an expanded partnership, including plans for a buy now, pay later network solution on the Discover Global Network, as well as a dedicated referral program introducing Discover credit and debit products to the Company’s consumer base. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of accounting | These unaudited consolidated financial statements are prepared and presented in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and the rules and regulations of the Securities and Exchange Commission (SEC) applicable to interim financial statements. While these consolidated financial statements and the accompanying notes thereof reflect all normal recurring adjustments that are, in the opinion of management, necessary for fair presentation of the results of the interim period, they do not include all of the information and footnotes required by U.S. GAAP for complete consolidated financial statements. These consolidated financial statements and their accompanying notes should be read in conjunction with the consolidated financial statement disclosures in our 2020 annual consolidated financial statements. Operating results reported for the three and six months ended June 30, 2021 might not be indicative of the results for any subsequent period or the entire year ending December 31, 2021. Sezzle Inc. (the “Company” or “Sezzle”) uses the same accounting policies in preparing quarterly and annual consolidated financial statements. |
Consolidation | The consolidated financial statements include all the accounts and activities of Sezzle Inc. and its wholly-owned subsidiaries. All significant intercompany balances and transactions are eliminated during consolidation. |
Segment reporting | Sezzle operates as a single segment that consists primarily of lending to consumers located in the United States and Canada who purchase goods from its affiliated merchants. The Company currently has startup operations in India and Europe. While distinct geographic locations, the operations in both countries are still in an early growth stage. Sezzle’s income and assets are primarily related to operations in North America. |
Recent accounting pronouncements | None of the recent accounting pronouncements issued by the Financial Accounting Standards Board during the six months ended June 30, 2021 are within scope for the Company; therefore, it does not expect any of the recent accounting pronouncements issued to have a material effect on the Company’s consolidated financial statements. |
Subsequent events and transactions | The Company has evaluated events and transactions occurring subsequent to the consolidated balance sheet as of June 30, 2021 for items that should potentially be recognized or disclosed in these consolidated financial statements. The evaluation was conducted through the date these consolidated financial statements were issued. |
Reclassification and comparability | Certain prior period amounts have been reclassified to conform with the current period presentation format. Notably, (a) balances previously reported as ‘Cost of income’ are now classified as ‘Transaction expenses’ and reported within operating expenses, (b) the Company has removed Gross profit from the consolidated statements of operations and comprehensive loss, and (c) the Company has disaggregated selling, general, and administrative expenses to reflect the primary components included within this line item, including: Personnel; Third-party technology and data; Marketing, advertising, and tradeshows; and General and administrative. These reclassifications had no effect on operating loss or total comprehensive loss. |
Allowance for uncollectible accounts | Sezzle maintains an allowance for uncollectible accounts at a level necessary to absorb estimated probable losses on principal and reschedule fee receivables from consumers. Any amounts delinquent after 90 days are charged-off with an offsetting reversal of the allowance for doubtful accounts through the provision for uncollectible accounts. Additionally, amounts identified as no longer collectible—such as when a consumer becomes deceased or bankrupt—are charged off immediately. Principal payments recovered after the 90 day charge-off period are recognized as a reduction to the allowance for uncollectible accounts in the period the receivable is recovered. Sezzle has not changed the methodology for estimating its allowance for uncollectible accounts during the six months ended June 30, 2021. |
