There are a huge number of fintech startups of varying sizes and varying levels of operational performance. I have linked here to a Forbes article about Cross River as it was a year ago. Affirm, a more flexible and transparent alternative to credit cards, today announced a $500 million series G round of funding. But Find the right companies, identify the right contacts, and connect with decision-makers with an all-in-one prospecting solution. Currency in USD. We remain focused on extending our leadership position with our core products, while capitalizing on our vast opportunities to empower more people with the new ones we continue to launch.. As mentioned credit from Affirm is available at Walmart both within physical stores and on-line. . But the company has developed an Affirm app which it markets directly to consumers-this is likely to be a key competitive tool over time. We are revolutionizing the financial industry to be more accountable and accessible while growing a network that is beneficial for consumers and merchants. San Francisco, California, United States 1001-5000 Post-IPO Equity Public affirm.com 6,399 Highlights Stock Symbol NASDAQ:AFRM Acquisitions 5 Investments 2 Total Funding Amount $1.5B Contacts 1,304 Employee Profiles 47 While the company is not yet profitable , its long term business model appears very attractive and the path to profitability appears clearly defined. Affirm was spun out of one of his ventures in 2012. Another company that offers POS credit is Greensky (GSKY). Worth noting is that Shopify is a 5% shareholder. Sign up for a free trial to see Affirm's valuations in January 2021 Affirm is a significant competitive advantage for Walmart. Is this happening to you frequently? Affirm narrowed its net loss in fiscal 2020 to $112.6 million, compared with a loss of $120.5 million a year earlier. A Delaware stock authorization form stated that Series G shares were sold at a more than 90% discount, "Axios" reports. With 6500 merchant partners, and several million users, Affirm is the largest company in its niche. I have linked here to the app for those interested in seeing what is being offered: Download a new way to pay over time | Affirm App. Their latest portfolio exit was Resolve on January 01, 2019. The new strategy for the IPO is supposed to capture more of the companys value for selling shareholders, employees and VCs and it seems likely that it will work to do so. The companys service provides consumer credit at the point of sale. The real question isnt whether there will be competitionits more along the lines of, are we delivering the kind of value that no one else can., This is a BETA experience. At that time of the Series G stock sale, the company did not disclose the enterprise value assigned as part of the capital raise. their loans have no compounding, and also no late fees are charged. And I have been told that most consumers who have used the service like it and will be repeat customers. It offers a 'buy now, pay later service that allows users to pay for a purchase in the course of six weeks without any fees or interest. The Company believes that total platform portfolio is a useful financial measure to both the Company and investors in assessing the scale of funding requirements for the Company's network. The funding round was led by GIC, a In the Risk Factors section of its S-1, the company notes that Peloton was its top merchant partner, representing 28 percent of Affirms total revenue for the fiscal year ended June 30, 2020 and 30 percent of its total revenue for the three months that ended on Sept. 30, 2020. It is not going to be cheap-the kind of growth this company is experiencing is not going to come at a discount. The company reported net revenue of a bit greater than $3 billion last quarter. The company reported a positive contribution margin last quarter. 9.89 +0.03 (+0.30%) After AAPL, FB, TWTR), Total amount raised across all funding rounds, Total number of lead investment firms and individual investors, Total number of investment firms and individual investors, Announced Date: Date that the Funding Round was publicly announced, Transaction Name: Auto-generated name of transaction (e.g. of Affirms plans for an IPO, estimated valuation at $5 billion to $10 billion. The following table summarizes Affirm's financial outlook for the first quarter and fiscal year 2022 periods. Essentially, the Affirm platform is able to look at factors beyond credit score to determine a risk profile for an individual borrower in a specific transaction and to make credit offers that are particularly appealing to an individual borrower. Affirm had been planning on launching its IPO before the end of 2020, but it has now delayed that schedule as I will detail below. These forward-looking statements reflect the Company's views with respect to future events as of the date hereof and are based on assumptions and subject to risks and uncertainties. Borrowers have been, and are more likely to make payments that are smaller in dollars and relate to a purchase that they are using such as a home exercise bike or a TV or even a puppy than might be the case for