Monthly Archives: November 2020

News: Astra targets December for next orbital launch attempt

• November 19, 2020
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Astra is set to launch it’s next orbital rocket, with a window that opens on December 7 and lasts for 12 days following until December 18, with an 11 AM to 2:30 PM PT block each day during which the launch could occur, depending on weather and conditions on the ground. This is the startup’s

Astra is set to launch it’s next orbital rocket, with a window that opens on December 7 and lasts for 12 days following until December 18, with an 11 AM to 2:30 PM PT block each day during which the launch could occur, depending on weather and conditions on the ground. This is the startup’s Rocket 3.2, a slightly revised and improved version of the Rocket 3.1 launch vehicle it flew in September.

Alameda-based Astra is a startup focused on building a small, relatively cheap-to-build launch vehicle that can carry small payloads to space at a rapid clip, with flexible launch location capabilities. It’s founded by former NASA CTO Chris Kemp, and backed by funding including Mac Benioff, Innovation Endeavors, Airbus Ventures, Canaan Partners and others, and it already has an active rocket assembly factory operating in the East Bay.

The company was originally founded with the goal of winning DARPA’s Launch Challenge, though the deadline for that has since passed. Astra still aims to essentially satisfying the functional requirements of that competition, by creating a launch vehicle that can be launched essentially on-demand when needed by clients looking for more responsive and mobile spaceflight capabilities, including the U.S. Department of Defense.

The goal of this next flight is similar to the goal of Rocket 3.1 in September: Essentially to study the startup’s rocket and boost its efficiencies while building its effectiveness. Actually reaching orbit isn’t a primary goal yet, but is a secondary, nice-to-have aim of this launch, which will take off from Kodiak in Alaska. The company already learned a ton from its first launch, including lessons that led to changes and improvements made to Rocket 3.2. It has always aimed for a three-flight initial orbital launch test series, and will also fly a Rocket 3.3 after this one incorporating additional lessons learned.

News: GM ups electric and autonomous vehicle spending to $27 billion through 2025

• November 19, 2020
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General Motors said it will spend $27 billion over the next five years on the development of electric vehicles and automated technology, a 35% percent increase that exceeds the automaker’s investment and gas and diesel and is an effort bring products to market faster. More than half of GM’s capital spending and product development team

General Motors said it will spend $27 billion over the next five years on the development of electric vehicles and automated technology, a 35% percent increase that exceeds the automaker’s investment and gas and diesel and is an effort bring products to market faster.

More than half of GM’s capital spending and product development team will be devoted to electric and electric-autonomous vehicle programs, the company said.

The U.S. automaker is also accelerating its go-to-market timeline and adding more EVs to its portfolio plans. GM laid out Thursday an ambitious plan to bring 30 new electric vehicles to a global market through 2025. The company had previously committed to 20 EVs by 2023. More than two-thirds of those launches will be available in North America and every one of GM’s brands, including Cadillac, GMC, Chevrolet and Buick will be represented, according to the automaker.

The acceleration of GM’s plans, which includes pushing the launch of its Cadillac Lyriq SUV ahead by nine months to the first quarter of 2022, comes amid a flurry of EV activity in the automotive industry. Numerous startups have announced mergers with special purpose acquisition companies to become publicly traded companies — a move aimed at securing the capital needed to scale. Legacy automakers like Ford and VW Group are ramping their own EV plans. Tesla, the established electric automaker in the field, is building a factory in Austin and another Berlin to boost production and add more vehicles to its portfolio. By the end of next year, consumers will have more EV options than ever before, including the Lucid Motors Air, Rivian R1T pickup truck and Ford’s Mustang Mach-E.

“We don’t want to just participate, we want to lead,” said Doug Parks, GM executive vice president of Global Product Development, Purchasing and Supply Chain, during a call with reporters ahead of the announcement. “Tesla’s got a good jump, and they’ve done great things and so they’re formidable competitors. There’s a lot of startups and everyone else invading the space, and we’re not going to secede leadership there.”

