That said, I think the long-term growth rate for Affirm is likely to exceed that of FOUR. I have no business relationship with any company whose stock is mentioned in this article. The Company believes that transaction costs is a useful financial measure to both the Company and investors of those costs, which vary with the volume of transactions processed on the Company's platform. (in thousands, except share and per share amounts), Securitization notes receivable and residual certificates (at fair value), Liabilities, Redeemable Convertible Preferred Stock and Stockholders Deficit, Redeemable convertible preferred stock, $0.00001 par value, 30,000,000 and 124,453,009 shares authorized as of June 30, 2021 and June 30, 2020, respectively; zero and 122,115,971 shares issued and outstanding as of June 30, 2021 and June 30, 2020, respectively; liquidation preference of $0 and $809,032 as of June 30, 2021 and June 30, 2020, respectively, Common stock, $0.00001 par value, no shares authorized, issued and outstanding at June 30, 2021; 232,000,000 shares authorized, 47,684,427 shares issued and outstanding as of June 30, 2020, Class A common stock, par value $0.00001 per share: 3,030,000,000 shares authorized, 181,131,728 shares issued and outstanding as of June 30, 2021; no shares authorized, issued and outstanding as of June 30, 2020, Class B common stock, par value $0.00001 per share: 88,226,376 shares authorized, issued and outstanding as of June 30, 2021; no shares authorized, no shares issued and outstanding as of June 30, 2020, Accumulated other comprehensive gain (loss), Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders Deficit, CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS, Excess return to preferred stockholders on repurchase, Net (Loss) Income Attributable to Common Stockholders. The Company is intentionally prioritizing increased investments in both its product and engineering teams, while also increasing its brand and direct response marketing efforts. Fourth Quarter of Fiscal Year 2021 Financial Highlights:1 All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated. Its commerce platform, agreements with originating banks, and Greensky has had its share of issues during the pandemic. Sales in the March quarter showed minimal sequential growth followed by a substantial bounce back in the June quarter, and some moderation of sequential growth in the September quarter. 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 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 Affirm has made 5 investments. 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. Affirm Holdings, Inc. operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. Mr. Hochfeld has enjoyed a long career in the tech world, working for IBM, Memorex/Telex, Raytheon Data Systems, and BMC Software. FedNow Real-Time Payments Are Here. In the September quarter, the cash burn fell to just $2 million. Stay up to date with recent funding rounds, acquisitions, and more with the I wrote this article myself, and it expresses my own opinions. Affirm What Should Banks Do Now? Founders Fund: 8,525,053 shares of Class A common stock and Class B common stock each. Highly esteemed for his investment wisdom accumulated over decades, Mr. Hochfeld ranks in the top 0.1% of Tip Ranks analysts for his selection of information technology stocks and their subsequent successes. I have linked here to a Forbes article about Cross River as it was a year ago. Others continue to feel that these companies will not achieve the kind of growth that supports their current valuation. These days, tech IPOs seem to reap valuations detached from any analytical reality. Affirm Grabs Mega $500M Series G Round - vcnewsdaily.com One of the concepts here is that credit based on a specific asset such as an exercise bike or an airline ticket has a better chance of being repaid than extending credit without any concern about the nature of the purchases. Back in July, The Wall Street Journal. The company reported a positive contribution margin last quarter. Stock Price. We have never been more confident and excited in Affirm's future.. That is simply not a problem for this company-in the last quarter that it reported, total revenues grew by 98%-and revenues related to commerce actually grew by 150%. 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. Gross Merchandise Volume ("GMV") - The Company defines GMV as the total dollar amount of all transactions on the Affirm platform during the applicable period, net of refunds. I believe that this company has some unique technology, a pretty decent competitive moat and an offering (I mean what they offer consumers) that is well in-tune with the way consumers want to conduct commerce. You may opt-out by. 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. A company like Affirm should have a noticeable cost advantage in the sense that its funding costs should be lower than competitive offerings given the low loss ratios, the favorable experience it had in terms of charge-ffs during the pandemic and the unique process of underwriting at checkout. The company offered a payment deferral program for certain borrowers. Currently, the proportion of loans with a 0% APR has reached 46% and that is up from 31% in the prior year. Peloton is rather substantial purchase for most consumers and exercise bikes specifically, and exercise equipment in general have never developed a specific financing channel despite the rather significant average cost of a purchase. Interestingly, a large portion of Affirms revenue comes from a single merchant partner: . This expense ratio has declined over time even though it has grown at more than 60% year on year. Affirm - Funding, Financials, Valuation & Investors - CrunchBase The strategic progress we achieved in fiscal year 2021 sets us up for long-term growth. Affirm's latest post-money valuation is from January 2021. 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 following tables present a reconciliation of transaction costs, revenue less transaction costs, adjusted operating income (loss), adjusted operating margin, and equity capital required to their most directly comparable financial measures prepared in accordance with GAAP for each of the periods indicated. It is obviously a big deal when it comes to valuation. The company has been leveraging the opportunities of its end to end approach and will continue to do so with offers to merchants that are uniquely attractive. It has added $18 billion to its market cap in four months. Khosla Ventures: 6,947,972 shares of Class A common stock and Class B common stock each. Yet it faces widening competition. Pretty much all of them say that they have proprietary algorithms that give them advantages in pricing risk and providing merchants with a tool to drive sales and provide a better experience for consumers. Servicing revenue rose by almost 100% in the latest quarter. The loans held for sale grew by 59% year over year, but the return declined from 21% to 18% as a function in the proportion of 0% APR loans in the Affirm portfolio. 