Buy now, pay later fintech Affirm just revealed that 30% of its revenue comes from one merchant partner: Peloton

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The buy now, pay later lender Affirm, which was founded in 2012 by PayPal cofounder Max Levchin and issues microloans to shoppers primarily online, just unveiled paperwork to go public.
Buy now, pay later has been having a moment in 2020.
Affirm, which enables online shoppers to use microloans to split up payments on goods they purchase online, has touted its reach in the digital retail space in recent months. It’s a trend that has gained steam as consumers have tightened their budgets and moved to online shopping during the coronavirus pandemic.
Affirm said in the S-1 that it revealed to the public on Wednesday that it works with more than 6,500 merchants.
But in the “risk factors” section of the filing, Affirm highlighted how much of its revenue is tied to just one merchant partner — at-home bike and fitness equipment maker Peloton.
Read more: Shopify and Affirm are partnering up on buy now, pay later in a deal bringing together 2 of the hottest e-commerce players. Here’s why it’s a big win for both sides.
Peloton sales made up about 28% of Affirm’s total revenue for the fiscal year ending on June 30, and 30% of its total revenue for the three-month period ending on Sept. 30.
Affirm noted that the loss of a big relationship like Peloton, which Affirm signed as a partner in 2015, would “materially and adversely” impact its financial condition and future prospects. 
With gyms and studios temporarily shuttered to prevent the spread of the coronavirus earlier this year, interest in Peloton’s fitness products surged. In its most recent quarter, sales jumped by 172% and the company saw delays in shipments due to overwhelming demand. 
Affirm said Peloton has become even more significant for the company thanks to consumer spending trends that have favored buying at-home fitness equipment, but there’s no guarantee that boost is sustainable in the long term. 
The buy now, pay later company said in the filing that it believes it has a strong relationship with Peloton.
It renewed a merchant agreement with Peloton in September 2020 for an initial term of three years, followed by one-year renewals after that. After September 2023, either side of the agreement can terminate without cause if they give at least 90-days notice.  
Read more: Affirm just revealed its IPO paperwork. Here’s a look inside the buy now, pay later frenzy, the new twist on financing that is a must have for everyone.
Under the agreement, Peloton pays Affirm a fee that’s based on the gross value of sales that are processed through the buy now, pay later platform. Most buy now, pay later players charge merchants a fee for each sale, typically between 3% and 6%. 
Total revenue jumped to $509.5 million in the fiscal year ending on June 30, up from $264.4 million the year earlier. Affirm had a net loss of $112.6 million, slightly narrower than the $120.5 million net loss the previous fiscal year. 
Of that total 2020 revenue, more than half was merchant network revenue. Other revenue streams include interest income and virtual card network revenue. 
Affirm joins companies including Airbnb and DoorDash in gearing up to go public before the end of the year.SEE ALSO: From Affirm to Klarna, buy now pay later startups are booming. But experts warn juggling explosive growth with responsible lending is a tricky balance.
SEE ALSO: Shopify and Affirm are partnering up on buy now, pay later in a deal bringing together 2 of the hottest e-commerce players. Here’s why it’s a big win for both sides.
SEE ALSO: Affirm just revealed its IPO paperwork. Here’s a look inside the buy now, pay later frenzy, the new twist on financing that is a must have for everyone.
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