Thank you. Good afternoon, everyone, and welcome to Sezzle's second quarter 2026 earnings call.

I'm Charlie Youakim, CEO and Executive Chairman of Sezzle. I'm joined today by our CFO, Lee Brading; my co-founder and company President, Paul Paradis; and Head of IR and Corporate Development, Jack Fagan.

In conjunction with this conference call, we filed our earnings announcement with the SEC and have posted it along with our earnings presentation on our investor website at sezzle.com. To retrieve the documents, please go to the Investor Relations section of our website.

Please be advised of the cautionary note on forward-looking statements and the reconciliation of GAAP to non-GAAP measures included in the presentation, which also covers our statements on today's call. With the boilerplate completed, let's get started.

We know you can now see that 2026 is off to a great start. I was remarking to our leadership team earlier this past quarter that our volume growth curves look a lot like they did back in 2020 and 2021, which was an amazing growth period for the company.

My tip-off to that was our May GMV surpassing our December holiday GMV. In recent years, it had taken until August for the same sort of event to occur.

As many of volume isn't our North Star. It's a nice secondary indicator that our solutions are taking hold.

In the second quarter, we made more strides towards improving those solutions and executing on their growth. We brought more consumers onto the subscription platform in the quarter than we have ever done before.

We improved the subscription offering, deepening the relationship with the customer once they've joined. Sezzle Cash is a new offering only available to subscribers that allows them to smooth their cash flow needs with a product that feels familiar, with a Pay in 4 or Pay in 5 payback period.

Now the customer can access funds at an extremely low cost relative to alternatives and budget for the payback. As we're supporting our customers with products like Sezzle Cash, they become more loyal to our brand because we keep nailing the offering.

In layman's terms, our products get stickier, which is a damn good thing. We're also winning outside the product ecosystem.

On slide three, you'll see we continue to receive accolades by outlets that have recognized us before. CNBC named us one of the world's top fintech companies for 2026.

Newsweek included us on its America's Best Online Platforms. U.S.

News recognized us as one of the best companies to work for in 2026. We don't do this for the awards, but when the same outlets keep coming back, it tells us the product is working for our consumers and the culture is working for our team.

Both of those matter. Now to the results.

Second quarter GMV grew 37.9% year-on-year to a record $1.3 billion. Total revenue grew 51.7% to $149.7 million.

Net income was $40.8 million, a 27.2% profit margin. Adjusted EBITDA was $58 million, a 38.8% margin.

Total revenue less transaction-related costs came in at 63.5% of total revenue, right in the upper half of the 55% to 65% range that we target. Given the strength in the first half and the momentum we're seeing across the platform, we are raising full-year guidance again.

We now expect total revenue growth of 35%, targeting the upper bound of our prior 30% to 35% range. We are raising adjusted net income guidance to $185 million from $180 million and adjusted net income per diluted share to $5.25 from $5.10.

Lee will give you more detail later in the call. The engagement story behind those numbers is in the bottom right of the slide.

Active subscribers reached 854,000, up an incredible 76.4% year-over-year. Average quarterly purchase frequency hit a record 7.2 times, compared to 6.1 times in the second quarter of last year.

Subscribers are our highest lifetime value users. Frequency is the metric that tells us whether the ecosystem is actually working.

Both are moving in the right direction. Turning to slide four, we added 140,000 net new subscribers in the quarter.

That's the largest quarter-over-quarter and year-over-year subscriber gain we've had since we launched the subscription program. That didn't happen by accident.

As you can see on the chart, marketing spend was $19.4 million in the quarter. We have said before that we push marketing as far as we can while staying inside a six-month payback period.

The second quarter is us doing exactly that. Based on the cohort data we have so far, payback is still under six months.

That tells us something important about the virality and the value of the subscription suite. When we put more dollars to work, consumers convert and they stick.

I'd like to note that this was a deliberate step-up to test out higher levels of marketing spend and not a new run rate. We tested to see how far channels could stretch until we became less comfortable with the ROI.

We found that we could push levels of spend higher and still stay at the sub-six-month payback. Even with that, we feel more comfortable with better ROIs on marketing spend.

I have always had a strong feeling that business is a bit art and a bit science. While the science says yes, you can do this, or even yes, you should do this, perhaps, our gut is telling us that we feel more comfortable with stronger return curves at lower levels of marketing spend.

