Thank you for standing by, and welcome to the Sezzle Inc. second quarter 2022 results call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Charlie Youakim, CEO. Please go ahead. 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. 2022 has been a unique year for us and also for many of you listening. In 2020 and 2021, investors and management teams aggressively pursued growth. Investor sentiment has since shifted and so have we. We know investors are looking for profitable companies, not just growth, and we have taken that message seriously. 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 re-educating our team that it's not just about growth at all costs. A key part of our monthly town halls at Sezzle is educating the team on the bottom line. Growth is no longer the top driver at Sezzle, it's profitability. 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 update on our second quarter numbers. We'll now move on to our presentation. If you'd like to follow along, you can find it posted on the ASX website. Let's get started, and please keep in mind that all dollar amounts shown here are USD. Please move forward to slide four, 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. On slide 5, we show a significant amount of growth in our active merchants and active consumer counts as well. Repeat usage is still growing. The theme here, our product is attracting new stakeholders and we're also sticky. Slide 6 reflects our product evolution from a company connecting to consumers through our merchant partners to one connecting directly with consumers. Earlier in our company's existence, we knew that our merchant stakeholders had to be a first focus because without their buy-in, our product would not reach the consumer. We put a focus on the features that we felt would make Sezzle attractive to those merchants. 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 as we round out the feature set that our customers are looking for. We'll be adding pay now and pay in two for smaller purchase sizes 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 feature set will be one of the most complete among North American payment platforms. We've been busy bees over here at Sezzle. Slide 7 and 8 will show you that. On slide 7, we're gonna run through some enhancements and extensions of our core products. First, our long-term products have gained traction through improvements to the user experience and the addition of a more capable lending partner in Bread Financial. We are experiencing 9x of volumes through that product after the switch in lenders, and we expect even more growth to come as the long-term product gets opened up to our entire merchant base. We also have two more lending partners coming on board with Oportun and Genesis joining our platform. Oportun 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. Next, our in-store offering continues to gain momentum. This momentum is coinciding with the move back to in-person shopping, which we timed well. Merchants can add Sezzle as a payment method at their physical stores using an entirely self-serve process initiated within our online merchant dashboard. It's even easier for our consumers to use us in-store at our integrated merchants. They just tap their mobile device to register to transact with us through our virtual card program. These user-friendly systems have led to an in-store program that has reached 10% of our total processing volume. 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 volume. To say we're excited about that progress is an understatement. As Sezzle Premium matures, we expect the volume through our marketplace to grow. This solidifies Sezzle as much more than a payment solution to our merchants, but as a significant lead generation channel. Meanwhile, our recently launched loyalty program will help us promote positive consumer behaviors within our products and increase engagement. Slide 8 provides the key highlights of our new Premium products, which was launched less than two 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. Premium members get a higher level of customer support, more rewards, and many other benefits that don't come with our core product. 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. Needless to say, we're excited for the value that we're bringing to consumers and the growth we are seeing in subscribers suggests that they agree with us. 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-in-Full 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 use this anywhere. Flex will be a true anywhere product for us. With these products, we believe our platform will be ready to serve all the payment needs of our customers, truly empowering them financially. Before I hand over the call to Karen, I want to review the initiatives that we've completed and plan to complete in 2022 on the road to profitability. Please flip ahead to slide 11 for that discussion. First, let's go through the initiatives we completed through 2022 thus far. 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. In early 2022, we identified this was not a sustainable approach given the changing market conditions. The cost of capital had gone up dramatically. It was no longer worth the cost of spending that $1 to try to make $2 later. We knew that every action in the company had to turn an immediate profit. This decision led us to off-board or renegotiate merchant accounts that were unprofitable for us. 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 were giving to them through the partnership. 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 startup 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 an additional revenue stream popping up. That's Sezzle Premium, which we went through earlier on the call. It's a top-line winner for us with a high effective rate. Since it's 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 positivity 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 backfill of positions, we were able to reduce employee operating costs by 20%. We also scaled back international operations, payment processing in India and fees, and we're working to spin off our EU and Brazil entities so we can focus on our core North American markets. Finally, we ran 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. By the way, those are the biggest needle movers, if not the entire list. As I mentioned, our entire team is rowing the boat towards profitability. There are countless other activities that we've achieved and are yet to achieve as we make the 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. 