Sezzle Inc (SEZL) 2022 Q2 法說會逐字稿

Thank you for standing by, and welcome to the Sezzle Inc. Second Quarter 2022 Results Call. (Operator Instructions) I would now like to hand the conference over to Mr. Charles Youakim, CEO. Please go ahead.

感謝您的耐心等待，歡迎參加 Sezzle Inc. 2022 年第二季度業績電話會議。 （操作員指示）我現在將會議交給首席執行官 Charles Youakim 先生。請繼續。

Thank you. Good morning, everyone, or to those joining us from our home here in the U.S., good evening, and welcome to the Sezzle Inc. 2022 Second Quarter Presentation. My name is Charlie Youakim. I'm the CEO and Executive Chairman of Sezzle, and I will be leading the presentation today. I'm joined on the call by our CFO, Karen Hartje; our President, Paul Paradis; and our Head of Investor Relations, Lee Brading.

謝謝。大家早上好，或者那些從美國家裡加入我們的人，晚上好，歡迎來到 Sezzle Inc. 2022 年第二季度演示。我叫查理·尤金。我是 Sezzle 的首席執行官兼執行主席，我將主持今天的演講。我們的首席財務官 Karen Hartje 也加入了我的電話會議。我們的主席保羅·帕拉迪斯；以及我們的投資者關係主管 Lee Brading。

2022 has been a unique year for us and also for many of you listening. In 2020 and 2021, investors and management team aggressively pursued growth. Investor sentiment has been shifted and so have we. We know investors are looking for profitable companies, not just growth, and we have taken that message seriously.

2022 年對我們以及你們許多聽眾來說都是獨特的一年。 2020年和2021年，投資者和管理團隊積極追求增長。投資者的情緒已經發生了變化，我們也是如此。我們知道投資者正在尋找盈利的公司，而不僅僅是增長的公司，我們認真對待這一信息。

We recognize this is a natural part of our evolution as a company from a scrappy start-up trying to get a foot in the door to an established leader. It is a cultural shift that requires reindicating our team that it's not just about growth at all costs. A key part of our monthly town hall to Sezzle is educating the team on the bottom line. Growth is no longer the top driver at Sezzle, its profitability.

我們認識到，這是我們從一家鬥志旺盛的初創公司發展成為成熟領導者的過程中自然而然的一部分。這是一種文化轉變，需要我們的團隊重新表明，這不僅僅是不惜一切代價實現增長。我們每月一次的 Sezzle 市政廳的一個關鍵部分是對團隊進行底線教育。增長不再是 Sezzle 的首要驅動力，而是盈利能力。

I'm happy to announce that we expect to hit a run rate of profitability by year-end, in which our total income will exceed our transaction-related expenses and our adjusted operating expenses, which as far as we know, would make us the first pure-play BNPL provider in North America to do so. We've taken a great number of steps to get there, and we have a few more left to complete. We're going to outline that plan to you as we give you our updates on our second quarter numbers. We'll now move on to our presentation. If you'd like to follow along, you can find a post on the ASX website.

我很高興地宣布，我們預計到年底將達到盈利運行率，其中我們的總收入將超過我們的交易相關費用和調整後的運營費用，據我們所知，這將使我們成為北美第一家這樣做的純BNPL 提供商。為了實現這一目標，我們已經採取了很多步驟，但還有一些工作需要完成。當我們向您提供第二季度數據的最新信息時，我們將向您概述該計劃。我們現在將繼續我們的演示。如果您想繼續了解，可以在 ASX 網站上找到一篇帖子。

Let's get started, and please keep in mind that all dollar amounts shown here are USD. Please move forward to Slide 4, where you can see our quarterly results on the right side of the page. We're really happy with our financial scorecard for the quarter. The results here speak to the efforts taken during the first half of 2022. Our underlying merchant sales continued to grow despite economic headwinds, a shift away from e-commerce back to in-store shopping and tightened underwriting due to our focus on profitability. These efforts also led to a record quarter for us, both in total income and what you're used to us calling net transaction margins, which came in at 2.3% of underlying merchant sales.

讓我們開始吧，請記住，此處顯示的所有美元金額均為美元。請轉到幻燈片 4，您可以在頁面右側看到我們的季度業績。我們對本季度的財務記分卡非常滿意。這裡的結果說明了 2022 年上半年所採取的努力。儘管存在經濟逆風、從電子商務轉向店內購物以及由於我們對盈利能力的關注而收緊承保，但我們的基礎商戶銷售額仍在持續增長。這些努力還為我們帶來了創紀錄的季度業績，無論是在總收入方面，還是在我們所說的淨交易利潤率方面，淨交易利潤率占基礎商家銷售額的 2.3%。

On Slide 5, we show a significant amount of growth in our active merchants and active consumer accounts as well and repeat usage is still growing. But being here, our product is attracting new stakeholders, and we're also sticky. Slide 6 reflects our product evolution from a company connected to consumers through our merchant partners to one connecting directly with consumers.

在幻燈片 5 上，我們顯示活躍商家和活躍消費者帳戶也顯著增長，並且重複使用仍在增長。但在這裡，我們的產品正在吸引新的利益相關者，而且我們也具有粘性。幻燈片 6 反映了我們的產品演變，從一家通過商業合作夥伴與消費者建立聯繫的公司，到直接與消費者建立聯繫的公司。

Earlier in our company's existence, we knew that our merchant stakeholders had to be a first focus because without their buy-in, our products would not reach the consumer. So we put a focus on the features that we felt would make Sezzle attractive to those merchants. But as we have evolved, we've been putting more and more focus on the consumer. Our loyalty program and Sezzle Premium, are recent examples of that. We have a few more additions coming to the platform in the next 12 months if you round out the feature set that our customer is looking for. We'll be adding pay now and pay in 2 for smaller purchases, and a physical card tied to a more traditional revolving credit account, which we call Sezzle Flex. When we complete the launches of these products, our future set will be one of the most complete among North American payment platforms.

