#AFFIRM BUYS CASHFLOW MANAGEMENT FREE#
Finally, the free cash flow margin would increase from 2.8% in 2026 to 23.33% in 2030. Capital expenditures are approximately close to 2% of the total amount of sales. I also assumed that the company wouldn’t need a lot of capital expenditures. PayPal reports a CFO margin between 15% and 30%, so I believe that using a CFO/Sales ratio between 12% and 21% is appropriate: With more solutions and more merchant feature functionalities, I would be expecting sales growth to decline from 38% in 2024 to 31% in 2026, and then be constant until 2030.įor the selection of the company’s CFO/Sales and FCF/Sales, I had a look at PayPal's ( PYPL) cash flow statement. Returnly, which we acquired in May 2021, helps direct-to-consumer brands offer their shoppers an instant and seamless returns experience, which can help increase customer satisfaction and conversion rates. The acquisition of Returnly is a clear example: The management can design its own solutions or buy competitors with successful products. As a result, Affirm will most likely collect more fees, and sales growth will increase. If merchants can increase their conversion rates thanks to Affirm, they will most likely use more Affirm’s solutions. I would be expecting significant sales growth when more solutions hit the market.īesides, if the management is sufficiently smart, it will offer more merchant feature functionalities. The examples of new solutions include the high-yield savings feature that clients can acquire through the app and the Affirm Debit+, a new U.S.
In my opinion, Affirm is still preparing a significant number of products to be released in the near future. The company intends to innovate new consumer product solutions. Source: 10-k With More Solutions Like The High-yield Savings Feature And Merchant Feature Functionalities, I Expect Sales Growth Of 31% y/y If Affirm offers the app in other countries, I would expect significant sales growth and free cash flow generation soon:
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The management is well aware of how to attract customers and offer loans. In my opinion, the company has acquired a significant amount of know-how in a short period of time. Revenue growth is very impressive in the United States and Canada. Once everything is ready, borrowers can monitor their payments through the Affirm app: Once clients have found a store, Affirm asks them to provide a payment schedule and a loan type. The Affirm’s payment system appears quite easy and straightforward.
Source: Affirm | Buy now, pay later with no late fees or surprises
Affirm’s Business Model And Sales Originįounded in 2012, financial tech company Affirm presents itself as the next-generation platform for digital and mobile-first commerce: However, I will be buying shares at the current price mark. There are various risks, and the downside potential is significant. If the management uses its cash in hand to penetrate with existing merchants and pay marketing efforts, the stock price could spike up. If the company continues to develop new payment solutions and new merchant feature functionalities, sales growth could escalate. Panida wijitpanya/iStock via Getty ImagesĪffirm ( NASDAQ: AFRM) does not only offer an innovative fintech business model, but the company’s sales growth in the US and Canada is also impressive.
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