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. 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, you'll see the payment processing costs are significant. They are about 35% of our total income, and that's before we account for any other expenses. We're putting a big focus on it. First, because of the lower transaction cost of ACH, we have created incentives for consumers to add their bank accounts for payments instead of choosing card on deferred payments, where a card really isn't necessary. We've implemented the incentive system whereby a customer can only see their spending power in the mobile app if they add ACH for 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 fee to installments two through four for customers that still insist on using their card instead of ACH. Between the two initiatives, we believe we'll make significant inroads against the roughly $10 million in quarterly transaction expenses. We plan to test over the coming two months and then fully implement 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. I'll now hand over the call to Karen Hartje, who will cover our financials. Karen? 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 2022 UMS was up 1.9% over the same period last year, while total income was up 6.8%. Second quarter 2022 UMS totaled $419 million, with in-store sales comprising almost 9% of the total. 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's SpendingPulse, U.S. e-commerce retail sales declined in the low single digits for the months of April and May before rising just 1.1% year-over-year in June. As a percentage of underlying merchant sales, second quarter 2022 total income improved to 7% versus 6.7% for second quarter 2021 and 6.1% last quarter. The percentage increase reflects our recent initiatives to drive profitability, including renegotiating with or off-boarding 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 2022, down 21 basis points and $1.7 million from last quarter. Transaction expenses comprised primarily of payment processing costs and the cost as a 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 this cost in coming quarters. 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 2022. This measure reflects record quarter performance for Sezzle in terms of both dollars and rates. The same calculation was $3.8 million or 0.8% last quarter and $3.2 million or 0.9% in first quarter 2021. 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. On to slide 15. Second quarter 2022 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 2022 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 non-recurring expenses such as merger-related costs. This chart is further broken down by key line items. In second quarter 2022, 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 2022 adjusted operating expense was down by 10.7% from first quarter 2022, 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. 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 2021 decreased to $19.4 million in first quarter 2022 and further decreased to $11.1 million in second quarter 2022. 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 that occurred during 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 two 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. Slide 17. At the end of June 2022, cash totaled $63.3 million, with $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. 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. 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 two teams would 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. As we brought our boats together, stormy seas developed, and it became clear that it was going to be tough to hold the two 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 agree after seeing all that was accomplished in the past quarter. We'll now hand it back to the moderator for Q&A. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Phillip Chippindale from Ord Minnett. Please go ahead. Good morning, Charlie and team. Thanks for your time. 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 put out that in March. In terms of the reduction in force? Correct. In that press announcement where we also mentioned the reduction in force? Correct. Yeah. There was a $10 million dollar- Yeah. -reduction annualized that you announced back in March. I'm just trying to understand if this is- Right. If this $40 million is in addition or does that include the $10 million? I believe it includes that. Karen? Yes, it includes the $10 million. Okay, thanks. 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, you know, how much of this is gonna 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? Karen, do you have the number or Lee? You know, go ahead, Lee. No, go ahead, Karen. Sorry, go ahead. I was just gonna say, Phil, I think that a 50/50 split is generally reasonable. Okay, thanks. Does that include this potential saving from transaction expenses that you've also identified further down the page about this, you know, the preference fee, et cetera? No, it does not include that. The $40 million includes initiatives that we've already undertaken. Okay. I understand. The natural follow-on then is, you know, 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 do you think you could potentially get on that transaction expenses line? I mean, moving to ACH is a significant saving, depending on the uptake. You know, it depends on the fee on the other side. But you know, could this see a halving of transaction expense? You know, our goal, Phil, is to completely offset that number. That is the goal of the company. I would say, you know, probably a reasonable estimate would probably be somewhere between 75%-100% of that. A 75% reduction. Okay. Thank you. Just moving on to one of the things that you've identified you've completed already is a renegotiation of fees with merchants. We saw a similar comment in Zip's recent disclosures for their 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, you know, BNPL operators and retailers? Paul, you might be the best person to take that one. Yeah. I do think that's common, Phil. Can you hear me? Yeah, we can hear you. Okay. Yeah. I do think that's becoming more commonplace. I think the industry in general is settling it down a bit when it comes to, you know, going out and bidding on merchant deals. I think for a long time, you know, we were all going after acquiring customers from these merchants. As Charlie mentioned earlier in the presentation, you know, 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. Okay. Thanks. Paul, while you've got the floor, you can probably address my last question, which is a combination of people and marketing expenses. I suppose one of the concerns would be that you're cutting costs, you know, in your business. 