在我們公司成立之初，我們就知道我們的商家利益相關者必須成為首要關注焦點，因為如果沒有他們的支持，我們的產品就無法到達消費者手中。因此，我們將重點放在我們認為能讓 Sezzle 對這些商家有吸引力的功能上。但隨著我們的發展，我們越來越關註消費者。我們的忠誠度計劃和 Sezzle Premium 就是最近的例子。如果您完善我們的客戶正在尋找的功能集，我們將在未來 12 個月內向該平台添加更多功能。對於小額購買，我們將添加立即付款和分兩次付款的功能，以及與更傳統的循環信用帳戶（我們稱之為 Sezzle Flex）綁定的實體卡。當我們完成這些產品的推出時，我們未來的產品將成為北美支付平台中最完整的產品之一。

We've been busy over here as Sezzle. Slides 7 and 8 will show you that. On Slide 7, we're going to run through some enhancements and extensions of our core products. First, our long-term product has gained traction through improvements through the user experience and the addition of a more capable lending partner in Bread Financial. We are experiencing 9x volumes through that product after the switch on lenders, and we expect even more growth to come as the long-term product gets opened up to our entire merchant base.

我們作為 Sezzle 在這裡一直很忙。幻燈片 7 和 8 將向您展示這一點。在幻燈片 7 上，我們將介紹我們核心產品的一些增強和擴展。首先，我們的長期產品通過改善用戶體驗以及在 Bread Financial 中增加更有能力的貸款合作夥伴而獲得了關注。在啟用貸方後，該產品的交易量增加了 9 倍，並且隨著長期產品向我們的整個商戶開放，我們預計還會出現更多增長。

We also have 2 more lending partners coming on board with Opportune and Genesis joining our platform. Opportune and Genesis expand our addressable customer base by accepting lower consumer credit bands within our products. We expect a step change improvement to volumes with their additions alongside Bread Financial.

隨著 Opportune 和 Genesis 加入我們的平台，我們還有另外 2 個貸款合作夥伴加入。 Opportune 和 Genesis 通過在我們的產品中接受較低的消費者信用等級來擴大我們的潛在客戶群。我們預計，隨著 Bread Financial 的增加，交易量將出現逐步改善。

Next, our in-store offering continues to gain momentum. This momentum is coinciding with the move back to in-person shopping, which we timebound. Merchants can add Sezzle as a payment method at their physical stores using an entirely self-serve process initiated within our online merchant dashboard. And it's even easier for our consumers to use us in store at our integrated merchants. They just tap their mobile device at the register to transact with us through our virtual card program.

接下來，我們的店內產品繼續增長勢頭。這種勢頭與回歸面對面購物的趨勢相吻合，而我們的購物是有時間限制的。商家可以使用我們在線商家儀表板中啟動的完全自助流程，在其實體店添加 Sezzle 作為付款方式。我們的消費者可以更輕鬆地在我們的綜合商戶店內使用我們的服務。他們只需在收銀台點擊移動設備即可通過我們的虛擬卡程序與我們進行交易。

These user-friendly systems have led to an in-store program that has reached 10% of our total profit environment. Our marketplace also continues to improve. Over 18% of our processing volume in the quarter originated from our marketplace. Just last week, marketplace represented almost 23% of our processing volumes. To say we're excited about that progress is an understatement. As Sezzle Premium matures, we expect the volume through our marketplace to grow.

這些用戶友好的系統使店內計劃達到了我們總利潤環境的 10%。我們的市場也在不斷改善。本季度超過 18% 的處理量來自我們的市場。就在上週，市場幾乎占我們處理量的 23%。說我們對這一進展感到興奮是輕描淡寫的。隨著 Sezzle Premium 的成熟，我們預計我們市場的銷量將會增長。

This solidified Sezzle as much more than a payment solution to our merchants, but a significant lead generation channel. Meanwhile, our recently launched loyalty program will help us promote positive consumer behaviors within our products and increase engagement.

這使 Sezzle 不僅成為我們商家的支付解決方案，而且成為重要的潛在客戶開發渠道。與此同時，我們最近推出的忠誠度計劃將幫助我們在產品中促進積極的消費者行為並提高參與度。

Slide 8 provides the key highlights of our new premium product, which was launched less than 2 months ago. In that short time frame, premium has acquired over 47,000 active subscribers, and those subscribers account for over 10% of our processing volume since launch. The way the product works is simple. In exchange for signing up for our premium subscription, the customer gets access to our affiliate and gift card programs, which opens up important retailers for that customer, including Amazon, Walmart, Lowe's and many other large retailers in the U.S.

幻燈片 8 介紹了我們不到 2 個月前推出的新優質產品的主要亮點。在這麼短的時間內，Premium 已經獲得了超過 47,000 名活躍訂閱者，這些訂閱者自推出以來占我們處理量的 10% 以上。該產品的工作原理很簡單。作為註冊我們的高級訂閱的交換，客戶可以訪問我們的附屬機構和禮品卡計劃，這為該客戶打開了重要的零售商，包括亞馬遜、沃爾瑪、勞氏和美國的許多其他大型零售商。

Premium members get a higher level of customer support, more rewards and many other benefits that don't come with our core products. The value prop is strong for the consumer. We give you more access to our products and more features in exchange for a small monthly account fee. This account fee plus affiliate revenue, gift card revenue and interchange revenue from our virtual card have helped us earn around a 10% effective rate for the product so far. And needless to say, we're excited for the value that we're bringing to consumers and the growth we are seeing in subscribers suggest that they agree with us.

高級會員可以獲得更高水平的客戶支持、更多獎勵以及我們核心產品所沒有的許多其他好處。對於消費者來說，價值支撐很強大。我們為您提供更多訪問我們產品和更多功能的機會，但每月只需支付少量帳戶費用。這筆賬戶費用加上附屬收入、禮品卡收入和虛擬卡的交換收入到目前為止已經幫助我們獲得了大約 10% 的產品有效利率。不用說，我們對我們為消費者帶來的價值感到興奮，我們看到訂閱者的增長表明他們同意我們的觀點。

On Slide 9, you'll see that we're not quite done. We want to round out our platform with a full feature set of payment options. Over the next 12 months, we'll be adding [pay in 2] and pay now to the checkout and shipping our customers a physical and virtual Flex card, which allows the customer to put payments onto a more traditional revolving account and uses anywhere.