GM’s strategy is to condense the typical 50-month development cycle by scrapping traditional methods and adopting a less bureaucratic team-focused approached, Parks said. For instance, the design to market timeline for the electric GMC Hummer will be 26 months, he said. Parks added that the early work on its Ultium battery architecture and drive units — the underlying foundation of its next-generation EV program — is allowing the company to move quickly.

As a result, Parks said GM is moving up three GMC electric vehicles — all of which are using its new Ultium battery — and four Chevrolet EVs, including a pickup and a compact crossover, as well as four Cadillacs. GM said Buick’s lineup will include two Ultium-based EVs.

GM is also on a hiring spree in a bid to keep pace and ultimately surpass its competition. The company said earlier this month it is hiring 3,000 electric system, infotainment software and controls engineers, plus developers for Java, Android, iOS and other platforms.

GM also has a joint venture with LG Chem to develop and supply the battery cells for its modular architecture. This modular architecture, called “Ultium,” (same as the battery) will be capable of 19 different battery and drive unit configurations, 400-volt and 800-volt packs with storage ranging from 50 kWh to 200 kWh, and front, rear and all-wheel drive configurations. At the heart of the new modular architecture will be the large-format pouch battery cells manufactured at this new factory.

The two companies previously committed to invest up to $2.3 billion into the new joint venture, as well as establish a battery cell assembly plant on a greenfield manufacturing site in the Lordstown area of Northeast Ohio that will create more than 1,100 new jobs.

The factory, which is already under construction, will be able produce 30 gigawatts hours of capacity annually. To put that into perspective, Tesla’s factory in Sparks, Nevada, which is part of a partnership with Panasonic, has a 35 GW-hour capacity.

News: Verizon partners with Apple to launch 5G Fleet Swap

• November 19, 2020
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Apple and Verizon today announced a new partnership that will make it easier for their business partners to go all-in on 5G. Fleet Swap, as the program is called, allows businesses to trade in their entire fleet of smartphones — no matter whether they are currently a Verizon customer or not — and move to

Apple and Verizon today announced a new partnership that will make it easier for their business partners to go all-in on 5G. Fleet Swap, as the program is called, allows businesses to trade in their entire fleet of smartphones — no matter whether they are currently a Verizon customer or not — and move to the iPhone 12 with no upfront cost and either zero cost (for the iPhone 12 mini) or a low monthly cost.

(Disclaimer: Verizon is TechCrunch’s corporate parent. The company has zero input into our editorial decisions.)

In addition, Verizon also today announced its first two major indoor 5G ultra wideband services for its enterprise customers. General Motors and Honeywell are the first customers here, with General Motors enabling the technology at its Detroit-Hamtramck Assembly Center, the company’s all-electric vehicle plant. To some degree, this goes to show how carriers are positioning 5G ultra wideband as more of an enterprise feature than the lower-bandwidth versions of 5G.

“I think about how 5G [ultra wide band] is really filling a need for capacity and for capability. It’s built for industrial commercial use cases. It’s built on millimeter wave spectrum and it’s really built for enterprise,” Verizon Business CEO Tami Erwin told me.

It’s important to note that these two projects are not private 5G networks. Verizon is also in that business and plans to launch those more broadly in the future.

“No matter where you are on your digital transformation journey, the ability to put the power of 5G Ultra Wideband in all of your employees’ hands right now with a powerful iPhone 12 model, the best smartphone for business, is not just an investment for growth, it’s what will set a business’s future trajectory as technology continues to advance,” Erwin said in today’s announcement.

As for 5G Fleet Swap, the idea here is obviously to get more businesses on Verizon’s 5G network and, for Apple, to quickly get more iPhone 12s into the enterprise. Apple clearly believes that 5G can provide some benefits to enterprises — and maybe more so than to consumers — thanks to its low latency for AR applications, for example.

