How much funding has this organization raised over time? According to the WSJ, Affirm and another likely strong IPO called Roblox (RBLX), a developer of video games, have determined that they can improve the IPO process by enlarging the offering size, and changing the mix of the offering that is sold for the benefit of the company, its employees and VC holders. SAN FRANCISCO--(BUSINESS WIRE)--Affirm, a more flexible and transparent alternative to credit cards, today announced a $500 million series G round of funding. Last quarter those revenues were 31% of total revenues and rose by 40% year over year. We delivered another set of excellent results to close out our fiscal year with GMV and revenue growth continuing to accelerate, said Michael Linford, CFO of Affirm. Much of the time I have written about IPOs during 2020, my ability to provide useful advice has been severely circumscribed by the huge 1st day gains that have been experienced by most of the offerings. affirm series g valuation affirm series g valuation Seeking Alpha's Disclosure: Past performance is no guarantee of future results. Affirm, a more flexible and transparent alternative to credit cards, today announced a $500 million series G round of funding. 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. Interestingly, a large portion of Affirms revenue comes from a single merchant partner: Peloton. 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. 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. The company offers consumers the option to pay for purchases in installments, rather than all at once. 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. AFRM Stock Valuation - Far From Cheap Affirm will finish fiscal 2022 with approximately 300 million shares outstanding, making its current market cap around $45 billion. How many investments has this organization made over time? That said, servicing revenues are still less than the cost of servicing and were just 2.3% of revenues in the September ending quarter. 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. WebAffirm Holdings, Inc. (AFRM) NasdaqGS - NasdaqGS Real Time Price. Servicing revenue rose by almost 100% in the latest quarter. Many of the borrowers who had deferred payments returned to current status. The company spends about 24% of its revenues on what it captions as technology and data analytics. Affirm is a fintech company with a rather unique approach to supplying credit to consumers. Valuations are submitted by companies, mined from state filings or news, provided by VentureSource, or based on a comparables valuation model. Crunchbase News reporter Christine Hall contributed to this article. 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. Fourth Quarter and Fiscal Year 2021 Operating Highlights: All comparisons are made versus the same period in fiscal year 2020 unless otherwise stated. When choosing to pay biweekly with Affirm, consumers can check eligibility in seconds, without impacting their credit score or inputting their social security number. Of course I do not know the specifics of the anticipated offering. The company has yet to reach profitability, and is just now reaching a position of positive contribution profit. Donte Smith, Defendant. 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. The company has been reducing its cash burn; in FY 2020, the cash burn had been $71 million. Affirm raised $447 million of capital in what was a Series G round. Founded in 2012, Affirm lets people buy everything from shirts to car tires and pay them off in regular installments. 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. 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. 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. : 6,947,972 shares of Class A common stock and Class B common stock each. Not this writer. We are also able to access and leverage SKU-level data, which we believe gives us a proprietary data advantage.. their loans have no compounding, and also no late fees are charged. It seems like a straight forward concept but it upends the way credit has been advanced through cards for many years now. In the spring of 2020, the company sold $75 million of convertible debt. During the fourth quarter, we increased the number of merchants on our platform by more than fivefold, more than doubled gross merchandise volume and grew active consumers by 97% year over year., Levchin continued, The secular shift toward flexible and transparent financial products continues to accelerate. Its sales and marketing effort is nascent. At the rate the shares have been appreciating, that wont take a long time regardless of the fact that the company has a current annual revenue run rate of $165 million and hasnt seen much growth lately. Active Consumers - The Company defines an active consumer as a consumer who engages in at least one transaction on its platform during the 12 months prior to the measurement date. 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. The company reported a positive contribution margin last quarter. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. The companys platform includes point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app. It has reduced its cash burn to a negligible level and continued to show a path to profitability. 