Notes Receivable (Tables)
Notes Receivable (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Receivables [Abstract] | |
Schedule of Notes Receivable | As of June 30, 2021 and December 31, 2020, Sezzle’s notes receivable, related allowance for uncollectible accounts, and deferred net origination fees are recorded within the consolidated balance sheets as follows: As of June 30, 2021 December 31, 2020 Notes receivable, gross $ 120,548,203 $ 95,398,668 Less allowance for uncollectible accounts: Balance at beginning of year (11,133,146) (3,461,837) Provision (22,424,183) (19,587,918) Charge-offs, net of recoveries totaling $1,220,773 and $648,799, respectively 17,086,349 11,916,609 Total allowance for uncollectible accounts (16,470,980) (11,133,146) Notes receivable, net of allowance 104,077,223 84,265,522 Deferred origination fees, net of costs (4,356,929) (3,458,222) Notes receivable, net $ 99,720,294 $ 80,807,300 As of June 30, 2021 and December 31, 2020, the balance of other receivables, net, on the consolidated balance sheets is comprised of the following: As of June 30, 2021 December 31, 2020 Account reactivation fees receivable, net $ 1,264,720 $ 804,060 Receivables from merchants 676,735 599,246 Other receivables, net $ 1,941,455 $ 1,403,306 As of June 30, 2021 December 31, 2020 Account reactivation fees receivable, gross $ 2,419,001 $ 1,875,648 Less allowance for uncollectible accounts: Balance at start of period (1,071,588) (483,518) Provision (2,050,636) (2,347,733) Charge-offs, net of recoveries totaling $291,478 and $71,110, respectively 1,967,943 1,759,663 Total allowance for uncollectible accounts (1,154,281) (1,071,588) Account reactivation fees receivable, net $ 1,264,720 $ 804,060 |
Schedule of Gross Notes Receivable and Related Allowance by Aging | The following table summarizes Sezzle’s gross notes receivable and related allowance for uncollectible accounts as of June 30, 2021 and December 31, 2020: As of June 30, 2021 December 31, 2020 Gross Receivables Less Allowance Net Receivables Gross Receivables Less Allowance Net Receivables Current $ 97,958,633 $ (3,394,809) $ 94,563,824 $ 79,673,073 $ (2,692,254) $ 76,980,819 Days past due: 1–28 11,447,731 (4,294,204) 7,153,527 9,574,902 (3,616,327) 5,958,575 29–56 5,540,414 (3,954,254) 1,586,160 3,576,255 (2,646,627) 929,628 57–90 5,601,425 (4,827,713) 773,712 2,574,438 (2,177,938) 396,500 Total $ 120,548,203 $ (16,470,980) $ 104,077,223 $ 95,398,668 $ (11,133,146) $ 84,265,522 |
Other Receivables (Tables)
Other Receivables (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Receivables [Abstract] | |
Schedule of Other Receivables, Net | As of June 30, 2021 and December 31, 2020, Sezzle’s notes receivable, related allowance for uncollectible accounts, and deferred net origination fees are recorded within the consolidated balance sheets as follows: As of June 30, 2021 December 31, 2020 Notes receivable, gross $ 120,548,203 $ 95,398,668 Less allowance for uncollectible accounts: Balance at beginning of year (11,133,146) (3,461,837) Provision (22,424,183) (19,587,918) Charge-offs, net of recoveries totaling $1,220,773 and $648,799, respectively 17,086,349 11,916,609 Total allowance for uncollectible accounts (16,470,980) (11,133,146) Notes receivable, net of allowance 104,077,223 84,265,522 Deferred origination fees, net of costs (4,356,929) (3,458,222) Notes receivable, net $ 99,720,294 $ 80,807,300 As of June 30, 2021 and December 31, 2020, the balance of other receivables, net, on the consolidated balance sheets is comprised of the following: As of June 30, 2021 December 31, 2020 Account reactivation fees receivable, net $ 1,264,720 $ 804,060 Receivables from merchants 676,735 599,246 Other receivables, net $ 1,941,455 $ 1,403,306 As of June 30, 2021 December 31, 2020 Account reactivation fees receivable, gross $ 2,419,001 $ 1,875,648 Less allowance for uncollectible accounts: Balance at start of period (1,071,588) (483,518) Provision (2,050,636) (2,347,733) Charge-offs, net of recoveries totaling $291,478 and $71,110, respectively 1,967,943 1,759,663 Total allowance for uncollectible accounts (1,154,281) (1,071,588) Account reactivation fees receivable, net $ 1,264,720 $ 804,060 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Leases [Abstract] | |