“The iPhone 12 lineup is the best for business, with an all-new design, advanced 5G experience, industry-leading security and A14 Bionic, the fastest chip ever in a smartphone,” said Susan Prescott, Apple’s vice president of Markets, Apps and Services. “Paired with Verizon’s 5G Ultra Wideband going indoors and 5G Fleet Swap, an all-new device offer for enterprise, it’s now easier than ever for businesses to build transformational mobile apps that take advantage of the powerful iPhone 12 lineup and 5G.”

In addition, the company is highlighting the iPhone’s secure enclave as a major security benefit for enterprises. And while other handset manufacturers launch devices that are specifically meant to be rugged, Apple argues that its devices are already rugged enough by design and that there’s a big third-party ecosystem to ruggedize its devices.

News: Is the internet advertising economy about to implode?

• November 19, 2020
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Advertising drives the modern digital economy. Whether it’s reading news sites like this one or perusing your social media feeds, advertising is the single most important industry that came out of the development of the web. Yet, for all the tens of billions of dollars poured into online advertising just in the United States alone,

Advertising drives the modern digital economy. Whether it’s reading news sites like this one or perusing your social media feeds, advertising is the single most important industry that came out of the development of the web. Yet, for all the tens of billions of dollars poured into online advertising just in the United States alone, how much does that money actually do its job of changing the minds of consumers?

Tim Hwang has a contrarian stance: it doesn’t. In his new book published as a collaboration between Logic Magazine and the famed publisher Farrar, Straus and Giroux, he argues in “Subprime Attention Crisis” that the entire web is staring into an abyss of its own making. Advertising is overvalued due to the opaqueness of the market, and few actors are willing to point out that the advertising emperor has no clothes. Much like the subprime mortgage crisis, once people come to realize the true value of digital ads, the market could crater. I found the book provocative, and I wanted to chat further with Hwang about his thoughts on the market.

Hwang formerly worked at Google on policy and has developed many, many projects across a whole swath of tech-oriented policy issues. He’s currently a research fellow at Georgetown’s Center for Security and Emerging Technology.

This interview has been condensed and edited for clarity.

TechCrunch: Let’s dive straight into the book. How did you get started on this topic of the “subprime attention economy”?

Tim Hwang: There were two incidents where I was like, something is going on here. I was having conversations with a couple of friends who are product managers at Facebook, and I remember making the argument that that there’s a lot of evidence to suggest that this whole adtech thing is maybe just mostly garbage. The most interesting thing that they said was, “Oh, like, advertising works but we can’t really tell you how.” That’s like talking to someone from the national security establishment and they’re like, “Oh yeah, we can stop terrorists but, like, we can’t tell you exactly how that goes down.”

I think one thing that got me really interested in it was how opaque a lot of these things are. The companies make claims that data-driven programmatic advertising really is as effective as it is but then they’re kind of strangely hesitant to show evidence of that.

Second, I was doing research with a lot of people who I think you’d rightly call sort of tech critics — strong critics of the power that these platforms have. I think one of the most interesting things is that even among the strongest critics of tech, I think a lot of them have just bought this claim that advertising and particularly data-driven advertising is as powerful as industry says it is.

It’s a kind of strange situation. Tech optimists and tech pessimists don’t agree on a whole lot, but they do seem to agree on the idea that this sort of advertising works. That was what I wanted to explore in the book.

Why don’t we talk a bit about the thesis?

The thesis of the book is really quite simple, which is you look around and basically our modern experience of the web is almost entirely shaped by advertising. The way social media is constructed, for example, is largely as a platform for delivering ads. Engagement with content is really good for creating profiles and it’s really good for delivering ads. It really has been the thing that has powered the current generation of companies in the space.

As you sort of look closer though, it really starts to resemble the market bubbles that we know of and have seen in other places. So explicitly, the metaphor of the book is the subprime mortgage crisis. I think the idea though is that you have this market that is highly opaque, there’s a lot of evidence to suggest that the value of ads is misidentified, and you have a lot of people interested in boosting it even in spite of all that.

