Evercore takes a deep dive into Apple FinTech

From a note to clients by analyst Amit Daryanani that landed on my desktop Sunday:

ALL YOU NEED TO KNOW: Over the next 5 weeks we intend to spotlight the 5 KEY underappreciated growth vectors for AAPL that could further expand their ecosystem and extend the platform. We are kicking this off with Apple Pay & Apple’s focus on the broader fintech markets.

Apple has operated its Apple Pay digital wallet for years, but has recently begun to expand its fintech offering into payment processing, and is reportedly targeting a buy now, pay later (BNPL) offering in the near future.

Apple Pay is a leading digital wallet that should continue to enjoy strong growth as digital wallets continue to account for a larger share of payments. The recently announced Tap- to-Pay feature will initially have a small addressable market by Apple standards, but over time this can scale to become a serious competitor to major payments platforms. The buy now, pay later feature has not yet been announced, but Bloomberg reports the announcement should come soon and will have two parts: 1) Apple Pay in 4 (4 installment payment plan with no interest), and 2) Apple Pay Monthly Installments which will be longer-term and charge interest (partnering with Goldman here).

From a revenue perspective, we see Apple Pay as the largest opportunity (~$10B in FY26), while the tap-to-pay feature is a more modest opportunity until they expand beyond micro merchants (~$1B in FY26). There are not enough details on Apple’s BNPL plans to develop a revenue estimate, but global BNPL volume is around $90B, growing to $268B in 2024.

Net/net: Sticking with our OP rating and $210 target as we think AAPL remains uniquely positioned to sustain mid-single digit top line growth and low/mid-teens EPS growth over the next several years.

Maintains Outperform rating and $210 target (duh)

My take: The first third of this 31-page report is the dive into FinTech. The rest is a recap of earlier Services research. There's some original research here and 43 charts and spreadsheets altogether. A sample:


  1. Fred Stein said:
    OMG Yes! Been saying for a while that Apple’s fintech has legs.

    They have massive upside by adding new services, users, countries, and institutions – 4 vectors growing all at the same time.

    Apple’s idea is at once powerful and simple – ease of use and complete trust that our data is protected. Apple was the first to ‘get it’.

    No one quite does. Venmo, preferred by my younger relatives, constantly tries to publish who paid on the platform. Crypto is for speculation.

    May 1, 2022
  2. Robert Paul Leitao said:
    In February Apple announced plans for Tap to Pay on the iPhone. Following the travails of Affirm and its BNPL experiences, I can see why Apple is proceeding cautiously on exposure. It is a very big potential market and Goldman Sachs is a natural partner on extended payment terms with interest. Mr. Daryanani is forecasting mid-single digit revenue growth over the next several years with eps growth in the low-to-mid teens. On that rate of revenue growth faster rates of eps growth would be from a combination of continued share repurchases and rising aggregate gross margins. That suggests Evercore expects Services revenue growth will continue to outpace the rate of growth in products revenue for the foreseeable future. FinTech would be one component of overall Services revenue growth and I suspect the GM will likely be high on a recognized revenue dollar basis even if recognized revenue is quite small compared to product sales and small compared to subscription services.

    May 1, 2022

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