Deep Dive: The Clear BNPL Leader

October 22, 2024

A growing trend amongst consumers, especially in the younger tech-savvy generations, has been the use of buy now, pay later (BNPL) services, a short-term financing option that allows consumers to purchase items immediately, and pay for them over time.

BNPL plans usually allow consumers to split costs into multiple interest free payments and have little impact on credit score.

Most BNPL consumers cite avoiding concerns with credit cards like paying interest, maxed out credit, or being unable to get approved as their reason for opting towards BNPL solutions.

One of the key companies perhaps best positioned in the BNPL market is Affirm (AFRM).

Last quarter, AFRM beat expectations on both its top and bottom line, with revenue growing 47.8% YoY to $659 million.

Affirm is closing the gap toward breaking even with EPS at -$0.14 compared to -$0.69 from a year ago. Total transactions also grew 42% YoY.

While the company is not yet profitable, its CEO, PayPal co-founder Max Levchin, cited more transactions as the path to reaching profitability goals. With the continued growth in consumers and transactions, Affirm is likely heading in the right direction.

Affirm's web traffic in the U.S. has seen positive growth as well, at +30% YoY.

This growth rate not only bests competitors, but is more impressive considering Affirm already is the overwhelming market share leader in the US, at least according toconsumer web traffic.

Here's what we're watching ahead of earnings early next month...

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