Affirm’s IPO Filing Reveals Nearly A Third Of Its Revenue Comes From A Single Customer

Affirm, the fintech startup known for providing installment loans to shoppers, publicly filed its S-1 with the United States Securities and Exchange Commission on Wednesday.

Max Levchin’s consumer payment-and-debt startup was founded in 2012. Prior to taking the helm of Affirm, Levchin was most known for co-founding PayPal with Peter Thiel in 2000.

The San Francisco-based company raised about $1.5 billion in funding from investors including Durable Capital Partners, GIC, Thrive Capital and Spark Capital. It most recently raised a $500 million Series G round led by Durable and GIC in September.

Affirm’s most recent valuation is not known. Back in July, The Wall Street Journal, which broke the news of Affirm’s plans for an IPO, estimated valuation at $5 billion to $10 billion.

The company offers consumers the option to pay for purchases in installments, rather than all at once. It’s among a number of pay-over-time fintech companies that have cropped up in recent years, with others including Klarna and Afterpay. Affirm says it has more than 6,500 merchant partners including Tonal, Dyson, Gucci, and Expedia.

Here are some of the financial highlights revealed in this week’s S-1 filing.

Revenue growth

Affirm reported a net revenue of $509.5 million for the fiscal year that ended on June 30, 2020. That’s up nearly 93 percent from the same period in 2019. 

More recently, the company reported net revenue of nearly $174 million for the three months that ended on September 30, 2020, up nearly 98 percent from the $87.9 million in revenue it generated during the same period the year prior.

The company has also been getting its losses under control, with net losses falling from nearly $120.5 million in fiscal year 2019 to around $112.6 million during fiscal year 2020. 

One big customer

Interestingly, a large portion of Affirm’s revenue comes from a single merchant partner: Peloton. In the “Risk Factors” section of its S-1, the company notes that Peloton was its top merchant partner, representing 28 percent of Affirm’s total revenue for the fiscal year ended June 30, 2020 and 30 percent of its total revenue for the three months that ended on Sept. 30, 2020. 

 “The significance of Peloton in our portfolio has increased as a result of consumer spending trends on home fitness equipment, and there can be no assurance that such trends will continue or that the levels of total revenue and merchant network revenue that we generate from Peloton will continue,” the company wrote.  “The loss of Peloton as a merchant partner, or the loss of any other significant merchant relationships, would materially and adversely affect our business, results of operations, financial condition, and future prospects.”

The company also notes that its revenue from merchant partners in certain industries hit hard by the pandemic declined, but its revenue from partners in other industries saw a big boost.

“Following the onset of the COVID-19 pandemic, 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, though we may see potential downswing in these categories if the trends we have seen thus far in the COVID-19 pandemic reverse,” the company wrote.

Major investors

Among the largest stakeholders in Affirm are Khosla Ventures, Lightspeed Venture Partners, Founders Fund, Jasmine Ventures, and Shopify. In the S-1, Affirm disclosed the number of Class A and Class B common stock each shareholder held, but did not disclose what percentage of ownership their shares represented.

Jasmine Ventures: 11,003,701 shares of Class A common stock and Class B common stock each.

Lightspeed Venture Partners: 9,370,230 shares of Class A common stock and Class B common stock each.

Founders Fund: 8,525,053 shares of Class A common stock and Class B common stock each.

Khosla Ventures: 6,947,972 shares of Class A common stock and Class B common stock each.

Shopify: Undisclosed, but listed as a 5 percent stockholder.

Affirm plans to list on the Nasdaq under the ticker AFRM. Goldman Sachs, Morgan Stanley and Barclays are among the underwriters for the IPO.

— Crunchbase News reporter Christine Hall contributed to this article.

Source