Affirm: Fintech's $650Mn Cloud Bet

Affirm, a fintech leader of the "buy now, pay later" category, recently signed a staggering 💲650M cloud commitments.

What does this massive investment tell us about cloud and partnerships?

Affirm has become a dominant player in the US BNPL sector, with 18M users and $20Bn+ in annual GMV in 2023. The company has a sophisticated partnership playbook, as it integrates its payment solutions into merchants online and in-store platforms.

More on how partners drive Affirm’s momentum shortly, let’s start with cloud commits.

💰 A $650M Cloud Commitment

Last year, Affirm signed ~2/3 of a billion dollars to a cloud hyperscaler:

“During the year ended June 30, 2023, we entered into non-cancelable purchase obligations with our third-party cloud computing web services provider, which included ... additional aggregate purchase commitment of $650.0 million...”

These commits are binding. As Affirm clarifies: “If we fail to meet any of the purchase commitments, we will be required to pay the difference.”

This massive contract highlights 2 key points:

✔️Affirm is comfortable to commit to cloud solutions long term (7 years)

✔️ It plans to spend large amount ~$94M/year on cloud until 2030

Affirm is not alone; many fintechs are similarly committed to cloud.

Yet, Affirm knows from experience that partnerships can unlock growth.

🛒 Affirm Savvy Strategy: Shopify Partnership Grows 2X

In 2020, Affirm signed its biggest partner, Shopify, which “Shop Pay Installments” in the US are exclusively powered by Affirm.

Max Levchin, Affirm’s CEO, recently emphasizes its significant impact:

“Shopify has just continued to perform extraordinarily. The growth of that particular partnership is accelerating 3+ years into the partnership. That set of products grew about twice the speed of the rest of Affirm.”

Levchin underscored that successful partnerships take time:

“It sometimes seems like you signed a great partner and that's the burst of volume.

But in reality, it takes us years to fully realize the opportunity for us when partnerships are this rich and with this much potential.”

📦 Affirm's Amazon Partnership: A Strategic Move

A hint at the hyperscaler behind the massive cloud commitment could be Affirm's expanded partnership with Amazon. In November, Affirm became the first pay-over-time option available at checkout on Amazon Business B2B store, used by businesses to automate procurement.

Affirm’s CFO, Michael Linford, summarized their strategy:

“In addition to our direct sales, which we continue to invest in acquiring new logos, we are also partnering now more with people who can help distribute our product for us.

And that has been a really successful strategy and gain distribution in some of the pockets that are harder to get to with a small sales force that we have.”

How are you leveraging cloud and partnerships to drive growth?

__________

📈 Accelerate your Growth in Cloud Marketplaces

Transform your marketplace strategy with first-hand insights from Cloud GTM leaders in our 5-week cohort course. Learn in a community of great alliance leaders. Join 100+ alums from companies like GitLab, Darktrace, IDC and others.

Join Cloud GTM Leader course