The High-Growth BNPL Sector: Why Sezzle and Affirm Are Outperformers in 2025

The buy-now-pay-later (BNPL) sector has emerged as one of the most dynamic segments of the fintech industry, with Sezzle (NASDAQ:SEZL) and Affirm (NASDAQ:AFRM) leading the charge. As of August 2025, both companies have demonstrated exceptional growth, but their divergent strategies—Sezzle's hypergrowth in embedded finance and Affirm's retail partnership dominance—position them as compelling yet distinct investment opportunities. For long-term investors, understanding their risk profiles, scalability, and market positioning is critical to capitalizing on the sector's potential.

Sezzle: Explosive Revenue Growth and Embedded Financial Wellness

Sezzle's Q2 2024 results were nothing short of staggering. Total revenue surged 60.2% year-over-year to $56.0 million, far exceeding its own guidance of 25% growth. This was driven by a 38.9% increase in Underlying Merchant Sales (UMS) to $532.2 million, with revenue as a percentage of UMS hitting 10.5%—a new high. The company also raised its full-year 2024 revenue guidance to 35%-40% growth, up from 25%, and projected $55 million in net income, a 183% increase from prior guidance.

Sezzle's success stems from its focus on embedded finance. By integrating BNPL into everyday spending via virtual cards and browser extensions, it has captured a younger, tech-savvy demographic. Its financial wellness tools, such as Sezzle Balance and Money IQ, further differentiate it by fostering long-term customer relationships. With 462,000 active subscribers as of June 2024, Sezzle's unit economics are improving rapidly, evidenced by a 343.7% surge in operating income to $16.7 million and a 32.9% Adjusted EBITDA margin.

However, Sezzle's rapid growth comes with risks. Its business model relies heavily on consumer adoption of embedded finance, which is still unproven at scale. If macroeconomic conditions worsen or competition intensifies, its high-growth trajectory could face headwinds.

Affirm: Strategic Partnerships and Diversified Revenue Streams

Affirm's Q2 2024 results underscored its dominance in retail partnerships. Total revenue rose 46.6% to $866.38 million, with Gross Merchandise Volume (GMV) hitting $10.1 billion—a 34.7% year-over-year increase. The company's partnerships with Amazon, Walmart, Apple, and Shopify have been instrumental in driving this growth. For instance, the Apple Pay integration allows U.S. users to apply for Affirm loans directly within the Apple Pay interface, expanding its reach to millions of consumers.

Affirm's diversified revenue streams—merchant network ($244.9 million), card network ($58.1 million), interest income ($409.4 million), and servicing income ($28.7 million)—provide stability. Its adjusted operating margin of 27.4% and $1.2 billion in cash and equivalents further highlight its financial resilience. Additionally, Affirm's guidance for 2025 GMV of $34.74–$35.34 billion and revenue of $3.13–$3.19 billion signals confidence in its ability to scale.

Yet, Affirm's reliance on retail partners introduces risks. A slowdown in e-commerce or a shift in partner priorities could impact its growth. Moreover, its credit losses increased 26.6% year-over-year to $153 million, reflecting the inherent risks of its lending model.

Comparative Analysis: Growth vs. Stability

Metric	Sezzle	Affirm
Revenue Growth (Q2 2024)	60.2% YoY	46.6% YoY
UMS/GMV	$532.2M (UMS)	$10.1B (GMV)
Profitability	32.9% Adjusted EBITDA margin	27.4% Adjusted Operating Margin
Strategic Focus	Embedded finance, financial tools	Retail partnerships, card network
Risk Profile	High (consumer adoption risk)	Moderate (partner dependency)

Sezzle's explosive growth and innovative product suite make it a high-reward, high-risk bet. Its focus on financial wellness aligns with long-term trends in consumer finance, but scalability depends on maintaining its current growth rate. Affirm, meanwhile, offers a more balanced approach, leveraging its retail partnerships to drive steady, diversified revenue. Its larger GMV and stronger cash reserves provide a buffer against market volatility.

Investment Thesis: Which Aligns with Long-Term Goals?

For investors seeking aggressive growth, Sezzle's 60%+ revenue growth and expanding subscriber base make it an attractive play. Its embedded finance strategy could redefine BNPL, but patience is required to navigate near-term risks.

For those prioritizing sustainable scalability, Affirm's strategic partnerships and diversified revenue streams offer a more predictable path. Its integration with Apple Pay and Amazon, combined with a robust balance sheet, positions it to capitalize on the BNPL sector's expansion while mitigating downside risk.

Conclusion

Both Sezzle and Affirm are outperformers in the BNPL sector, but their paths to success differ. Sezzle's innovation and growth metrics are hard to ignore, while Affirm's partnerships and financial discipline provide a safety net. For long-term investors, a diversified approach—allocating to both but tilting toward Affirm for its stability and Sezzle for its growth potential—could offer the best of both worlds. As the BNPL market matures, the company that adapts to shifting consumer and merchant needs will emerge as the sector's leader.