Affirm Holdings Inc., the buy-now-pay-later operator, exceeded expectations with its latest financial results, leading to a nearly 7% surge in its stock value during after-hours trading on Thursday.

Financial Highlights

  • The company reported a net loss of $206.0 million, or 69 cents per share, compared to $186.4 million, or 65 cents per share, in the same period last year.
  • Analysts were predicting a loss per share of 87 cents, according to FactSet consensus.
  • Affirm's revenue increased to $446 million from $364 million, surpassing analysts' expectations of $406 million.

Positive Credit Results and Growth

Despite significant changes in interest rates and consumer demand, Affirm demonstrated positive credit results, strong unit economics, and gross merchandise volume (GMV) growth. Chief Financial Officer Michael Linford stated, "We also demonstrated that the business can continue to expand profitably even in a high interest-rate environment."

GMV Expansion

Affirm recorded $5.5 billion in GMV, up from $4.4 billion in the previous year, beating the FactSet consensus of $5.3 billion. GMV represents the total dollar value of transactions flowing through Affirm's platform.

Focus on Consumer-Friendly Features

Chief Executive Max Levchin highlighted several impactful launches in the quarter to help consumers make smarter financial decisions. This includes down payment-sensitive APRs (annual percentage rates) and campaigns to increase adoption of repayment from bank accounts via ACH (automated clearing house). Additionally, the company implemented various servicing tools and checkout optimizations. Levchin added, "Several projects to improve conversion shipped and are expected to add over $600 million of annualized GMV."

Transaction Costs and Active Cardholders

Revenue less transaction costs, a metric used by the company to measure the economic value of its transactions, declined slightly to $182.1 million from $184.2 million in the previous year.

Affirm also disclosed that it has been steadily adding approximately 75,000 active cardholders each month for its debit-card product, with over 300,000 active cardholders as of mid-August.

Future Outlook

For the fiscal first quarter, Affirm anticipates a GMV between $5.30 billion and $5.50 billion, accompanied by revenue ranging from $430 million to $455 million. Analysts had estimated a GMV of $5.39 billion and revenue of $430 million.

In conclusion, Affirm Holdings Inc. has delivered strong financial results, impressing analysts by surpassing expectations in key areas such as revenue, GMV, and active cardholder growth. The company's ability to thrive in a high interest-rate environment further solidifies its position as a notable player in the buy-now-pay-later industry.

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