It is obviously a big deal when it comes to valuation. Is this happening to you frequently? Ana Braskamp Affirm has been one of the creators of a new class of e-commerce-POS credit. This allow me to make calculations in term of EV/S that can be compared to other ratios on an apples to apples basis. Revenue Less Transaction Costs - The Company defines revenue less transaction costs as GAAP total revenue less transaction costs, as defined above. 1009-2020. As mention, in Q3, that total revenue came to $ 851 million, and my estimate of revenues for the next 4 quarters is $4.3 billion. Affirm's financial outlook assumes the following for GMV and revenue: In fiscal year 2022, Affirm expects GMV to grow faster than revenue as the Company's GMV mix shifts toward shorter duration Split Pay volume, and the volume coming from longer-duration Peloton financing de-concentrates. It can be almost impossible to estimate the growth rate for a company providing a new service to consumers. press@affirm.com As a private company, Affirm last raised money in September, 2020 at roughly one-fifth its current value. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT. Ind. Affirm has raised over $1.3 billion from investors to date. As mentioned. Crunchbase News reporter Christine Hall contributed to this article. It was founded in 2018 and is based in London, United Kingdom. Affirms credit app provides consumers with offers essentially on an instantaneous basis. WebAffirm's valuation in April 2019 was $2,600 - $2,900M. Last quarter, as mentioned the company reported 98% growth in revenues and growth of no less than 150% in commerce revenues, and investors have determined to pay a stiff premium for growth. Donte Smith, Defendant. Did you think that there were enough channels for consumers to obtain credit? The kinds of companies with excessive valuation are far different today than was the case 20 years ago, companies are not doing barter transactions for the most part, or selling shelfware, digital transformation is a real game changer and the ROI for many software solutions is high and has risen. : 8,525,053 shares of Class A common stock and Class B common stock each. My belief is that Affirm is likely to be a large and successful company with a high growth rate and above average profitability. 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. Among the largest stakeholders in Affirm are Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Jasmine Ventures, and Shopify. It is standard these days for fintech firms to assert that they have competitive advantages based on their unique credit scoring technology. The company has been able to price risk with a high level of accuracy and its latest delinquency rate of 1.1% based on a weighted average calculation seems quite attractive. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. The company also talks about how its machine learning paradigm produces better decisions than are elsewhere available: Our technology is built to handle the immense scale of our data-driven operations we are capable of processing thousands of checkouts per minute. : Undisclosed, but listed as a 5 percent stockholder. . large and successful company with a high growth rate and above average profitability. Their latest acquisition was Returnly on April 21, 2021. Certainly I am not. Other returning investors include Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, The Company believes that equity capital required is a useful financial measure to both the Company and investors in assessing the amount of the Company's total platform portfolio that the Company funds with its own equity capital. How much funding has this organization raised over time? Affirm is a fintech company with a rather unique approach to supplying credit to consumers. Revenue Less Transaction Costs as a Percentage of GMV - The Company defines revenue less transaction costs as a percentage of GMV as revenue less transaction costs, as defined above, as a percentage of GMV, as defined above. Overall, the pandemic notionally has been a headwind in terms of revenue growth. Affirm says it has more than 6,500 merchant partners including. Currently, the proportion of loans with a 0% APR has reached 46% and that is up from 31% in the prior year. Like many other payment processors, Shift4 reports gross revenues which really are not comparable to the revenues reported by other software companies. This sale left the company with a cash balance of $684 million. Sign up for a free trial to see Affirm's valuations in January 2021 and more. 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. Supplemental Disclosures of Cash Flow Information, Supplemental Disclosures of Non-Cash Investing and Financing Activities, Stock-based compensation included in capitalized internal-use software, Additions to property and equipment included in accrued expenses, Issuance of warrants in exchange for commercial agreement, Acquisition of commercial agreement assets, Conversion of redeemable convertible preferred stock, Issuance of common stock in connection with acquisition, Right of use assets obtained in exchange for operating lease liabilities, Reconciliation of Non-GAAP Financial Measures. Currency in USD. Overall, the trends of servicing revenue and costs are quite favorable. Similar to adjusted operating (loss) income, the Company believes that adjusted operating margin 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. Others might suggest that these businesses are really gussied up financial institutions that should be evaluated on those standards. With 6500 merchant partners, and several million users, Affirm is the largest company in its niche. Earlier in the summer, the WSJ had suggested that Goldman, Sachs has offered to underwrite an IPO for the company at a valuation of as much as $10 billion. 