Sezzle's Strategic Shift to Subscriptions: A Catalyst for 2026 EPS Growth and Long-Term Profitability

In a bold move to reinvigorate its business model, Sezzle Inc. (SEZL) has pivoted back to a subscription-centric strategy, a decision that appears to be paying dividends as the company eyes a 29% year-over-year increase in 2026 adjusted earnings per share (EPS) to $4.35. This strategic realignment, announced in Q3 2025, has already driven a 67% year-over-year revenue surge to $116.8 million and a subscriber base expansion to 568,000 users, signaling a renewed focus on sustainable growth and customer retention, according to Sezzle's Q3 2025 results.

A Strategic Pivot: From On-Demand to Subscriptions

Sezzle's recent emphasis on its On-Demand product-a service offering users flexible payment options-failed to deliver the anticipated lifetime value compared to subscriptions. Recognizing this, the company refocused its marketing efforts on its MODS (My Outfit, Delivered) subscription program, which saw subscribers balloon from 36,000 to 784,000 in 2025, as detailed in the Q3 results. This shift not only improved unit economics but also aligned with long-term goals of fostering customer loyalty. CEO Charlie Youakim highlighted that the company crossed $1 billion in quarterly gross merchandise volume (GMV) for the first time, underscoring the effectiveness of the strategy.

Strengthening Unit Economics and Profitability

While explicit metrics like customer acquisition cost (CAC) and churn rates remain undisclosed, Sezzle's operational engagement metrics tell a compelling story. Monthly Active Users (MAU) grew 38% year-over-year, revenue-generating users surged 120%, and app sessions increased 78% YoY, according to the company's Q3 report. These figures suggest a sticky user base and efficient monetization. Financially, the company's adjusted EBITDA hit $39.6 million in Q3 2025, up 74.6% YoY, while operating income rose 70.6% to $35.6 million, reinforcing the improving profitability trajectory noted in the Q3 results.

The company's balance sheet further bolsters confidence, with $134.7 million in cash and $225 million in credit facility capacity reported in Q3 2025. This financial flexibility positions Sezzle to reinvest in customer acquisition and retention initiatives, even as it navigates potential headwinds like credit loss provisions (projected at 2.5%–2.75% of GMV for 2025).

Long-Term Profitability and 2026 Guidance

Sezzle's 2026 EPS guidance of $4.35 reflects a strategic emphasis on subscriber monetization and operational efficiency. By prioritizing subscriptions, the company is likely to benefit from recurring revenue streams and reduced customer acquisition costs over time. While churn rates remain unquantified, the 38% YoY MAU growth and 78% YoY increase in app sessions indicate strong user retention, as highlighted in the Q3 results.

The company's preliminary 2026 guidance also hinges on its ability to maintain disciplined marketing spend and optimize credit risk management. With a robust foundation of $1 billion in quarterly GMV and a subscriber base that continues to expand, Sezzle's long-term profitability appears well-supported per the Q3 disclosures.

Conclusion

Sezzle's return to a subscription model has reignited its growth trajectory, delivering both immediate financial results and a sustainable path toward 2026 EPS targets. By leveraging improved unit economics, a loyal customer base, and a fortified balance sheet, the company is well-positioned to capitalize on its strategic realignment. For investors, the key will be monitoring subscriber monetization trends and the effectiveness of retention strategies in the coming quarters.