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. Could you talk to that? The second thing I wanted to just touch on is marketing expenses. Clearly the outlook has changed for the sector. I'm assuming that you know, co-marketing commitments are really pretty modest going forward. Is that a fair assumption? To answer your second question, Phil, yes, that is an accurate assumption. I think, you know, again, we're not shying away from putting marketing incentives into deals, when we think the deal is profitable. We're looking at every activity we undergo as being independently profitable. You know, we're not having the same approach of, you know, acquiring merchant A, and the shoppers that come with it in hopes that they'll go shop at merchant B where we might have a better profit margin, right? I think we are taking a different approach, in that respect. 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? Yeah. It's really, you know, I guess you are identifying and/or have already cut headcount. So I guess I'm just wondering about the impacts on your business from those headcount reductions and where, you know, do you think that that's having an impact on your ability to onboard merchants or your customer service levels, et cetera? Yeah. You know, I think, in some respects, I think the reduction of force was actually overdue. I think, you know, we actually have a very strong, cohesive team now, and I think it allowed us to cut some poor performers that, you know, ended up actually bolstering our company in some respects. You know, when you do lose staff, especially in the growth areas of business like sales and marketing, I think, you know, you will see a little bit of slowing in terms of of merchant acquisition. You know, we're in the middle of a pivot toward profitability and also direct-to-consumer products. 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 to market. Additionally, we're focusing on capturing more share of wallet from our existing customer base through products like Premium, Pay-in-4, Pay-in-2, and the Flex Card. 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. You know, one comment there. I actually think, you know, there really is truth to addition by subtraction and streamlining the team, streamlining the company. Even like, on our product and engineering teams, we've actually pushed more code to production over the past few months than we ever have with a leaner team. On the sales front, I'd say the challenges with growth over the last, you know, as you can see it in the CR numbers, I would say that's less due to the team size and more due to the fact that we were in a merger where we were being acquired. The merchants that we were speaking with, some of them knew that. In some cases, we didn't get invited to RFPs, or they looked to the acquirer instead of us. That does affect your growth when that happens. I think I'd actually point to that growth side more of an effect on that than on the team size itself. Okay. Thanks. I'll let somebody else ask a question. Thank you. Once again, if you wish to ask a question, please press star one on your telephone and wait for your name to be announced. The next question comes from Siraj Ahmed from Citi. Please go ahead. Hi, Charlie. Just a couple of questions. Just following up that question about UMS growth expectations. Just so you understand, right, you are taking measures to reduce loss rates, focusing on the product, et cetera. I appreciate that maybe the growth was impacted by the merger. Should we expect potentially UMS to decline because you are focusing, you know, on much more profitable customers and merchants? I think, you know, basically, Siraj, we made that move during the past few months here. Because of the merger, we were limited a bit. Yeah. I don't think we're expecting growth that you've seen in our past in terms of percentage basis. 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 grow again. I'll follow your response. Okay. Yeah. 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. You know, I don't expect a decline in underlying merchant sales, and 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. I think we're focused on supplementing those with new revenue streams. That makes sense. Second question, this one in terms of Sezzle Premium. I mean, previously when you used to have these non-integrated merchants, there was a higher loss rate. Just can you tell us on how you're seeing that since you launched with these 47,000 subscribers? Is it the loss rate higher, or is it actually better? Yeah. It's too early to tell for sure, Siraj. I'd say early indications is that we probably would expect a slightly higher loss rate for that group. Okay. You know, because of the items you pointed out. Yeah. Lastly, just on Pay-in-Full and Pay-in-2, the expansion of products, are you getting the same take rate from the merchant for those two new things? I didn't hear the question. Can you repeat? The Pay-in-Full and Pay-in-2 options, in addition to Pay-in-4. Is the merchant paying you the same take rate for it? Yeah. We currently will be launching under the same payment platform. We will get the same take rate. But when we launch products within our platform, we build in levers that allow us to adjust. We'll have the capability to adjust. Okay. --on a, you know, a platform level or a payment method level, but it'll launch initially under the same envelope. Perfect. To clarify, though, those products are not live in market yet, so we don't know the- Yeah. They're not there yet. Take rate on those products yet. Yeah. Got it. All right. Thanks. Thanks, Charlie. Thanks, Boris. No problem. Thank you. There are no further questions at this time. I'll now hand back to Mr. Youakim to closing remarks. 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. Thank you all very much. Also to our investors, thank you for your time and interest, and have a great rest of your day. Thank you all. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.