Sezzle (SEZL) 2026年第三季法說會：營收成長 42.6%，調升財測指引

重點摘要

• 2026 年第三季總營收年增 42.6% 至 1.665 億美元，淨利則成長 79.3% 至 4,780 萬美元。
• 總交易量 (TTV) 達到創公司紀錄的 14 億美元，年增 34.9%、季增 11.6%。TTV 包含 SezzleCash 與 Sezzle Send 的交易活動。
• 活躍訂閱用戶數年增 68.1% 至 95.5 萬戶。平均單季交易頻率從 6.5 次增至 7.8 次，總交易筆數則成長 30.1% 至 1,240 萬筆。
• 淨交易利潤擴大至 1.077 億美元，佔營收的 64.7%。Sezzle 與 Visa 的獨家合作協議帶來 370 萬美元的效益，對此表現有所貢獻。
• Sezzle 上調 2026 年財測，預期營收成長約 42.5%、調整後淨利達 1.9 億美元，調整後稀釋每股盈餘 (EPS) 為 5.45 至 5.50 美元。
• 管理階層提出了初步的 2027 年調整後稀釋每股盈餘 (EPS) 財測為 7.20 美元，相較於更新後的 2026 年預估區間成長 31% 至 32%。

關鍵財務數據

業務與營運表現

訂閱成長仍是核心驅動力。繼第二季淨增創紀錄的 140,000 戶後，Sezzle 第三季淨增 101,000 戶訂閱用戶。管理階層表示，訂閱用戶的單季平均交易次數比非訂閱用戶多出 9 次。

Pay-in-5（分五期付款）已全面推出，約佔 Sezzle 核心先買後付 (BNPL) 業務活動的 70%。管理階層稱其為公司近期推出的新產品中表現最強勁者，並表示該產品有助於客戶獲取與留存。

SezzleCash 在 6 月推出後完成了第一個完整季度。符合資格的新 Sezzle Anywhere 訂閱用戶中，有超過 15% 的用戶首筆交易即使用 SezzleCash。這些客戶中有超過 60% 隨後完成了 BNPL 消費，而第三季所有 SezzleCash 用戶中，更有超過 90% 同時使用了 BNPL。此外，超過 60% 的用戶在該季內多次預借現金。

Sezzle Send 在整個第三季仍處於測試階段，並於 10 月初擴大開放使用。管理階層將這款點對點 (P2P) 產品視為潛在由用戶驅動的獲客管道，但表示該產品仍需進一步優化，且普及可能需要時間。

導入 AI 有效提升了營運效率。AI 代理在無人工干預的情況下解決了 40% 的客服諮詢，且超過 90% 的工程代碼合併均有 AI 參與。每位工程師合併的代碼變更量年增 43%，且單位工作量的 AI 成本較上一季下降 27%。

Sezzle 亦於第四季初在加拿大試營運推出 Sezzle Anywhere。該產品結合了訂閱模式與開放式虛擬卡功能，可在加拿大境內任何接受 Visa 的場所使用。

管理階層財測

管理階層表示，2027 年每股盈餘 (EPS) 展望涵蓋了已推出的產品，但對 SezzleCash 與 Sezzle Send 採取較為審慎的預期。更詳細的營收與利潤率預估預計將於第四季財報更新時公布。

該公司預期，受常態性季節因素影響，第四季營收收益率將較上季下滑。然而，在第三季訂閱用戶的強勁貢獻帶動下，管理階層仍預期 2026 全年抽成率將略高於 2025 年。

風險與關注領域

• SezzleCash 與 Sezzle Send 仍處於初期階段，相較於核心 BNPL 業務，目前產生的交易量較小。
• 管理階層表示，新產品的利潤率可能較低，且初期的提存準備金或損失率可能較高。此外，對 Sezzle Send 的評估部分是將其作為獲客管道，而非僅考量其獨立獲利能力。
• 第三季淨交易利潤包含來自 Visa 的 370 萬美元相關收益。管理階層估計，若扣除該收益，淨交易利潤率約為營收的 62.5%。
• 信用損失準備預計將在第四季出現常態性的季節性增加。
• Sezzle 的反壟斷案件仍處於證據開示階段，管理階層預計該程序將持續至 2027 年。
• 該公司於 10 月提交了全美銀行執照申請。管理階層強調，審查過程冗長，且結果無法保證。

分析師問答精選

管理階層表示，Sezzle 日益轉向以訂閱為導向，而非將隨選即用 (On-demand) 方案作為通往訂閱的過渡橋樑。目前隨選即用方案更多被定位為商戶獲取工具，主要用於商戶對標準 BNPL 手續費接受度較低的情境。

針對未來的錢包份額，管理階層認為透過推出額外的金融產品，仍有提升交易頻率的空間。未來潛在的支票與儲蓄產品將取決於全美銀行執照申請程序的完成情況。

關於 AI 驅動的商業應用，Sezzle 表示其 Anywhere 虛擬卡目前已可綁定至各類購物助理中。其合作夥伴團隊亦在評估與新興 AI 平台的整合機會。

在資本配置方面，管理階層將產品的有機投資列為首要任務。多餘的資本也可用於實施庫藏股買回或發放股利，但銀行執照的申請使公司有動力維持強勁的現金部位。在 1 億美元的實施計畫下，Sezzle 年初至今已回購了 2,800 萬美元的股票。

完整電話會議逐字稿

完整財報電話會議逐字稿

管理層陳述

Operator

Good day, and welcome to the Sezzle Inc. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded.

