1/7 Why did Affirm only grow revenues 3% sequentially this past quarter?
Even if you back out the distortion from Peloton, non-Peloton GMV only grew 9%.
Yet the number of merchants has grown insanely fast from the Shopify deal.
The installed base is growing very well but...
Even if you back out the distortion from Peloton, non-Peloton GMV only grew 9%.
Yet the number of merchants has grown insanely fast from the Shopify deal.
The installed base is growing very well but...
2/7 it doesn't quite seem to be flowing through to revenue yet.
As Peloton has decreased (from 28% to 9% of revenue), the percentage of revenue from merchant revenues has slowed down a bunch.
Why?
Because the Peloton partnership is 0% APR deals.
As Peloton has decreased (from 28% to 9% of revenue), the percentage of revenue from merchant revenues has slowed down a bunch.
Why?
Because the Peloton partnership is 0% APR deals.
3/7 On 0% APR deals, Affirm gets a much higher cut from merchants because they don't get any interest income revenue.
For instance, in the latest quarter, YoY interest revenue grew 116%.
But network revenue (merchant + virtual card revs) grew 13% YoY.
For instance, in the latest quarter, YoY interest revenue grew 116%.
But network revenue (merchant + virtual card revs) grew 13% YoY.
4/7 So now interest income revenue makes up more as a percentage of revenue than network revenues.
So by revenue, Affirm is more of a bank than a POS system.
What's interesting is that Affirm is keeping fewer of these loans on their own balance sheet.
So by revenue, Affirm is more of a bank than a POS system.
What's interesting is that Affirm is keeping fewer of these loans on their own balance sheet.
5/7 Equity capital employed as a percentage of the platform portfolio is now 3% vs. 8% last Q1.
So third-party buyers of Affirm's loans are getting more comfortable with their underwriting.
So third-party buyers of Affirm's loans are getting more comfortable with their underwriting.
6/7 This holiday season will be very telling in my opinion. For this Christmas and next, Affirm has an exclusive deal with Amazon for sales over $50.
And the sequential revenue comp of 3% seems pretty easy. So I would be expecting a huge Q2.
And the sequential revenue comp of 3% seems pretty easy. So I would be expecting a huge Q2.
7/7 Again, 3% sequential revenue seems super low but maybe these partnerships are just ramping up?
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