Expected lease maturity | The expected maturity of the Company’s operating leases as of June 30, 2021 is as follows: 2021 $ 77,008 2022 70,388 Interest (4,404) Present value of lease liabilities $ 142,992 |
Significant Accounting Polici_3
Significant Accounting Policies (Details) | 6 Months Ended |
Jun. 30, 2021segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Fair Value (Details)
Fair Value (Details) - USD ($) | Jun. 30, 2021 | Dec. 31, 2020 |
Level 1 | Money Market Securities | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Money market securities | $ 2,000,019 | $ 9,996,155 |
Total Income (Details)
Total Income (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($)installment | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)installment | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Disaggregation of Revenue [Line Items] | |||||
Typical number of installments under the Consumer installment payment plans | installment | 4 | 4 | |||
Installment period | 14 days | ||||
Initial installment payment delay (up to) | 14 days | ||||
Deferred Income | $ 4,356,929 | $ 4,356,929 | $ 3,458,222 | ||
Reactivation fee waiver period | 2 days | ||||
Total income | 27,845,669 | $ 12,614,031 | $ 53,876,426 | $ 20,782,921 | |
Sezzle income | |||||
Disaggregation of Revenue [Line Items] | |||||
Total income | 24,149,057 | 10,848,916 | 46,401,446 | 17,887,117 | |
Account reactivation fee income | |||||
Disaggregation of Revenue [Line Items] | |||||
Total income | $ 3,696,612 | $ 1,765,115 | $ 7,474,980 | $ 2,895,804 |
Notes Receivable (Details)
Notes Receivable (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Receivables [Abstract] | |||||
Notes receivable, gross | $ 120,548,203 | $ 120,548,203 | $ 95,398,668 | ||
Less allowance for uncollectible accounts: | |||||
Balance at beginning of year | (11,133,146) | $ (3,461,837) | (3,461,837) | ||
Provision | (13,847,205) | $ (2,300,977) | (22,424,183) | $ (5,134,589) | (19,587,918) |
Charge-offs, net of recoveries totaling $1,220,773 and $648,799, respectively | 17,086,349 | 11,916,609 | |||
Notes receivable, net of allowance | (16,470,980) | (16,470,980) | (11,133,146) | ||
Recoveries | 1,220,773 | 648,799 | |||
Deferred origination fees, net of costs | 104,077,223 | 104,077,223 | 84,265,522 | ||
Notes receivable, net | (4,356,929) | (4,356,929) | (3,458,222) | ||
Deferred origination fees, net of costs | $ 99,720,294 | $ 99,720,294 | $ 80,807,300 |
Notes Receivable - Aging (Detai
Notes Receivable - Aging (Details) - USD ($) | 6 Months Ended | ||
Jun. 30, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Financing Receivable, Past Due [Line Items] | |||
Notes receivable, gross | $ 120,548,203 | $ 95,398,668 | |
Financing Receivable, Allowance for Credit Loss | (16,470,980) | (11,133,146) | $ (3,461,837) |
Deferred origination fees, net of costs | $ 104,077,223 | 84,265,522 | |
Weighted average days outstanding of notes receivable | 34 days | ||
Current | |||
Financing Receivable, Past Due [Line Items] | |||
Notes receivable, gross | $ 97,958,633 | 79,673,073 | |
Financing Receivable, Allowance for Credit Loss | (3,394,809) | (2,692,254) | |
Deferred origination fees, net of costs | 94,563,824 | 76,980,819 | |
1–28 | |||
Financing Receivable, Past Due [Line Items] | |||
Notes receivable, gross | 11,447,731 | 9,574,902 | |
Financing Receivable, Allowance for Credit Loss | (4,294,204) | (3,616,327) | |
Deferred origination fees, net of costs | 7,153,527 | 5,958,575 | |
29–56 | |||
Financing Receivable, Past Due [Line Items] | |||
Notes receivable, gross | 5,540,414 | 3,576,255 | |
Financing Receivable, Allowance for Credit Loss | (3,954,254) | (2,646,627) | |
Deferred origination fees, net of costs | 1,586,160 | 929,628 | |
57–90 | |||
Financing Receivable, Past Due [Line Items] | |||
Notes receivable, gross | 5,601,425 | 2,574,438 | |
Financing Receivable, Allowance for Credit Loss | (4,827,713) | (2,177,938) | |