I would now like to turn the conference over to Charlie Youakim, Executive Chairman and CEO. Please go ahead, sir.

Charles Youakim

Thank you, and good afternoon, everyone, and welcome to Sezzle's third 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 Corp Dev, Jack Fagan.

In conjunction with this conference call, we filed our earnings announcement with the SEC and 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 the 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.

Before getting into the results, I want to talk about how I'm looking at the third quarter. We spent a good part of this year building and launching new products. I'm incredibly proud of what our teams have accomplished this year. We spent a good deal of time researching which products made sense with strategy sessions and customer surveys and panels, but the real test is whether consumers actually use the product after we launch it and whether it adds value to their relationship with Sezzle and ultimately, whether it helps us build a better business.

We saw one of our early product launches this year do just that. Pay-in-5 was a home run product launch for us. The results match the research. It's become a much-used and much-loved variant of our core BNPL product. And this quarter, we're starting to get some more answers. SezzleCash looks like it's going to be another great product for us, but it's still not putting up significant numbers just because it's starting from scratch. And Sezzle Send, our P2P product, that one looks like it still needs some fine-tuning to make a significant impact in future years. But again, really small volumes, but we just wanted to give you the early reads. All of this activity is helping though. It adds up.

We're seeing purchase frequency continue to increase, and we're seeing stronger monetization as consumers engage more deeply with the platform. We're still in the learning and improvement phase with some of these offerings like Send and Cash, and their volumes are so small relative to our base product that it will take many months for them to catch up and have truly measurable numbers relative to the existing products.

But what is encouraging is that we're beginning to see the different pieces of our strategy work together. And we're doing that while maintaining the financial discipline that's been so important to our success. We continue to keep our OpEx growth in check while we grow the team and launch new offerings for our consumers. That's how I want to frame today's results. It's not just about how much we've built, it's about what those investments are starting to deliver.

With that, let's turn to Slide 3. Total transaction volume, which expands our traditional GMV measure to include SezzleCash and Sezzle Send, grew 34.9% year-over-year, while total revenue increased 42.6%. We generated $47.8 million of net income and $70.2 million of adjusted EBITDA. And total revenue less transaction-related costs came in at 64.7% of revenue, near the upper end of the range we've consistently targeted.

Those are strong results, but I think the more important story is what's happening with our consumers. We ended the quarter with 955,000 active subscribers, up 68.1% year-over-year, putting us within reach of 1 million subscribers.

And average quarterly transaction frequency reached 7.8x compared to 6.5x a year ago. Importantly, that now includes not only purchases but also SezzleCash advances and Sezzle Send payments. That's an important distinction because we're giving consumers more reasons to use Sezzle beyond shopping. And to me, that's exactly what we've been working toward.

Given the strength of the business, we're also raising our full year outlook. We now expect revenue growth of approximately 42.5%, adjusted net income of $190 million and adjusted net income per diluted share of $5.45 to $5.50. We've also introduced a preliminary adjusted net income per diluted share outlook of $7.20 for 2027. Lee will walk through the financial details and outlook later in the call.

But before we get there, I want to spend some time talking about what's driving these results and why we believe the consumer relationship continues to strengthen. Let's start with subscriptions.

On Slide 4, you can see the continued progress we're making with subscriptions. We added another 101,000 net new subscribers in the third quarter, following the record 140,000 we added in Q2. That brings us to 955,000 active subscribers, and it puts us within reach of 1 million.

One thing I want to call out is our marketing spend because we spent quite a bit of time talking about it last quarter. In Q2, we deliberately pushed spending higher to see how far we could go while staying within our 6-month marketing payback threshold. We also said at the time that it was a test, not necessarily a new run rate.

In the third quarter, we brought marketing spend down to $15.9 million from $19.4 million, while continuing to grow our subscriber base. Our philosophy hasn't changed. If we find opportunities to acquire high-value consumers at attractive returns, we're going to pursue them. But we're not interested in growing subscribers just for the sake of growing subscribers. Based on this test, we like the lower marketing run rate spend level. We think it gives us a nice margin of safety while still delivering long-term results.