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 company has been achieving remarkable growth with total revenue growth reaching 98% last quarter accelerating from 93% in the prior fiscal year. We can also now better support merchants who offer smaller ticket items and bring their customers a more transparent, flexible way to pay.. The Affirm platform, so the S-1 says, is built on data science. The Company believes that revenue less transaction costs is a useful financial measure to both the Company and investors of the economic value generated by transactions processed on the Company's platform. Fly Now Pay Later seeks to help global travel businesses increase their sales by allowing customers a flexible payment option at checkout. An undefined amount of this increase related to the value of the warrants granted to Shopify as part of the overall agreement with that company. Shares shot up 98%, lifting its market value to an eye-popping $23.6 billion. In the last reported quarter, Peloton (PTON) accounted for 30% of total revenues. We have never been more confident and excited in Affirm's future.. Affirm partners with over 6,000 merchants in the U.S., helping them grow sales and access new consumers. 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 funding round was led by GIC, a returning investor, and Durable Capital Partners LP. At this point, the companys virtual card revenues are quite minimal; the company still gets most of its revenue from its merchant network. I have linked here to a Forbes article about Cross River as it was a year ago. 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. Transaction Costs - The Company defines transaction costs as the sum of loss on loan purchase commitment, provision for credit losses, funding costs, and processing and servicing expense. I think it unlikely, as I detail below, that this company can achieve 98% growth in this current quarter. Series G - Affirm - 2020-09-17 - Crunchbase Funding The curated list of the most valuable private companies in the world |. Worth noting is that Shopify is a 5% shareholder. Use of these cookies, which may be stored on your device, permits us to improve and customize your experience. 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. Definitions of these non-GAAP financial measures are included under "Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators" above, and reconciliations of these non-GAAP financial measures with the most directly comparable GAAP financial measures are included in the tables below. Affirm savings accounts are held with Cross River Bank, Member FDIC. large and successful company with a high growth rate and above average profitability. WebAffirm Raises $500M Series G Round. This financing was based on the sale of 21.8 million shares of Series G preferred shares. Interestingly, a large portion of Affirms revenue comes from a single merchant partner: . 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. Their latest acquisition was Returnly on April 21, 2021. But the companys service has already been used by 6.4 million consumers. Trying to disentangle all of the competing claims about who offers what to whom would be a bootless undertaking. WebAffirm's valuation in April 2019 was $2,600 - $2,900M. 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. 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. 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. It has focused on prime+ credit customers. Entering text into the input field will update the search result below. So far, Affirm has grown primarily through its merchant partners and through word of mouth. Affirm, Bessemer Venture Partners, FinTech Collective, FIS, Fiserv, MassMutual, Morgan Stanley, New York Life Insurance Company, WestCap Group, and Whistler Capital Partners. Which industries has this organization most actively invested in? Transaction Costs as a Percentage of GMV - The Company defines transaction costs as a percentage of GMV as transaction costs, as defined above, as a percentage of GMV, as defined above. Series G 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. press@affirm.com Adjustments to reconcile net (loss) income to net cash used in operating activities: Amortization of premiums and discounts on loans, net, Changes in fair value of assets and liabilities, Amortization of commercial agreement assets, Proceeds from the sale of loans held for sale. Affirm Raises $500M Series G Round | Business Wire The company has been experiencing explosive growth in revenues and it was planning for an IPO before the end of the year. Getting credit instantaneously when an individual wants to buy a TV or a puppy or a Peloton bike resonates enormously with individuals who have inadequate credit limits on their cards, inadequate cash in the bank and are looking for instant gratification. affirm series g valuation - Flix Houphout-Boigny Foundation for Other returning investors include Lightspeed Venture Partners, Wellington Management Company, Baillie Gifford, Spark Capital, While consumers in the U.S. latched on to early plant-based meat alternatives, vegan seafood didnt see the same rise in popularity. 