Deferred origination fees, net of costs | $ 773,712 | $ 396,500 |
Other Receivables (Details)
Other Receivables (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Other receivables, net | $ 1,941,455 | $ 1,941,455 | $ 1,403,306 | ||
Less allowance for uncollectible accounts: | |||||
Provision | (2,505,818) | $ (931,549) | |||
Other receivables, net | 1,941,455 | 1,941,455 | 1,403,306 | ||
Recoveries | 291,478 | 71,110 | |||
Account reactivation fees receivable, net | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Other receivables, net | 1,264,720 | 1,264,720 | 804,060 | ||
Account reactivation fees receivable, gross | 2,419,001 | 2,419,001 | 1,875,648 | ||
Less allowance for uncollectible accounts: | |||||
Balance at start of period | (1,071,588) | (483,518) | (483,518) | ||
Provision | (2,050,636) | (2,347,733) | |||
Charge-offs, net of recoveries totaling $291,478 and $71,110, respectively | 1,967,943 | 1,759,663 | |||
Total allowance for uncollectible accounts | (1,154,281) | (1,154,281) | (1,071,588) | ||
Other receivables, net | 1,264,720 | 1,264,720 | 804,060 | ||
Receivables from merchants | |||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||
Other receivables, net | 676,735 | 676,735 | 599,246 | ||
Less allowance for uncollectible accounts: | |||||
Provision | (110,546) | $ (145,399) | (455,182) | $ (164,313) | |
Other receivables, net | $ 676,735 | $ 676,735 | $ 599,246 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Leases [Abstract] | ||||
Lease expense | $ 138,246 | $ 88,193 | $ 275,427 | $ 186,969 |
Lease liabilities arising from obtaining right-of-use assets | $ 142,597 | $ 0 | ||
Weighted average remaining lease term | 1 year | 1 year | ||
Weighted average discount rate (percent) | 4.75% | 4.75% |
Leases - Expected Lease Maturit
Leases - Expected Lease Maturity (Details) | Jun. 30, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 77,008 |
2022 | 70,388 |
Interest | (4,404) |
Present value of lease liabilities | $ 142,992 |
Internally Developed Intangib_2
Internally Developed Intangible Assets, Property, and Equipment (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Impairment losses | $ 0 | $ 0 | $ 0 | $ 0 |
Merchant Accounts Payable (Deta
Merchant Accounts Payable (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Payables and Accruals [Line Items] | |||||
Merchant accounts payable | $ 88,926,109 | $ 88,926,109 | $ 60,933,272 | ||
Net interest expense | 1,226,108 | $ 1,048,633 | 2,579,727 | $ 1,855,539 | |
Merchant Interest Program | |||||
Payables and Accruals [Line Items] | |||||
Merchant accounts payable | $ 78,970,860 | $ 78,970,860 | $ 53,528,501 | ||
Spread on variable rate (percent) | 3.00% | 3.00% | |||
Weighted average yield (percent) | 3.24% | 6.27% | 3.26% | 6.85% | |
Net interest expense | $ 583,332 | $ 379,462 | $ 1,046,067 | $ 621,196 | |
Deferred payments due on demand (maximum per 7 days) | $ 250,000 | $ 250,000 |
Line of Credit (Details)
Line of Credit (Details) - USD ($) | May 14, 2021 | Feb. 10, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||||||
Termination fee paid to exit previous loan | $ 1,000,000 | $ 0 | ||||
Amortization of debt issuance costs | 310,475 | 208,527 | ||||
Impairment losses | $ 0 | $ 0 | $ 0 | $ 0 | ||
Less than one-third | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Unused capacity of the Facility (percent) | 33.33% | 33.33% | ||||
Between one-third and two-thirds | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Unused capacity of the Facility (percent) | 33.33% | 33.33% | ||||
Between one-third and two-thirds | Maximum | ||||||
Debt Instrument [Line Items] | ||||||
Unused capacity of the Facility (percent) | 66.67% | 66.67% | ||||
More than two-thirds | Minimum | ||||||
Debt Instrument [Line Items] | ||||||
Unused capacity of the Facility (percent) | 66.67% | 66.67% | ||||
Line of Credit | Receivables Funding Facility | ||||||
Debt Instrument [Line Items] | ||||||
Funding facility | $ 250,000,000 | |||||
Term of facility from the agreement date | 28 months | |||||
Capacity committed (as a percent) | 50.00% | |||||
Capacity committed | $ 125,000,000 | |||||
Capacity available for expanding funding capacity (percent) | 50.00% | |||||
