The United States-based buy now, pay later (BNPL) company, Affirm Holdings Inc (NASDAQ: AFRM) rose 4.9% in overnight trade. As a result, the Affirm share price is now sitting at $110.98, which might prompt local investors to wonder how the US company stacks up against local BNPL legend Afterpay Ltd (ASX: APT).
Since joining the public markets in January this year the instalment payment provider has traded between US$46.50 and US$176.65. Yet, the erratic swings in the company's share price have only amounted to a 14% gain for the year so far.
Not all too exciting when you consider an investment in the S&P/ASX 200 Index (ASX: XJO) delivered a 9.5% return over the same period without having your heart in your throat.
Nonetheless, let's look at how Afterpay compares to Affirm after its share price rise last night.
Survival of the fastest growing
When it comes to the BNPL industry there aren't too many companies worried about profitability. Instead, it's all about growing the top line as fast as possible, taking market share from competitors in the process. For this reason, investors will seldom fret over the bottom line.
So, let's lift the lid on Affirm and ASX-listed Afterpay's last annual growth metrics.
Firstly, the gross merchandise volume (GMV) processed by BNPL companies is an important indicator of market penetration. In FY21, Affirm delivered a GMV of US$8.3 billion (A$11.57 billion), compared to Afterpay's A$22.4 billion worth of underlying sales during the financial period.
Similarly, Afterpay claimed the trophy when it comes to active customers at the end of FY21. The ASX-listed company reported 16 million shoppers actively using its platform. Meanwhile, Affirm reached 7.1 million active customers using its product. But, how does this translate into real revenue for the companies?
Well, in FY21 Affirm recorded US$870.5 million (A$1,213 million) in revenue — representing an increase of 71% on the prior corresponding period. In comparison, ASX-listed Afterpay notched up A$836 million, which was an increase of 75% compared to the previous year.
Though these figures might seem relatively inconspicuous at first, the interesting aspect is how Affirm is driving roughly 45% more revenue from nearly half as much in underlying sales.
Looking a little closer at Affirm's financial statements, it can be seen that the BNPL company made US$326.4 million in interest income in FY21. Whereas, Afterpay does not charge interest on any of its payments. Affirm offers 6 monthly payments and 12 monthly payments which both come with an annualised 15% interest rate.
How does Affirm's share price compare to Afterpay on the ASX?
Compared to Afterpay's abysmal ~25% share price fall, Affirm's share price has provided a positive return for investors so far this year (as shown below).
Since being announced in August, Afterpay's acquisition by Block Inc (NYSE: SQ) (formerly Square) has been jumping through all the hurdles that come with such a deal. For the ASX-listed company, it has meant that its share price has been tied to Block's due to the all-scrip deal.
In turn, Afterpay's ASX-quoted market capitalisation is now ~A$26.4 billion. In comparison, based on Affirm's current share price, the US-listed company commands a market cap of A$43.5 million.
