Affirm Holdings Inc., the popular buy-now-pay-later company, announced impressive financial results for the fiscal second quarter. Despite a slight dip in share price after the earnings report, Affirm exceeded expectations and demonstrated significant growth.
Revenue Surge and Increased Gross Merchandise Volume (GMV)
In the second quarter, Affirm recorded revenue of $591 million, soaring past the FactSet consensus of $521 million. This marked a substantial increase from the previous year’s revenue of $400 million. Impressively, revenue less transaction costs reached $242 million, reflecting a 68% surge from the previous year. Furthermore, this figure accounted for 3.2% of the company’s GMV.
Affirm experienced remarkable growth in GMV, which rose by 32% to $7.5 billion. This growth rate represents the company’s fastest acceleration in over a year.
Strong Credit Performance and Enhanced Customer Confidence
Affirm’s CEO, Max Levchin, emphasized the company’s commitment to preserving credit performance, volume growth, and innovation simultaneously. The shareholder letter highlighted the strong credit quality of Affirm, with 30-plus-day delinquencies remaining flat year-over-year and on a sequential basis. Notably, this resilient credit performance occurred despite the accelerated GMV growth.
The shareholder letter also noted that Affirm believes its credit performance has returned to pre-pandemic trends. This includes the normal seasonality observed throughout the fiscal year. Historically, delinquency rates tend to be lower during the second and third quarters while showing a seasonal increase during the first and fourth quarters.
Improved Net Loss and Positive Outlook
Affirm demonstrated significant progress in reducing its net loss for the December quarter. The net loss amounted to $166.9 million or 54 cents per share, which was notably lower than the previous year’s $322.4 million loss or $1.10 per share. Analysts had expected a loss of 72 cents per share, making Affirm’s performance better than anticipated.
Looking ahead, Affirm forecasts a gross merchandise volume of $5.8 billion to $6.0 billion for the March quarter. This outlook exceeded the analysts’ estimate of nearly $5.8 billion. Additionally, the company anticipates revenue less transaction costs of $205 million to $215 million.
Affirm’s exceptional performance in the second quarter, along with its optimistic outlook, positions the company for continued success in the buy-now-pay-later market.