Buy Now Pay Later

Affirm’s IPO Filing Shows Narrowing Losses, Surging GMV And BNPL’s Growing Appeal

Affirm has become just one of several FinTechs and platform companies to file for an initial public offering (IPO), revealing in an SEC filing known as an S-1 that gross merchandise values (GMVs) are surging, while losses are narrowing. The company, which focuses on buy now, pay later (BNPL) offerings, also logged considerable growth in its active customers count and transactions per active customers, according to the filing.

Here’s what we learned from the S-1 about Affirm’s business:

Revenues Are Surging

As measured in the fiscal year that ended in June, the company’s top line surged 93 percent to reach nearly $510 million. Net losses shrank year over year in the fiscal year to $112.6 million, from more than $120 million in the 12 months that ended in June 2020.

And for the latest quarter, the revenue pace accelerated 98 percent to about $174 million, while net losses were roughly halved quarter over quarter to about $15.2 million.

Breaking down the revenue components in the latest quarter, merchant network revenues were up more than 156 percent to $93 million, while virtual card network revenues rose more than 63 percent to just under $6 million.

Gross Merchandise Volume 

GMV – defined as the total dollar amount of all transactions on the Affirm platform, net of refunds – grew 77 percent year over year to $4.6 billion.

The company added that 64 percent of sales came from repeat customers.

Transactions 

The filing revealed that as of Sept. 30, more than 6.2 million consumers have completed approximately 17.3 million transactions with over 6,500 merchants.

Affirm also disclosed that 0 percent APR financing represented 43 percent of total GMV for the latest fiscal year that ended in June. It also accounted for 46 percent of total GMV in the September quarter.

Customer Concentration 

Peloton accounts for almost a third of Affirm’s top line, coming in at 28 percent of sales for the latest fiscal year and 30 percent of sales for the quarter that ended Sept. 30.

The outsized presence of Peloton has come amid increased consumer spending on exercise equipment.

Delinquency Rates

Affirm said that its risk algorithms allow the company to assess risk with “a high degree of confidence,” with a weighted average quarterly delinquency rate of about 1.1 percent for the 36 months that ended in September 2020.

Active Customers

The active customer tally, defined as consumers engaged in at least one transaction on the Affirm platform in the prior 12 months, totaled 3.6 million at the end of September. That’s up from two million in the prior year’s September period.

Transactions per active customer were 2.1 in the latest period, compared to 2.0 a year ago.

COVID-19 

As for the pandemic, Affirm noted in the filing that “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.”

That’s not surprising. PYMNTS’ research has found that 48 percent of consumers who prefer POS credit (i.e., BNPL options) wouldn’t buy from merchants that didn’t offer it.

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