For the book, I wanted to look at that market and then what the internet could look like after all this. Are there other alternative business models that we want to adopt for the web going forward?

News: 48 hours left to save $100 on passes to TC Sessions: Space 2020

• November 19, 2020
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T-minus two days and counting. That’s how much time you have left to score early-bird passes to TC Sessions: Space 2020. If you’re part of this global startup community, don’t miss a two-day deep dive focused on the intrepid visionaries pushing the boundaries of technology and forging the future of space. And don’t miss the

T-minus two days and counting. That’s how much time you have left to score early-bird passes to TC Sessions: Space 2020. If you’re part of this global startup community, don’t miss a two-day deep dive focused on the intrepid visionaries pushing the boundaries of technology and forging the future of space.

And don’t miss the opportunity to attend at the lowest price point. Lock in the early-bird price ($125) before prices increase on 11.13.20 at 11:59 p.m. PST. Beat the deadline, buy your pass and save $100.

TC Sessions are known for featuring outstanding experts in their respective industries and this one, our first dedicated to the rapidly growing space industry, is no exception. The examples below prove the point, and you’ll find plenty more listed in the event agenda.

Building Up a Business Looking Down at Earth: How Earth observation is one of the real moneymakers in the space category and what’s ahead for the industry. Note: The experts on this panel all possess an impressive curriculum vitae. Learn more about them here.

Launching a Launch Startup: The launch business is booming, but besides SpaceX and Rocket Lab, there isn’t anyone far enough along to truly capitalize in terms of new space startups. We’ll talk to the founders of companies hoping to be next in line. Learn more about Tim Ellis here.

Sourcing Tech for Securing Space: Lt. General Thompson is responsible for fostering an ecosystem of non-traditional space startups and the future of Space Force acquisitions, all to the end goal of protecting the global commons of space. He’ll talk about what the U.S. is looking for in startup partnerships and emerging tech, and how it works with these young companies. Learn more about Lt. General Thompson here.

Big opportunity: Don’t miss the Fast Money breakout sessions where you’ll learn how to engage with Space Force and other government accelerators, NASA’s small business programs and attend a primer on working with the Naval Information Warfare Systems Command (NAVWAR).

Get your network mojo running and make the connections that can shoot your startup into orbit. The free, AI-powered CrunchMatch platform simplifies finding and connecting with people who align with your business goals. Schedule 1:1 meetings with potential customers, engineers, investors and founders.

Buy a Space Startup Exhibitor Package and increase brand awareness. It includes digital exhibition space, lead-gen capabilities and three passes. Bonus: All exhibiting startups get to pitch live to thousands of global attendees.

Forging the future of space takes time, money and monumental effort. TC Sessions: Space 2020 helps intrepid pioneers go further together. You have just 48 hours left to beat the clock. Buy your early-bird ticket ($125) before 11.13.20 at 11:59 p.m. PST, and you’ll save $100.

Is your company interested in sponsoring TC Sessions: Space 2020? Click here to talk with us about available opportunities.

News: Google Stadia and GeForce Now are both coming to iOS as web apps

• November 19, 2020
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Google and Nvidia both had some news about their respective cloud gaming service today. Let’s start with Nvidia. GeForce Now is now available on the iPhone and the iPad as a web app. The company says it’s a beta for now, but you can start using it by heading over to play.geforcenow.com on your iOS

Google and Nvidia both had some news about their respective cloud gaming service today. Let’s start with Nvidia. GeForce Now is now available on the iPhone and the iPad as a web app. The company says it’s a beta for now, but you can start using it by heading over to play.geforcenow.com on your iOS device.

GeForce Now is a cloud gaming service that works with your own game library. You can connect to your Steam, Epic and Ubisoft Connect accounts and play games you’ve already purchased on those third-party platforms — GOG support is coming soon. GeForce Now is also available on macOS, Android and Windows.