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. The Company believes that active consumers is a useful operating metric to both the Company and investors in assessing consumer adoption and engagement and measuring the size of the Company's network. Affirm - Funding, Financials, Valuation & Investors - CrunchBase 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. The Company is intentionally prioritizing increased investments in both its product and engineering teams, while also increasing its brand and direct response marketing efforts. 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%. The company has more than 6500 merchants who are integrated on the Affirm platform. We prioritize building our own technology and investing in engineering talent, as we believe these are enduring competitive advantages that are difficult to replicate.. GMV does not represent revenue earned by the Company. PayRight is an Australian payment plan provider developed for merchants to accelerate return-on-effort and for making things more affordable to consumers, by spreading the cost of purchases over time, without ever paying interest. Please disable your ad-blocker and refresh. 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. Part of this is obviously a self-selection process that is engendered by word-of-mouth. Merchants are paid upfront and in full on the same day and include a diverse mix of broad-reaching products and services such as direct sales businesses, home improvement, education, photography, dental, and health and beauty. Historically this company has seen substantial revenue contribution from merchant partners in the travel, hospitality and entertainment industries. Affirms most recent valuation is not known. 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. $12.5. Including employee stock options and restricted share units, Affirm would have a valuation of more than $11 billion, the filing showed. While the S-1 is not explicit, I think that it is likely that the latest capital raise was done on the basis of a $4 billion total valuation for the company. Last quarter those revenues were 31% of total revenues and rose by 40% year over year. Edit Post-Money Valuation Data by PrivCo Section. The sequential increase in commerce sales last Q4 was spectacular-reaching a triple digit pace. Copyright 2023 CB Information Services, Inc. All rights reserved. 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. Looked at holistically and ignoring the reversal of bad debt provisions in Q2, the company is seeing favorable opex trends. Market site you are consenting to these choices. What Should Banks Do Now? The company earns interest on the balances of loans it holds for sale. Shopify: Undisclosed, but listed as a 5 percent stockholder. For the first fiscal quarter of 2021, it posted a loss of $15.3 million. Worth noting is that Shopify is a 5% shareholder. Based on what I know, Affirm really does provide its borrowers with a better experience, and allows them to buy more than would be the case using other credit scoring technologies. It was founded in 2016 and is based in Los Angeles, California. 9.86 -0.30 (-2.95%) At close: 04:00PM EDT. Typically, most consumers have bought these kind of bikes on their cards-but not everyone can make a $2000 purchase on their card. But from what has been suggested, this will be an IPO in which many readers can actually participate and which may not have a 1st day advance that has made investing in IPOs such a terribly fraught undertaking. The company has been reducing its cash burn; in FY 2020, the cash burn had been $71 million. It offers services such as direct payments, pay-after-delivery options, and installment plans. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Affirm is now accepted as a payment method for consumers using the Ayden platform. Afterpay, the five-year-old Australian company valued at $24 billion, has 13 million registered U.S. customers. Transactions per Active Consumer - Transactions per active consumer is defined as the average number of transactions that an active consumer has conducted on its platform during the 12 months prior to the measurement date. The Forbes Investigation: Inside The Secret Bank Behind The Fintech Boom, Download a new way to pay over time | Affirm App. What is quite unique about what Affirm does, is that there is a specific connection between the asset and the loan. In November, Ayden, which is a major and rapidly growing global payment platform signed a partnership with Affirm. 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. In the June quarter, repayments were essentially at historic levels. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. I have no reason to doubt the statement and of course given the background of the CEO and the rest of the management team, it makes sense to me that the company would be in a position to create differentiated offerings. 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. We consider data beyond traditional credit scores, such as transaction history and credit usage, to predict repayment ability, and leverage this with real-time response data. Built In San Francisco Affirm Raises Half a Billion Dollars in Its Series G Funding Round News Sep 17, 2020 Crowdfund Insider U.S. Fintech Affirm Secures $500 Million Through Series G Funding Round Led By GIC & Durable Capital Partners News Sep 17, 2020 Finextra Research Affirm raises $500m News Sep 17, 2020 Some of these limitations are as follows: Accordingly, investors should not consider these non-GAAP financial measures in isolation or as substitutes for analysis of the Company's financial results as reported under GAAP, and these non-GAAP measures should be considered along with other operating and financial performance measures presented in accordance with GAAP. According to news reports, the IPO has been postponed because of the frothy share price action of the last 3 major IPOs . The initial offering is perhaps a bit circumscribed in that credit is only being advanced for 2 months with payments due every two weeks but presumably this is the start of a more far-reaching set of offers that Affirm will be able to present to end customers of the base of Shopify merchants. 