- Affirm shares jumped in after-hours trading Wednesday after it reported top-line and earnings figures.
- The company reported a loss per share of 14 cents, while analysts had expected a loss of 51 cents per share.
- Revenue of $659 million exceeded the average analyst estimate of $604 million.
Affirm shares rose as much as 16% in after-hours trading on Wednesday after the instant loan provider reported better-than-expected fourth-quarter results.
This is how the company performed compared to the consensus estimates of LSEG analysts.
- Loss per share: 14 cents adjusted compared to 51 cents expected
- Revenue: $659 million versus expected $604 million
Affirm reported gross merchandise volume (GMV) of $7.2 billion, up 31% year over year. GMV is a key industry metric that measures the total value of transactions during the reporting period.
Revenue increased 48% year-over-year and Affirm’s net loss narrowed to $45.1 million from $206 million in the same period last year. The company’s active merchant base reached more than 300,000 and its active consumer base also increased 19% to 18.6 million.
In a note to shareholders, Affirm CEO Max Levchin said the company has set a new goal of achieving GAAP operating profitability by the fourth fiscal quarter of 2025.
For the current quarter, Affirm expects revenue of between $640 million and $670 million. Analysts surveyed by LSEG forecast revenue of $625 million.
Affirm shares were down 36 percent for the year as of Wednesday’s close, but have recently shown an upward trend, rising 12 percent in August. Federal Reserve Chairman Jerome Powell hinted on Friday that lower interest rates could come as early as September.
Bank of America analysts said in a note last month that rate cuts would be positive for Affirm’s funding costs and profit from loan sales. The company has set a 36% annual percentage rate cap for its merchants, up from 30% previously. Analysts said this should “remain a tailwind for earnings and GMV growth.”
Analysts said Affirm’s new relationship with Apple, as well as other partnerships with Amazon and Shopify, are also helping. In June, Affirm and Apple announced plans to allow U.S. Apple Pay users on iPhones and iPads to apply for loans directly through Affirm.
Affirm also plans to launch in the UK by the end of this year.
Gina Sanchez, chief market strategist at Lido Advisors, told CNBC’s “The Exchange” on Wednesday that the slowdown in consumption could make it difficult for the company to meet its profitability targets.
“This is a buy now, pay later business in an environment of declining consumer spending,” Sanchez said. “You have to be prepared for a pretty quiet period, which could be in the first half of 2025, until the rate cuts really take hold, because that’s just the reality of being in a consumer business that requires consumption volume.”
REGARD: Affirm CEO on consumer behavior
