Affirm stock sees strong demand during IPO, Peloton represents 28% of revenue

Peloton’s financing partner Affirm had its initial public offering this week, and demand is currently very strong for its stock driving it up over $100 on its first day of trading.

Peloton is a strong driver of its business now as it represents 28% of its revenue.

Our top merchant partner, Peloton, represented approximately 28% of our total revenue for the fiscal year ended June 30, 2020 and 30% of our total revenue for the three months ended September 30, 2020.

There can be no assurance that such trends will continue or that the levels of total revenue and merchant network revenue that we generate from Peloton will continue

The loss of Peloton as a merchant partner, or the loss of any other significant merchant relationships, would materially and adversely affect our business, results of operations, financial condition, and future prospects,” according to the filing.

Affirm’s S-1 filing.

Affirm reported revenue of $509.5 million for the fiscal year ending June 30, 2020, and that was compared to $264.4 million a year earlier, representing year-over-year growth of approximately 93%.

I personally used Affim when purchasing my Peloton bike, and the interest-free payment options were part of the reason I pulled the trigger on my Peloton when I did. The checkout process was seamless, and I’d likely use it in the future if I were making a large purchase.

For Peloton, while it does increase their cost of delivery on hardware, it does drive sales. From a marketing perspective, pitching a $49/month payment for your bike looks a lot more appealing than spending $1,895 up front. From a cash flow perspective, getting their money up front is helpful. I could see Peloton moving to a lease model in the future, which would certainly affect Affirm.