Affirm Holdings, Inc. (AFRM) Valuation Measures & Financial (650)398-2715, Internet Explorer presents a security risk. 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. Affirm will host a conference call and webcast to discuss fourth quarter fiscal year 2021 financial results on Thursday, September 9, 2021, at 5:00 pm ET. The company earns interest on the balances of loans it holds for sale. I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. One of the things that has struck me in doing due diligence with regard to Affirm is that compared to most credit card purchases, Affirms lending is based on a specific consumer purchase. 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. Last quarter, a little less than 10% of revenues came from a category called gain on sales of loans. This caption, and it contra, loss on loan purchase commitment is primarily a function of the companys funding costs and its relation with Cross River Bank. : 6,947,972 shares of Class A common stock and Class B common stock each. Consumers I have spoken with are quite enthused about the 0% APR offering and it is one of the reasons why the company has experienced rapid growth. 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. 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. 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. Overall, last quarter, the company achieved an increase of 71% in terms of the GMV transacted on the companys platform on a year to year basis. That said, I think the long-term growth rate for Affirm is likely to exceed that of FOUR. Affirm's new interest-free, biweekly payment option for transactions as low as $50 (Photo: Business Wire). Affirm Stock Price, Funding, Valuation, Revenue & Financial To supplement the Company's condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company presents the following non-GAAP financial measures: transaction costs, transaction costs as a percentage of GMV, revenue less transaction costs, revenue less transaction costs as a percentage of GMV, adjusted operating (loss) income, adjusted operating margin, total platform portfolio, equity capital required, and equity capital required as a percentage of total platform portfolio. I am not receiving compensation for it (other than from Seeking Alpha). It can offer some consumers a 0% APR loan which has created lots of word of mouth excitement amongst consumers. Interest income is a function of both the amount of loans held for sale and the interest rate the loans yield. Klarna, founded in 2005, was recently valued at $10.7 billion and has 11 million American users. That said, servicing revenues are still less than the cost of servicing and were just 2.3% of revenues in the September ending quarter. However, these non-GAAP financial measures are presented for supplemental informational purposes only, and these non-GAAP financial measures have limitations as analytical tools. We are revolutionizing the financial industry to be more accountable and accessible while growing a network that is beneficial for consumers and merchants. Market Mr. Levchin was one of the several co-founders of PayPal (PYPL) and is credited with creating its initial set of security applications. Crunchbase News reporter Christine Hall contributed to this article. In the latest reported quarter, about 57% if the companys revenues came from the commerce fees paid by merchants and consumers. Analyst Briefing Submitters are 7x more likely to receive a qualified connection. Affirm prides itself on showing consumers how much interest theyll pay upfront and having no late fees. At some level, a company like Affirm might be said to compete with PayPal-but in terms of the realities of competition, that is a stretch. It has reduced its cash burn to a negligible level and continued to show a path to profitability. The Company believes that transactions per active consumer is a useful operating metric to both the Company and investors in assessing consumer engagement and repeat usage, which is an indicator of the value of the Company's network. Indeed, I would find that kind of valuation an attractive entry point and would be buying shares if they are available at such a valuation. Did you think that there were enough channels for consumers to obtain credit? Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. Affirms strong results this quarter and fiscal year demonstrate the progress we are making in rapidly expanding our network, said Max Levchin, Founder and Chief Executive Officer of Affirm. WebAffirm's valuation in April 2019 was $2,600 - $2,900M. Affirm, a buy now and pay later solution, has closed its Series G round on $500m. I have to start this article by stating the obvious: the market is very frothy and investors seem to be losing their connections to a realistic valuation paradigm. What can readily be determined, is that Affirm has both a higher positive rate in terms of extending credit and a lower charge-off rate that was less impacted by the economics of the pandemic than expected. SAN FRANCISCO September 17, 2020 By offering Affirm, our 6,000 merchant partners can I imagine that the partnership will further accelerate the growth of merchant partners who use Affirm to accelerate their sales performance. Affirm is yet another payment platform that has been designed for the digital era. It has focused on prime+ credit customers. It focuses on merchants in the home improvement and in the healthcare service organizations. In the S-1, Affirm disclosed the number of Class A and Class B common stock each shareholder held, but did not disclose what percentage of ownership their shares represented. affirm series g valuation - Flix Houphout-Boigny Foundation for The investment was led by GIC and Durable Capital Partners, with additional 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. And I have been told that most consumers who have used the service like it and will be repeat customers. You may opt-out by. The curated list of the most valuable private companies in the world |. The conference call will be webcast live from the Company's investor relations website at https://investors.affirm.com/. Overall, the pandemic notionally has been a headwind in terms of revenue growth. Here are some of the financial highlights revealed in this weeks S-1 filing. I cant say I know most of the merchants who offer the Affirm service, but I do know Dyson, Callaway, Delta Airlines and Expedia. If you have an ad-blocker enabled you may be blocked from proceeding. It seems like a straight forward concept but it upends the way credit has been advanced through cards for many years now. 