Other returning investors include Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, It can offer some consumers a 0% APR loan which has created lots of word of mouth excitement amongst consumers. 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 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. The investment thesis for this company is based on its creation of a new credit category in which it is the leading player. 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. Like many other payment processors, Shift4 reports gross revenues which really are not comparable to the revenues reported by other software companies. 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. I think the valuation of Affirm will be positively influenced by its management team and the entrepreneurial record of Mr. Levchin. 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. Tala provides digital financial services through its mobile application. The concept is to limit any first day pop, and to secure a better overall return for selling shareholders, while limiting the returns achieved by those lucky enough to get allocations on an IPO. Affirm Holdings, Inc. (AFRM Not this writer. Affirm Reports Fiscal Year 2021 Fourth Quarter Results | Affirm Affirm, a buy now and pay later solution, has closed its Series G round on $500m. The strategic progress we achieved in fiscal year 2021 sets us up for long-term growth. 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. 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 This sale left the company with a cash balance of $684 million. Affirm reported a net revenue of $509.5 million for the fiscal year that ended on June 30, 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. 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. It could, quite conceivably, however achieve growth in the 75% range. Affirm - Funding, Financials, Valuation & Investors - CrunchBase 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. In turn, this has apparently lead to a shorter duration loan than is the case for most revolving credit loans which automatically renew. In the latest quarter provisions were 23% of revenues compared to 28% in the year earlier quarter. No. This expense ratio has declined over time even though it has grown at more than 60% year on year. 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. 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. On a sequential basis, revenues rose by 13.4% last quarter. The company services some of the loans that it generates. Affirm was founded and is still lead by Max Levchin. I have linked here to a Forbes article about Cross River as it was a year ago. Founders Fund: 8,525,053 shares of Class A common stock and Class B common stock each. Its among a number of pay-over-time fintech companies that have cropped up in recent years, with others including Klarna and Afterpay. The Company believes that transaction costs as a percentage of GMV is a useful financial measure to both the Company and investors as it approximates the variable cost efficiency of transactions processed on the Company's platform. In addition, the Company uses these non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of its annual operating budget, and for evaluating the effectiveness of its business strategy. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. 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. 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. Affirm 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. But I have briefly reviewed two names that I consider to be reasonable analogs to the kinds of strategies and opportunities I see Affirm pursuing. It offering is obviously quite attractive to merchant partners and can be a key competitive tool. 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. 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. 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. Affirm scores $300M Series F at reported $2.9B valuation 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. Crunchbase Daily. You're more than your latest funding, tell our customers your company's story. Others continue to feel that these companies will not achieve the kind of growth that supports their current valuation. 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. Affirm Holdings, Inc. (AFRM) Valuation Measures & Financial 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. WebFind out all the key statistics for Affirm Holdings, Inc. (AFRM), including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Including employee stock options and restricted share units, Affirm would have a valuation of more than $11 billion, the filing showed. Affirm 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. 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. These days, tech IPOs seem to reap valuations detached from any analytical reality. As I mentioned earlier, I have no independent way of assessing the companys assertions about the superiority of its credit grading algorithms. The event will be webcast from Affirms investor relations website at https://investors.affirm.com/ and a replay will be available following the event. Affirm Raises $500M Series G Round Their latest portfolio exit was Resolve on January 01, 2019. 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. Header placeholder lorem ipsum dolor sit amet, consectetur adipiscing elit. 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. 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, 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 are a huge number of fintech startups of varying sizes and varying levels of operational performance. I wrote this article myself, and it expresses my own opinions. 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. Learn more. 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. Its commerce platform, agreements with originating banks, and 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. 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. The pandemic has tilted Affirms trajectory steeply upward, as it has for many fintech companies. The famous founder here is Max Levchin, an alumni and founder of PayPal PYPL). Affirm Our solutions use the latest in machine learning, artificial intelligence, cloud-based technologies, and other modern tools to create differentiated and scalable products. I imagine that the partnership will further accelerate the growth of merchant partners who use Affirm to accelerate their sales performance. Affirm says it has more than 6,500 merchant partners including Tonal, Dyson, Gucci, and Expedia. Adds Interest-Free Biweekly Payment Product. 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.. How much funding has this organization raised over time? 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 Affirm platform, so the S-1 says, is built on data science. 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. That has made the home exercise segment, and Peloton specifically, ideal for penetration by the Affirm service. On that basis, FOUR has an EV/S of 14X+ based on my most current estimate and calculation. So, from my perspective, any EV/S ratio of 20X or less is reasonable. As mentioned, because of the pandemic, the company has had a rather volatile level of loss provisions. 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. It charges interest in about half of its transactions, making most of its revenue through fees charged to merchants. I imagine that many readers, as well as this author had never heard of Affirm. The company has been achieving remarkable growth with total revenue growth reaching 98% last quarter accelerating from 93% in the prior fiscal year. For the most part, it doesnt matter in the sense that consumers obviously believe they are securing financing for items they want, when they want to buy the items with payments that they can afford. At what valuation should Affirm sell? Affirms most recent valuation is not known. . 