Game publishers have to opt in to appear on GeForce Now, which means that you won’t find your entire Steam library on the service. Still, the list is already quite long.

Right now, it costs $5 per month to access the Founders edition, which lets you play whenever you want and for as long as you want. It’s an introductory price, which means that Nvidia could raise prices in the future.

You can also try the service with a free account. You’re limited to one-hour sessions and less powerful hardware. There are also few slots. For instance, you have to wait 11 minutes to launch a game with a free account right now.

Once you add the web app to your iOS home screen, you can launch the service in full screen without the interface of Safari. You can connect a Bluetooth controller. Unfortunately, you can’t use a keyboard and a mouse.

The company says it is actively working with Epic Games on a touch-friendly version of Fortnite so that iOS players can play the game again. It could definitely boost usage on the service.

As for Google, the company issued an update 12 months after the launch of Stadia. Unlike GeForce Now, Stadia works more like a console. You have to buy games for the platform specifically. There are a hundred games on the platform including some games that you get with an optional Stadia Pro subscription.

The company says that iOS testing should start in the coming weeks. “This will be the first phase of our iOS progressive Web application. As we test performance and add more features, your feedback will help us improve the Stadia experience for everyone. You can expect this feature to begin rolling out several weeks from now,” the company wrote.

News: ‘Wonder Woman 1984’ is coming to HBO Max (and some US theaters) on Dec. 25

• November 19, 2020
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Although COVID-19 is surging in the United States and around the world, Warner Bros. still plans to release “Wonder Woman 1984” on Christmas Day — but its plans are are no longer limited to a theatrical release. Director Patty Jenkins and star Gal Gadot both posted tweets last night announcing that in in the United

Although COVID-19 is surging in the United States and around the world, Warner Bros. still plans to release “Wonder Woman 1984” on Christmas Day — but its plans are are no longer limited to a theatrical release.

Director Patty Jenkins and star Gal Gadot both posted tweets last night announcing that in in the United States, the film will be released simultaneously in theaters and on WarnerMedia’s streaming service HBO Max.

“THE TIME HAS COME,” Jenkins wrote. “At some point you have to choose to share any love you have to give over everything else. We love our movie as we love our fans, so we truly hope that our film brings a little bit of joy and reprieve to all of you this holiday season.”

A press release from HBO Max offers a few more details: The film will debut in theaters internationally on December 16, then launch in U.S. theaters and on HBO Max on December 25. It will be available to the streaming service’s U.S. subscribers for one month at no additional cost.

While the pandemic caused some films to shift from a theatrical release to streaming, the studios have mostly chosen to delay their big blockbusters. The Wonder Woman sequel (which had already moved around the calendar several times as part of normal Hollywood scheduling) was scheduled for a June release when the pandemic started, with Warner Bros. pushing the date back to August, then from August to Christmas.

Last month, the disappointing box office performance of Christopher Nolan’s “Tenet” (which Warner Bros. only released in theaters) prompted studios to delay other tentpoles like “Dune,” “No Time To Die” and “The Batman.” But they may not be able to delay indefinitely — and in the case of WarnerMedia, this also seems like a smart way to drive subscriptions for HBO Max after a rocky launch.

Disney, meanwhile, decided to release its live action “Mulan” remake on Disney+ for an additional $29.99 (while also supporting a theatrical launch in some markets). It will be releasing Pixar’s “Soul” via streaming on Christmas Day at no additional charge.

News: Microsoft brings new shopping tools to its Edge browser

• November 19, 2020
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Microsoft announced a few updates to its Edge browser today that are all about shopping. In addition to expanding the price comparison feature the team announced last month, Edge can now also automatically find coupons for you. In addition, the company is launching a new shopping hub in its Bing search engine. The timing here

Microsoft announced a few updates to its Edge browser today that are all about shopping. In addition to expanding the price comparison feature the team announced last month, Edge can now also automatically find coupons for you. In addition, the company is launching a new shopping hub in its Bing search engine. The timing here is undoubtedly driven by the holiday shopping season — though this year, it feels like Black Friday-style deals already started weeks ago.