And I think that's where the engagement metrics on this slide become particularly important. On average, our subscribers are making 9 more transactions per quarter than nonsubscribers. And importantly, that now includes not just traditional purchases, but also SezzleCash advances and Sezzle Send payments. So we're getting a more complete picture of how consumers are engaging with Sezzle across different financial needs, not just when they're shopping.

To me, that's really what we're trying to accomplish. We want to keep giving consumers reasons to come back and use Sezzle more often. And we're continuing to add to that value proposition. More recently, we introduced Subscription Saver, which helps anywhere subscribers identify, manage and cancel recurring subscriptions they no longer need. It's one more practical way we can deliver value to our consumers.

And that same thinking is driving our broader product strategy. Whether consumers are shopping, converting a short-term cash need or sending money to someone else, we're finding new ways to make Sezzle more useful in their everyday lives. We've made a lot of progress on that front this year. Part of what gives me confidence in the direction is the pace at which our teams have continued to deliver new products. And when you look at what we've accomplished throughout 2026 on Slide 5, it's not just one big product launch. It's a series of additions that we are making to make Sezzle more useful for our consumers.

We started the year with Pay-in-5, added the virtual card offering in Canada, expanded our long-term lending capabilities and introduced Sezzle Mobile. Then we launched SezzleCash, giving eligible anywhere consumers access to funds for short-term cash needs without having to make a purchase. And we also introduced Sezzle Send, which remained in beta throughout the third quarter before we opened it up more broadly to Sezzle users at the beginning of October.

This brings the flexibility of installment payments to everyday money transfers. Now each of these products serves a different purpose, but the strategy behind them is the same. We're giving consumers more reasons to choose Sezzle and more reasons to keep coming back.

We also did an updated study earlier this year on Sezzle Up, our pro bono credit builder. It turns out that for our on-time subprime customers, they are lifting their credit score an average of 17 points in 4 months. That's an amazing result for a group of consumers that can benefit greatly from a credit score lift like that. And it's there in the product set and has been there for years.

Importantly, not every new product needs to be a significant stand-alone revenue driver. Look at Sezzle Up. It's free for our consumers to join. Some products are designed to attract new consumers, others to improve engagement and retention and others, like Up, to do the right thing for our consumers. In the end, what matters is the value they all create in the overall platform.

Looking ahead, we've also soft launched Sezzle Anywhere in Canada at the start of the fourth quarter. This brings our subscription model and open-loop virtual card capabilities to the Canadian customer, allowing them to use Sezzle wherever Visa is accepted in Canada. But launching new products is really only the first step. The more important question is what consumers actually do with them once they're available.

And with SezzleCash, we're starting to see some encouraging results that I think are worth spending a little more time on. We rolled out SezzleCash in June. So the third quarter was our first full quarter of seeing how consumers use the product, and the early results are encouraging. As a reminder, SezzleCash allows eligible anywhere subscribers to access funds for short-term cash needs without having to make a purchase. So whether it's paying a bill, covering an unexpected expense or something that simply doesn't accept a card, we're giving consumers another way to manage their everyday finances.

One of the clearest signals we're seeing is how consumers are getting started. In the third quarter, more than 15% of eligible new Anywhere subscribers made their very first transaction with SezzleCash. That's a meaningful number. We're seeing consumers sign up for Sezzle Anywhere, a product that has historically been centered around shopping and their first transaction isn't the purchase. It's a cash advance.

That suggests SezzleCash may be attracting consumers who wouldn't have necessarily considered an anywhere subscription for BNPL alone, and that potentially opens up an entirely new avenue for subscriber acquisition. But there's another part of the story. More than 60% of new Anywhere subscribers who started with SezzleCash also went on to make a BNPL purchase. And when we look at all SezzleCash users during the third quarter, more than 90% also use Sezzle for BNPL purchases.

We're also seeing repeat engagement with the product itself with more than 60% of SezzleCash users taking multiple advances during the quarter. Now we're still early, and we're continuing to be thoughtful about how we grow and manage the product, but the opportunity is becoming clearer. SezzleCash may be bringing consumers into our subscription offering who wouldn't have used us or reached us otherwise. And we're seeing many of those consumers go on to use our traditional BNPL products.

With Sezzle Send, we're exploring another avenue for reaching consumers, but this time through something entirely different, sending money to another person. Sezzle Send is a different kind of product for us. It was in beta throughout the third quarter, and we opened it up more broadly to Sezzle users at the beginning of October. So we're still at an early stage of understanding how consumers will use it, and we're still actively working on tweaking the offering to make it a hit.

The concept displayed on Slide 7 is straightforward. You can send money to someone using their phone number, either paying in full or splitting the payment into 5 installments. And regardless of how the sender chooses to pay, the recipient receives the full amount upfront. Where this becomes a new avenue for Sezzle is in how it can introduce people to the platform. When one of our consumers sends money to somebody who doesn't use Sezzle, that recipient has a reason to sign up and experience our product for the first time. Instead of coming to us through a merchant or an advertisement, they're being introduced through someone they know.