You can expect a lower level of spend in Q3, all things being equal, but for us, it's never that simple. As we have just recently launched Sezzle Cash and are about to launch Sezzle Send, the mandate to the team hasn't changed.

If they find places to put dollars to work that stay within our payback threshold, we're going to test them. Even with that step-up in spend in this quarter, we're still raising our bottom-line guidance because the consumers we added this quarter begin paying back in the third and fourth quarters.

The other half of the equation is making the subscription itself worth more every quarter. On last quarter's call, we announced the Sezzle Mobile plan, giving Sezzle Anywhere subscribers an unlimited 5G plan on AT&T's network starting at $29.99.

At the end of the second quarter, we added another benefit, access to Sezzle Cash, a new cash advance product that gives Anywhere subscribers a way to cover short-term liquidity needs through Pay in 4 or Pay in 5, with no down payment required. Add in card-linked offers, more points and rewards, and early access to beta products, and the subscription keeps getting harder to walk away from.

As an added benefit in the coming quarter, Anywhere consumers will enjoy no service fees on Sezzle Send. However, we aren't only building value for subscribers.

We're expanding what every consumer gets because retention and engagement matter across the whole base. A lot of this we're doing through partnerships, which lets us bring benefits to everyday shoppers quickly rather than building everything ourselves, as seen on slide five.

That includes card-linked offers that reward virtual card spending at partner merchants, an expansion of cash back across more merchants, and daily actions like gamified surveys, trivia, and giveaways that give consumers a reason to open the app even when they aren't shopping. On the monetization side, we're converting engagement we already have into revenue without changing the user experience.

The more value our consumers get from Sezzle, the more valuable they become to us. Consumer value and shareholder value move together here, and that's the test we apply to every product decision.

You'll also see the merchant side of this. When we launched on-demand, we said it would help us win enterprise merchants because it lets us offer more competitive pricing to merchants with thinner margins.

Enterprise sales cycles are long, this takes time, but the strategy is starting to bear fruit. Recent enterprise wins include Poshmark, Gymshark, Debenhams, and several others.

Acquiring users and driving engagement matters in any consumer business, but what matters just as much to us is the pace at which we ship. As you'll see on slide six, the second quarter was another busy one for our product and engineering teams.

We rolled out Sezzle Cash in June through a phased launch, reaching the full population of eligible Sezzle Anywhere subscribers by the end of the quarter. Coming in August, we plan to launch Sezzle Send, a peer-to-peer money transfer product that lets consumers send money by phone number and either pay in full or use Pay in 5.

The recipient receives the full amount up front and doesn't need to be a Sezzle consumer to get the money. Every send is a potential introduction to the platform.

Slide seven goes deeper on both. Up to this point, almost everything we built has been anchored to a purchase.

Sezzle Cash and Sezzle Send aren't. They're about liquidity and moving money, everyday financial needs that have nothing to do with a checkout page.

We are continually expanding beyond our original point-of-sale offering in our never-ending race to increase the value of our platform to our stakeholders. Sezzle Cash and Sezzle Send do three things for us: drive virality, increase attraction to the platform, and improve retention to the platform by bringing consumers back into Sezzle for reasons other than shopping and by offering more value to them.

As we continue to increase our value, the consumer will continue to earn more share in their wallet. Although Sezzle Cash just launched, the initial signal is encouraging.

The average advance size is approximately $165, and nearly 10% of eligible new subscribers are requesting an advance as their first transaction in the Sezzle Anywhere ecosystem. That tells us the product is pulling in consumers we might not have reached through our traditional offering alone.

On Sezzle Send, I think most of us on this call use a money transfer product, we all understand the virality of these platforms. Our twist is to take the burden off the transfer.

A consumer can send 100% of the money to their friend up front and repay us through Pay in 5. Because the recipient doesn't need a Sezzle account to get the money, every send is a potential low-cost acquisition in a new acquisition channel our consumers drive for us.

For Sezzle Anywhere subscribers, we wave the service fee on Pay in 5 entirely in Sezzle Send. For non-subscribers, the fee is de minimis, around $3 for a $100 send.

Unlike Sezzle Cash, we made the send product available to non-subscribers because of the virality it can help us create. Even though the fee for non-subs is small, it's still another reason to be a subscriber and another screen in our app where we can convert a consumer into a subscriber.