Image Credits: Microsoft

The potential usefulness of the price comparison tools is pretty obvious. I’ve found this always worked reasonably well in Edge Collections — though at times it could also be a frustrating experience because it just wouldn’t pull any data for items you saved from some sites. Now, with this price comparison running in the background all the time, you’ll see a new badge pop up in the URL bar that lets you open up the price comparison. And when you already found the best price, it’ll tell you that right away, too.

At least in the Edge Canary where this has been available for a little bit already, this was also hit and miss. It seems to work just fine when you shop on Amazon, for example, as long as there’s only one SKU of an item. If there are different colors, sizes or other options available, it doesn’t really seem to kick in, which is a bit frustrating.

Image Credits: Microsoft

The coupons feature, too, is a bit of a disappointment. It works more consistently and seems to pull data from most of the standard coupon sites (think RetailMeNot and Slickdeals), but all it does is show sitewide coupons. Since most coupons only apply to a limited set of items, clicking on the coupon badge quickly feels like a waste of time. To be fair, the team implemented a nifty feature where at checkout, Bing will try to apply all of the coupons it found. That could be a potential time- and money-saver. Given the close cooperation with the Bing team in other areas, this feels like an area of improvement, though. I turned it off.

Microsoft is also using today’s announcement to launch a new URL shortener in Edge. “Now, when you paste a link that you copied from the address bar, it will automatically convert from a long, nonsensical URL address to a short hyperlink with the website title. If you prefer the full URL, you can convert to plain text using the context menu,” Microsoft explains. I guess that makes sense in some scenarios. Most of the time, though, I just want the link (and no third-party in-between), so I hope this can easily be turned off, too.

News: Google rolls out iOS widgets for Gmail, Drive and Fit; says Calendar and Chrome coming soon

• November 19, 2020
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Google has updated its flagship iPhone apps with support for home screen widgets, a new feature of iOS 14. The company announced today it’s rolling out new widgets for Gmail, Google Drive, Google Fit and soon, Google Calendar and Google Chrome, in order to put useful information on the home screen or to provide quick

Google has updated its flagship iPhone apps with support for home screen widgets, a new feature of iOS 14. The company announced today it’s rolling out new widgets for Gmail, Google Drive, Google Fit and soon, Google Calendar and Google Chrome, in order to put useful information on the home screen or to provide quick access to common tasks. The company had already launched a widget for its Google Search app back in September. 

The new widgets, for the most part, seem to be handy home screen additions for anyone who regularly uses Google’s products. However, the Gmail widget is a little lacking.

While the Google Drive widget offers easy access to a couple of your most recent documents with a tap, the Gmail widget doesn’t let you preview your emails. Instead, you can tap to search your email or compose a new message, and there’s a button that displays your unread count. Of course, if you use iOS icon badges, you don’t need an entire widget to know how many emails are waiting for you.

Image Credits: Google

By comparison, some alternative email apps are outdoing Gmail when it comes to iOS widgets. Basecamp’s Hey app, for instance, offers a variety of widgets which include message previews.

Even if Gmail couldn’t offer message previews, it would have been interesting if the widget allowed users to configure it in some way that was more useful to them personally.

For example, it could alert you to how many unread emails you have from a particular person, like your boss, or an email domain, like your work. Or how many were associated with a particular label. Or perhaps it could alert you to how many unread emails in your Priority Inbox that are considered “important,” if you use that inbox configuration.

Image Credits: Google

Meanwhile, the Google Drive iOS widget includes quick access to files and a search bar. The Google Fit widget makes it easy to track your activity, including Heart Points and Steps, from the home screen.