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. Header placeholder lorem ipsum dolor sit amet, consectetur adipiscing elit. SAN FRANCISCO September 17, 2020 By offering Affirm, our 6,000 merchant partners can Its sales and marketing effort is nascent. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. 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. Affirm partners with over 6,000 merchants in the U.S., helping them grow sales and access new consumers. their loans have no compounding, and also no late fees are charged. The last IPO I reviewed (C3.AI) (AI) had shares that had trebled since the time of the IPO to a valuation that made little sense-at least to me-and besides that, the growth clothes that are the point of most of these IPOs were conspicuous by their absence. Button CTA. In the latest quarter provisions were 23% of revenues compared to 28% in the year earlier quarter. Its credit offers are based on low or deferred interest promotional financing solutions. Affirm, a buy-now, pay-later fintech company based in San Francisco, went public today at $49 a sharean implied valuation of $12 billion. In the spring of 2020, the company sold $75 million of convertible debt. Their latest investment was in NYDIG as part of their Growth Equity - IV on December 12, 2021. Hosting the call will be Max Levchin, Founder and Chief Executive Officer, and Michael Linford, Chief Financial Officer. The company has consistently exceeded 100% in terms of dollar based merchant retention-presumably most merchants find Affirm a useful competitive tool and one that helps them fulfill their sales goals. Because of this experience, the company significantly reversed the provision for credit losses as seen in the S-1. It seems like a straight forward concept but it upends the way credit has been advanced through cards for many years now. 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! WebFind out all the key statistics for Affirm Holdings, Inc. (AFRM), including valuation measures, fiscal year financial statistics, trading record, share statistics and more. round led by Durable and GIC in September. Last quarter, Affirm grew revenues at 98% and grew its commerce revenues by 146%. Obviously that kind of progression will not continue and I think it is best to look a growth for this company in terms of its growth in GMV. WebAffirm Holdings, Inc. (AFRM) NasdaqGS - NasdaqGS Real Time Price. I cant say I know most of the merchants who offer the Affirm service, but I do know Dyson, Callaway, Delta Airlines and Expedia. The company has negotiated fees that it charges merchants for the commerce transacted across the platform and the fee is higher when the transaction is based on a 0% APR loan. 2023-02-10. Summaries of the reasons why the Company believes that the presentation of each of these non-GAAP financial measures provides useful information to the Company and investors are included under "Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators" above. American Express B2B Cross-Border Payments: Building Business Beyond The Card, First Republics Billions In Losses Show Why Bank Deposits Need More Protection, The Ascendancy Of AI In Asias Financial Services Industry, National Digital ID Is A Foundation For CBDC. Khosla Ventures: 6,947,972 shares of Class A common stock and Class B common stock each. Were excited about this vote of confidence from both new and existing investors as we advance our 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. The statistics that have been seen for these kind of partnerships are exceptionally compelling and should allow Affirm to continue to acquire merchant partners at a substantial rate. Crunchbase Daily. It most recently raised a $500 million Series G round led by Durable and GIC in September. Payment options through Affirm are provided by these lending partners: https://www.businesswire.com/news/home/20210909006033/en/, Gross merchandise volume ("GMV") for the fourth quarter of fiscal 2021 was, Active merchants grew by 412% to nearly 29,000 for the fourth quarter of fiscal 2021, including several thousand newly integrated Shopify merchants, Transactions per active consumer increased 8% to approximately 2.3 as of, Adjusted operating income for the fourth quarter of fiscal 2021 was, Net loss for the fourth quarter of fiscal 2021 was, The Company has not included estimates of potential contributions to GMV or revenue from the recently announced partnership with Amazon, which is currently being tested with select customers. 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. 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 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. A replay will be available on the investor relations website following the call. The company offers credit both on the basis of 0% APR, or simple interest loans, i.e. I look at companies such as Square and Shift4 as technology companies that facilitate loans and payments. 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. The company estimates its credit losses based on historic trends and the volume of loans held for investment. The company had 210 million shares outstanding on a proforma basis after the sale of the Series G preferred shares according to the S-1.
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