So we're creating a potential acquisition channel that's built directly into how consumers use the product. But to be clear, this is a new behavior for consumers within the Sezzle app. Spending money is different from shopping and for someone receiving their first transfer, there's an onboarding experience involved. So broader adoption may take some time.

SezzleCash addresses a more immediate financial need for eligible Anywhere subscribers. Sezzle Send involves getting consumers comfortable using Sezzle in a new way, including people who may never have interacted with our platform before. We like the potential here, but we're going to be thoughtful about building it out and learning from how consumers actually use it.

And while we're exploring new offerings like Sezzle Send, we're also continuing to invest in the products we've already built. Slide 8 is a good example. We originally launched Sezzle Up back in 2021, becoming the first BNPL platform in North America to give consumers the option to report their short-term installment payments to the credit bureaus.

More recently, we've focused on making that experience easier and more accessible. We've expanded eligibility, simplified enrollment and refreshed the design. We're also working on adding features like in-app credit scores, credit monitoring and alerts. And we're already seeing some encouraging results from those changes. Following our September enhancements, enrollment conversion increased 18% and average weekly enrollments nearly doubled.

So this isn't about introducing something new. It's about continuing to improve a product we've had for years and making it more useful for more consumers.

And beyond helping consumers build their credit, we've also been investing in financial education and finding better ways to learn directly from our users as seen on Slide 9. Money IQ is one part of that effort. Through the program, more than 338,000 consumers have completed over 2 million financial education modules, representing more than 68,000 hours of learning. And in our March survey, 91% of respondents said Money IQ was helpful in making financial decisions. But we're also learning from our consumers.

Our Gen Z Advisory Council gives younger consumers a direct way to tell us what they like, what they change and what they'd like to see next. And we're putting that feedback to work across products like Sezzle Send, Sezzle Up and our rewards offerings. It's a 2-way relationship. We're helping consumers become more informed about their finances while they're helping us build better products.

And as we continue to improve these products, AI is playing an increasingly important role in how quickly and efficiently we can deliver. AI continues to be a major focus across Sezzle, and Slide 10 shows some meaningful progress since our last update. We've talked before about embedding AI throughout our organization. What I want to highlight this quarter is the impact we're seeing from those efforts.

On the consumer side, 40% of support contacts now end with our AI agent without requiring any human involvement. And we're seeing strong consumer satisfaction from those interactions as well. Based on our post-contact surveys, AI interactions are 1.4x as likely to receive a top satisfaction score compared to human handled tickets.

Internally, we're seeing similar progress. More than 90% of our engineering merges in the third quarter involved AI, and we're seeing a 43% year-over-year increase in code changes merged per engineer. We're also getting more efficient in how we use these tools with AI costs per unit of work declining 27% sequentially.

These are the great results we're looking for, more consumer support handled without human intervention, greater output from our engineering teams and improving cost efficiency. It's one thing to adopt AI across an organization. It's another to see that adoption translate into measurable improvement in how the business operates.

And while a lot of this work happens behind the scenes, the ultimate measure of our progress is how consumers are engaging with Sezzle. The metrics on Slide 11 give you a good picture of how this is all coming together.

First, we're continuing to see strong engagement in our core shopping business. Average quarterly frequency reached 7.8x, up from 6.5x a year ago. That now includes BNPL purchases along with SezzleCash and Sezzle Send payments, giving us a broader view of how consumers are using the platform. Across the platform, total transactions increased 30.1% year-over-year to 12.4 million. Repeat usage also remained strong at 97.4% of total transactions, up 80 basis points year-over-year. But the number I'd like to leave you with is average quarterly revenue per monetized user, which increased 28.1% year-over-year to $41.

We spent a lot of time today talking about our investments in subscriptions, new products and the consumer experience. These are the measures that help us evaluate whether those investments are paying off. Consumers are shopping with us more frequently. They're engaging with a broader range of subtle products, and we're generating more revenue per monetized user. There's still plenty of work ahead of us, but we're encouraged by the progress we're making and confident in the direction of the business.

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

Lee Brading

Thanks, Charlie. I'll start on Slide 12. Total revenue increased 42.6% year-over-year to $166.5 million. Net income rose 79.3% to $47.8 million and adjusted net income grew 89.9% to $47.7 million.

As you can see, it was a solid quarter of growth coupled with margin expansion, driven by margin improvements, profit grew roughly twice as fast as revenue as we more than doubled the threshold for the Rule of 40.

Total revenue less transaction-related costs rose 10.5 points to 64.7% of total revenue at the top of our 55% to 65% target range. Non-transaction-related operating expenses were 27.8% of revenue, up 0.7 points year-over-year, but down 1.2 points from Q2.