I'll add the caveat I'd want to hear as an investor. As with any new lending product, we're being conservative early and still fine-tuning the underwriting.

I'll spoil part of Lee's narrative and tell you now that our guidance does not assume material upside from Sezzle Cash and assumes zero contribution from Sezzle Send. A couple of items about Sezzle Send.

First, we've already got about 100k users on the waitlist. Our users are excited about it.

Second, it's the first product we produced where the vast majority of the build was AI-driven. A small team has taken it from concept to launch-ready in a matter of weeks rather than months.

A product that moves real money between real people built by AI. A couple of years ago, that would have been a research project.

For us, it was one quarter's worth of work. Which leads us to slide eight.

AI is embedded across this platform now, and I want to give you real numbers rather than talking points. On the consumer side, our AI support chatbot is deflecting 68% of consumer inbounds.

I'd note that the bot is scoring a higher CSAT than our human agents on those answers. That frees our people up for the complex issues that genuinely need a person.

Our AI shopping assistant within our Discover tab is driving a 3.6 times product click-through rate versus control. It's now live for 80% of Sezzle Anywhere users, with plans to expand to all consumers.

Internally, we've become an organization that effectively requires AI in the workflow. It's the expectation for every employee, and the team has taken that to heart.

As new models roll out, I expect all of our internal KPIs, not just a few listed on the right side of the slide, to get better and our teams to do more with the same headcount. My first boss out of school told me, speed, quality, and cost, pick two out of three.

With AI, Sezzle's taking all three. That brings me to slide nine.

We're building fast, shipping quickly, and putting more products in front of consumers every quarter. That pace compounds.

It shows up directly in the year-over-year engagement metrics. MAUs increased 234,000 year-over-year to 982,000.

Quarterly purchase frequency reached a new high of 7.2 times, up 1.1 turns. Repeat usage was 97.2% of total orders, up 80 basis points.

While these numbers continue to step up every quarter, the one I'd like to point out to you is the bottom left. The average quarterly revenue per monetized user increased 16.2%.

Growth is coming from a larger user base, but it's also coming from consumers who engage with us more often and generate better economics over time. Those two things working together are the whole model.

It's multiplication, not addition. A bigger base and a more valuable consumer within it compound on each other.

That's what we're building for over the long run. We are still early in what Sezzle can become for the value-focused consumer, but the flywheel is getting stronger every quarter.

With that, I'll turn it over to Lee to walk you through the numbers in more detail.

Thanks, Charlie. I will get started on slide 10.

It's exciting to see the hard work and effort put in by our team at Sezzle pay off. Q2 revenue increased 51.7% year-over-year, net income rose 47.7% year-over-year, and adjusted net income expanded by 58.4% year-over-year.

Growth did not come at the sacrifice of margins, as we have always said that we will not grow for growth's sake. We take bottom-line profitability seriously, if not more so, than top-line growth.

Total revenue less transaction-related costs as a percentage of total revenue increased 240 basis points to 63.5%, which is at the upper end of our 55% to 65% target range. Revenue growth plus EBITDA margin puts us right at a score of 91 for the rule of 40, exceeding our 82 score for Q1.

On slide 11, you can see the strong momentum in our business. Q2 GMV grew 15.1% sequentially, 37.9% year-over-year, and exceeded our Q4 2025 holiday season peak.

Q2 revenue rose 51.7% as revenue yield expanded 110 basis points year-over-year to 11.7%. For 2026, we expect our revenue yield will be similar to 2025's yield of 11.4%.

Therefore, we project our revenue yield will continue to step down sequentially for the remainder of 2026, with Q4 being the seasonal low point. Turning to our unit economics on slides 12 through 14, as a reminder, transaction-related costs is a non-GAAP measure that combines transaction expense, provision for credit losses, and net interest expense.

You might also hear us refer to revenue less transaction-related costs as net transaction margin or gross margin. For those that listened to our Q1 earnings call, you heard us belabor the point about the seasonality in our business regarding the revenue yield and provision.

As a quick reminder, revenue yield tends to be the highest in Q1 and lowest in Q4, while the provision for credit losses typically reaches its lowest point in Q1 and rises throughout the year. This is evident on slide 13.

You can see that transaction expense and net interest expense are relatively static as a percentage of GMV compared to the provision for credit losses. Again, Q1 tends to be a seasonal low point in the provision, led by the tax refund season.

