This was Affirm’s first earnings call since going public. The prepared remarks spanned nearly thirty minutes and spent time introducing the business along with associated metrics. Major components of their business include merchant and consumer sign ups, their loan portfolio and performance of these loans, along with their app/marketplace. Their partnership with Shopify is in beta and still early innings.
Max Levchin – CEO – revenue growth +57% YoY – gross merchant volume (GMV) +55% YoY, to a record 2.1B – product continues to resonate with consumers and merchants alike – grew active consumers by 52% and merchant base by 90% YoY – industry tailwinds are driving growth – first earnings call, detailing the product of building a new kind of payment network – aligns with what consumers and merchants want …
I have this on my watchlist. I think it’s an interesting business. They have a premium brand and are the leader in the space.
But what I was most intrigued by was this:
– smaller segment: travel and ticketing, declined 47% YoY, went from 11% of volume to 3% in 2020
When travel and events eventually pick up it could help accelerate their growth significantly. Travel is the largest category of advertising on Google. It’s a giant business and currently isn’t a big segment for Affirm.
I also like this:
– Affirm app, has marketplace, discover relevant merchants and get exclusive offers
I think Affirm can be the AmEx of Gen Y/Z. I used to love the AmEx offers marketplace. But now I never use it as it doesn’t have anything brands that I am excited about.
Here are a few other gems:
– cost to acquire a customer and convert a sale are two of the biggest challenges facing merchants, fueling demand for Affirm
– three year agreement with Walmart signed in January
– ramping up partnership with Shopify, and making strategic investments in marketing
– 67% of purchases in 2020 were made by repeat Affirm users
– several strong tailwinds: younger customers have lost trust in financial institutions and prefer flexible innovative payments
@Golf it’s interesting that you mentioned travel. Prior to the pandemic travel was one of AFRM’s main categories (except cruises which the company was trying to break into). Hence I wouldn’t be too concerned about AFRM’s concentration on PTON assuming that travel will eventually pick up post pandemic, whenever that is.
The other thing mentioned in your post about Amex of Gen Y/Z – I recalled having this hallway conversation with Max where I randomly asked him what’s his 10 sec pitch for Affirm – he said to me “In the past you were cool because of your Amex cards, AFRM is cool because of you.” It was kind of awkward cuz I think my question caught him off guard but it’s funny that you both compared AFRM to Amex.