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 scores $300M Series F at reported $2.9B valuation The funding round was led by GIC, a 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 company has most of the elements that investors look for in terms of strong and persistent growth, excellent unit economics, a defensible moat and what appears to be a strong management team. Affirm - Funding, Financials, Valuation & Investors - CrunchBase In the June quarter, repayments were essentially at historic levels. 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. Affirms credit app provides consumers with offers essentially on an instantaneous basis. Affirm is a fintech company with a rather unique approach to supplying credit to consumers. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. My belief is that Affirm is likely to be a large and successful company with a high growth rate and above average profitability. 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. Unlike payment options that have late fees, compounding interest and unexpected costs, Affirm shows customers up front exactly what theyll pay with no hidden fees and no surprises. The company reported a positive contribution margin last quarter. 2W 10W 9M. 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 following table summarizes Affirm's financial outlook for the first quarter and fiscal year 2022 periods. Affirm has made 5 investments. Shares shot up 98%, lifting its market value to an eye-popping $23.6 billion. As part of the series G financing, this debt was converted into 4.4 million Series G shares. The company was founded in 2005 and is based in Stockholm, Sweden. But I actually believe that Walmart's ability to make credit offers based on Affirm is a significant competitive advantage for Walmart. These investments are expected to benefit the Company's product innovation capabilities and brand awareness in support of its long-term growth objectives. Affirm was founded and is still lead by Max Levchin. Accelerates Q4 Gross Merchandise Volume Growth to 106% and Total Revenue Growth to 71% Year Over Year, Expands Network by Nearly Doubling Active Consumers and Growing Active Merchants by Over 400% Year Over Year, Expects Fiscal Year 2022 GMV Growth of At Least 50%, or 70% Excluding Peloton, Prior to Any Benefit from the Recently Announced Amazon Partnership. of Affirms plans for an IPO, estimated valuation at $5 billion to $10 billion. Sign up for a free trial to see Affirm's valuations in January 2021 and more. Fiscal Year 2021 Financial Highlights:1 All comparisons are made versus fiscal year 2020 unless otherwise stated. The company has been achieving remarkable growth with total revenue growth reaching 98% last quarter accelerating from 93% in the prior fiscal year. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. It also provides security solutions for credit and fraud risks for e-stores. It was founded in 2016 and is based in Los Angeles, California. Max Levchins consumer payment-and-debt startup was founded in 2012. Should readers/investors buy Affirm shares? 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. We have never been more confident and excited in Affirm's future.. 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. Shopify: Undisclosed, but listed as a 5 percent stockholder. _______________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. The Affirm platform, so the S-1 says, is built on data science. During the fourth quarter, we delivered strong unit economics while driving even greater capital efficiency. The Company is intentionally prioritizing increased investments in both its product and engineering teams, while also increasing its brand and direct response marketing efforts. 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. Affirms most recent valuation is not known. Sony Pictures Affirm Originals has struck a deal with author Karen Kingsbury to adapt her 2005 novel A Thousand Tomorrows as a TV series. Affirm's latest funding round was a IPO for $1,205.4M on January 13, 2021. In IPO Pop, Affirm Doubles In Value To $24 Billion - Forbes Affirm, a more flexible and transparent alternative to credit cards, today announced a $500 million series G round of funding. I am not inclined to think that Pay in 4 itself will have any material influence on the growth of Affirm). WebFor example, a $800 purchase could be split into 12 monthly payments of $72.21 at 15% APR, or 4 interest-free payments of $200 every 2 weeks. 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 offers credit both on the basis of 0% APR, or simple interest loans, i.e. It charges interest in about half of its transactions, making most of its revenue through fees charged to merchants. Apparently that is not going to be a problem of the same magnitude experienced by prospective investors in recent IPOs. valuation 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. Still, it is something that may be of interest to readers: The Forbes Investigation: Inside The Secret Bank Behind The Fintech Boom. 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. 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. 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. 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. I am not going to try to determine if the service offered by Affirm winds up being a better deal for consumers than traditional credit card purchases. Fitch to Affirm Houston GO CP Notes Series G-1's S-T Rating at 'F1+'. 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. site you are consenting to these choices. | forrest county jail docket 2020 Could the shares trade a substantial premium to that kind of valuation? Baillie Gifford & Co., Durable Capital Partners, Fidelity Investments, Founders Fund, GIC, Lightspeed Venture Partners, Spark Capital, and Wellington Management. Some of the credit offers include a 0% APR option as well as credit terms of varying lengths. Fourth Quarter of Fiscal Year 2021 Financial Highlights:1 All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated. This expense ratio has declined over time even though it has grown at more than 60% year on year. Goldman Sachs, Morgan Stanley and Barclays are among the underwriters for the IPO. The loss of Peloton as a merchant partner, or the loss of any other significant merchant relationships, would materially and adversely affect our business, results of operations, financial condition, and future prospects.. I have no business relationship with any company whose stock is mentioned in this article. Entering text