buying use a revolving credit card. The company derives a significant amount of revenue from the interest it receives on loans held for sale. Its among a number of pay-over-time fintech companies that have cropped up in recent years, with others including Klarna and Afterpay. Affirm has 1 portfolio exit. By building a new kind of payment network one based on trust, transparency and putting people first we empower millions of consumers to spend and save responsibly, and give thousands of businesses the tools to fuel growth. So, from my perspective, any EV/S ratio of 20X or less is reasonable. The offering from Affirm is in the nature of a virtuous circle in which borrowers, funding sources and Affirm all benefit by the specific nature of the companys offerings and technology. Some things have changed since then to be sure, and I imagine the article would look a bit different were it being written in December 2020. The company offered a payment deferral program for certain borrowers. As mentioned, because of the pandemic, the company has had a rather volatile level of loss provisions. No. Affirm The company offers credit both on the basis of 0% APR, or simple interest loans, i.e. Other companies, including companies in the same industry, may calculate these non-GAAP financial measures differently from how the Company calculates them or not at all, which reduces its usefulness as a comparative measure. Fitch to Affirm Houston GO CP Notes Series G-1's S-T Rating at 'F1+'. Fourth Quarter of Fiscal Year 2021 Financial Highlights:1 All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated. The sequential increase in commerce sales last Q4 was spectacular-reaching a triple digit pace. WebThis opinion is uncorrected and subject to revision before publication in the printed Official Reports. Because of the increase in the proportion of 0% APR loans the company in the quarter, the company saw a rather sharp increase in merchant fees. Affirm has a nascent partnership with SHOP with an offering called Shop Pay installments. The investment was led by GIC and Durable Capital Partners, with additional At the end of the day, regardless of the specific classification of the company, Affirm shares will trade at some multiple of sales that is congruent to its growth rate and its free cash flow expectations. Affirm, a buy-now, pay-later fintech company based in San Francisco, went public today at $49 a sharean implied valuation of $12 billion. Affirm provides more than 5.6 million U.S. and Canadian consumers a better alternative to traditional credit cards, giving them the flexibility to buy now and pay over time at virtually any store. According to the press release, published by Affirm, the company has raised a $500 million series G round of funding.The funding round was led by GIC, a returning The company has apparently created technology that has allowed it to develop a high-yielding, short duration portfolio of credits that is attractive to funding sources. CBI websites generally use certain cookies to enable better interactions with. According to the S-1, " As of September 30, 2020, 47% of our employees were in engineering and technology-related roles, reflecting the emphasis we place on technology." Did you think that there were enough channels for consumers to obtain credit? Looking at Square in terms of an analytical construct is more difficult-partly because Square has 2 very different businesses, and partly because the company has been obliged to change how it reports revenue for one of those businesses. Stay up to date with recent funding rounds, acquisitions, and more with the Most investors these days look at companies such as Square and Shift4 and value them as they might enterprise software businesses with very high growth rates. Affirms credit app provides consumers with offers essentially on an instantaneous basis. You can read more about your cookie choices at our privacy policyhere. Follow. So far, Affirm has grown primarily through its merchant partners and through word of mouth. Analyst Briefing Submitters are 7x more likely to receive a qualified connection. The company has an extensive list of venture investors with the 3 largest investors being Jasmine, Lightspeed and Founders Fund. I think it is quite straightforward to suggest that a company with both a data advantage and a technology advantage in using the data, and which is led by a team that is very familiar with the limitations of current credit technology is going to be able to create a substantial business. Currently, the proportion of loans with a 0% APR has reached 46% and that is up from 31% in the prior year. The company grew the number of its merchant partners by 84% in its latest fiscal year, and then further grew its user base by another 15% in the latest quarter it reported. Adjusted operating (loss) income is presented because the Company believes that it is a useful financial measure to both the Company and investors for evaluating its operating performance and that it facilitates period to period comparisons of the Company's results of operations as the items excluded generally are not a function of the Company's