On Slide 13, you'll notice a change in how we measure volume. Starting this quarter, total transaction volume, or TTV, is our primary measure of overall volume. Our products now go beyond the checkout. So TTV includes volume from SezzleCash and Sezzle Send, which GMV did not capture. We recast prior periods to the TTV definition, so every comparison on these slides is apples-to-apples. Q3 TTV grew 34.9% year-over-year to a new company high of $1.4 billion, an 11.6% sequential increase.

Growth was driven by our Sezzle Anywhere and Sezzle Premium subscribers plus the launch of SezzleCash in June. Total revenue grew faster than volume at 42.6%. Revenue as a percentage of TTV was 11.9%, up 60 basis points year-over-year and flat with Q2. As a reminder of seasonality, revenue yield is usually highest in Q1 and lowest in Q4. So we expect it to step down in the fourth quarter.

Turning to the unit economics on Slide 14 through 16. As a reminder, transaction-related cost is a non-GAAP measure that combines transaction expense, provision for credit losses and net interest expense. Revenue less transaction-related costs is what we also refer to as net transaction margin.

On Slide 14, transaction-related costs for Q3 were $58.8 million or 4.2% of TTV, down from 5.2% a year ago. As a percentage of revenue, they fell more than 10 points to 35.3%.

Slide 15 breaks out the 3 main components of transaction-related costs, transaction expense, provision for credit losses and net interest expense. Most of the decrease in transaction expense as a percentage of TTV is attributed to us signing an exclusive arrangement with Visa for our U.S. credit products. During the quarter, we recognized a $3.7 million benefit from the arrangement. Excluding this benefit, transaction expense would have been about 1.6% of TTV, still an improvement on the 1.7% we've run for the past several quarters.

The provision for credit losses was 2.7% of TTV, down from 3.1% a year ago. The step-up from Q2 is the normal seasonal pattern from Q1 as the low point because of tax refunds and the provision climbing through the year from there. Year-to-date, the provision is about 2.2% of TTV. With the move to TTV, we're updating full year guidance to approximately 2.5% of TTV from 2.5% to 3% of GMV, which still allows for the usual seasonal rise in Q4.

Net interest expense fell 29% year-over-year to $2.8 million or 0.2% of TTV. That reflects the new $300 million credit facility we entered into in May at a lower rate, plus SezzleCash and Sezzle Send now being handled through our loan facility with WebBank.

That brings us to Slide 16. Net transaction margin was $107.7 million, up 70% year-over-year and 64.7% of total revenue. Even without the payment network benefit, we would have been around 62.5%, comfortably in the upper half of our 55% to 65% target range.

Our focus on costs extends to non-transaction-related operating expenses on Slide 17. These costs were $46.2 million or 27.8% of revenue, down from 29% in Q2. Marketing came in at $15.9 million, down from $19.4 million in Q2 and consistent with what we talked about in Q2. As Charlie noted earlier, Q2 was a deliberate test of higher spend, not a new run rate.

Marketing is still up 81% year-over-year, and we'll keep putting dollars to work wherever the math supports a payback of less than 6 months. The investments we made in Q2 are already showing up with active subscribers reaching 955,000.

We're also gaining operating leverage in other areas. Personnel expense grew 17% against revenue growth of 43%, helped by the AI productivity gains Charlie described. Third-party technology and data grew faster as we scaled cloud infrastructure for higher volume and 3 new products.

Corporate strategic project costs were $2.4 million this quarter for 2 projects. First, our antitrust case remains in discovery, which we expect to continue through 2027. Second, we submitted our application for a national bank charter in October. Both are long-term investments in Sezzle, and we add these costs back in our adjusted figures.

On Slide 18, net income was $47.8 million, a 28.7% margin. That's up 79% year-over-year, even though our effective tax rate rose 22.1% from 15.7% a year ago. Adjusted EBITDA was $70.2 million, up 77% year-over-year with a 42.1% margin.

We continue to keep our adjustments to a minimum. Adjusted net income was $47.7 million. The relatively minor difference with GAAP net income is attributed to the difference of discrete tax benefit offset against the after-tax add-back of corporate strategic project costs. You can also see our seasonality here. Q1 and Q4 are typically our strongest quarters for bottom line performance.

Slide 19 shows we remain well capitalized with plenty of liquidity and low leverage. At quarter end, we had about $239 million in liquidity, made up of $70.1 million of unrestricted cash and $169.3 million of availability in our $300 million line of credit. We had $104 million drawn on the line, down from $118 million a year ago, even as notes receivable grew 72% to $315.9 million. Total debt is about 0.4x trailing 12-month adjusted EBITDA and 0.4x equity.

