Affirm is one of the largest US and Canada players in the "Buy Now, Pay Later" segment of the payment market. Affirm earns revenue from merchants when it helps them facilitate transactions. The company is also getting paid through simple interest-bearing transactions; it earns interchange fees; it provides loan services on behalf of third-party investors, and manages loan portfolios. Affirm reported 16m active consumers in 3Q23 (ends Mar'23). The gross merchandise volume is estimated at $4.6bn up 18% in 3Q23 generating $381mn revenue for the quarter. The BNPL market is estimated at $34bn in 2021 out of the $900bn North American e-commerce market, and BNPL may grow to $127bn out of the $1.5trln e-commerce market by 2025. Affirms expects $19.9-20.0bn GVM for FY23, $1532-1557mn of revenue, $894-904mn transaction costs and adj Operating margin of -7.0 to -5.9% for FY23.
Affirm Holdings provides commerce platform for digital and mobile retailers. Through its platform and partnership with originating banks, Affirm enables consumers to pay for a purchase over time, with terms ranging from one to sixty months. The company runs proprietary risk model to offer a consumer a loan or preferred repayment option. Its platform includes: a point-of-sale (POS) payment solution, merchant commerce solutions, and a consumer-focused application. POS solution allows consumers to pay for purchases in fixed installments. Its platform enables APR payment options and interest-bearing loans. Affirm consumer-focused application enables consumers to use its application to manage pa... Affirm Holdings provides commerce platform for digital and mobile retailers. Through its platform and partnership with originating banks, Affirm enables consumers to pay for a purchase over time, with terms ranging from one to sixty months. The company runs proprietary risk model to offer a consumer a loan or preferred repayment option. Its platform includes: a point-of-sale (POS) payment solution, merchant commerce solutions, and a consumer-focused application. POS solution allows consumers to pay for purchases in fixed installments. Its platform enables APR payment options and interest-bearing loans. Affirm consumer-focused application enables consumers to use its application to manage payments, open a savings account and access a personalized marketplace. In 2021, Affirm acquired ShopBrain, a data aggregation and cataloging technology company; Kite; Returnly Technologies, a leading provider of online return experiences for direct-to-consumer brands; PayBright, one of Canada's leading buy now, pay later provider.
The "Buy now, pay later" segment of the overall payment market accounted for only 3.8% of e-commerce payments in North America in 2021, however, it grows faster than other categories of the payment market. BNPL is changing the global payment market estimated at $10trln. The BNPL segment is estimated at $285bn in 2018 to grow up to $680bn globally in 2025 with a CAGR of 13.2% p.a. (Insider Intelligence) The main retail categories using BNPL are general merchandise (20% of total general merchandise volume, GMV), Fashion (19%), Sporting goods (12%), Electronics (12%), Home, and lifestyle (11%), Travel (11%), according to Affirm data. The BNPL market includes several types of players: direct providers of BNPL solutions at the point-of-sale (POS) such as Affirm, Afterpay, and Klarna, payment facilitators such as Mastercard, Shopify, and Stripe, credit card providers such as American Express and Chase with flexible options after purchase have been made.
- Affirm is one of the leaders of the BNPL category in the payment service with over $10trln global payments market opportunity
- Affirm addresses more than 60% of US e-commerce via partnerships across all verticals
- Two-side network effect: growing consumer and merchant bases reinforce one another
- Underwrite every individual transaction before extending access to credit
- Develops and maintains its own credit rating score based on AI and machine learning 6.Ability to address a broad range of transactions $50-17,500 and terms ranging from six weeks to 60 months
- High competition in the BNPL segment, with large retailers, such as Apple, entering BNPL
- Exposure to growing interest rates and high inflation
- A history of loss-making
- Exposure to regulatory risks
- The company may have an exposure to poor credit quality loans when the macro situation is getting worse
- Affirm deals with loan portfolios and depends on credit quality and interest rates, having exposure to macro trends
- The company's ability to attract new consumers and merchants may be negatively affected by high competition
- High inflation may negatively affect the company's business model
- New loans of the company may imply a higher interest rate
- Large retailers may develop their own BNPL solution resulting in Affirm's decreasing market share
| Company | RIC | Market Capitalization, $mn | Last reporting year | P/E Fwd 1Y | P/E Fwd 2Y | EV/EBITDA 1Y fwd | EV/EBITDA 2Y fwd | EV/Revenues 1y fwd | EV/Revenues 2y fwd |
|---|---|---|---|---|---|---|---|---|---|
| Affirm Holdings Inc | AFRM.O | 4,766 | 2022-06-30 | 87.9 | 5.5 | 4.5 | |||
| Nuvei Corp | NVEI.TO | 4,100 | 2022-12-31 | 13.9 | 10.8 | 11.4 | 9.0 | 4.3 | 3.5 |
| Marqeta Inc | MQ.O | 2,633 | 2022-12-31 | 83.7 | 1.3 | 1.1 | |||
| Repay Holdings Corp | RPAY.OQ | 800 | 2022-12-31 | 9.4 | 8.7 | 9.3 | 8.2 | 4.1 | 3.7 |
| ACI Worldwide Inc | ACIW.O | 2,524 | 2022-12-31 | 26.1 | 17.7 | 9.0 | 8.4 | 2.4 | 2.3 |
| Paymentus Holdings Inc | PAY.N | 1,285 | 2022-12-31 | 135.5 | 79.8 | 31.6 | 22.4 | 1.9 | 1.6 |
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |||
|---|---|---|---|---|---|---|---|---|---|
| Revenue | 265 | 478 | 781 | 1,339 | 1,549 | 1,905 | 2,376 | ||
| Growth | 80% | 63% | 72% | 16% | 23% | 25% | |||
| EBITDA | -22 | 64 | -137 | -813 | -19 | 103 | 176 | ||
| EBITDA margin | -8.5% | 13.3% | -17.5% | -60.7% | -1.2% | 5.4% | 7.4% | ||
| Net income | -120 | -113 | -441 | -707 | -1,057 | -977 | -827 | ||
| Net margin | -45.5% | -23.6% | -56.5% | -52.8% | -68.3% | -51.3% | -34.8% | ||
| Net debt | 391 | 391 | 391 | 391 | 391 | ||||
| MktCap | 18,141 | 4,342 | 4,342 | 4,342 | 4,342 |
Historical Multiples
| 2021 | 2022 | 2023 | 2024 | 2025 | |
|---|---|---|---|---|---|
| EV/Revenue | 23.7 | 3.5 | 3.1 | 2.5 | 2.0 |
| EV/EBITDA | -135.5 | -5.8 | -248.9 | 46.0 | 26.9 |
| P/E | -41.1 | -6.1 | -4.1 | -4.4 | -5.2 |
