Sezzle Inc. (SEZL) Cash Flow Statement

The OCF/NI ratio of 1.28 in 2026Q2, up from negative levels in 2025Q2, suggests that cash conversion has improved markedly, likely due to lower working capital drag from loan growth. This retained cash appears to be funding the company's expansion without heavy reliance on external debt, as evidenced by minimal long-term debt issuance. Investors should monitor whether this cash generation can sustain the high ROE of 103.3% without increasing leverage.

The absence of deposit flows in the cash flow statement indicates Sezzle relies on wholesale funding and retained earnings to support its BNPL receivables. The provision volatility, including a release in 2025Q4, highlights the cyclicality of credit costs that could pressure cash flow if delinquencies rise. This suggests the company's growth is inherently tied to its ability to manage credit risk while maintaining access to capital markets.

The increasing buyback activity, despite no dividend, suggests management views the stock as undervalued and is using excess cash to enhance per-share metrics. However, this capital return is occurring alongside a debt/equity ratio of 0.83, implying the company is balancing shareholder returns with leverage. If cash flow deteriorates, the sustainability of these buybacks may be questioned, especially given the lack of forward guidance.

The provision for credit losses as a percentage of revenue has been inconsistent, with a notable release in 2025Q4 that boosted operating cash flow to $154.3M. This volatility suggests that underwriting performance is not yet stable, and investors should monitor delinquency trends closely. The recent increase in provisions may indicate a normalization of credit costs after a favorable quarter, which could pressure future cash generation.