The business continues to fund itself. Year-to-date, cash from operations was $227.9 million, up 64%. Stockholders' equity grew 79% year-over-year to $277.7 million. Year-to-date, we have also returned capital as we have repurchased $28 million of stock under our $100 million program this year, which brings me to Slide 20.

We first guided to $4.35 of adjusted EPS for 2026 a year ago, and this is our fourth raise since. We now expect total revenue growth of approximately 42.5% for 2026, up from 35%. We're also raising adjusted net income guidance to $190 million from $185 million and adjusted net income per diluted share to $5.45 to $5.50, up from $5.25.

We are also introducing preliminary 2027 guidance for adjusted net income per diluted share of $7.20. That's a growth rate of 31% to 32% over our updated 2026 range. Our outlook includes a measured view of our newest products. SezzleCash is off to a strong start, and Sezzle Send just rolled out more broadly in October. As with any new lending product, we're managing both carefully on risk and marketing, and we'll update you as they mature.

With that, I'll turn the call over to the operator for Q&A.

Operator

[Operator Instructions] And today's first question comes from Mike Grondahl with Northland.

分析師問答

Mike Grondahl

A nice quarter. Charlie, you guys are clearly product innovation and kind of riding a new product wave here, Pay-in-5, SezzleCash, Sezzle Send. Can you talk about what inning you think we're in, in some of these newer products? And any other to call out other than those 3?

Charles Youakim

Well, good question, and thanks, Mike. Pay-in-5 is pretty much rolled out at this point. So I think that's a ball game for Pay-in-5 in terms of rolling out within our business. But our view on Pay-in-5 is maybe it's not ball game in terms of acquiring consumers and retaining consumers. That's all point is we saw such good feedback from consumers using our product that they love it so much that our view is that it incrementally helps us win consumers and keep consumers from competition.

SezzleCash and Sezzle Send, super early. I mean they're just getting started. So I think that's probably the layout. We're excited about all of them. But really Pay-in-5 has just been -- I mean, it rolled out earlier this year. So it's had a lot of time to make hay for us. And so that is the winner of the 3 right now.

Mike Grondahl

Got it. And maybe just 2 more questions. One quick on Pay-in-5. What percent of the business, and I think it's a big number, has transitioned to Pay-in-5? And then secondly, could you just cover again how SezzleCash and how Sezzle Send you think that's going to help with customer acquisition kind of bringing in new customers?

Charles Youakim

Yes. I'll pass off the first part to Lee because he might have more detail on that. But on SezzleCash, Sezzle Send, actually even Pay-in-5, they all help us acquire new customers because they're basically differentiated offerings from, I think, some of the competitive base that our consumers may be compare us against. So we have differentiated or totally different products from some of our competitors that allow us to acquire new consumers.

I would say Sezzle Send has launched the entire -- I would say the majority of the design was around helping us acquire new consumers because the thesis is that consumers will send other money to their friends and family, contact, et cetera. And if you're already a Sezzle user, it's likely that you -- in your nexus, you have other potential Sezzle users just because people tend to hang out with people like them. There's a little bit of that. So our view is that, that would be a user-generated acquisition channel. And we still believe it is. But they're all helping us acquire users. I don't know, Lee, anything to add on the first part of the question?

Lee Brading

Yes, on the percent of Pay-in-5. Yes, if you look at our kind of core BNPL product, yes, it's about -- it's the majority, and I think we've alluded to it before around 70%. And like Charlie said, yes, it's past the ninth inning, I guess.

Mike Grondahl

Got it. Yes, I mean that turned out to be pretty popular.

Operator

And the next question is from Ross Cole with Needham & Company.

Ross Cole

Congratulations on the great quarter. My first question here is for FY '27, the $7.20 guide, can you provide any color into what's driving this? And then also, is this including an impact from SezzleCash and Send? Or would you consider like that growth to be upside here?

Charles Youakim

Lee, do you want to take that one?

Lee Brading

Yes, I can pop in here. I guess what I'll give you just a little more on the history of how we've given guidance. We did similarly in Q3 last year. We gave that $4.35 EPS for 2026. And it's inclusive of what we have opened like, what we've already launched in terms of products. So -- but we don't give much more than that at this point in time. As we come out in Q4, we'll break out more in terms of revenue and margin expectations. But at this point, it's just more of an EPS estimate for you guys.

Ross Cole

Great. And then I was wondering as well, it's great to see the subscribers approaching 1 million. Can you maybe talk a bit about how chartering conversions from on-demand are trending?

Charles Youakim

Well, on-demand has been shrinking as a percentage of our business, mainly because we realized -- we talked about this earlier in the year as we started to transition more to subscribers as the focus. When we first launched on-demand, we had the theory in our mind, and we've been wrong before. The theory was that we were basically building like a bridge like almost like -- I know it's not free, but it's like a freemium bridge into our subscription product where it's like try before you buy, before you commit. And what we realized is a lot of those customers, they just like gating us like just dabbling, and they never made commitment. And when we converted, we did get on-demand consumers to convert in, but it wasn't like what we imagined it would be.

