Affirm shares tumble 14% as earnings hit, but prospects are short

Affirm shares tumble 14% as earnings hit, but prospects are short

The shares of Affirm Holdings Inc. fell nearly 14% in after-hours trading on Thursday after the company’s buy-now, pay-later beat expectations with its latest results, but delivered a lower-than-expected forecast that its chief financial officer described as prudent given macroeconomic uncertainty. .

The company generated a comprehensive fiscal fourth quarter loss of $201.2 million, or $0.65 per share, compared to a loss of $121.4 million, or $0.46 per share, in same period of the previous year. FactSet’s consensus was a loss of 58 cents per share on a GAAP basis.

Affirm the AFRM,
+3.31%
revenue rose from $261.8 million to $364.1 million, while analysts had expected $355 million.

The company’s active merchant count grew to 235,000 from 207,000 on a sequential basis, while its annual active consumer count reached 14.0 million from 12.7 million in the March quarter.

“While online commerce growth is returning to pre-COVID levels, the centuries-old trend of embracing honest financial products is gaining traction,” Chief Executive Max Levchin said in a statement.

On the conference call, he highlighted the largely short-term nature of Affirm funding.

“This part probably doesn’t need to be said, but just because there still seems to be some confusion, unlike the loan business folks in the market, we’re not dealing with the declining performance of loans made years ago in pursuit of growth. cost,” said Levchin. “Approximately half of our outstanding loan portfolio is due in four months or more, and about 80% in eight months.”

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Gross merchandise volume (GMV) was $4.4 billion, up 77% year-on-year, while analysts were modeling $4.1 billion.

For the first fiscal quarter, Affirm’s management expects GMV of $4.2 billion to $4.4 billion, along with revenue of $345 million to $365 million. The FactSet consensus was $4.55 billion in GMV and $386 million in revenue.

Looking at the full fiscal year, Affirm executives model $20.5 billion to $22.0 billion in GMV and $1.625 billion to $1.725 billion in revenue. Analysts polled by FactSet projected $19.15 billion in GMV and $1.91 billion in revenue.

“In light of the uncertain macroeconomic backdrop, we are approaching our next fiscal year with prudence, maintaining our focus on driving responsible growth and continuing to invest in strengthening our leadership position,” Chief Financial Officer Michael Linford said in a statement. “We continue to expect to achieve a sustained rate of return, based on adjusted operating income, by the end of fiscal 2023.”

Mizuho analyst Dan Dolev wrote that “GMV [guidance] may simply be conservative and expect the decline in equities to slow… and potentially even reverse course tomorrow.”

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Affirm shares are down 69% so far this year, with the S&P 500 SPX,
+1.41%
dropped 12%.

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