Dive Brief:

• San Francisco-based Affirm said it will no longer provide its buy now, pay later services in Australia, exiting that market just as it's breaking away from long-time merchant customer Peloton there this month.
• In a post on its website, Affirm said it opted “to begin an orderly wind-down of our operations in Australia” as of Feb. 28. That will leave the company with operations in the U.S. and Canada.
• Active loan holders were to receive more information via email in the days that followed the company’s “important update” post, which was undated. Affirm Spokesperson Matt Gross said the company made the decision to exit the Australian market “a few months ago.”

Dive Insight:

Affirm’s exit from Australia comes as competitive dynamics among BNPL providers intensify, and macroeconomic headwinds put pressure on their operations and customers.

Block-owned Afterpay and Sydney-based Zip are major providers in Australia, and Stockholm-based Klarna also offers BNPL services in the country. Affirm operated in Australia on a more limited basis than it does in the U.S. and Canada, the company noted in its most recent annual filing with the Securities and Exchange Commission.

“International expansion is a key part of Affirm’s long-term growth plans to scale our network and further expand our total addressable market,” Gross said in an email. “As we continue to sharpen our focus to drive growth and profitability, we made the decision to begin an orderly wind down of our operations in Australia.”

Peloton, one of Affirm’s biggest merchant customers, noted on its website that its tie-up with Affirm in Australia ended as of March 1. Instead, the stationary bike company is now planning to work with BNPL rival Zip, Peloton’s website says. A spokesperson for Zip didn’t immediately respond to a request for comment. 

Affirm began operating in Australia in November 2021, expanding on an existing partnership with Peloton at that time. It was Affirm’s “official launch” in Australia, according to a press release.

When asked which company  prompted the change in Australia, Gross said Affirm made the decision to wind down its Australian operations. A Peloton spokesperson confirmed the company is no longer working with Affirm in Australia, although customers “who have taken out financing with Affirm will continue to be serviced as per their pre-established agreements.” The spokesperson did not respond to a question about which company prompted the change.

After experiencing a COVID-19 pandemic surge, Peloton sales have fizzled in recent quarters. At one point, Peloton sales accounted for one-fifth of Affirm’s revenue in the fiscal year ended in June 2021. By last year, Affirm was relying less on Peloton, with just 8% of revenue flowing from that merchant for the year ended June 30, 2022, according to Affirm’s annual SEC filing in August.

During its last earnings call in February, Affirm announced it was cutting about 500 employees as its quarterly net loss ballooned. The company also said it was winding down its cryptocurrency service as it sought to cut costs and focus on its core business in North America.

At the same time, Affirm continues to invest with respect to a planned expansion in the U.K., according to Gross. Affirm CEO Max Levchin has identified that region as the next market the company will enter. Gross declined to say when the company will start operations in the U.K.