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. 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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. We are revolutionizing the financial industry to be more accountable and accessible while growing a network that is beneficial for consumers and merchants. In 2012, Mr. Hochfeld was convicted of misappropriating funds from a hedge fund he operated. Affirm has six million. It is my belief that Affirm will be a company in which many investors in the tech space will choose to invest. But what I can say, is that the statistics and metrics regarding deferrals and charge-offs seem to me to be substantial evidence that the companys claims should be accepted in whole or in part, and that is one huge reason to expect that this company will achieve high valuations and enjoy very successful operating results compared to other companies in the space. 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. Risa Procton, Esq., Queens County Legal Aid Society, affirm. 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. 2023-02-10. Button CTA. 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. (in thousands, except percent data) (unaudited), Add: Stock-based compensation included in operating expenses, Add: Amortization of Shopify Inc. commercial agreement asset, Less: Notes issued by securitization trusts. Affirms mission is to deliver honest financial products that improve lives. 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. Mr. Levchin has assembled what appears to be a very capable executive team with a great deal of specific experience in the credit and fintech spaces. I have no business relationship with any company whose stock is mentioned in this article. 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 Shares shot up 98%, lifting its market value to an eye-popping $23.6 billion. For merchants, adding Affirm is simple and can take as little as one hour. We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.. That is doubtless frustrating to readers and not terribly salutary for this writer. Sign up for a free trial to see Affirm's valuations in January 2021 and more. Given these uncertainties, you should not place undue reliance on these forward-looking statements. Affirm Financials | Craft.co The concept of fintech is somewhat controversial and many companies that are supposedly in the space havent produced the growth or the disruption that investors have sought. 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. 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'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. It gathers discrete data points of customers to build a financial identity and deliver instant credit. Zilch operates as a financial service provider. It can be almost impossible to estimate the growth rate for a company providing a new service to consumers. Worth noting is that Shopify is a 5% shareholder. You can read more about your cookie choices at our privacy policyhere. It offers services such as direct payments, pay-after-delivery options, and installment plans. Affirm salaries: How much does Affirm pay? | Indeed.com I have no business relationship with any company whose stock is mentioned in this article. The curated list of the most valuable private companies in the world |. affirm series g valuation affirm series g valuation I wrote this article myself, and it expresses my own opinions. Overall, the pandemic notionally has been a headwind in terms of revenue growth. Most of the commerce that the company enables is transacted on a mobile basis. As with Affirms existing monthly payment options, consumers will never be charged late or hidden fees when using this new product. Series G - Affirm - 2020-09-17 - Crunchbase Funding Affirm is a method of payment accepted by Walmart. The company, while not yet profitable, has a positive contribution margin and has been improving its expense ratios sequentially. Affirm Holdings, Inc. operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. Affirm has 21 investors. Please. 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. The company has been able to build a stream of transactions that comply with the credit policies and underwriting standards of its finance partners and the portfolio has lead to lower than average fraud rates and higher approval rates compared to traditional underwriting models. I am not sure just how long it will take for the IPO to be rescheduled and of course I have no idea what the revised terms will look like. Entering text into the input field will update the search result below. 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. Which types of acquisition does this organization make most frequently. Here are some of the financial highlights revealed in this weeks S-1 filing. April 3, 2019. (a) Amounts include stock-based compensation as follows: Total stock-based compensation in operating expenses, CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS. Klarna offers a range of payment solutions to e-stores. Please disable your ad-blocker and refresh. That said, servicing revenues are still less than the cost of servicing and were just 2.3% of revenues in the September ending quarter. Founded in 2012, Affirm lets people buy everything from shirts to car tires and pay them off in regular installments. 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. 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 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 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. This financing was based on the sale of 21.8 million shares of Series G preferred shares. Some of the credit offers include a 0% APR option as well as credit terms of varying lengths. 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. 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's latest post-money valuation is from January 2021. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate the business. The People of the State of New York. Affirm, a more flexible and transparent alternative to credit cards, today announced a $500 million series G round of funding. : 8,525,053 shares of Class A common stock and Class B common stock each. 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. Apparently that is not going to be a problem of the same magnitude experienced by prospective investors in recent IPOs. The company has been reducing its cash burn; in FY 2020, the cash burn had been $71 million. The company also offers consumers virtual cards which are loaded with an approved loan amount and which are issued by Visa. Stock ticker symbol (e.g. 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 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. The half-a-billion-dollar Series G round, which was led by returning investor GIC and Durable Capital Partners LP, brings the total money raised to $1.3 billion since the 2W 10W 9M. As explained below, Affirmed postponed its offering to reconstitute it in a way that avoids some of the first day pop associated with IPOs. 9.89 +0.03 (+0.30%) After Analysts Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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. Average Affirm hourly 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. Last quarter those revenues were 31% of total revenues and rose by 40% year over year. 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. 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. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. 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. WebThis opinion is uncorrected and subject to revision before publication in the printed Official Reports. In the September quarter, the cash burn fell to just $2 million. People v Smith (2023 NY Slip Op 23127) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT. When the pandemic struck, the company substantially increased its provision for loan losses which jumped more than 100% sequentially during the March quarter.