operating performance. That said, I think the long-term growth rate for Affirm is likely to exceed that of FOUR. So, therefore, I think it will be valued at some comparable level to companies such as SQ and FOUR. Affirm Holdings, Inc. operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. The company calls out a differentiated technology that has been able to increase credit approvals while creating a high performing and rapidly maturing pool of assets. Stock Price. SAN FRANCISCO--(BUSINESS WIRE)--Sep. 9, 2021-- Affirm Holdings, Inc. (NASDAQ:AFRM) (Affirm or the "Company), the payment network that empowers consumers and helps merchants drive growth, today reported financial results for its fourth quarter and fiscal year ended June 30, 2021. Adjusted Operating Margin - The Company defines adjusted operating margin as its adjusted operating (loss) income, as defined above, as a percentage of its GAAP total revenue. Active Merchants - The Company defines an active merchant as a merchant which engages in at least one transaction on its platform during the 12 months prior to the measurement date. As the saying goes, a rose by any other name would still be as sweet. My contention is that the growth and margins that Affirm will enjoy have very little in common with the metrics of other lenders or financial institutions. The company has also been getting its losses under control, with net losses falling from nearly $120.5 million in fiscal year 2019 to around $112.6 million during fiscal year 2020. Following the onset of the COVID-19 pandemic, our revenue from merchant partners in the travel, hospitality, and entertainment industries declined, but we saw a significant increase in revenue from merchant partners offering home fitness equipment, home office products, and home furnishings, though we may see potential downswing in these categories if the trends we have seen thus far in the COVID-19 pandemic reverse, the company wrote. On that basis, FOUR has an EV/S of 14X+ based on my most current estimate and calculation. Trying to disentangle all of the competing claims about who offers what to whom would be a bootless undertaking. Senior editor covering fintech and crypto. site you are consenting to these choices. Please. Total Platform Portfolio - The Company defines total platform portfolio as the unpaid principal balance outstanding of all loans facilitated through its platform as of the balance sheet date, including loans held for investment, loans held for sale, and loans owned by third-parties. I think this is a very reasonable strategy from the perspective of most investors who read about 100% first day pops but are unable to penetrate the charmed circle of brokerage house favorite clients and hedge funds who generate trading volumes that are often rewarded by IPO allocations. The CB Insights tech market intelligence platform analyzes millions of data points on vendors, products, partnerships, and patents to help your team find their next technology solution. Most recently, looking at data from just before the advent of the pandemic, Affirm was approving 20% more customers than competitive products. Web+44 (0) 203 637 7085 | how many locomotives does kansas city southern have? By offering Affirm, our 6,000 merchant partners can drive overall sales, grow average order value (AOV), and increase repurchase rates. For readers wanting to do a deep dive on this company, a few paragraphs from the S-1 are important to consider: Technology is at the core of everything we do. The significance of Peloton in our portfolio has increased as a result of consumer spending trends on home fitness equipment, and there can be no assurance that such trends will continue or that the levels of total revenue and merchant network revenue that we generate from Peloton will continue, the company wrote. Prior to taking the helm of Affirm, Levchin was most known for co-founding, The San Francisco-based company raised about $1.5 billion in funding from investors including. We want to be in the lending business, but we want it to be a clean, good version of it as opposed to this kind of sneaky, let's-make-money-when-you-don't-expect-it, Levchin told Forbes in 2019. The prior fiscal year, growth reached 93%. At what valuation should Affirm sell? Affirm is a fintech company with a rather unique approach to supplying credit to consumers. Among the largest stakeholders in Affirm are Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Jasmine Ventures, and Shopify. Affirm has recently signed a 3 year agreement with Peloton that renews automatically for additional one year terms. It is standard these days for fintech firms to assert that they have competitive advantages based on their unique credit scoring technology. The other side of the transaction is that Affirm bills its merchant partners a higher fee for extending credit on an APR basis. These days, tech IPOs seem to reap valuations detached from any analytical reality. It also provides security solutions for credit and fraud risks for e-stores. Analysts Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. However, the Company believes that GMV is a useful