The increase in the provision is not unexpected, and I want to remind everyone of two things when we consider the provision and its impact on our financials. First, we target a 55% to 65% net transaction margin, which is inclusive of the provision.

Second, we expect the full-year provision to be in the range of 2.5% to 3% of GMV. We are good on both accounts.

We finished Q2 with a net transaction margin of 63.5%, which is at the high end of our target range, and we expect the provision for credit losses will be in the 2.5% to 3% range for 2026. Yes, we can have a provision in a quarter that goes above the 3% level.

Before moving on, I want to emphasize the increase in provision was expected due to seasonality and our push to bring on new users. As Charlie noted in his comments, we had a record quarter-over-quarter and year-over-year gain in the number of net new subscribers.

As a result, we had more new consumers utilizing the platform, and with new users comes higher provisioning. Our hyper-focus on costs does not stop at the unit economic line.

It also extends to our non-transaction-related operating expenses as shown on slide 15. Non-transaction-related operating expenses consist of personnel, third-party tech and data, marketing, and G&A.

The bulk of the expense is driven by personnel and marketing. Like last quarter, we more than doubled our marketing spend year-over-year.

As Charlie noted earlier, as long as the math works for a less than six-month payback, we will continue spending. I'm guessing the marketing spend might be more than most people modeled for, but the results speak for themselves: new highs in active consumers, subscribers, and GMV.

Further, we were still able to raise our net income and EPS guidance while removing the low end of our revenue guidance despite the significant growth in marketing expenditure. A large incremental increase in spending can be a headwind initially, but will start paying dividends for us over the coming quarters.

On an apples-to-apples basis, we do expect our core marketing spend to decrease from Q2 to Q3. However, we are in the middle of launching two important products, Sezzle Cash and Sezzle Send.

We have done little to no marketing for either of these, it will require some basic awareness expense, and we will let the payback math dictate the magnitude of the spend. We did incur minor costs related to our corporate strategic projects during the quarter.

On May 11th, the US District Court granted in part and denied in part the defendant's motion to dismiss our antitrust suit. Most notably, the court denied the motion to dismiss our claims of monopolization and attempted monopolization under the Sherman Act and the parallel claims under Minnesota antitrust law and the Minnesota Deceptive Trade Practices Act.

We are now entering the discovery phase, which is expected to go through 2027. The banking charter process continues to roll forward, and we are planning to submit our application for a national bank charter this quarter.

I believe we have one of the cleanest income statements when it comes to add-backs and adjustments. You can see on slide 16 very little difference between net income and adjusted net income.

Most of the differences are attributable to discrete tax items recognized in each quarter. Further, you can see the seasonality of our numbers, with Q1 followed by Q4 as typically the best bottom-line performing quarters.

We are well-capitalized and positioned with plenty of liquidity and very low leverage, as seen on slide 17. At quarter-end, we had over $205 million in liquidity between unrestricted cash and availability under our new $300 million line of credit.

Our total debt to trailing 12-month adjusted EBITDA stands at only 0.5 times, and our total debt to equity is also only 0.5 times. I'm sure by now everyone has already checked out slide 18 and therefore is quite aware of our updated guidance.

We are really excited about the momentum in our business and believe some of that is captured in our updated guidance. I'll make a couple of comments before passing the call over to the operator for Q&A.

Our guidance does not take into consideration Sezzle Send as that product is just getting to the launch pad. Additionally, the guidance has very little impact from our recent launch of Sezzle Cash.

Sezzle Cash has been a measured rollout in terms of marketing and risk, it is still too early to put much emphasis on it in our guidance. I would now like to turn the call over to the operator for Q&A.

Hi, this is Mike Chu on for Mike Grondahl. Thanks for taking the questions.

Maybe just on the bank charter, do you mind just what a typical timeline might look like for that application process?

The OCC has been pounding the table that from application to conditional approval or conditional decision is around 120 days, or basically, I guess mandated at 120 days. That's not the end of the process.

You also have to go through FDIC approval and Fed approval. I would say our expectations are 12 to 18 months in total.

I think we're being a little bit conservative with that, but we view that as if we get our national charter in the next 18 months, we'd feel pretty good about the entire process.

Got it. Makes sense.

Then on the new partnership funnel, if you could just characterize that maybe versus 6 months ago or a year ago, is there anything to call out there?