And so we decided, let's just lead with subscription. We've talked about this a bit externally, a bit internally. It's almost like the view is, do you want to be like a target or do you want to be like a Costco model? And what we started to realize is just we really like the kind of the Costco model instead, just a subscription-based product allows us to deliver lower-cost financial services products to our subscriber base, the ones that commit to us and want to be a part of our system.

And so we're really viewing as leading with subscription as the primary solution. And on-demand is still there. But now it's not used as much as a tool with the direct-to-consumer type of relationship with consumers. It's used more as a tool to help our sales and partnerships teams to work and deliver solutions to merchants that might be less comfortable with the merchant fees required to support BNPL. And if we can pass on some of the fees to the consumer directly in the merchant checkout, now the merchants much more comfortable with adding Sezzle into their checkout. So it's become more of a merchant acquisition tool than a consumer tool.

Operator

And our next question is from Ryan Tomasello with KBW.

Huan Chong

This is Huan Chong on for Ryan. Congrats on a great quarter. Could you just help frame for us what the monthly spending is like for your average subscriber and how you're thinking about your current wallet share of either credit or spending within the current user base? Just trying to get a sense of how much room there could be for like a TTV per user growth, especially given the expanded product suite.

Charles Youakim

Yes. We plan to keep on pushing forward with more and more products in our future. Some of those products are waiting for our national bank charter completion, like checking accounts, savings account products and potentially more in the financial services area or arena. So we think there's more wallet share with these consumers and more frequency. We know they love our product, but we just think there's probably a lot more there in terms of making these consumers -- having these consumers that are in love with us, do more with us.

But Lee, I don't know if you have any additional color on the first part of the question?

Lee Brading

Yes, I'll follow up on a couple of items there. Yes, we haven't -- we're not disclosing the CAC, what we do from a subscription cost because we do a net number, and we have subscribers move in and out, and it's very easy to cancel and move in and out. So we just don't get into those numbers. But also add on to Charlie's comment on the wallet shares. We've looked at some others -- other companies out there and people are transacting with them 15-plus times a month, the consumers are. And we disclosed consumers using us what, 7 to 8 times a quarter. So we definitely think there's a lot of upside.

Huan Chong

Okay. Got it. That's helpful. And just in the most recent 10-Q, you broke out your new revenue disaggregation, which was helpful in getting a sense of that with the different moving pieces of take rate. Can you just help us understand the outlook for take rate? And do you see that roughly 11.8% rate in 3Q as something that's sustainable?

Charles Youakim

Lee, do you want to take that?

Lee Brading

Yes. We -- sorry, yes, I'll take that. The seasonality of our business, we definitely expect it to come down in Q4. And -- but we do -- I think last quarter, we did give guidance out there. At least on the call, we talked about seeing the take rate flat year-over-year, meaning '26 versus '25. But we had a strong quarter here in Q3, particularly driven by the subscriber side, if you look at take rate. And so we'd expect that probably up a little bit year-over-year on the take rate versus -- '26 versus '25.

Operator

And the next question is from Rayna Kumar with Oppenheimer.

Anthony Cyganovich

This is Anthony Cyganovich filling in for Rayna. With AI-driven shopping assistance and agentic commerce becoming more prevalent, can you talk about how Sezzle is positioning itself to remain relevant at the checkout layer? Are there opportunities for Sezzle to become a preferred payment or financing option within AI-powered purchasing workflows?

Charles Youakim

We're definitely thinking about a lot. I mean you hear us talk about AI a ton, I'm sure, and we really lean into it heavily. So we also think about it with our products and services to the consumer as well. I think it is a big win for our partnerships team right now because our partnerships team is looking at where are the big AI partnerships, where are the potentials, where can we get plugged in, where can we watch for fast risers and latch on quickly to become the partners of the winners of the future in AI. And we think it does matter.

But I think we're also helped a bit is that we have our Anywhere card where just like -- I'm not sure -- I asked this question to a bunch of investors about a year ago and asked who's using AI shopping assistant and it was still pretty low. But I even find myself using them now. And I'm probably a super early adopter because I try to adopt products and I like to. But I'm starting to use shopping assistants.

And basically, what I find is that when you connect into them, it's all about loading your card into the product -- and we have that card. We have a credit card for our consumers that's used as a payment vehicle. And so for our Anywhere customers, I think we're already kind of on that front, our Anywhere customers can load those cards into these virtual shopping assistants and then just be prompted to use us or to confirm the purchase.

So I think we already have an avenue that's helping us with the virtual card and our Anywhere subscription as a leading front, but we're also actively thinking about how else to get in there deeper because we really believe in it.

