Specialist
Former divisional leader at Affirm Holdings Inc
Agenda
- Buy now, pay later update – demand trends, industry growth rates, paths to profitability and more
- Competitive dynamics between Affirm (NASDAQ: AFFRM) and Klarna, Afterpay (ASX: APT), Sezzle (ASX: SZL), PayPal (NASDAQ: PYPL) and others
- Affirm's product diversification and merchant growth strategy
- Implications of Shop Pay partnership with Shopify (NYSE: SHOP)
Questions
1.
What’s your overview of the buy now, pay later operating environment for Affirm and its peers? What trends are impacting the business and what should investors pay attention to?
2.
There’s a really interesting tactic by some of the buy now, pay later players to monetise the many customers that were acquired at a fairly low CAC [customer acquisition cost] through marketplaces. What’s your take on the profitability or broader model of these marketplaces? How do the unit economics work for Affirm or other players, within those marketplaces vs outside? How are players monetising the user base?
3.
How do you expect merchants’ costs to trend in the longer term? Is the market competition constraining the ability to increase MDRs [merchant discount rates]?
4.
Who is Affirm’s target customer and how could that change over time? Would you expect Affirm to move downmarket and into sub-prime territory?
5.
How is Affirm positioned relative to peers? What competitive dynamics are at play between Affirm, Afterpay, Klarna, PayPal and others?
6.
There seems to be clear industry commoditisation and with that comes pricing pressure, which you mentioned. How do you think players might try to differentiate? You alluded to overlap and the lack of loyalty between merchants and some of the buy now, pay later players. How can Affirm place itself as the sole buy now, pay later provider for merchants?
7.
In Canada and LATAM, merchant acquirers such as Global Payments are offering buy now, pay later credit card solutions that are directly embedded into the checkout flow, with no third party, such as Affirm. To what extent is this a threat? Why would a merchant be loyal to one buy now, pay later solution if there’s this option?
8.
How are you assessing Klarna and Afterpay’s abilities to penetrate the US market? What might be some remaining challenges relative to Affirm, which is US-based?
9.
What do you make of the Apple Pay Later launch? How do you expect this to impact the industry more broadly or Affirm specifically?
10.
How might Affirm and its product roadmap evolve? You noted some of the company’s product roll-outs and attempts to position itself more directly with the consumer, but what’s your five-year outlook?
11.
What do you make of Affirm’s move away from Peloton and shift towards lower average order volume? How much could this lower average order volume and lower take rate drag on the company’s revenue growth? What are your longer-term expectations for take rates, given that movement?
12.
How would you rate Affirm’s ability to grow merchant adoption? What would be your growth estimate?
13.
Affirm isn’t profitable but the company has better margins vs competitors. Why is it better-positioned on margin? What might be a longer-term margin trajectory? Could 20-30% margin be achieved?
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