Affirm Holdings wasn’t interested in competing with Klarna for Walmart’s business because doing so wouldn’t have made economic sense, the buy now, pay later company’s chief operating officer said during a recent presentation.
Walmart accounts for only a sliver of San Francisco-based Affirm’s business, COO Michael Linford told a William Blair analyst during a March 20 question and answer session hosted by the investment firm.
“We felt like it was important to draw the line and not do deals that we thought were uneconomic,” Linford told analyst Andrew Jeffrey.
Walmart, which Affirm first partnered with in 2019, made up about 5% of the company’s gross merchandise volume and 2% of its adjusted operating income in the second half of last year, Affirm said in a March 17 SEC filing.
“We will be able to replace a meaningful portion of that GMV,” Linford said, although he provided few details.
An Affirm spokesperson declined to comment on the specifics of Affirm’s partnership with Walmart.
Affirm also works with major e-commerce players like Shopify and Amazon, Linford noted.
Buy now, pay later company Klarna disclosed on March 17 that it would be the sole provider of installment loans through OnePay, a Walmart-backed app that customers of the retail behemoth can use to pay in-store or online.
OnePay is a service provided by One, the fintech Walmart and venture capital firm Ribbit Capital established in 2021 that is majority owned by the retailer.
“We think that Klarna was offering something on the order of $200 million to $300 million of equity in warrants [to Walmart], and that was a deal that just didn't make sense for something that had so little contribution to us,” Linford said.
Klarna, which has the bulk of its operation in Stockholm, did not disclose the terms of the deal, but in a March 14 SEC filing Klarna said it had entered into an agreement with a “global partner” this month. The filing says the BNPL granted that partner 15,343,932 Klarna warrants, each of which can be exercised to buy a share of stock for about $34, in exchange for “certain services.”
A Klarna spokesperson declined to say whether or not the filing refers to the Walmart partnership.
Affirm is still an option at checkout for Walmart customers, and the company will continue to work with the mega-retailer, Linford stressed, although he did not say how long the partnership will last.