在幻燈片 9 上，您會發現我們還沒有完全完成。我們希望通過一整套功能的支付選項來完善我們的平台。在接下來的12 個月內，我們將在結賬處添加[pay in 2] 和pay now 功能，並向客戶提供實體和虛擬Flex 卡，該卡允許客戶將付款存入更傳統的循環賬戶並在任何地方使用。

Telex will be a true anymore product for us. With these products, we believe our platform will be ready to serve all the payment needs to our customers, truly empowering them financially. Before I hand over the call to Karen, I want to review the initiatives that we completed and plan to complete in 2022 on the road of profitability. Please flip ahead to Slide 11 for that discussion.

Telex 對我們來說將不再是一個真正的產品。有了這些產品，我們相信我們的平台將準備好滿足客戶的所有支付需求，真正增強他們的財務能力。在我把電話交給凱倫之前，我想回顧一下我們在盈利之路上已經完成和計劃在 2022 年完成的舉措。請翻到幻燈片 11 進行討論。

First, let's go through the initiatives we completed through 2022 thus far. But before we get started, I want to explain that we traditionally believe in the concept of exchanging upfront costs for long-term gains. Yes, we do believe in the CAC for LTV exchange. But in early 2022, we identified this was not a sustainable approach given the changing market conditions. The cost of capital has gone up dramatically. It was no longer worth the cost of spending that dollar to try to make $2 later. We know that every action in the company had determined immediate profit.

首先，讓我們回顧一下 2022 年迄今已完成的舉措。但在開始之前，我想解釋一下，我們傳統上相信用前期成本換取長期收益的概念。是的，我們確實相信 CAC 可以實現 LTV 交換。但在 2022 年初，我們發現鑑於不斷變化的市場狀況，這不是一個可持續的方法。資金成本急劇上升。為了以後賺 2 美元而花那 1 美元的成本已經不值得了。我們知道，公司的每一個行動都決定了眼前的利潤。

This decision led us to off-board or renegotiate merchant accounts that weren't (inaudible) for us. And trust me, we didn't take this initiative lightly, but we knew that it was necessary. We feel blessed that the vast majority of our merchant partners agreed to repricing to help us capture more of the value that we are giving to them through the partnership.

這一決定導致我們關閉或重新談判不適合我們的商家帳戶（聽不清）。相信我，我們並沒有輕易採取這一舉措，但我們知道這是必要的。我們感到很幸運，我們的絕大多數商業合作夥伴都同意重新定價，以幫助我們獲得更多通過合作夥伴關係給予他們的價值。

Second, on the revenue optimization front. We also renegotiated our supplier contracts. The key supplier change to call out is our renegotiation of our virtual card offering. We launched with a lower revenue share because we wanted to get to market quickly as a start-up company, and we didn't have any volume to negotiate with. But as our product volume has grown in scale, we are now able to capture more of the revenue for our efforts. Lower on the completed initiatives [list], you'll see the additional revenue stream popping up. That's Sezzle premium, which we went through earlier on the call.

其次，在收入優化方面。我們還重新談判了供應商合同。需要指出的關鍵供應商變化是我們對虛擬卡產品的重新談判。我們以較低的收入份額推出，因為我們希望作為一家初創公司快速進入市場，而且我們沒有任何數量可供談判。但隨著我們的產品數量規模不斷擴大，我們現在能夠通過我們的努力獲得更多的收入。在已完成的計劃[列表]下方，您會看到額外的收入來源突然出現。這就是 Sezzle 溢價，我們之前在電話會議中討論過。

It's a top line winner for us with a high effective rate. And since was only just launched at the end of Q2, we think most of the momentum from this product will be captured in Q3 and Q4 of this year, further assisting our path to profitability. Let's go to the cost side of the equation next. We undertook a number of activities that helped us towards our goal of cash flow positively by year-end. First, we had to execute a reduction in force. This was completed in March of this year. Between our reduction in force and eliminating back sales and physicians, we were able to reduce employee operating costs by 20%.

它以高效率成為我們的頂線贏家。由於該產品在第二季度末才剛剛推出，我們認為該產品的大部分動力將在今年第三季度和第四季度得到體現，進一步幫助我們實現盈利。接下來讓我們看看等式的成本方面。我們開展了一系列活動，幫助我們在年底前積極實現現金流目標。首先，我們必須削減兵力。該工作已於今年 3 月完成。通過減少人力並消除返銷和醫生，我們能夠將員工運營成本降低 20%。

We also scaled back international operations, payment processing and (inaudible), and we're working to spin off our EU and Brazilian [FP] so we can focus on our core North American market. Finally, we are in an internal program to reduce third-party spending within the company. We shut down a number of services that weren't found to be cost effective, which led to a significant savings for the company. And by the way, those are the biggest needle movers, if not the empower list.

我們還縮減了國際業務、支付處理和（聽不清），並且我們正在努力剝離我們的歐盟和巴西 [FP]，以便我們可以專注於我們的核心北美市場。最後，我們正在進行一項內部計劃，以減少公司內部的第三方支出。我們關閉了許多不具有成本效益的服務，這為公司節省了大量資金。順便說一句，即使不是授權列表，這些也是最大的推動者。

As I mentioned, our entire team is rowing the boat towards profitability. So there are countless other activities that we've achieved and are yet to achieve as we meet this journey. We've even removed an expensive sparkling water machine in the office. Sorry, Jake and Tara. Keep in mind, the work you're hearing about occurred over the quarter we're reporting. So while you're seeing a great quarter result before you, I can also assure you that we're getting closer to profitability by the month. We still have some work to do, though.

