Affirm

Affirm is a BNPL platform founded by PayPal co-founder Max Levchin. The company offers three core solutions 1) a point-of-sale (POS) payment solution for consumers, 2) merchant commerce solutions, and 3) a consumer-focused app. Users do not pay any fees (late fees, prepayment fees, annual fees, account opening, or closing), however, selected transactions are subject to interest (0%-36% APR) depending on the terms agreed upon between Affirm and the merchant, the tenor, and the user's platform history. In FY2021, 0% APR financing accounted for 38% of platform GMV. Affirm also features an option to pay for purchases up front (launched in December 2021) through its app, while earning rewards through its Cash Back Rewards program. Affirm lending partners include Cross River Bank and Celtic Bank. 

In October 2021, Affirm opened the waitlist for Affirm Debit+, the first debit card that allows customers to pay in installments. In September 2021, Affirm announced the launch of “Adaptive Checkout”, a personalized payment options service built on top of Affirm’s existing POS financing product. Its POS solution includes a virtual card network that can be used for merchants not fully integrated with Affirm. Its merchant commerce solutions also include data and insights on consumer spending habits. The app permits consumers to utilize Affirm’s virtual card and browse special discounts offered by merchants. 

The platform mainly generates revenue through merchant fees and interest income generated from consumer financing. Merchant fees are charged on a commission basis. Virtual card network revenue represents the portion of interchange fees charged when customers use the card at checkout. The issuing processors pay a portion of interchange fees collected from merchants.

In January 2021, the company acquired a Canadian BNPL startup, PayBright, for CAD 340 million (approximately USD 254 million). This expanded Affirm’s merchant network to Canada. During the same month, Affirm completed its IPO on the Nasdaq, raising USD 1.2 billion at USD 49 per share for a USD 12 billion valuation. Moreover, Affirm completed the acquisition of returns payment platform Returnly for USD 300 million in May 2021 to broaden its merchant services. In March 2023 , Affirm announced its exit from the Australian market.

Key customers and partnerships

It had a merchant footprint of 235,000 as of December 2022 across verticals spanning the fashion and beauty, personal fitness, apparel, home and lifestyle, and travel industries.

In November 2023, Affirm expanded its partnership with Amazon Business to debut its B2B flexible payment solution and planned to grow its product reach by facilitating small business purchases via Amazon Business, financing it through installment payments over 3–48 months upon approval. In July 2023, Affirm partnered with Loop Returns , a product return management platform to integrate its merchants' product return workflows and handle post-sales services relating to product returns. Following the divestiture of Returnly, Merchant product returns and related operations will be handled by Loop Returns. Affirm partnered with Amazon in June 2023, to allow merchants on Amazon Pay to offer Affirm's Adaptive Checkout as a payment option. The company announced a partnership with payment infrastructure provider Stripe in May 2022. As of February 2021, Stripe handled over 250 million API requests per day in more than 135 currencies across over 35 countries. The move expanded Affirm’s reach considerably, as its solutions will now be available to merchants on Stripe’s network across the US and Canada. On the other hand, Stripe can offer its customers additional payment flexibility. Other notable partners include Shopify (June 2021), Amazon (August 2021), Target (October 2021), Selfbook (August 2023) and Booking.com (September 2023).

Funding and financials

In November 2021, Affirm announced a private Convertible Senior Notes offering of USD 1.5 billion due November 2026 at 0% interest, with an option granted to initial buyers to purchase additional Notes to USD 225 million. The new funding was used to support general corporate purposes and future expansion efforts, which included working capital expenses, capital expenditures, and related investments.

In FY2022, Affirm reported that its platform generated USD 15.5 billion in gross merchandise volume (GMV), reflecting 84.5% YoY growth. The platform’s active customers rose 97.2% YoY to 14.0 million. Additionally, the platform’s revenue grew by 55.5% YoY to USD 1.35 billion from USD 870 million in FY2021. The majority of its revenue was generated through its merchant network (41%), followed by interest income (39%). Affirm reported an adjusted operating loss of USD 78.3 million compared to an adjusted operating profit of USD 14.3 million in FY2021.

In its latest quarterly release, Affirm downgraded its FY2023 revenue guidance to USD 1.48-1.55 billion, implying a YoY growth of 9-15% given macroeconomic headwinds. The company also downgraded GMV guidance to USD 19-20 billion, implying a YoY growth of 23-29%