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$24.35 sezzle inc.

SEZL:NASDAQ Valuation Ideas?, page-34

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prosperity

9,247 Posts.

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28/02/24

18:23

Post #: 72653120
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Originally posted by Prestonian: ↑

I found a useful website here with guidance on how to value companies using the Rule of 40 as a valuation tool, where there's a tradeoff between profit and growth.

https://ruleof40.volitioncapital.com/The CEO mentioned the Rule of 40 in the conference call:

The rule of 40 is that your revenue growth % plus your EBITDA margin % should add up to 40%. A company might have 10% in one and 30% in the other or even 50% and -10%. As long as it adds up to 40%. So as the CEO pointed out, Sezzle hit this easily in 2023 with 18% + 26% = 44%

Anyway this definitely supports the use of higher revenue and EBITDA multiples to value Sezzle. Have a look at some of the companies in the table in the link above to give an idea of their own "Rule of 40" result, and the revenue multiples supported. Sezzle still only about 1.75 x forward revenue!

Also worth a look at this page, shown below is EV/Revenue chart over the years to 2024 finishing with a median of 7.4:

https://aventis-advisors.com/saas-valuation-multiples/#saastransactions

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We just need to quadruple the current SP to reach the market average multiple. I think the quality of the Sezzle business model means that a US$360 SP is closer to fair value.

Last edited by prosperity: 28/02/24

SZL Price at posting: $24.35 Sentiment: Buy Disclosure: Held
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0 Great analysis

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