Hey folks - hope everyone is enjoying their weekend. Wanted to share another DD I did on an interesting company in the buy now pay later industry, $FSRV - more below

First a little on the space. Due to the pandemic, the shift to e-commerce has accelerated by 5 years. As a part of this shift, a new trend has emerged called "buy now, pay later," which is exactly what it sounds like

BNPL point-of-sale (POS) microloan offers have become a popular alternative for payment, by spreading out online and mobile purchase amounts into interest-free installments over time - this has become especially popular with younger generations w/ low / poor credit profiles

As a result, POS lending is one of the fastest growing segments in the lending sector of FinTech, increasing at 40% volume (YoY) and it is expected to reach 150% annual growth in 2020

What is the reason for this growth? There are a few macro factors but it is primarily because the model benefits both merchants and consumers. Merchants can efficiently process more transactions at a lower risk, and consumers are able to increase their buying power

So where does $FSRV come in? They are the only nonprime BNPL lender focused on e-commerce. There is a large opportunity here as the nonprime market currently accounts for roughly ~40% of US consumers

Their proprietary platform drives a cycle of engagement between consumers and merchants by solving critical consumer pain points and driving higher conversion rates for merchants

More specifically, merchants benefit from:
- Increased customer loyalty
- Higher repeat purchase rates (~45%)
- Multiple integration options - flexibility to address a broad range of retailers

Additionally, the integrations they have embedded in their platform help them differentiate themselves. They have partnerships with $SHOP, $AFRM, and $BIGC, among others

A quick example of how a merchant can benefit can be seen below. Out of 1M total applications, 650k were declined (65% decline rate). Out of those 650k, $FSRV approved 390k (60% approval rate) and out of those 390k approvals, 195k moved forward with $FSRV (60% conversion rate)

So merchants can clearly benefit from using $FSRV. How exactly do consumers benefit?
- No credit score is required
- Fully-automated approval in <5 seconds
- Digitally native platform that can be accessed from anywhere
- Flexible and transparent payment options, and no late fees

Clearly there is a value proposition for both sides here. One last thing about their platform, it performs better as they grow. How exactly? As more data is generated, it is incorporated into their algorithms and business practices, leading to improved performance

Interesting, so let's take a look at their growth strategy and financials. Moving forward they forecast significant levers for continued organic growth

Regarding their financials:
- 171% YoY growth, up from $92M in 2019 to $250M in 2020
- Expecting to be profitable in 2020
- 87% rev CAGR from 2019-2023
- 75% EBITDA and net income CAGR from 2020-2023

These numbers are INSANE. $FSRV is also 1 of 5 SPACs with over $250M in 2020 rev that are projected to grow at the high rates in 2021

Wow, so they are growing significantly due to macro tailwinds but regardless, this trend looks like it's here to stay. To wrap things up, let's look at their management

CEO Orlando Zayas, has 7+ yrs of exp in the space and has led $FSRV since 2017. The rest of leadership has vast experience in their respective positions and come from notable companies like EY, Qualcomm, Citibank, and JP Morgan

All in all, $FSRV is without a doubt the most interesting BNPL company to me, as they have a clear moat by being the only nonprime BNPL lender

Quick thread on $FSRV -

@skaushi
@FoxyFomo