operating metric to both the Company and investors in assessing the volume of transactions that take place on the Company's platform, which is an indicator of the success of the Company's merchants and the strength of that platform. The APR loans that are created do have a component of interest that is calculated by determining the amortization of the loan discount but this amortization is at a rate far below what Affirm charges on standard loans in the portfolio. Not all readers will be familiar with all fintech companies. To ensure the most secure and best overall experience on our website, we recommend the latest versions of, Shopifys selection of Affirm as its exclusive partner to power Shop Pay Installments, bringing Affirm to hundreds of thousands of new merchants and their customers later this year, The introduction of Affirm Savings, a high-yield savings account, The launch of numerous merchant partnerships over the last month including. Affirm went public in January at $49 a share, and its stock price has since jumped by over 150% to $133.70 on Wednesday. Button CTA. Transaction Costs - The Company defines transaction costs as the sum of loss on loan purchase commitment, provision for credit losses, funding costs, and processing and servicing expense. This allow me to make calculations in term of EV/S that can be compared to other ratios on an apples to apples basis. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. This announcement comes on the heels of recent company news, including: Affirm is purpose-built from the ground up to provide consumers and merchants with honest financial products and services that improve their lives. I imagine that many readers, as well as this author had never heard of Affirm. These amounts have, and will continue to vary based on the level of 0% ALR loans that are sold or purchased. I wrote this article myself, and it expresses my own opinions. Apple Savings, Financial Health And Bankings Future, Apple, Goldman Sachs And BAM Fintechs Take A Bite Out Of Traditional Banking. The company also notes that its revenue from merchant partners in certain industries hit hard by the pandemic declined, but its revenue from partners in other industries saw a big boost. The conference call will be webcast live from the Company's investor relations website at https://investors.affirm.com/. Getting credit instantaneously when an individual wants to buy a TV or a puppy or a Peloton bike resonates enormously with individuals who have inadequate credit limits on their cards, inadequate cash in the bank and are looking for instant gratification. The famous founder here is Max Levchin, an alumni and founder of PayPal PYPL). It can offer some consumers a 0% APR loan which has created lots of word of mouth excitement amongst consumers. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. When choosing to pay biweekly with Affirm, consumers can check eligibility in seconds, without impacting their credit score or inputting their social security number. Total revenue less transaction costs was $431.4 million, compared to $160.9 millionin fiscal year 2020, driven by strong revenue growth, and offset by a $90.4 The Affirmed S-1 is written from the point of view of trying to prove the company is based on technology-I think it is, other readers will not reach the same conclusion. Entering text into the input field will update the search result below. Mr. Levchin was one of the several co-founders of PayPal (PYPL) and is credited with creating its initial set of security applications. More consumers and merchants are continuing to choose Affirm because of our ability to offer a variety of ways to pay, thanks to our unrivaled technology. How much funding has this organization raised over time? Supreme Court, Queens County. I believe, therefore, that the growth opportunity for Affirm will be substantial and of long duration. Affirms most recent valuation is not known. I will attempt to provide some rough metes and bounds that relate to what I consider to be a fair enterprise value for the company. Some of the credit offers include a 0% APR option as well as credit terms of varying lengths. Not this writer. The company is also introducing an interest-free biweekly payment product for transactions as low as $50. The Company believes that revenue less transaction costs is a useful financial measure to both the Company and investors of the economic value generated by transactions processed on the Company's platform. I think it unlikely, as I detail below, that this company can achieve 98% growth in this current quarter. The event will feature keynote presentations by Max Levchin, Founder and Chief Executive Officer, and Michael Linford, Chief Financial Officer, and Q&A sessions with Mr. Levchin, Mr. Linford and additional members of its executive leadership team. Last quarter those revenues were 31% of total revenues and rose by 40% year over year. More recently, the company reported net revenue of nearly $174 million for the three months that ended on September 30, 2020, up nearly 98 percent from the $87.9 million in revenue it generated during the same period the year prior. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT. You may opt-out by. The Forbes Investigation: Inside The Secret Bank Behind The Fintech Boom, Download a new way to pay over time | Affirm App. That computes to an enterprise value of $3.75 billion. Ind. Lightspeed Venture Partners: 9,370,230 shares of Class A common stock and Class B common stock each. And I do not expect the shares to be cheap. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. How many investments has this organization made over time? The company has been achieving remarkable growth with total revenue growth reaching 98% last quarter accelerating from 93% in the prior fiscal year. The company focuses on contribution margins which are basically a marginal profit calculation that excludes a number of opex items including technology and general and administrative expense that are not volume related. Given the growth expectations for this company, I imagine that sales and marketing expense will continue to grow as an expense ratio from current levels. Affirm reports its numbers consistent with those of a consumer finance company and some of its revenue and expense captions are quite different than those familiar to followers of enterprise software companies. Shop Now Easy Builder Custom build the perfect gaming PC based on the games you play and we will ship it out in 5 business days! I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. Affirm, Max Levchin's buy now, pay later credit card alternative, expects to achieve a valuation of just over $9 billion from its forthcoming IPO on Nasdaq. There arent many companys with that kind of growth in GMV and those that have enjoyed that kind of growth rate-think of Shopify (SHOP) as an example sell at enormous EV/S ratios-above 40X, actually. The Company believes that active merchants is a useful performance indicator to both the Company and investors because it measures the reach of the Company's network. This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. Others continue to feel that these companies will not achieve the kind of growth that supports their current valuation. Unlike credit cards and other pay-over-time options, we show consumers exactly what they will pay up front, never increase that amount, and never charge any late or hidden fees. Starting in the 1990s, Mr. Hochfeld worked as a sell-side analyst and won awards from the Wall Street Journal for his coverage of the software space. The pandemic has tilted Affirms trajectory steeply upward, as it has for many fintech companies. Affirm prides itself on showing consumers how much interest theyll pay upfront and having no late fees. The ability of merchants to offer credit decisions and 0% APR loans at the time of checkout would seem to me to be a major competitive advantage for many consumer brands. Like many other payment processors, Shift4 reports gross revenues which really are not comparable to the revenues reported by other software companies. You're more than your latest funding, tell our customers your company's story. This company experiences notable seasonality typical of consumer retail buying patterns. Affirm's fiscal year 2022 financial outlook also reflects its strategy to drive growth in its network through continued investment in product as well as merchant and consumer acquisition and retention efforts. : 8,525,053 shares of Class A common stock and Class B common stock each. I wish I didnt have to write that-but while there are many differences between now and the .com bubble, there are some similarities as well. 2W 10W 9M. _______________1 Information about Affirm's use of non-GAAP financial measures is provided under "Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators" and "Use of Non-GAAP Financial Measures" below, and reconciliation of GAAP results to non-GAAP results are provided in the tables at the end of this press release.2 A reconciliation of adjusted operating loss to the comparable GAAP measure is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future.3 Other costs consists of one-time expenses incurred in the period associated with the Company's initial public offering, its strategic acquisitions, and impairment of right of use assets. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. : 6,947,972 shares of Class A common stock and Class B common stock each. April 3, 2019. How many readers believed that Square Cash would achieve the growth trajectory it has. Affirm is now accepted as a payment method for consumers using the Ayden platform. Transaction Costs as a Percentage of GMV - The Company defines transaction costs as a percentage of GMV as transaction costs, as defined above, as a percentage of GMV, as defined above. In any event, the deferral program was used by just 63k borrowers deferring payments on less than $20 million of loan principle. Affirm plans to list on the Nasdaq under the ticker AFRM. Allowance for Credit Losses as a Percentage of Loans Held for Investment - The Company defines allowance for credit losses as a percentage of loans held for investment as GAAP allowance for credit losses as a percentage of GAAP loans held for investment.