正如我所提到的，我們整個團隊正在努力實現盈利。因此，在我們踏上這一旅程時，我們已經完成和尚未完成無數其他活動。我們甚至拆除了辦公室裡一台昂貴的蘇打水機。對不起，傑克和塔拉。請記住，您所聽到的工作是在我們報告的季度內發生的。因此，當您看到出色的季度業績時，我也可以向您保證，我們每個月都越來越接近盈利。不過，我們還有一些工作要做。

One major outstanding item includes making adjustments to our product to offset the cost of payment processing. If you take a look at our income statement, yields opinion processing costs are significant. They are about 35% of our total income. And that's before we account for any other expenses. So we're putting a big focus on this. First, because of the lower transaction costs of ACH, we have created incentives for consumers to have their bank accounts for payments instead of choosing card on deferred payments, where our card really isn't necessary.

一項主要的未完成項目包括對我們的產品進行調整，以抵消支付處理的成本。如果您查看我們的損益表，就會發現收益意見處理成本非常高。它們約占我們總收入的35%。這還是在我們考慮任何其他費用之前。所以我們非常關注這一點。首先，由於 ACH 的交易成本較低，我們鼓勵消費者使用銀行賬戶進行付款，而不是選擇延期付款卡，而我們的卡確實沒有必要。

We've implemented the incentive system, whereby a customer can only see their spending power in the mobile app if they add ACH per payment. Early results are positive, but this was launched late in the quarter, so you won't see the benefit just yet. Next, we'll be adding a payment preference speed to installments 2 through 4 for customers that still insist on using their card instead of.

我們實施了激勵系統，客戶只有在每次付款時添加 ACH，才能在移動應用程序中看到他們的消費能力。早期結果是積極的，但這是在本季度末推出的，所以您還不會看到好處。接下來，我們將為仍堅持使用銀行卡的客戶在第 2 至第 4 期分期付款中添加付款偏好速度。

Between the 2 initiatives, we believe we'll make significant inroads against the roughly $10 million in quarterly transaction expenses. We plan to pass over the coming 2 months and then fully implemented during Q4. Altogether, these initiatives will propel us on our path to profitability, which is something that we're incredibly proud to present to you today.

通過這兩項舉措，我們相信我們將在季度交易費用大約 1000 萬美元的基礎上取得重大進展。我們計劃在未來 2 個月內完成，然後在第四季度全面實施。總而言之，這些舉措將推動我們走上盈利之路，這是我們今天非常自豪地向您展示的。

I'll now hand over the call to Karen Hartje, who will cover our financials. Karen?

現在我將把電話轉給凱倫·哈特耶 (Karen Hartje)，她將負責我們的財務事宜。凱倫？

Thanks, Charlie, and hello to all. Before starting the presentation, just a reminder that our quarterly results are unaudited and are presented in U.S. dollars. Starting with Slide 13. As Charlie highlighted, we've sharpened our focus in pursuit of profitability, and the numbers on this slide reflect our strategic direction. Second quarter '22 UMS was up 1.9% over the same period last year, while total income was up 6.8%. Second quarter '22 UMS totaled $419 million, with in-store sales comprising almost 9% of the total.

謝謝查理，大家好。在開始演示之前，請注意我們的季度業績未經審計，並以美元表示。從幻燈片 13 開始。正如 Charlie 所強調的，我們更加註重追求盈利能力，這張幻燈片上的數字反映了我們的戰略方向。 22 年第二季度 UMS 較去年同期增長 1.9%，總收入增長 6.8%。 22 年第二季度 UMS 銷售額總計 4.19 億美元，其中店內銷售額幾乎佔總銷售額的 9%。

In-store continues to outpace online as we are seeing a return of the shopper to physical locations. For us, in-store rose 263% from last year. From a macro standpoint, U.S. online spending for the second quarter was generally soft. According to MasterCard spending costs, U.S. e-commerce retail sales declined in the low single digits for the month of April and May before rising just 1.1% year-over-year in June. As a percentage of underlying merchant sales, second quarter '22 total income improved to 7% versus 6.7% for second quarter '21 and 6.1% last quarter.

隨著我們看到購物者回歸實體店，店內購物的增長速度繼續超過網上購物。對我們來說，店內銷售額比去年增長了 263%。從宏觀角度來看，美國第二季度在線支出總體疲軟。根據萬事達卡支出成本數據，美國 4 月和 5 月電子商務零售額出現低個位數下降，6 月同比僅增長 1.1%。作為基礎商戶銷售額的百分比，22 年第二季度總收入提高至 7%，而 21 年第二季度為 6.7%，上季度為 6.1%。

The percentage increase reflects our recent initiatives to drive profitability, including renegotiating with or offboarding unprofitable merchants. This strategy applies to prospective merchants as well. We are not going to enter marginally unprofitable contracts with new merchants, even if it means walking away from some big name marquee deals. Moving to Slide 14. Transaction expense as a percentage of UMS totaled 2.4% in second quarter '22, down 21 basis points and $1.7 million from last quarter. Transaction expenses comprised primarily in payment processing costs and the cost as the percentage of UMS decreased because the proportion of lower-cost ACH payments relative to card payments increased. As Charlie mentioned earlier, this is the largest component of our unit costs and also one of our biggest opportunities. We are highly focused on lowering its costs in coming quarters.

這一百分比增長反映了我們最近為提高盈利能力而採取的舉措，包括與不盈利的商家重新談判或將其淘汰。這一策略也適用於潛在的商家。我們不會與新商家簽訂略微無利可圖的合同，即使這意味著放棄一些大牌的大牌交易。轉到幻燈片 14。2022 年第二季度交易費用佔 UMS 的百分比總計 2.4%，比上季度下降 21 個基點和 170 萬美元。交易費用主要包括支付處理成本和 UMS 百分比下降的成本，因為低成本 ACH 支付相對於卡支付的比例增加。正如查理之前提到的，這是我們單位成本的最大組成部分，也是我們最大的機會之一。我們高度重視在未來幾個季度降低成本。

The provision for uncollectible accounts as a percent of UMS in second quarter was 1.9%, reflecting 44 basis points improvement from last quarter and 149 basis points improvement year-over-year. While the second quarter was marked by rising interest rates and surging inflation, we continue to refine our underwriting strategies at the expense of unprofitable growth. Total income, less transaction-related costs, including transaction expense, provision for uncollectible accounts and net interest expense totaled $9.6 million or 2.3% of UMS for second quarter '22.