Image Credits: Google

The anticipated Google Calendar widget is not yet out, but Google today offered a look at what’s to come. The widget looks a lot like a mini calendar, with the day’s appointments, stacked and color-code for easy reading. A tap will bring you to your full calendar, as well.

A Chrome widget is also coming soon, with support for a search bar, incognito mode, voice search and QR code scanning — much like the main Google Search widget offers today.

All the widgets are available now except for Calendar and Chrome. The former is expected in the “coming weeks” and the latter “in the new year,” Google says.

Image Credits: Google

News: Inside Affirm’s IPO filing: a look at its economics, profits and revenue concentration

• November 19, 2020
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Last night Affirm filed to go public, herding yet another unicorn into the end-of-year IPO corral. The consumer installment lending service joins DoorDash and Airbnb in filing recently, as a number of highly-valued, venture-backed private companies look to float while the public markets are more interested in growth than profits. TechCrunch took an initial dive

Last night Affirm filed to go public, herding yet another unicorn into the end-of-year IPO corral. The consumer installment lending service joins DoorDash and Airbnb in filing recently, as a number of highly-valued, venture-backed private companies look to float while the public markets are more interested in growth than profits.

TechCrunch took an initial dive into Affirm’s numbers yesterday, so if you need a broad overview, please head here.

This morning we’re going deeper into the company’s economics, profitability and the impact of COVID-19 on its business. The last element of our investigation involves Peloton and the historical examples of Twilio and Fastly, so it should be fun.

The Exchange explores startups, markets and money. Read it every morning on Extra Crunch, or get The Exchange newsletter every Saturday.

Affirm is a company that TechCrunch has long tracked. I was assigned an interview with founder Max Levchin at Disrupt 2014, giving me a reason to pay extra attention to the company over the last six years. This S-1 has been a long time coming.

But is Affirm another pandemic-fueled company going public on the back of a COVID-19 bump, or are its business prospects more durable?

Let’s get into the numbers.

Economics

First, let’s discuss Affirm’s core economics. I want to know three things:

• What does Affirm’s loss rate on consumer loans look like?
• Are its gross margins improving?
• What does the unicorn have to say about contribution profit from its loans business?

These are related questions, as we’ll see.

Starting with loss rates, Affirm thinks it is getting smarter over time, writing in its S-1 that its “expertise in sourcing, aggregating, protecting, and analyzing data” provides it with a “core competitive advantage.” Or, more simply, Affirm writes that it has “data advantages that compound over time.”

So we should see improving loss rates, yeah? And we do. The company has a very pretty chart up top in its IPO filing that makes its model’s improvement appear staggeringly good over time:

But, things aren’t improving as fast inside its results, as Affirm later explains when discussing its aggregate, as opposed to cohort-delineated, results.

Here’s Affirm discussing its provision for credit losses in its most recent quarter (calendar Q3 2020) and the period’s year-ago analog (calendar Q3 2019):

As we can see, the percentage of total revenue that Affirm has to provision for expected credit losses is going down over time. That’s what you’d hope to see.

To better explain what’s going on, let’s explore what Affirm means by “provision for credit losses.” Affirm defines the metric as “the amount of expense required to maintain the allowance of credit losses on our balance sheet which represents management’s estimate of future losses,” which is “determined by the change in estimates for future losses and the net charge offs incurred in the period.”

And it got quite a lot better in the last year, which the company says was “driven by lower credit losses and improved credit quality of the portfolio.” So, Affirm is getting better at lending as time goes along. What does that mean for its gross margins?

Well, Affirm doesn’t provide direct gross margin results. So we’re left to do the work ourselves. For reference, this is the income statement we’re working off of:

Fun, right? Annoying, but fun.

How should we calculate the company’s gross margins? We can’t drill down on a per-product basis given that costs aren’t apportioned in a manner that would allow us to, so we’ll have to take Affirm’s revenue as a bloc, and its costs as a bloc as well.