into the input field will update the search result below. Affirm's latest post-money valuation is from January 2021. Adjusted Operating (Loss) Income - The Company defines adjusted operating (loss) income as its GAAP operating loss, excluding: (a) depreciation and amortization; (b) stock-based compensation included in GAAP operating loss; (c) the amortization of its commercial agreement asset; and (d) certain other costs as set forth in the reconciliation of adjusted operating (loss) income to GAAP operating loss included in the tables at the end of this press release. I am clearly not qualified to evaluate the Affirm algorithms that it has developed to determine credit for its borrowers. With our superior technology, Affirm is strongly positioned to build a more valuable two-sided network for consumers and merchants. Consumers seem attracted to this kind of transparent borrowing and funding sources find the high velocity of repayments to be congruent with their own needs. I have chosen to use the sum of transaction based gross profit ($403 million) and subscription and services based revenue ($448 million) to calculate a revenue level that is more or less comparable to the revenues reported by most enterprise software companies. Yes, I do imagine there will be a correction of some magnitude and for some time period, but no, I do not see this as an analog to that which was experienced at the turn of the century. In the latest quarter provisions were 23% of revenues compared to 28% in the year earlier quarter. Certainly I am not. Equity Capital Required - The Company defines equity capital required as the sum of the balance of loans held for investment and loans held for sale, less the balance of funding debt and notes issued by securitization trusts as of the balance sheet date. It was founded in 2011 and is based in Santa Monica, California. 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. Affirm offers 0% financing for Peloton bikes, and Peloton is its largest customer, making up 30% of its revenue in the quarter ending September 30, 2020. 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. Servicing revenue rose by almost 100% in the latest quarter. Probably most analysts will look at the increase in GMV of 71% as a reasonable proxy for growth expectations. Sign up for a free trial to see Affirm's valuations in January 2021 press@affirm.com It has added $18 billion to its market cap in four months. 9.89 +0.03 (+0.30%) After 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 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. Part of this is obviously a self-selection process that is engendered by word-of-mouth. Affirm Raises $500M Series G Round Sunbit is a financial technology that enables financing in-store purchases for consumers across the credit spectrum. Affirm plans to list on the Nasdaq under the ticker AFRM. 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. Adds Interest-Free Biweekly Payment Product. Header placeholder lorem ipsum dolor sit amet, consectetur adipiscing elit. My last article on C3.AI (AI) which, amongst other topics, focused on its stretched valuation, garnered a comment to the effect that valuation doesnt/shouldnt matter until an enterprise reaches a $50 billion enterprise value. The company aims to disrupt the process of financing in-store purchases for customers across the credit spectrum, including the unbanked or underbanked. Interestingly, a large portion of Affirms revenue comes from a single merchant partner: . 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. Stay up to date with recent funding rounds, acquisitions, and more with the Affirm has been one of the creators of a new class of e-commerce-POS credit. Average Affirm hourly 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. I wrote this article myself, and it expresses my own opinions. Founders Fund: 8,525,053 shares of Class A common stock and Class B common stock each. Affirm's valuation in April 2019 was $2,600 - $2,900M. iBUYPOWER: Gaming Computers, Custom PCs and Laptops 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. Our solutions use the latest in machine learning, artificial intelligence, cloud-based technologies, and other modern tools to create differentiated and scalable products. That yields an EV/S ratio for Square of just greater than 27X. 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. The Company believes that equity capital required as a percentage of total platform portfolio is a useful financial measure to both the Company and investors in assessing the proportion of outstanding loans on the Company's platform that are funded by the Company's own equity capital. (Recently, PayPal launched a service called Pay in 4 which allows consumers to split payments into 4 bi-weekly payments with a 0% APR-this is perhaps an initial step into the world of POS lending which may be of significance over time. Predictions were rife coming into 2023 that we would see a flood of M&A deals for venture-backed startups as funding and IPOs dried up. Please disable your ad-blocker and refresh. 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. The forward-looking statements are made as of the date hereof, and the Company assumes no obligation and does not intend to update these forward-looking statements. Among the largest stakeholders in Affirm are Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Jasmine Ventures, and Shopify. 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. Overall, I think the advantages that Affirm has within the POS credit market are of sufficient magnitude that it likely they will continue to dominate the broadly defined space-and the space itself is likely to experience continued rapid growth. Affirm's deal structure is available for 7 funding rounds, including their IPO from January 13, 2021. Senior editor covering fintech and crypto. 2023-02-10. In turn, this has apparently lead to a shorter duration loan than is the case for most revolving credit loans which automatically renew. Stock ticker symbol (e.g. 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. For merchants, adding Affirm is simple and can take as little as one hour. Its profitability optics obscure its path to profitability. As with Affirms existing monthly payment options, consumers will never be charged late or hidden fees when using this new product. Which industries has this organization most actively invested in? 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. 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.

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