I would just say, just in general, a lot stronger with a lot of nice enterprise names on the partnership side. I think on-demand has a lot to do with that, and also our strong lifetime values of our consumers.

That math all goes in the equation. On-demand goes in the equation for the merchant side.

It helps us model better pricing for merchants that are sensitive to cost, which brings many more merchants into the fold. On our side, because our subscription products are such strong products for us on the consumer side, we do model in winning these merchant deals and what percentage of those consumers will go into those products.

That also helps us with more aggressive pricing, more aggressive deal-making. I think, all in all, that's helping quite a bit.

I don't know, Paul, anything to add to that?

I would just add to that, we've started to be added alongside other BNPL providers over the last 2, 3 years. Early days, a merchant would commit to one exclusively.

As we create successful case studies that show that adding a second or third brings incremental sales, it's accelerated the enterprise sales funnel. We expect it to continue to improve.

Thanks, guys. I'll hop back in the queue.

Thanks.

Hey, guys. Good.

A couple of questions on the new products and I know you partnered with Pagaya for some larger loan offerings, you've got Pay in 5, and you have the two new initiatives you just announced today. Could you tell us, maybe what's embedded in your outlook for some of those products?

Lee, I'll leave this to you on that one. We already mentioned a couple of those, Hal.

On Sezzle Send, Sezzle Cash, not a lot. Lee, anything to add to that?

I think, Hal, you were asking about Pagaya, too. Pagaya is helpful, but it's, I'd say, not a material impact at this point.

Nothing significant from those, I would say, that materially moves the needle.

Okay. On the marketing spend, are you suggesting that the payoff is so good that you're going to continue this kind of maybe dollar spend or even take that up because the subscriber numbers were pretty powerful sequentially in a seasonally weak quarter, generally seasonally weak?

It was one of your largest net adds in a non-holiday quarter ever.

I think it depends, Hal. The way that we were viewing it is, I always like to look at visuals or think of visualizations, and I think we were hitting the gas in the car just to kind of see how the car reacted if we did it, and just what the cohort pumping through would look like.

I think from that perspective, we're letting off the gas a little bit, all things being equal. That's why we mentioned all things aren't equal because we have Sezzle Send launching.

We have Sezzle Cash. Sezzle Cash, we haven't even started marketing externally yet.

It's just marketing internally to our existing cohorts and customers, seeing pickup rates, seeing reactivation rates. We're really not even spending externally on that product at this time.

I think if you subtract Sezzle Cash, Sezzle Send, I'd probably expect a lower level on a volume basis of marketing spend, just because we want to pump that cycle through and see how the cohorts run out. What we're seeing from the cohorts running out is it is a sub-six-month return on investment.

That being said, I think we just feel a little bit more comfortable not going near the six-month or not going as near the six-month edge. That's another reason for a little bit of a pull back.

Some of it is just seeing the engine react, and some of it is just we feel a little bit more comfortable pulling it back. Then again, the reason I caveat is because now we've got these two products launching.

With those two products launching and pushing out a little bit more, that might be the offset that leads to a little bit higher spending level. Does that make sense?

Okay. Thanks, guys.

Thank you very much.

Thanks, Hal.

Thanks, everyone. Congrats on the on a good quarter.

Also wanted to ask about the thought process around the marketing spend, maybe just help us understand why why pull back if the payback is so strong. I know that a few of your peers that also focus on the lower income category have also been leaning heavily into customer acquisition, curious if there were any signals that, were suggesting pressure on the payback, and why not run rate 2Q into the second half?

Then just looking at the second half guidance, obviously still really solid growth, but I think maybe the hope would have been that there would have been some more meaningful flow-through of the growth momentum in the second half. Just help us understand what's driving the deceleration in 2Q in sorry, in second half revenue growth as well.

Thanks.

On marketing spend, again, it's just a level of comfort. The six months is our edge.

The closer you get to your edge, the higher the risk-reward, I guess, near that edge. That's part of the reason for maybe a little bit of a pullback in our mind.

We also want to see it pulse through. Again, it takes six months to get the return.

If you're off by 30%, it's not six months. It's seven-something months, near eight months.

You don't know that until you get a little bit further down the month-on-month-on-month line. That's why I was kind of the analogy of they're pumping the gas on the car.

We wanted to kind of hit the gas in the car, push that cycle through, let's see how it looks as it cycles through. As we start to feel more comfortable, confident, I think maybe the next time we go about an exercise like this, we might feather on it a little bit slower instead of just pumping on a cycle like that.

