Buy-now-pay-later operator Sezzle raised full-year 2026 guidance after Q1 gross merchandise volume jumped 37.3% to $1.1 billion, subscribers hit a record 714,000, and CEO Charlie Youakim told analysts that AI now writes upwards of 80% of the company's code, with adjusted EBITDA margin reaching an all-time high of 52.5%.
The Minneapolis-based BNPL firm has spent the past two years quietly transitioning from a pure pay-in-four checkout product into a subscription-led financial services platform, and Q1 2026 was the clearest proof yet that the model is working.
Revenue rose 29.2% year-on-year to $135.5 million, gross margin hit a company record of 74%, and adjusted earnings per share came in at $5.10, ahead of Sezzle's own $4.70 guide. "We are raising our full-year guidance as a result" of strong execution and better-than-expected credit performance, Youakim told analysts on the call. The new range now sits at 30% to 35% revenue growth for 2026, up from a previous 25% to 30% guide, with adjusted net income lifted to $180 million from $170 million.
The subscriber dynamic is what underpins all of it. Sezzle has been pushing its premium tier hard, and the numbers are starting to compound.
"Our investments continue to pay off in the first quarter, with total subscribers increasing by 44,000 to 714,000," Youakim said. He added that engagement was running at a record level: "Average quarterly purchase frequency reached a new Company high of 7.1x and Active Subscribers grew 48.4% year over year."
That repeat-use number is what separates Sezzle from most of the BNPL peer group. Klarna and Afterpay still rely heavily on one-off checkout traffic. A subscriber transacting more than seven times a quarter looks closer to a debit-card relationship than a one-shot installment loan.
Youakim was explicit that the company has outgrown its original product label. "We are no longer just a Pay in 4 company. We are building an all-in-one services platform for the value-focused consumer," he said.
The AI disclosure was the second story. "Upwards of 80% of our code is now being developed by AI, with reviewed by our team," Youakim said. That number lines up with what Chime disclosed for the same quarter and underscores a pattern across mid-cap fintech: companies that already had small engineering teams are leaning hard on AI tooling to keep headcount flat while volume grows.
Chief financial officer Lee Brading walked the margin numbers. "Net income outpaced our top line growth," Brading said. "Adjusted EBITDA was $71.1 million, a 52.5% margin. Each of these reflects an all-time high."
President Paul Paradis offered the most useful framing of the strategic shift, telling analysts the company has reframed how it views its merchant base. "We view merchants primarily as a customer acquisition channel," Paradis said. The implication is that Sezzle's economic centre of gravity has moved from merchant fee revenue to recurring consumer subscription and engagement revenue, which is structurally higher margin and far less cyclical.
The risks are real. BNPL still faces a slow regulatory grind in both the US and Australia, credit performance can deteriorate quickly if unemployment turns, and the subscriber model's growth rate has to keep accelerating to justify a stock that has already re-rated sharply. But on a quarter where most listed BNPL competitors disappointed, Sezzle delivered record gross margin, record EBITDA margin, a raised full-year guide, and a measurable AI productivity claim. That is the cleanest BNPL print of the cycle so far.