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 was founded in 2016 and is based in Los Angeles, California. Because of this experience, the company significantly reversed the provision for credit losses as seen in the S-1. We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.. The following table summarizes Affirm's financial outlook for the first quarter and fiscal year 2022 periods. Header placeholder lorem ipsum dolor sit amet, consectetur adipiscing elit. 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 As explained below, Affirmed postponed its offering to reconstitute it in a way that avoids some of the first day pop associated with IPOs. Crunchbase News reporter Christine Hall contributed to this article. In dealing with Affirm, the analogs I will use are going to be Square (SQ) and Shift4 (FOUR). Affirm nets huge $500M Series G, bringing total funding WebAffirm's valuation in April 2019 was $2,600 - $2,900M. Their latest portfolio exit was Resolve on January 01, 2019. My own view is that while a company like Affirm is a financial institution that facilitates loans, the entire premise of the company is based on what appears to be a disruptive business model built on proprietary technology. The event will be webcast from Affirms investor relations website at https://investors.affirm.com/ and a replay will be available following the event. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Our machine learning-based risk models are currently calibrated and validated on more than one billion individual data points, based on a complex set of variables, and are custom built to effectively detect fraud, price risk, and provide customized recommendations. Affirm plans to list on the Nasdaq under the ticker AFRM. Many readers and analysts will be struck by customer concentration. Which types of acquisition does this organization make most frequently. Servicing revenue rose by almost 100% in the latest quarter. 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. The companys market cap has swelled past $35 billion. Others continue to feel that these companies will not achieve the kind of growth that supports their current valuation. Affirm's latest funding round was a IPO for $1,205.4M on January 13, 2021. 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. 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. Affirms credit app provides consumers with offers essentially on an instantaneous basis. The company has an extensive list of venture investors with the 3 largest investors being Jasmine, Lightspeed and Founders Fund. It would not be worthwhile to try to identify all of the companies that currently offer POS loans. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. The company, while not yet profitable, has a positive contribution margin and has been improving its expense ratios sequentially. Adds Interest-Free Biweekly Payment Product. Affirm Holdings, Inc. (AFRM) Valuation Measures & Financial Lightspeed Venture Partners invested in Affirm's Series G funding round. It has experienced very substantial growth between the September and December quarters, with less growth in the subsequent March quarter. Affirm has raised over $1.3 billion from investors to date. Figuring out the validity of a particular fintech concept is a debate that I cant settle in some dispositive fashion. Total Revenue as a Percentage of GMV - The Company defines total revenue as a percentage of GMV as GAAP total revenue as a percentage of GMV, as defined above. At this point, the companys virtual card revenues are quite minimal; the company still gets most of its revenue from its merchant network. It was founded in 2011 and is based in Santa Monica, California. Angel - Uber), Number of Investors: Total number of Investors in a Funding Round, Money Raised: Amount of money raised in Funding Round, Lead Investors: Name of the investor who led the investment in the funding round, The date when the Organization went public, Investor Name: Name of the investor who participated in the Investment, Lead Investor: This field indicates whether an investor led/organized the investment, Funding Round: Name of the funding round where the Investment is made, Partners: Name of the individual who led a funding round for his/her firm, Announced Date: Date when the Investment is announced, Organization Name: Name of the organization that received the investment, Acquiree Name: Name of the acquired organization, Announced Date: Date the acquisition was announced, Transaction Name: Auto-generated name of transaction (e.g. 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 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. : 11,003,701 shares of Class A common stock and Class B common stock each. Adds Interest-Free Biweekly Payment Product. their loans have no compounding, and also no late fees are charged. With our superior technology, Affirm is strongly positioned to build a more valuable two-sided network for consumers and merchants. I think the valuation of Affirm will be positively influenced by its management team and the entrepreneurial record of Mr. Levchin. Affirm But based on my investigation thus far, this is one of those e-commerce platforms that is likely to achieve long term success and thus is worthy of detailed investigation even with the IPO not firmly scheduled. Affirm is now accepted as a payment method for consumers using the Ayden platform. : 8,525,053 shares of Class A common stock and Class B common stock each. Yet it faces widening competition. 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. In 2001, Mr. Hochfeld formed his own independent research company, Hochfeld Independent Research Group, which provided research services to major institutions including Fidelity, Columbia Asset, SAC Capital, and many other prominent institutions and hedge funds. 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. But that $3 billion includes a substantial level of pass-through revenues which had never been considered in arriving at an EV/S ratio for this company until the SEC began preventing this company from reporting adjusted revenues which excluded the pass through component of income from payment processing. Which industries has this organization most actively invested in? That said, I think the long-term growth rate for Affirm is likely to exceed that of FOUR. 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. 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. Our merchants include brands like Walmart, Peloton, Oscar de la Renta, Audi, and Expedia, and span verticals including home and lifestyle, travel, personal fitness, electronics, apparel and beauty, auto, and more. It also provides security solutions for credit and fraud risks for e-stores. 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. Alongside this new capital, our latest product is another step towards becoming as ubiquitous as credit cards Affirm is now an even more attractive payment option for everyday wants and needs, Levchin added. POS lending solution Affirm closes $500m Series G 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. WebThis opinion is uncorrected and subject to revision before publication in the printed Official Reports. 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. And I do not expect the shares to be cheap. consumer payment-and-debt startup was founded in 2012. It has reduced its cash burn to a negligible level and continued to show a path to profitability. As mentioned earlier, while 0% APR loans do carry a small level of amortization, they are recorded as an expense on the income statement as part of the loss on purchase commitments to Cross River. 