Outstanding line of credit balance | $ 21,000,000 | $ 21,000,000 | ||||
Borrowings as a percentage of eligible notes receivables pledged (percent) | 90.00% | |||||
Notes receivables pledged | 116,283,313 | 116,283,313 | ||||
Unused borrowing capacity | 56,763,483 | 56,763,483 | ||||
Weighted average interest rate (percent) | 5.25% | |||||
Interest expense | 318,083 | 987,331 | ||||
Unused facility fee (percent) | 0.50% | |||||
Prepayment exit fee (percent) | 0.75% | |||||
Amortization of debt issuance costs | 180,018 | 310,475 | ||||
Cumulative cash payments of debt issuance costs | $ 1,697,705 | $ 1,697,705 | ||||
Line of Credit | Receivables Funding Facility | Less than one-third | ||||||
Debt Instrument [Line Items] | ||||||
Unused facility fee (percent) | 0.65% | |||||
Line of Credit | Receivables Funding Facility | Between one-third and two-thirds | ||||||
Debt Instrument [Line Items] | ||||||
Unused facility fee (percent) | 0.50% | |||||
Line of Credit | Receivables Funding Facility | More than two-thirds | ||||||
Debt Instrument [Line Items] | ||||||
Unused facility fee (percent) | 0.35% | |||||
Line of Credit | Receivables Funding Facility | FICO score less than 580 | ||||||
Debt Instrument [Line Items] | ||||||
Borrowings as a percentage of eligible notes receivables pledged (percent) | 85.00% | |||||
Line of Credit | Receivables Funding Facility | LIBOR | Class A senior lender | ||||||
Debt Instrument [Line Items] | ||||||
Spread on variable rate (percent) | 3.375% | |||||
LIBOR floor rate (percent) | 0.25% | |||||
Line of Credit | Receivables Funding Facility | LIBOR | Class B mezzanine lender | ||||||
Debt Instrument [Line Items] | ||||||
Spread on variable rate (percent) | 10.689% | |||||
LIBOR floor rate (percent) | 0.25% | |||||
Line of Credit | Previous Line of Credit | ||||||
Debt Instrument [Line Items] | ||||||
Termination fee paid to exit previous loan | $ 1,000,000 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Jun. 24, 2021 | Apr. 14, 2021 | Jun. 30, 2021 | Jun. 30, 2020 |
Debt Instrument [Line Items] | ||||
Payment of accrued interest | $ 2,579,591 | $ 1,653,730 | ||
U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) Loan | Uncollateralized Forgivable Loan | ||||
Debt Instrument [Line Items] | ||||
Loan proceeds received | $ 1,220,332 | |||
Repayments of loan principal | $ 1,220,332 | |||
Payment of accrued interest | $ 14,779 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Other Commitments [Line Items] | |||||
General and administrative | $ 3,905,806 | $ 826,811 | $ 6,289,322 | $ 1,722,817 | |
Co-Branded Marketing | |||||
Other Commitments [Line Items] | |||||
Marketing and advertising spend commitment | 35,000,000 | 35,000,000 | |||
General and administrative | 1,353,626 | $ 325,743 | 2,459,562 | $ 333,566 | |
Prepaid expenses | $ 231,000 | $ 231,000 | $ 211,000 |
Short and Long-Term Incentive_2
Short and Long-Term Incentive Plans (Details) | Jun. 10, 2021USD ($) | May 22, 2020$ / shares | May 22, 2020$ / shares | May 31, 2020 | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Conversion of liability-classified incentive awards to stockholder's equity | $ 9,293,035 | $ 9,293,035 | $ 9,293,035 | ||||||
Restricted stock units | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Accruals | 3,508,023 | 3,508,023 | $ 2,133,806 | ||||||
Stock options | |||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||||
Shareholder Total Return testing period | 3 years | ||||||||
Continuous employment period | 3 years | ||||||||
Vesting period | 3 years | ||||||||
Exercise price (in A$ per share) | $ / shares | $ 2.10 | ||||||||
Value of grants as a percentage of salary (percent) | 300.00% | 300.00% | |||||||
Value of grants as a percentage of annual salary (percent) | 100.00% | 100.00% | |||||||
Fair value of options (in US$ per share) | $ / shares | $ 0.64 | ||||||||
Expense recognized | $ 2,612,089 | $ 575,000 | $ 4,857,121 | $ 575,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Jul. 19, 2021 - Subsequent Event - Common Stock - Expected - Discover $ / shares in Units, $ in Millions | USD ($)$ / shares | $ / shares |
Subsequent Event [Line Items] | ||
Common stock issued | $ 30 | |
Shares price (in usd per share) | (per share) | $ 6.58 | $ 8.83 |