第二季度壞賬準備佔UMS的比例為1.9%，較上季度改善44個基點，同比改善149個基點。儘管第二季度的特點是利率上升和通脹飆升，但我們繼續完善我們的承保策略，但代價是無利可圖的增長。總收入減去交易相關成本（包括交易費用、壞賬準備金和淨利息費用）總計 960 萬美元，佔 2022 年第二季度 UMS 的 2.3%。

This measure reflects record quarter performance for Sezzle in terms of both dollars and rate. The same calculation was $3.8 million or 0.8% last quarter and $3.2 million or 0.9% in first quarter '21. Let's just take a moment to enjoy these record results. Just kidding, there's no time for taking a moment. We are on a mission to profitability.

這一指標反映了 Sezzle 在美元和利率方面創紀錄的季度業績。同樣的計算結果是，上季度為 380 萬美元，即 0.8%，21 年第一季度為 320 萬美元，即 0.9%。讓我們花點時間來欣賞這些創紀錄的成果。開個玩笑，沒時間閒著。我們的使命是盈利。

On to Slide 15. Second quarter '22 other operating expenses totaled $24.8 million compared with $31.5 million last quarter and improved to 84.8% of total income in second quarter of '22 from 114% of total income last quarter as represented in the top chart. The lower chart reflects adjusted operating expenses, a non-GAAP measure, which excludes equity-based compensation, depreciation and amortization, impairments and other nonrecurring expenses, such as merger-related costs.

轉到幻燈片15。 22 年第二季度其他運營支出總計2,480 萬美元，而上一季度為3,150 萬美元，佔總收入的比例從上一季度總收入的114% 提高到22 年第二季度的84.8%，如上圖所示。下圖反映了調整後的運營費用，這是一種非公認會計準則衡量標準，不包括基於股權的薪酬、折舊和攤銷、減值以及其他非經常性費用，例如合併相關成本。

This chart is further broken down by key line items. In second quarter '22, adjusted operating expense totaled $20.7 million or 65.6% of total income versus $23.1 million or 84.2% of total income last quarter. Second quarter '22 adjusted operating expense was down by 10.7% from first quarter -- excuse me, from first quarter '22 and the decrease was driven by reduced personnel expense resulting from our workforce reduction in March, lower professional fees, partially offset by higher co-marketing spend with enterprise merchants.

該圖表按關鍵行項目進一步細分。 2022 年第二季度，調整後運營費用總計 2070 萬美元，佔總收入的 65.6%，而上一季度為 2310 萬美元，佔總收入的 84.2%。 22 年第二季度調整後的運營費用比第一季度下降了10.7% - 對不起，與22 年第一季度相比，下降的原因是我們3 月份裁員導致人事費用減少，專業費用降低，部分被較高的費用所抵消與企業商家的聯合營銷支出。

Slide 16. With the profitability initiatives launched this year, you can see the impact on results. We are closing the gap between total income, net of transaction-related costs as represented by the bottom line on the chart and adjusted operating expense represented by the top line on the chart. The profitability gap of $24.5 million in fourth quarter '21 decreased to $19.4 million in first quarter '22 and further decreased to $11.1 million in second quarter '22.

幻燈片 16。隨著今年推出的盈利計劃，您可以看到對結果的影響。我們正在縮小圖表底線所示的扣除交易相關成本的總收入與圖表頂線所示的調整後運營費用之間的差距。 21 年第四季度 2450 萬美元的盈利缺口減少到 22 年第一季度的 1940 萬美元，並在 22 年第二季度進一步減少到 1110 萬美元。

We expect this gap to improve in third quarter as initiatives develop and mature. In third quarter, we will have the benefit of the full quarter impact of merchant contract renegotiations would occur during the second quarter, increased ACH utilization as a repayment method and testing of the payment preference fee initiative during third quarter. The goal is for the 2 lines on this chart to intersect to reach profitability and positive free cash flow generation. We are diligently innovating and monitoring our progress towards this goal.

我們預計隨著舉措的發展和成熟，這一差距將在第三季度得到改善。在第三季度，我們將受益於第二季度商戶合同重新談判的整個季度影響、作為還款方式的 ACH 利用率的增加以及第三季度支付優惠費用計劃的測試。目標是使該圖表上的兩條線相交以實現盈利並產生正的自由現金流。我們正在努力創新並監控我們實現這一目標的進展。

Slide 17. At the end of June 2022, cash totaled $63.3 million, was $57.8 million drawn against our line of credit and $10.1 million in unused borrowing capacity. This compares with our first quarter results where cash totaled $60.6 million with $52.8 million drawn against our line of credit and $39.7 million in unused borrowing capacity. These amounts do not include the $11 million reimbursement payment that we received from ZIP in July.

幻燈片 17。 截至 2022 年 6 月末，現金總額為 6,330 萬美元，其中 5,780 萬美元是根據我們的信貸額度提取的，1,010 萬美元是未使用的借款能力。相比之下，我們第一季度的業績為 6,060 萬美元，其中 5,280 萬美元是根據我們的信貸額度提取的，3,970 萬美元是未使用的借款能力。這些金額不包括我們 7 月份從 ZIP 收到的 1100 萬美元補償付款。

As of June 30, the weighted average interest rate stood at 6.7% on our credit facility. As a reminder, the $125 million committed line of credit facility matures in June 2023. Now I'll pass it back to Charlie to close out the presentation.