Anthony Cyganovich

That's helpful. Just as my follow-up, I mean, your profitability and cash generation has been improving a lot over the last year. Can you talk about how you're prioritizing capital allocation among buybacks, product investment, geographic expansion or potential M&A?

Charles Youakim

It always starts with product and delivering to the consumer. That's the first thought whenever we're talking about capital allocation. But because we're such an efficient company with how we do things, it tends not to be a big usage of cash. To give you an idea like when we launch new products, it's basically bringing 3 or 4 new team members, especially now with AI.

I mean it's -- we've even started to discuss testing single-person teams, single-person teams bring things end-to-end more and more rather than multifaceted or multifunctional teams. So we're bringing on team members to launch and support products that doesn't tend to be a big use of funds. And then so that tends to lead to cash coming out of the balance sheet. And then we have decision-making there. Do we sit and wait? Do we do buybacks? Do we do dividends?

But we also have right in front of us our national bank charter application process. And that process also -- there's a bit of a lean towards putting on cash during that process because you want to show safety and soundness, too. So we have that in kind of the back of our heads as well.

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

Lee Brading

No, you're spot on hit on all the items. And I'd say we're constantly looking at all of those. And number one, as you mentioned, is organic investment back in the business. But with the excess, we're always looking for the best opportunity, best return.

Operator

The next question comes from Hoang Nguyen with TD Cowen.

Hoang Nguyen

Congrats on the quarter. I wanted to start first with maybe on the gross margin. So over the past 4 quarters, it looks like you guys have been, again, at the high end, 65% or even exceed that, right? Do you think we're at the stage where the business is at a consistently higher level of profitability and maybe the high end is what we should think about the business going forward? And I have a follow-up.

Charles Youakim

Yes, I'll let Lee give more detail on this. But I think it's hard for us to say just because we're learning about the product mix as the products get out into the market. And we think about gross margin as we launch products, but each one has like puts and takes on gross margin and what we are okay with. Like for instance, I'll give a more obvious caveat to gross margin. Sezzle Send is a product that we're okay with lower financial metrics on because we view it as a product that can help us acquire consumers. That's more of the focus. So it's a give and take. That product would have a lower gross margin. So it depends on that product grows in terms of like the next 12, 24 months on what happens to gross margin. But that kind of gives you the idea of like why it's hard to predict where it might be in 12 months, 24 months because we have some -- our own gives and takes of how we want to guide things.

But Lee, anything to add?

Lee Brading

Yes. No, that's spot on. Yes, as we launch these new products, particularly Cash and Send, as you noted, lower margin. And typically, when you start off on the product too, you're going to have a higher provision or higher loss rate with that. So that type of -- that takes time to play out. And as Charlie mentioned earlier, we're just getting started with these products.

Hoang Nguyen

Got it. And maybe on the marketing, it looks like, I mean, marketing has gone up, but that also happened to your net subscriber adds, right? So net-net, I mean, how do we think about the efficiency of your marketing over the past year and coming into the holiday season, I mean, how should we think about the net subscriber add as we are about to enter the holiday?

Charles Youakim

Well, we feel good about our efficiencies. We're always focused on efficiency. We always try to explain also marketing, just so people are aware, there's some fixed elements in marketing with our Timberwolves partnership, just quarter-to-quarter-to-quarter. We have some parts of marketing that are just the more people use our app, the more -- some of the marketing cost components just rise from consumer usage. And then some of it is discretionary. So it's kind of a mixed bag on the total marketing spend we get every quarter. But on the discretionary part, I feel like we've been even more deliberate, more conservative maybe or more -- wanting even more return from what we're spending over the last quarter-on-quarter.

But Lee, anything to add to that or clear up?

Lee Brading

No, that was spot on.

Operator

And at this time, there are no further questioners in the queue, and this does conclude our question-and-answer session. I would now like to turn the conference back over to Charlie Youakim for any closing remarks.

Charles Youakim

Thank you. I usually close with a Buffett or Munger quote, but tonight, I wanted to share something JPMorgan said to Congress in 1912. During the Pujo hearings, he was asked whether commercial credit is based primarily on money or property. His answer, "No, sir, the first thing is character." Asked whether that came before money or property said, "Before money or anything else, money cannot buy it."

A few weeks ago, we filed our application to become a national bank. It's a long process and the outcome isn't guaranteed, but it made us take a hard look at what we've built, a model where customers stay current to keep using Sezzle, where we adjust spend limits so customers don't overextend and where customers who pay on time can build their credit history through Sezzle Up. We think that's what character looks like in the lending business. The numbers we shared to that matter, but what we're more focused on building is trust with our consumers, our merchants, our regulators and all of you.

And before we close, as always, a big thank you to the Sezzle team who accomplishes far more than you can believe and to our investors for your continued support. We'll talk to you again next quarter. Thanks.

Operator

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.