Affirm shares jumped as much as 16% in after hours trading on Wednesday, after the provider of buy now, pay later loans reported better-than-expected fiscal fourth-quarter results.
Here’s how the company did, compared to analysts’ consensus estimates from LSEG.
- Loss per share: 14 cents adjusted vs. 51 cents expected
- Revenue: $659 million vs. $604 million expected
Affirm reported gross merchandise volume, or GMV, of $7.2 billion, up 31% from a year earlier. GMV is a key industry metric that helps gauge the total value of transactions over the reporting window.
Revenue climbed 48% from a year earlier, and Affirm’s net loss narrowed to $45.1 million from $206 million in the same period a year ago. The company’s active merchant count hit more than 300,000 and active consumers also grew 19% to 18.6 million.
Affirm CEO Max Levchin said in a note to shareholders that the company set a new goal of hitting operating profitability on a GAAP basis by the fiscal fourth quarter of 2025.
For the current quarter, Affirm sees revenue in the range of $640 million and $670 million. Analysts polled by LSEG called for revenue of $625 million.
Affirm shares were down 36% for the year as of Wednesday’s close, but have been trending higher lately, up 12% in August. Federal Reserve Chairman Jerome Powell signaled Friday that lower interest rates could be coming as soon as September.
Bank of America analysts said in a note last month that rate cuts would be beneficial to Affirm’s funding costs and for gain on loan sales. The company moved its merchants to a 36% APR cap on loans, up from 30% previously, and analysts said this “should remain a tailwind for yields and GMV growth.”
The analysts said that Affirm’s new relationship with Apple plus other partnerships with Amazon and Shopify are also helping. In June, Affirm and Apple announced plans for U.S. Apple Pay users on iPhones and iPads to be able 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 consumer slowdown could make it difficult for the the company to achieve its profitability goals.
“This is a buy now, pay later company in an environment where consumption is falling,” said Sanchez. “You have to be prepared for a pretty slow period that could come in the first half of 2025 until rate cuts really start to take hold, because that’s just the reality of being in a consumer play that requires consumption volume.”