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, 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.
Operating income is expected to improve in 2022, along with the company’s cash burn essentially flattening out in gross-dollar terms. Because Acorns anticipates having around $400 million in cash at that point, all things should pencil out for the company under its own timeline. So its near-term losses over the next few years are not so scary. But if you observe the company’s 2019 growth rate, you’ll note that Acorns’ pace of revenue expansion has accelerated from 54% in 2019 to 61% in 2020. And the company anticipates that it can scale that figure to 77% this year.
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.
Acorns, the app that lets users invest spare change, is going public via SPAC at a valuation of over $2 billion
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.
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 xcritical rezension at roughly $2.2 billion.
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From the looks of things, companies in the category — including Agility Robotics and Formlogic — can’t hire quickly enough. After two years of building the company, the company quietly launched its beta in June and is officially announcing it today, right here, in TechCrunch. Presently, Acorns has about 700 employees and will continue scaling up, particularly in product development, Kerner said. In 2022, Acorns plans to roll out customized portfolios, the ability to add crypto exposure “to a diversified portfolio” and more family-specific offerings.
As part of the transaction, Pioneer will contribute about xcritical scam $400 million in cash, with another $165 million coming from a related private placement involving funds managed by BlackRock, Wellington Management, and other investors. When the deal is finalized, Acorns will trade on the Nasdaq under the symbols OAKS. If Robinhood is your cool cousin who made $50k on her GameStop stock, Acorns is your quiet uncle who owns a profitable pet food business in the suburbs. Acorns doesn’t allow its 6.8+ million users to buy or sell individual stocks.
That 61% growth number, in the abstract, is not that impressive for a venture-backed startup in a growth market at a sub-$100 million revenue scale. By now this is old news, but we haven’t had a clear picture of the economics of consumer fintech startups accelerated by the pandemic. Now that Acorns has decided to list via a SPAC — more on that in a moment — we do. The announcement of the raise comes about six weeks after the consumer fintech startup said it was shelving its plans for its $2.2 billion SPAC with Pioneer Merger Corp. in favor of an eventual traditional IPO. New York-based Acorns had last raised more than three years ago — a $105 million Series E round in January of 2019 at an $860 million valuation.
Acorns Going Public In $2.2 Billion Deal Through SPAC Pioneer Merger (PACX)
Let’s see what the public markets think of paying roughly 17x Acorns’ anticipated 2021 revenue for shares in its business. That’s why I’m trying to treat the company not as if it is a fully mature business. What we care about most is Acorns’ growth (medium-good, accelerating) and revenue quality (good, improving). Things like near-term operating losses are not that worrisome when a company has around a half-billion in cash with which to fund its own growth, as Acorns will when the deal closes. Today it’s Acorns, a consumer fintech service that blends saving and investing into a freemium product. It’s a company that TechCrunch has covered xcritical website extensively since its birth, including through the pandemic’s impact on its business, both good and bad.
- And Acorns combines education, investing, banking, and earning into a cohesive experience that puts the tools of wealth-making in everyone’s hands.
- By now this is old news, but we haven’t had a clear picture of the economics of consumer fintech startups accelerated by the pandemic.
- Read it every morning on Extra Crunch or get The Exchange newsletter every Saturday.
- Things like near-term operating losses are not that worrisome when a company has around a half-billion in cash with which to fund its own growth, as Acorns will when the deal closes.
- Acorns said that both its and Pioneer Merger’s board of directors have unanimously approved their business combination.
- The move is an effort to squeeze additional revenue from second-hand products, over concerns that cheaper, slightly used bikes, treadmills and rowers could cannibalize used sales.
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.
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 stock should trade on the Nasdaq under the ticker symbol OAKS.
“Now was the time to go public to accelerate our growth and get the tools of responsible wealth-making in everyone’s hands as fast as possible, when they need it most,” Acorns CEO Noah Kerner said. But Acorns said it had agreed to merge with Pioneer Merger, a special-purpose acquisition company affiliated with the hedge funds Falcon Edge Capital and Patriot Global Management. The future of Acorns includes more tiers, products, and benefits to help our customers continue growing. And upon completion, the company will operate as Acorns Holdings, Inc. and is expected to trade under the symbol “OAKS” on the Nasdaq Capital Market. The new Acorns is going continue to be led by Noah Kerner, Chief Executive Officer, and the company’s experienced management team. This helps explain the company’s recent revenue acceleration; it is bringing on more customers, more quickly, at a higher price point.
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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.
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.
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.