Affirm ER - Growth Accelerates 71%

Amazing QoQ growth from Buy Now Pay Later (BNPL) leader Affirm. Revenue accelerated QoQ by 71%!

BOOM!
This shows significant traction with their Shopify partnership which offset the challenges they face as the Peloton business slows. As was often stated, Peloton was their largest customer, and many were concerned that Affirm was a one-trick pony. That is, until the Shopify partnership.

Now we have some numbers to quantify the Shopify partnership and they look amazing. While they don’t break out Shopify, the Gross Merchandise Volume (GMV) which is the total dollar amount of transaction going through the Affirm platform grew 106% QoQ. But if you take out Peloton it grew 178% QoO.

Now, keep in mind the Amazon partnership was just announced. And none of these numbers take any of that into account. I expect strong growth to continue given these early results from Shopify.

  • Active consumers grew 97% now up to 7.1 Million
  • Transactions per active consumer up 8% to 2.3
  • Active merchants up 412% to 29,000 (Clearly Shopify is scaling.)

Here is the full investor presentation:
https://investors.affirm.com/static-files/80b7c17e-f83f-4bcb…

A misunderstood company
I think this is (or was) a deeply misunderstood and mispriced company. The finance and investment world just doesn’t seem to get Affirm’s vision, which I would describe as building a digitally native alternative to American Express or traditional credit cards that uses technology to allow access to credit on a per transaction basis with instant approval. It’s much simpler and straightforward than credit cards.

Merchant network moat
The ancillary merchant network that is developed as part of their model will prove to be the moat that keeps customers in the network. It’s why Square and PayPal are now scrambling to acquire the smaller BNPL players in defense. They are worried that without this feature they will lose customers to Affirm who now has the largest and most diverse e-commerce merchant network.

Launching the Affirm card
If all that wasn’t enough they are taking out of beta the Affirm card which you can use to make purchases IRL. Obviously, this will help to increase the number of transactions per Affirm customer.
https://www.affirm.com/card

Holiday growth should be strong
What’s even more exciting to me is how Affirm has put all of this in place just in time to blow out this year’s Black Friday and Cyber Monday which is predicted to grow to $17 billion a +20% increase YoY. And all of the recent press should help accelerate consumer adoption of BNPL overall.

73 Likes

Recommendations: 44
Amazing QoQ growth from Buy Now Pay Later (BNPL) leader Affirm. Revenue accelerated QoQ by 71%!

… the Gross Merchandise Volume (GMV) which is the total dollar amount of transaction going through the Affirm platform grew 106% QoQ. But if you take out Peloton it grew 178% QoQ.

Hi GC4PL,

I was ready to scoop up some shares after-hours but then checked the presentation and found those are YoY figures.

Revenue went from 231 to 262, so 13.4% QoQ.

GMV went from 2257 to 2484, so 10.1% QoQ.

This looks more consistent with the 20% pop we saw in after-hours.

Otherwise I found your comments about BNPL replacing credit cards very thought provoking. A different and more flexible way to think about credit, possibly better suited to the upcoming generations.

7 Likes

Yes, you are correct. Sorry about that. Just goes to show you, do you’re own DD and make your own decisions.

1 Like

Gaucho Rico (board member) posted the following on Twitter:

$AFRM is not mainly the $PTON financing company anymore. Blowout Q4 yesterday. Hyper growth. $AMZN partnership imminent. Debit card launch coming soon. Consumers win. Merchants win. $AFRM wins. Opened a 4% allocation.

Link: https://twitter.com/GauchoRico/status/1436343503454310402

FWIW, I opened a 3% myself after earnings (even before I saw Gaucho’s post). I learned from my experience with UPST; in that case I hesitated before buying after earnings, and really missed out on some gains.

3 Likes

As an owner of Afterpay (the competition) and of Shopify (itself a holder of a stake in Affirm), I passed on Affirm even though I saw the Shopify revenue kick coming (but didn’t foresee Amazon).

My view on Affirm is - if Shopify take them global, (which they are incentivised to do given their stake - right now they just have the North America native contract for Shopify) and if Amazon use them forevermore as their BNPL solution across their commerce merchant platform then they deserve their valuation and have growth remaining; if Amazon uses them and then circumvents them with their own solution as it does time and time again against its own merchant customers and partners and if Shopify does not go global with Affirm, then this is an extreme valuation and a revenue bump that might not be repeated or maintained.

Ant

25 Likes