DealmakingPayments

Affirm drops S-1, revealing sharply rising revenue on a narrower net loss

Buy now, pay later innovator has over 6.2 million consumers on its network

Alternative payments provider Affirm Holdings, better known as Affirm, filed its long-awaited IPO late afternoon on Wednesday.

Its S-1 – filed with the U.S. Securities and Exchange Commission – gives us a glimpse into what all of us fintech nerds have been waiting for: the company’s financials. It also comes on the heels of its confidentially filing to go public last month and a $500 million fundraise in September. That investment brought the company’s total raised to over $1.3 billion since its 2012 inception from backers such as Khosla Ventures, Founders Fund, Lightspeed Venture Partners, Spark Capital, Fidelity and Andreessen Horowitz (a16z).

PayPal co-founder Max Levchin helped launch Affirm to provide consumers a replacement for credit cards. Its mobile app offers installment loans to consumers at the point of sale.

In a letter he wrote with the IPO filing, Levchin said his goal was to “build the first payment platform with a moral backbone and consumer-first mindset.”

The company’s public plans and large raise are a testament to the increased popularity of the “Buy Now, Pay Later” movement, which has gained serious traction as of late – especially during the COVID-19 pandemic.

But back to the S-1.

San Francisco-based Affirm said it has yet to determine neither the number of shares it plans to offer nor the price range. But it did list a proposed maximum offering price of $100 million as is customary in such filings. It also noted that it plans to list its common stock on the Nasdaq Global Select Market (“Nasdaq”) under the symbol “AFRM.”

The numbers

Affirm has seen impressive growth in recent years.

Last November 2019, Affirm shared in a blog post that it had over 3 million consumers in its network. In a post from July 2020, it said it had over 5.6 million. In its S-1, Affirm said that number was up to “over 6.2 million consumers” as of Sept. 30, 2020. It also has over 6,500 merchant partners.

In its S-1, Affirm also shed more light on its financials. It revealed both increased revenue and net loss so far in 2020.  Specifically, the company’s revenue surged 93 percent to $509.5 million in its fiscal year ended June 30, 2020, compared with $264 million in its previous fiscal year. At the same time, its net loss declined slightly – to $112.6 million for the fiscal year ended June 30, 2020, compared to $120.4 million in its last fiscal year. 

Notably, the S-1 reveals that a significant portion of Affirm’s revenue comes from Peloton, which means that the company needs to be careful not to put all its eggs in one basket.

Specifically, Affirm states Peloton that was its top merchant partner, making up about 28% of its total revenue for the fiscal year ended June 30, 2020, and 30% of its total revenue for the three months ended September 30, 2020. 

“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,” it wrote.

Other significant merchant partners include Tonal, West Elm and Expedia.

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