2023 Crunchbase Inc. All Rights Reserved. Affirm Stock Price, Funding, Valuation, Revenue & Financial The strategic progress we achieved in fiscal year 2021 sets us up for long-term growth. It is not going to be cheap-the kind of growth this company is experiencing is not going to come at a discount. Currency in USD. The Company believes that allowance for credit losses as a percentage of loans held for investment is a useful performance indicator to both the Company and investors of the future estimated credit losses on the Company's outstanding loans held for investment. (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. Sunbit is a financial technology that enables financing in-store purchases for consumers across the credit spectrum. Affirm Reports Fiscal Year 2021 Fourth Quarter Results | Affirm It is my belief that Affirm will be a company in which many investors in the tech space will choose to invest. Others might suggest that these businesses are really gussied up financial institutions that should be evaluated on those standards. He also operated the Hepplewhite Fund, a hedge fund that specialized in technology investments. (in thousands, except share and per share amounts), Securitization notes receivable and residual certificates (at fair value), Liabilities, Redeemable Convertible Preferred Stock and Stockholders Deficit, Redeemable convertible preferred stock, $0.00001 par value, 30,000,000 and 124,453,009 shares authorized as of June 30, 2021 and June 30, 2020, respectively; zero and 122,115,971 shares issued and outstanding as of June 30, 2021 and June 30, 2020, respectively; liquidation preference of $0 and $809,032 as of June 30, 2021 and June 30, 2020, respectively, Common stock, $0.00001 par value, no shares authorized, issued and outstanding at June 30, 2021; 232,000,000 shares authorized, 47,684,427 shares issued and outstanding as of June 30, 2020, Class A common stock, par value $0.00001 per share: 3,030,000,000 shares authorized, 181,131,728 shares issued and outstanding as of June 30, 2021; no shares authorized, issued and outstanding as of June 30, 2020, Class B common stock, par value $0.00001 per share: 88,226,376 shares authorized, issued and outstanding as of June 30, 2021; no shares authorized, no shares issued and outstanding as of June 30, 2020, Accumulated other comprehensive gain (loss), Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders Deficit, CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS, Excess return to preferred stockholders on repurchase, Net (Loss) Income Attributable to Common Stockholders. Looked at holistically and ignoring the reversal of bad debt provisions in Q2, the company is seeing favorable opex trends. 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. Stay up to date with recent funding rounds, acquisitions, and more with the In 2019, merchants using Affirm reported 85% higher AOVs when compared to other payment methods, and 67% of Affirm purchases were from repeat users. 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. This sale left the company with a cash balance of $684 million. Which types of acquisition does this organization make most frequently. Were excited about this vote of confidence from both new and existing investors as we advance our The other side of the transaction is that Affirm bills its merchant partners a higher fee for extending credit on an APR basis. Among the largest stakeholders in Affirm are Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Jasmine Ventures, and Shopify. Affirm Raises $500M Series G Round 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. 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. Affirm has six million. Affirm Please note that I deliberately used the word niche as opposed to space. 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. Obviously, this is not an eleemosynary enterprise. There arent many companys with that kind of growth in GMV and those that have enjoyed that kind of growth rate-think of Shopify (SHOP) as an example sell at enormous EV/S ratios-above 40X, actually. 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. CBI websites generally use certain cookies to enable better interactions with. Affirm's new interest-free, biweekly payment option for transactions as low as $50 (Photo: Business Wire). 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 apparently created technology that has allowed it to develop a high-yielding, short duration portfolio of credits that is attractive to funding sources. Jasmine Ventures: 11,003,701 shares of Class A common stock and Class B common stock each. Affirm has 1 portfolio exit. Currently, the company has $4.2 billion of committed funding capacity from a diverse set of capital partners. That said, most of Affirms loans are funded by an institution called Cross River Bank, which is located across the river from NYC in Fort Lee, NJ. 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. Affirm Holdings, Inc. (AFRM) Valuation Measures & Financial Affirms most recent valuation is not known. 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. 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. Thats up nearly 93 percent from the same period in 2019. 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. Affirm No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Probably most analysts will look at the increase in GMV of 71% as a reasonable proxy for growth expectations. 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. Fiscal Year 2021 Financial Highlights:1 All comparisons are made versus fiscal year 2020 unless otherwise stated. WebFind out all the key statistics for Affirm Holdings, Inc. (AFRM), including valuation measures, fiscal year financial statistics, trading record, share statistics and more. Bert Hochfeld graduated with a degree in economics from the University of Pennsylvania and received an MBA from Harvard. In the latest quarter provisions were 23% of revenues compared to 28% in the year earlier quarter. There are a huge number of fintech startups of varying sizes and varying levels of operational performance. Revenue Less Transaction Costs - The Company defines revenue less transaction costs as GAAP total revenue less transaction costs, as defined above.