截至 6 月 30 日，我們信貸額度的加權平均利率為 6.7%。提醒一下，承諾的 1.25 億美元信貸額度將於 2023 年 6 月到期。現在我將把它傳回查理以結束演示。

Thanks, Karen. One final topic to cover and we'll be brief. It's the termination of our merger with Zip. First, I want to say that we wish the best of luck to the Zip team. The people we met were phenomenal, and our 2 teams have been a great cultural fit. We wish them the best. We entered into this agreement with high hopes and some of those are still valid, scale and growth through M&A is a valid path forward in our sector, but the timing was just not right.

謝謝，凱倫。最後一個主題要討論，我們將簡短介紹。我們與 Zip 的合併就此終止。首先，我想說我們祝 Zip 團隊好運。我們遇到的人都很出色，我們的兩個團隊在文化上也非常契合。我們祝他們一切順利。我們滿懷希望地簽訂了這份協議，其中一些協議仍然有效，通過併購實現規模和增長是我們行業前進的有效道路，但時機並不合適。

As we [row] our boats together, storms developed and it became clear that it was (inaudible) to hold the 2 boats together. In the end, we came to believe it was better to be in control of our own destiny. We believe we can weather the storm better on our own, and we hope you will agree after seeing all that we've accomplished in the past quarter. We'll now hand it back to the moderator for Q&A.

當我們一起划船時，風暴開始發展，很明顯需要（聽不清）將兩艘船固定在一起。最終，我們開始相信掌控自己的命運會更好。我們相信我們可以自己更好地度過這場風暴，我們希望您在看到我們在過去一個季度所取得的所有成就後也會同意。我們現在將其交還給主持人進行問答。

(Operator Instructions) Your first question comes from Phil Chippindale from Ord Minnett.

（操作員說明）您的第一個問題來自 Ord Minnett 的 Phil Chippindale。

Charlie, first question, just on that Slide 11 and your $40 million of revenue and cost savings that you're targeting. Can you just talk to that in a little bit more detail. Does that include the $10 million of cost savings that you identified earlier in the year? I think you went out in March.

Charlie，第一個問題，關於幻燈片 11 以及您目標的 4000 萬美元收入和成本節約。您能否更詳細地談談這一點。這是否包括您在今年早些時候確定的 1000 萬美元的成本節省？我想你三月就出去過。

In terms of the reduction in force?

就力量的減少而言？

Correct.

正確的。

In that announcement. And in that press announcement where you also mentioned reduction in force?

在那份公告中。在那份新聞公告中你也提到了減少武力？

Correct. Yes. So there was a $10 million reduction in annualized that you announced back in March. I'm just trying to understand if this is -- as this is (inaudible) in addition? Or does that include the $10 million?

正確的。是的。因此，您在 3 月份宣布年化金額減少了 1000 萬美元。我只是想了解這是否是——因為這是（聽不清）另外？或者這包括那1000萬美元嗎？

I believe we included that. Karen?

我相信我們已經包括了這一點。凱倫？

Yes, it includes the $10 million.

是的，其中包括 1000 萬美元。

Okay. Could you give us a bit of a sense of the split then? So you said the $40 million is both revenue and cost savings. Can you give us a rough split between how much of this is going to come from cost out and how much from revenue? Is it a 50-50 sort of split? Or again, can you just give us a bit of a sense of that source split?

好的。您能給我們一些關於分裂的感覺嗎？所以你說這 4000 萬美元既是收入又是成本節省。您能否粗略地告訴我們其中有多少來自成本支出，有多少來自收入？是 50-50 的分割嗎？或者，您能否讓我們稍微了解一下源頭分裂的情況？

Karen, do you have the number? Or Lee?

凱倫，你有電話號碼嗎？還是李？

I think it would be -- go ahead, Lee.

我想是——繼續吧，李。

No, Karen, sorry. Go ahead.

不，凱倫，抱歉。前進。

It's just going to say, Phil, I think that 50-50 split is generally reasonable.

只是想說，菲爾，我認為 50-50 的分配通常是合理的。

Okay. And does that include this potential savings from transaction expenses that you've also identified further down the page about this -- the preference for, et cetera?

好的。這是否包括您在頁面下方進一步確定的交易費用的潛在節省——偏好等等？

No. That's what -- no, it does not include that. The $40 million includes initiatives that we've already undertaken.

不，這就是——不，它不包括那個。 4000 萬美元包括我們已經採取的舉措。

Okay. I.

好的。我。

And then I guess the...

然後我猜...

And the natural follow-on then is if you're spending $10 million in transaction expenses in the quarter just gone, and you're undertaking this change on a forward-looking basis, how much of a saving you could potentially get on that transaction expenses line? I mean moving to ACH is a significant saving depending on the uptake. Yes, it depends on the fee on the other side. But could this see a halving of the transaction expense?

那麼自然的後續結果是，如果您在剛剛過去的季度花費了 1000 萬美元的交易費用，並且您是前瞻性地進行這一改變，那麼您可能會從該交易中節省多少費用費用線？我的意思是，轉向 ACH 可以節省大量資金，具體取決於採用情況。是的，這取決於對方的費用。但這能讓交易費用減半嗎？

Our goal is to completely offset that number. That is the goal of the company. I would say probably a reasonable estimate would probably be somewhere between 75% to 100%, that's a 75% reduction.

我們的目標是完全抵消這個數字。這是公司的目標。我想說，合理的估計可能在 75% 到 100% 之間，即減少 75%。

Okay. Just moving on to one of the things that you've identified. You've completed already a renegotiation of fees with merchants. We saw a similar comment in Zip's recent disclosures for the U.S. business. Is it your view that this is a pretty common discussion point at the moment in the buy now, pay later sector? Do you think between BNPL operators and retailers?

好的。只是繼續處理您已經確定的事情之一。您已經與商家完成了費用的重新協商。我們在 Zip 最近披露的美國業務信息中看到了類似的評論。您是否認為這是目前“先買後付”領域中一個非常常見的討論點？您如何看待 BNPL 運營商和零售商之間的關係？

Paul, you may be the best question we take that one.

保羅，你可能是我們提出的最好的問題。

Yes, I do think that's common, Phil. Can you hear me?

是的，我確實認為這很常見，菲爾。你能聽到我嗎？

Yes, we can hear you.