Then as far as the guidance or the growth, I don't know, Lee, if you have anything to touch on that.

Just following up, too, on your comments on marketing. Just I think you kind of touched on at the end was more of a smoothing, right?

You don't want to accelerate too hard at one time. It's just a more steady process with it as well, just managing that.

From the guidance standpoint, yeah, we guided here, got rid of the low end of our revenue guidance, did bump up our bottom-line guidance. Second half, you do the basic math, right?

First half, we were up 40% year-over-year, 48% on net income, 40% on revenue, and guiding kind of 30% up here in revenue for the top line and then bottom line 40%. We feel very confident in those.

We've talked about, too, not having some certain things in there at this point in time in our guidance. That'll to be determined as we go through the remaining quarters.

That's all very helpful. Then in terms of, Charlie, how you're thinking about the overall growth algorithm for the business over the next year or so, and also looking at this disclosure in the slide deck that I think is new, the average quarterly revenue per monetized user, it looks like the mix of revenue growth in the quarter was call it two-thirds user growth and one-third ARPU.

Is that kind of a mix that you feel comfortable with going forward, or should that maybe balance out heading into the back half of the year as you pull back on the marketing and baking in these new products? Just trying to understand that growth algorithm.

Thanks.

I hear what you're saying, Ryan. I guess from my perspective, I don't really totally focus on that kind of split.

I guess when I'm focusing on us growing the business, it's really about launching products and executing on existing products in a way that is showing that it's providing interest and value to the consumer. We basically look at take-up rates of products, attraction rates to products, for instance, Pay in 5, an absolute home run.

We said it from the start. It seems like it doesn't make sense to maybe the credit card user who's not maybe a BNPL user.

We saw it early with surveys. Our customers really wanted Pay in 5.

We had really high engagement rates on the product. We launched it.

We saw it play through. I think with Sezzle Cash, we saw some of the same dynamics with surveys.

We've played it through. A lot of our customers are taking it.

I don't know if people caught the comment we made during the call, but Sezzle Anywhere, the subscribers, when they first join it, 10% of the customers that are joining Sezzle Anywhere, their first transaction is a Sezzle Cash transaction. I think that's pretty incredible, especially the fact we're not even leading with it at the moment.

It shows how much interest is in that type of a cash flow product. Then Sezzle Send, I think, that's a product that we have a really good sense that the customer wants.

The waitlist is already over 100,000 on the waitlist, which is really exciting. We basically just launched the waitlist, the uptake on that is really exciting.

With Sezzle Send, we have another avenue for providing value to existing customers, but also acquiring new customers. Because as those customers use our product with P2P, they can send it to new customers or new potential customers, non-Sezzle users, to accept their funds and get introduced to our platform.

It creates a whole new channel for customer acquisition. I think from my perspective, that breakdown that you mentioned is not even something I look at.

What I think about is just what are home run-type products. I think what I feel good about with our business and our company is we've had just a very high percentage of home run products.

We've had only a couple products where I'd call them singles or strikeouts. It's been a very high hit rate, and I think we have a few more in the hopper with Sezzle Cash and Sezzle Send that are going to be home runs.

Thanks, Charlie.

Hey, good afternoon. Thanks for taking the questions.

Want to start out with some of the moving pieces on the take rate in the guide. I think you guys said 11.4% for the year, to be about flat, and so I understand there's some seasonality there, but just trying to square at least some of the year-on-year impacts with some of these newer products, a Pay in 5, which I would think would be accretive to take rate, just wanted to see how much is conservatism versus if there's any other mix or moving pieces that we should be mindful of.

Lee, do you want to take that one?

You're right on the Pay in 5 can be accretive. As we launch new products like Pagaya can be not accretive to the take rate, just the nature of how that is accounted for, and then also as we launch Sezzle Cash as well.

Those can lower the take rates. While we still have very similar profitability and margin standpoints, the take rates on those can be a little lower.

That is helpful. Then, I guess, wanted to double-click on the provision expectations moving forward.

I know there's some seasonality there, and then you guys also have some more new customers coming on board. I guess is there any change on a apples-for-apples basis that you guys are seeing in either repayment rates or consumer credit health or anything like that?

Just want to be able to understand on a going-forward basis and kind of what you're seeing real-time, especially with existing customers' performance.