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. Affirm's latest post-money valuation is from January 2021. 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. 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. 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. 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. The funding round was led by GIC, a returning investor, and Durable Capital Partners LP. Thus far, the concept seems to be succeeding. 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. Freelance Writers: How To Pitch Crunchbase News, After Years Of Sinking Venture Funding, Plant-Based Seafood Charts A New Course, 4 Charts Show Startup M&A Deal-Making Is Not Moving In The Direction We Expected, The 10 Biggest Rounds Of March: Stripe Raises Huge $6.5B Round, HR-tech Startup Rippling Lands $500M, E-Commerce Company Boxed Files For Bankruptcy As Online Grocery Struggles, Global VC Funding Falls Dramatically Across All Stages In Rocky Q1, Despite Massive OpenAI And Stripe Deals, 5 Interesting Startup Deals You May Have Missed In March: Space Sweepers, Better Tattoo Care And More AI, Asia Venture Funding Drops 57% Year Over Year, With Late Stage Posting Largest Decline. 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. Entering text into the input field will update the search result below. Zilch operates as a financial service provider. Revenue Less Transaction Costs - The Company defines revenue less transaction costs as GAAP total revenue less transaction costs, as defined above. The prior fiscal year, growth reached 93%. Affirms IPO Filing Reveals Nearly A Third Of Its Revenue Comes It is just a guess, but companies that can achieve a 3 year CAGR of 40%, are averaging an EV/S ratio of about 30X. These amounts have, and will continue to vary based on the level of 0% ALR loans that are sold or purchased. Cautionary Note About Forward-Looking Statements. 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 Series G 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. Some of the credit offers include a 0% APR option as well as credit terms of varying lengths. Affirm is a fintech company with a rather unique approach to supplying credit to consumers. Probably most analysts will look at the increase in GMV of 71% as a reasonable proxy for growth expectations. I think it unlikely, as I detail below, that this company can achieve 98% growth in this current quarter. By the end of September, the amount of the portfolio in deferral had fallen to 0.1% of the outstanding loan balance. But I actually believe that Walmart's ability to make credit offers based on Affirm is a significant competitive advantage for Walmart. Fitch to Affirm Houston GO CP Notes Series G-1's S-T Rating at 'F1+'. WebAffirm is a financial technology services company that offers installment loans to consumers at the point of sale. The company aims to disrupt the process of financing in-store purchases for customers across the credit spectrum, including the unbanked or underbanked. Greensky has had its share of issues during the pandemic. 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. The foregoing is an article about a company called Affirm (NASDAQ:AFRM) which is apparently planning an IPO in a few weeks. Defendant. Sunbit is a financial technology that enables financing in-store purchases for consumers across the credit spectrum. 9.86 -0.30 (-2.95%) At close: 04:00PM EDT. In IPO Pop, Affirm Doubles In Value To $24 Billion - Forbes 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. I am not receiving compensation for it (other than from Seeking Alpha). Affirm Reports Fiscal Year 2021 Fourth Quarter Results | Affirm For merchants, adding Affirm is simple and can take as little as one hour. 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. affirm series g valuation affirm series g valuation Shopify: Undisclosed, but listed as a 5 percent stockholder. Those revenues have been hit hard, but have most recently been replaced by strong growth of merchant partners of home fitness, equipment, work-from-home products needed for home and remote offices and home furnishings which may also relate to the dramatic upswing in the work-from-home paradigm. Affirm, a more flexible and transparent alternative to credit cards, today announced a $500 million series G round of funding. In the June quarter, repayments were essentially at historic levels. 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 WhatsApp acquired by Facebook). 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. 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. 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. 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. The pandemic has tilted Affirms trajectory steeply upward, as it has for many fintech companies. 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. As with Affirms existing monthly payment options, consumers will never be charged late or hidden fees when using this new product. 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. 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. Tala provides digital financial services through its mobile application. Historically this company has seen substantial revenue contribution from merchant partners in the travel, hospitality and entertainment industries. It is my belief that Affirm will be a company in which many investors in the tech space will choose to invest. How many readers believed that Square Cash would achieve the growth trajectory it has. Other returning investors include Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, Founders Fund, and Fidelity Management & Research Company LLC. 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 has various funding relationships-particularly those with Cross River and significant categories of expense and revenue relate to the sale and purchase of loans either above or below fair market value. Until recently, Affirm has spent a relatively inconsequential amount on sales and marketing. 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. The company also offers consumers virtual cards which are loaded with an approved loan amount and which are issued by Visa. 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. 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. Lightspeed Venture Partners: 9,370,230 shares of Class A common stock and Class B common stock each. 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. Affirm - Yet Another Digital Credit Solution-But One With Some 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. Risa Procton, Esq., Queens County Legal Aid Society, affirm. | forrest county jail docket 2020 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. Please disable your ad-blocker and refresh. Not this writer. Affirm has been one of the creators of a new class of e-commerce-POS credit. Affirm says it has more than 6,500 merchant partners including Tonal, Dyson, Gucci, and Expedia. 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. 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 WSJ had suggested that Goldman, Sachs, a rose by any other name would still be as sweet., Affirm has recently signed a 3 year agreement, Ayden, which is a major and rapidly growing global payment platform.