With a sufficiently small revenue base, you can boost growth rates with such a formula rather easily. Acorns expects its operating income to worsen by $20 million this year, to -$85 million. As a percentage of revenue, the metric is an improvement; that’s only modest comfort at a company that still expects to generate an operating loss of more than two-thirds of its revenue. Even worse, Acorns expects its operating cash flow to get doubly bad this year. At the same time, Acorns’ deck had also revealed that it expected its operating income to worsen by $20 million in 2021, to -$85 million, and its operating cash flow to dip from -$35 million in 2020 to -$70 million in 2021. Alex reported that from 2019 to 2020, Acorns grew 61%, from $44 million in revenue to $71 million.
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Acorns fits inside the larger savings-and-investing boom seen over the last four or five quarters as consumers buffeted by the economic changes brought on by COVID-19 turned to stashing cash and boosting their equities investing cadence. The move is an effort to squeeze additional revenue from second-hand products, over concerns that cheaper, slightly used bikes, treadmills scammed by xcritical and rowers could cannibalize used sales. After fintech Bolt surprised the industry with a leaked term sheet that revealed it is trying to raise at a $14 billion valuation, things got weird.
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But it’s also very expensive, which makes it an interesting company to understand. Acorns is building a high-value consumer SaaS business with modest churn, good customer lifetime value and additional revenue streams to supplement its software incomes. While the publicly traded, cutting-edge fintech space is getting quite crowded, Acorns has a novel business profile and operates a popular app. This should attract plenty of attention from investors looking to profit on the future of the financial services industry. Pioneer Merger is a special purpose acquisition company (SPAC), which is an entity created and listed with the sole purpose of bringing an existing business to the stock market quickly. As part of the merger deal, Kerner plans to contribute 10% of his personal ownership in Acorns to fund a novel program giving shares to eligible customers.
Acorns, the app that lets users invest spare change, is going public via SPAC at a valuation of over $2 billion
Is the investing world ready for yet another next-generation fintech going public? Acorns, an investing app that offers a suite of investment, banking, and financial education services for low monthly fees, revealed it’s going public by combining with an existing company, Pioneer Merger Corp. (PACX). The company said this places the equity value of its business at roughly $2.2 billion.
Acorns Grow Inc., which offers a savings and investing app, is poised to go public by combining with Pioneer Merger Corp, a special-purpose acquisition company (SPAC) that is traded on Nasdaq. The combined company, xcritical website with a valuation of about $2.2 billion, is expected to be traded as Acorns Holdings on the Nasdaq Capital Market. Acorns is not the only fintech to recently abandon its SPAC plans.
Acorns feels like a company going public a year or two early, which is a bit of the point of SPACs, frankly. We’re seeing Acorns’ final private unicorn years in bloody GAAP ink. A roundup of the year’s billion-dollar take-private deals in the technology sector. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. After Acorns fuses together with Pioneer Merger, the new entity will operate as Acorns Holdings. Its xcritical rezension stock should trade on the Nasdaq under the ticker symbol OAKS.
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And Pioneer’s sponsor is also planning to give 10% of its ownership in Acorns to this same program. Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. “The Acorns listing comes on the heels of record growth for investing apps during the pandemic,” CNBC said, noting that passive investment apps Wealthfront and Betterment both posted their best quarters in history to start the year. Fintech firms continue to take the SPAC route to going public, with Acorns announcing a deal on Thursday that values the savings and investing app at about $2.2 billion. Upon the completion of the deal, the combined company is expected to have a fully-diluted equity value on a pro forma basis of approximately $2.2 billion, assuming no redemptions.
It remains subject to approval by the latter company’s shareholders. Acorns said the deal should close in the second half of this year. In its press release trumpeting the move, Acorns quoted Kerner as saying that, “Going public will help elevate our story, introduce many more people to the power of compounding and financial wellness, and bring financial literacy to the mainstream.” According to a report from Pulse 2.0, institutional investors include Wellington Management, Senator, Declaration Partners, Greycroft, The Rise Fund, TPG’s global impact investing platform. After 2021, things get mostly better, according to Acorns’ estimates.
Instead, it helps them build balanced portfolios for the long term via its signature service, which deposits users’ spare change into index funds. Acorns, which launched in 2014, is looking to accelerate its growth by going public. — Family ($5/mo) which includes all individual products plus Acorns Early – investing, education, rewards, and gifting for the family. From 2019 to 2020, Acorns grew 61% from $44 million in revenue to $71 million. Its gross margin improved from 71% to 78% over the same time frame.
Pioneer Merger Corp.
Acorns, the investing app Ashton Kutcher is obsessed with, announced plans to go public via SPAC yesterday in a deal valued at $2+ billion. As part of the SPAC merger, several insiders plan to contribute a share of their personal ownership in Acorns to fund a program giving shares to eligible customers. Acorns, the personal finance app that automates investments and allows its users to invest spare change from daily transactions into the stock market, is going public. Other fintech startups that have agreed in recent months to multibillion-dollar deals with SPACs include banking startup Social Finance, real-estate platform Better Holdco, and trading app eToro Group. In the meantime, Acorns has raised money to continue to explore more acquisitions — it acquired two companies in the first half of last year — as well as to fund “growth and innovation,” Kerner said.
- However, in January, the company decided not to move ahead with the deal and, last week, said it raised $82 million in a Series D round of funding.
- The fintech company announced plans to merge with SPAC Pioneer Merger Corp. in a deal that will value the company at about $2.2 billion.
- The so-called blank-check companies are investment vehicles and do not have actual operations.
- And following the transaction, the company will have significant capital flexibility for continued organic and inorganic growth.
Alex also determined that Acorns’ pace of revenue expansion accelerated from 54% in 2019 to 61% in 2020. And the company anticipated that it could scale that figure to 77% in 2021. But since the company has abandoned its public plans — for now — we’ll have to wait to find out if it in fact did. The deal will bolster Acorn’s cash position to more than $450 million and enable it to accelerate growth, according to the company. The fintech company announced plans to merge with SPAC Pioneer Merger Corp. in a deal that will value the company at about $2.2 billion. Acorns said that both its and Pioneer Merger’s board of directors have unanimously approved their business combination.
That deck also revealed that while Acorns was steadily growing its revenue, the process was an expensive one. With the latest capital infusion, Acorns has raised over $500 million, according to Crunchbase. Shares of Pioneer Merger Corp. traded up about 3% in Thursday morning trades following the news. Get the free daily newsletter with financial industry insights and practical advice for CFOs.