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. While customer concentration is a risk, given the size and growth rate of PTON, and the synergistic components of the relationship, I am not particularly concerned about this kind of customer concentration. We are revolutionizing the financial industry to be more accountable and accessible while growing a network that is beneficial for consumers and merchants. Their latest investment was in NYDIG as part of their Growth Equity - IV on December 12, 2021. We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.. The company has yet to reach profitability, and is just now reaching a position of positive contribution profit. The famous founder here is Max Levchin, an alumni and founder of PayPal PYPL). The company derives a significant amount of revenue from the interest it receives on loans held for sale. Affirm financials. Revenue less transaction costs and revenue less transaction costs as a percentage of GMV are not intended to be measures of operating profit or loss as they exclude key operating expenses such as technology and data analytics, sales and marketing, and general and administrative expenses; Adjusted operating (loss) income and adjusted operating margin exclude certain recurring, non-cash charges such as depreciation and amortization, although the assets being depreciated and amortized may need to be replaced in the future, and share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of the Company's compensation strategy; and. The company has been acquiring merchant partners at what I can only describe as a prodigious rate because it can be such a potent competitive tool. Fourth Quarter and Fiscal Year 2021 Operating Highlights: All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated. Button CTA. During the fourth quarter, we increased the number of merchants on our platform by more than fivefold, more than doubled gross merchandise volume and grew active consumers by 97% year over year., Levchin continued, The secular shift toward flexible and transparent financial products continues to accelerate. People v Smith (2023 NY Slip Op 23127) SAN FRANCISCO September 17, 2020 By offering Affirm, our 6,000 merchant partners can With our superior technology, Affirm is strongly positioned to build a more valuable two-sided network for consumers and merchants. 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. The company is also introducing an interest-free biweekly payment product for transactions as low as $50. : Undisclosed, but listed as a 5 percent stockholder. My record in trying to handicap the value of IPOs has not been great; as noted, most of them are now selling at levels far beyond what I had anticipated. Revenue Less Transaction Costs - The Company defines revenue less transaction costs as GAAP total revenue less transaction costs, as defined above. Shopify: Undisclosed, but listed as a 5 percent stockholder. 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. There are a huge number of fintech startups of varying sizes and varying levels of operational performance. 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. Lightspeed Venture Partners: 9,370,230 shares of Class A common stock and Class B common stock each. Fly Now Pay Later seeks to help global travel businesses increase their sales by allowing customers a flexible payment option at checkout. I am a strong believer in the end-to end platform approach of Shift4, and the ability of management to create an offering that has and will continue to resonate with restaurants and the broader hospitality industry. And while consumers rarely have the tools to sift through offers to determine the real cost of credit, the phrase 0% APR is one that resonates and is easy to understand. Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators, (in millions, except GMV and percent data) (unaudited), Revenue Less Transaction Costs (Non-GAAP), Revenue Less Transaction Costs as a % of GMV (Non-GAAP), Adjusted Operating Income (Loss) (Non-GAAP), Total Platform Portfolio (Non-GAAP) (in billions), Equity Capital Required (Non-GAAP) (in millions), Equity Capital Required as a % of Total Platform Portfolio (Non-GAAP), Allowance for Credit Losses as a % of Loans Held for Investment. 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. In the latest reported quarter, about 57% if the companys revenues came from the commerce fees paid by merchants and consumers. Sony Pictures Affirm Originals has struck a deal with author Karen Kingsbury to adapt her 2005 novel A Thousand Tomorrows as a TV series. Adds Interest-Free Biweekly Payment Product. 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. round led by Durable and GIC in September. So, therefore, I think it will be valued at some comparable level to companies such as SQ and FOUR. Were excited about this vote of confidence from both new and existing investors as we advance our mission to build honest financial products that improve lives, said Max Levchin, CEO and founder of Affirm. Ana Braskamp 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. By the end of September, the amount of the portfolio in deferral had fallen to 0.1% of the outstanding loan balance. Crunchbase Daily. Could the shares trade a substantial premium to that kind of valuation? Affirm is a method of payment accepted by Walmart. | forrest county jail docket 2020 Thus far, the concept seems to be succeeding. Web+44 (0) 203 637 7085 | how many locomotives does kansas city southern have? 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. In addition, if this policy is properly executed, it will eliminate one of the greater risks in investing in newer companies, the dreaded expiration of share sale lock-ups. I think the only objective way to test the validity of these assertions is to see how they have worked out over time in the real world. The point I would make is that whether or not Affirms algorithms produce better results (and it seems as though they do) , the company has rather substantial advantages of scale and first mover benefits in the space. Other returning investors include Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, California residents: Affirm Loan Services, LLC is licensed by the Department of Financial Protection and Innovation. Affirms mission is to deliver honest financial products that improve lives. 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. 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. Affirm scores $300M Series F at reported $2.9B valuation Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. In the last few quarters, there has been some impact from headwinds created by the pandemic. Affirm, the fintech startup known for providing installment loans to shoppers, publicly filed its S-1 with the United States Securities and Exchange Commission on Wednesday. Affirm will also hold a virtual event after the close of market on September 28, 2021 to provide an update on its strategic, financial and product initiatives. Affirm Raises $500M Series G Round Affirm is a company that has been a pioneer in the POS-Credit space. While the company is not yet profitable , its long term business model appears very attractive and the path to profitability appears clearly defined. Affirm Reports Fiscal Year 2021 Fourth Quarter Results | Affirm Most of the commerce that the company enables is transacted on a mobile basis. Please. Affirm has a nascent partnership with SHOP with an offering called Shop Pay installments. Its offering resonates among younger people who have less access to traditional credit resources-its technology appears to produce better outcomes for its end users, its merchant clients, its funding sources and of course its shareholders.
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