是的，我們能聽到你的聲音。

Okay. Yes. So I do think that's becoming more common place. I think the industry in general is settling it down a bit when it comes to going out and bidding on merchant deals. I think for a long time, we were all going after acquiring customers from these merchants. But as Charlie mentioned earlier in the presentation, as the cost of capital has gone up, I think we all have to be a bit more conservative and conscious of the deals that we're putting in place with these merchants. Not only merchants that we're already working with, but new merchants that we're going out and talking to.

好的。是的。所以我確實認為這正變得越來越普遍。我認為，在走出去和競標商業交易方面，整個行業正在稍微安定下來。我想很長一段時間以來，我們都在追求從這些商家那裡獲取客戶。但正如查理在演講中前面提到的，隨著資本成本的上升，我認為我們都必須更加保守，並意識到我們與這些商家達成的交易。不僅是我們已經合作的商家，還有我們正在出去交談的新商家。

Okay. Paul, while you've got the floor, you can probably address my last question, which is a combination of people and marketing expenses. So I suppose one of the concerns would be that you're cutting costs in your business. And so I guess I'm just wondering about the impact that, that is having day-to-day in terms of whether it be onboarding merchants, providing customer service or whatever. So could you talk to that? And the second thing I wanted to just touch on is marketing expenses. Clearly, the outlook has changed for the sector. I'm assuming that current marketing commitments are really pretty modest going forward. Is that a fair assumption?

好的。保羅，既然您已經發言，您也許可以回答我的最後一個問題，即人員和營銷費用的結合。因此，我認為擔憂之一是您正在削減業務成本。所以我想我只是想知道這對日常的影響，無論是入職商家、提供客戶服務還是其他方面。那麼你能談談嗎？我想談的第二件事是營銷費用。顯然，該行業的前景已經發生變化。我認為目前的營銷承諾確實相當有限。這是一個公平的假設嗎？

So to answer your second question, Phil, yes, that is an accurate assumption. I think, again, we're not shying away from putting marketing incentives into deals when we think the deal is profitable. But we're looking at every activity we undergo as being independently profitable. We're not having the same approach of acquiring merchant A and the shoppers that come with it, in the hopes that they go shop at merchant B where we might have a better profit margin, right? So I think we are taking a different approach in that respect. And then going back to your first question, Phil, was it in regards to the reduction in force and how that's affected our growth and support? Is that accurate?

所以，回答你的第二個問題，菲爾，是的，這是一個準確的假設。我再次認為，當我們認為交易有利可圖時，我們不會迴避在交易中加入營銷激勵措施。但我們將我們開展的每一項活動視為獨立盈利。我們沒有採用同樣的方法來收購商家 A 和隨之而來的購物者，希望他們去商家 B 購物，在那裡我們可能會有更好的利潤率，對嗎？所以我認為我們在這方面採取了不同的方法。然後回到你的第一個問題，菲爾，是關於兵力的減少嗎？這對我們的成長和支持有何影響？準確嗎？

Yes, it's really -- I guess you are identifying and have already cut headcount. So I guess I'm just wondering about the impacts on your business from those headcount reductions and where do you think that that's having an impact on your ability to onboard merchants or your customer service levels, et cetera.

是的，確實如此——我想你正在確定並已經削減了員工人數。因此，我想我只是想知道這些人員減少對您的業務有何影響，以及您認為這對您招收商家的能力或客戶服務水平等有何影響。

Yes. I think in some respects, I think the reduction in force was actually overdue. And I think we actually have a very strong cohesive team now, and I think it allowed us to cut some poor performers that ended up actually bolstering our company in some respects. But when you do lose staff, especially in the growth areas of business like sales and marketing, I think you will see a little bit of slowing in terms of merchant acquisition.

是的。我認為從某些方面來說，我認為削減武力實際上是姍姍來遲的。我認為我們現在實際上擁有一支非常強大的凝聚力團隊，我認為這使我們能夠裁掉一些表現不佳的員工，而這些員工最終在某些方面實際上增強了我們公司的實力。但當你確實失去員工時，特別是在銷售和營銷等業務增長領域，我認為你會看到商家收購方面的速度有所放緩。

We're in the middle of a pivot toward profitability and also direct-to-consumer products. So growth may slow a bit in the short term, but we do expect to pick it back up once we have all our new products in market. And additionally, we're focusing on capturing more share of wallet from our existing customer base. through products like premium, pay now, pay 2 and the Flex Card. So although I think there is a slowing in the short term on growth, I think we expect it to be short-lived and then can get back to faster growth in the future.

我們正處於轉向盈利和直接面向消費者的產品的過程中。因此，短期內增長可能會有所放緩，但我們確實預計，一旦我們將所有新產品推向市場，增長就會回升。此外，我們還致力於從現有客戶群中獲取更多的錢包份額。通過 premium、pay now、pay 2 和 Flex Card 等產品。因此，儘管我認為短期內增長會放緩，但我認為我們預計這種增長是短暫的，然後可以在未來恢復更快的增長。

One comment there. I actually think there are really good true addition by some traction and streamlining the team, streamlining the company, even like on our product and (inaudible) teams. We've actually pushed more coach production over the past few months than we ever have with a leaner team. And on the sales front, I'd say the challenges of growth over the last -- as you see our numbers, I would say that's less due to the team size and more due to the fact that we are in a merger where we were being acquired.

那裡有一條評論。事實上，我認為通過一些牽引力和精簡團隊、精簡公司，甚至像我們的產品和（聽不清）團隊一樣，確實有很好的補充。實際上，在過去的幾個月裡，我們推動了更多的教練生產，比我們在精簡團隊中所做的要多。在銷售方面，我想說的是過去的增長挑戰——正如你看到我們的數字，我想說這不是因為團隊規模，而是因為我們正在進行合併。被收購。

And the merchants that we were speaking with, some of them knew that. And in some cases, we didn't get invited to RFPs or they looked to the acquirer, instead of us. And that does affect your growth when that happens. So I think I'd actually point to that growth side, more of an effect on that than on the team size itself.