Everything seems just normal, Kyle, I'd say. Nothing related to the customer profile or customer in the economy.

I'd say our prior guidance on that stands, 2.5% to 3% for the year, which basically explains that there's going to be a step-up in the third quarter and fourth quarter. I think that everyone modeling can expect that and model for that.

The only caveat I'd say is how these new products take up when we really start to push them externally. I'd say especially with virality around Sezzle Send, if that really does pick up a lot of new users, basically it's a trade-off with new users.

Cuz new users have higher loss rates. If new users pick up more than expected or more than modeled for many out there modeling, then I would expect if you have variability in your model, if you pick up new user growth, you're going to expect to have provision be higher than you have modeled for if you move that variable around.

Okay. All right.

Thank you very much.

Hi, thanks for taking my question. Great quarter.

I just want to better understand just the puts and takes of the revenue yield. Obviously, it was up 110 basis points on my calculation year-over-year.

Just want to understand is that mix, is that pricing? Then secondly, your 2026 guidance assumes that there is going to be a sharp deceleration in revenue growth in 2H from second quarter.

Just want to understand the drivers there. Thank you.

One of the key things we pointed out heading into Q2, on our Q1 call was that we had a easy comp on the revenue yield in Q2, which drove that revenue growth this quarter. I don't know if you saw that.

I think it was a 10 handle or so last year versus the 11 handle this year. We had a number of items change as far as types of fees or the rates that we had.

We mentioned on that call that going forward, I'd say more of a normalized, meaning that we weren't having much movement in terms of how we were charging and the fees that we did and the revenue items that were driving our revenue yield. You'd see a more consistent, I guess you could say, from Q3, 4, and on.

That's where we talked about seeing a more normal performance in revenue yield from the seasonality, that being Q1 being the strongest and Q4 being the lowest, cuz you're not seeing a lot of movement in the puts and takes. That's why you saw it was down year-over-year in Q1, up in Q2.

Now, you'll see an easier, more normal comparison going forward here. Overall for the year, we said it would be flattish for the year.

Thanks. Thanks for taking my questions.

I want to ask on, I guess, the chart on the on-demand number of users versus subscribers. I think since you guys made the pivot, I think on-demand count continues to go down while subscriber count continues to go up.

While subscriber demand has been strong, should we read this as a sign that once you kind of limit people's ability to use on-demand, a large percentage of these people eventually convert to subscribers?

There is a portion that are converting. That's a good insight that as we diminish the push towards it.

I'd say really more of the change has been just what is presented. We used to lead with on-demand as the lead product.

Come and try Sezzle at a merchant site and you can pay as you go. Now that's really not the lead.

The lead is join our subscription program. Then on-demand, the place where that's still led, where we're still the lead for on-demand, is in merchant checkouts.

When we have these enterprise partnerships, some of these merchants coming on board, the way to pay is with essentially a transaction with a service fee, which is on-demand. That's really the only place, and I shouldn't say the only, because there's always edge cases here and there, but the vast majority of the new cases for people entering on-demand are at those checkouts.

I think it's more about what's being presented or led as the transition product for consumers that are moving into our mod products.

Thank you, operator. I'd like to leave you all with something Warren Buffett said back in 1991.

It's not a crazy idea. It's a simple one.

He said, "Someone's sitting in the shade today because someone planted a tree a long time ago." I thought that even though it's a simple concept and a simple quote, I think it nails one vector of our thinking at Sezzle.

We plan for long-term returns. Let's take a look at the tree we planted and the tree today, which is giving us all shade.

Back in July of 2019, we listed on the Australian Stock Exchange. I wanted to share some of our results from the second quarter of that year right before we went public, about seven years ago, just to give you an idea of how long-term growth plans play out.

Our second quarter of 2019 GMV: $41.2 million versus $1.3 billion today, basically a 30x. Our second quarter 2019 revenue: $2.6 million versus $149.7 million today, nearly 60x.

Our second quarter 2019 gross margin: a negative $260,000. This quarter: $95.1 million.

As you can see, the long-term approach to growth works. I'm going to calendar this one as a reminder to do this again in seven years.

I hope you'll all still be investors at that time. To that seven-year timeline, many members of our team have been here for that entire seven-year journey.

To them and the rest of the team, a big thank you for your incredible work on getting us from there to here. We'll talk again next quarter.

Thank you.