Installment Loan Provider Affirm Joins Year-End IPO Rush

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Affirm Holdings Inc., which provides installment loans to online shoppers, filed for an initial public offering, reporting revenue gains and shrinking losses.

The San Francisco-based company in its filing Wednesday listed the size of the offering as $100 million, a placeholder that will likely change.

Affirm joins a class of consumer technology companies seeking to tap the public market before the year ends. Airbnb Inc. and DoorDash Inc. filed this month for IPOs, with filings still possible by other companies. Online discount retailer Wish Inc. is one of those expected to complete an IPO in December, people familiar with its plans have said.

Driven largely by software companies and record filings by special purpose acquisition companies, or SPACs, IPOs on U.S. exchanges this year have raised an all-time high of more than $143 billion, according to data compiled by Bloomberg. Airbnb alone is seeking to add $3 billion to that total, according to people familiar with the matter.

More than 6,500 merchants use Affirm’s platform, according to its prospectus filed with the U.S. Securities and Exchange Commission. After selecting their purchases, shoppers can choose a schedule for paying for them at an annual interest rate of 0% to 30%, according to Affirm’s website.

For the third quarter, Affirm had a net loss of $15 million on revenue of $174 million, compared with a loss of $31 million on revenue of $88 million during the same period in 2019, according to its filing.

Peloton’s No. 1

Home exercise company Peloton Interactive Inc. was by far Affirm’s most important merchant partner, accounting for 30% of its total revenue in the third quarter. Its top 10 merchants including Peloton produced about 37% of Affirm’s revenue during the period, creating the risk its business could be adversely affected by the loss of any of those partners, according to the filing.

Affirm was founded in 2012 by Max Levchin, who also co-founded PayPal Holdings Inc. Levchin is the company’s single biggest shareholder, according to the filing. Other large owners include Khoisan Ventures, Founders Fund, Lightspeed Venture Partners, Jasmine Ventures and Shopify Inc. The company said its Class B shares will carry 15 votes each, while the Class A shares sold in the IPO will have one vote each.

The offering is being led by Morgan Stanley, Goldman Sachs Group Inc. and Allen & Co. Affirm plans to list its shares on the Nasdaq Global Select Market under the symbol AFRM.

©2020 Bloomberg L.P.

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