與我們交談的商人中，有些人知道這一點。在某些情況下，我們沒有被邀請參加 RFP，或者他們向收購方而不是我們尋求幫助。當這種情況發生時，這確實會影響你的成長。所以我想我實際上會指出增長方面，這對增長的影響比對團隊規模本身的影響更大。

(Operator Instructions) Your next question comes from Siraj Ahmed from Citi.

（操作員說明）您的下一個問題來自花旗銀行的 Siraj Ahmed。

Charlie, just a couple of questions. Just following up the question the UMS growth expectations. And just keen to understand, right, you are taking measures to sort of reduce loss rates, focusing on the product, et cetera so I appreciate that maybe the growth was impacted by the merger. But should we expect potentially a [modest] decline because you are focusing on much more profitable customers and merchants.

查理，有幾個問題。只是跟進 UMS 增長預期的問題。只是熱衷於了解，對吧，你們正在採取措施來降低損失率，專注於產品等等，所以我很理解，也許增長受到了合併的影響。但我們是否應該預期潛在的[適度]下降，因為您專注於利潤更高的客戶和商家。

I think basic strategy, we made that move during the past few months here and because of the merger, we were limited a bit. Yes, I don't think we're expecting the growth that you've seen in our past in terms of a percentage basis. But I do believe that now that we've unlocked a little bit more about our product and the capabilities and our team is out from under the merger, I do believe that you'll start to see UMS growing again. (inaudible) other thoughts?

我認為基本策略是，我們在過去幾個月裡採取了這一舉措，由於合併，我們受到了一些限制。是的，我認為我們不會像您過去看到的那樣以百分比為基礎實現增長。但我確實相信，現在我們已經釋放了更多關於我們的產品和功能的信息，並且我們的團隊也擺脫了合併，我確實相信您將開始看到 UMS 再次增長。 （聽不清）還有其他想法嗎？

I would add that I think underlying merchant sales are going to become of decreasing importance to our overall growth on the revenue and profit side of our business, right, as we introduce some of these new kind of consumer-facing products and the fees and revenue associated with those.

我想補充一點，我認為隨著我們推出一些面向消費者的新型產品以及費用和收入，基礎商家銷售對我們業務收入和利潤方面的整體增長的重要性將會下降。與那些有關。

So I don't expect a decline in underlying merchant sales, especially as we approach the holidays here, where spending will pick back up. Certainly, there's some macroeconomic conditions that are bringing retail sales down, especially e-commerce sales right now. But I think we're focused on supplementing those with new revenue streams.

因此，我預計基本的商家銷售不會下降，特別是當我們臨近假期時，支出將會回升。當然，一些宏觀經濟條件導致零售額下降，尤其是目前的電子商務銷售。但我認為我們的重點是用新的收入來源來補充那些人。

That makes sense. My second question, this one in terms of Sezzle Premium. I mean, previously, when you said these nonintegrated merchants, there was a higher loss rate. Just make us you understand how you're seeing that since you launched with these [4,000] subscribers? Is it the loss rates higher? Or is it actually better?

這就說得通了。我的第二個問題是關於 Sezzle Premium 的問題。我的意思是，之前你說這些非綜合性的商家，損失率是比較高的。請讓我們了解自從您推出以來擁有這 [4,000] 位訂閱者，您對此有何看法？是不是損失率比較高？或者它實際上更好嗎？

Yes, it's too early to tell for sure, Siraj. But I say early indications that we probably would expect a slightly higher loss rate for that group. (inaudible) as you pointed out. Yes.

是的，現在下結論還為時過早，Siraj。但我想說的是，早期跡象表明，我們可能預計該群體的損失率會略高。 （聽不清）正如你所指出的。是的。

Okay. And lastly, just to pay now and pay in 2, the expansion of products. Are you getting a [trade] for the merchant for those 2 things?

好的。最後，現在就付費，並在2、產品擴展中付費。您是否會因為這兩件事而與商人進行[交易]？

I didn't hear the question. Can you repeat?

我沒有聽到問題。你可以重複嗎？

The pay now and pay in 2 options, in addition to pay in 4, are you getting -- is the merchant paying a same take rate for that?

現在支付和分 2 種支付選項，除了 4 種支付之外，您是否得到 - 商家是否為此支付相同的費率？

Yes. We certainly will be launching the same payment platform. So we will get the same take rate. But when we launch products within our platform, we always have -- we build in levers that allow us to adjust. So we'll have the capability to adjust on a platform level or a payment method level, but it will launch initially under the same envelope.

是的。我們當然會推出相同的支付平台。所以我們會得到相同的採用率。但是，當我們在我們的平台上推出產品時，我們總是會建立允許我們進行調整的槓桿。因此，我們將有能力在平台級別或支付方式級別進行調整，但它最初將在相同的範圍內啟動。

To clarify, though, those products are not live in market yet. So we don't know the...

但需要澄清的是，這些產品尚未投放市場。所以我們不知道...

Yes, they're not there yet.

是的，他們還沒有到那裡。

So we don't know the take rates of the product yet.

所以我們還不知道該產品的採用率。

There are no further questions at this time. I'll now hand back to Mr. Youakim for closing remarks.

目前沒有其他問題。現在請尤金先生致閉幕詞。

Thank you. I'll be quick here. I really just wanted to say a big thank you to the Sezzle team on this quarter. I think they've done a phenomenal job through a lot of adversity to get our company into a great place. So thank you all very much. And also to our investors, thank you for your time and interest, and have a great rest of your day. Thank you all.

謝謝。我這邊會快點的。我真的只是想對本季度的 Sezzle 團隊表示衷心的感謝。我認為他們在經歷了很多逆境後做了出色的工作，使我們的公司走向了輝煌。非常感謝大家。還有我們的投資者，感謝您的時間和興趣，祝您今天休息愉快。謝謝你們。

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.

謝謝。我們今天的會議到此結束。感謝您的參與。您現在可以斷開連接。