Technology
Affirm: Shiny Quarterly Figures Clouded by Cautious Forecast
Affirm releases quarterly figures: Business development disclosed, but the market reacts soberly to the outlook.
Affirm, the Payment Service Provider, Has Announced the Results of its Second Quarter and the Market Reactions are Sobering. Compared to the Previous Year, Affirm Recorded Revenues of 591 Million US Dollars, Representing a Significant Increase from the 400 Million US Dollars in the Same Period Last Year.
The FactSet estimates of $521 million were also exceeded. Revenue excluding transaction costs amounted to $242 million and represents approximately 3.2 percent of the gross merchandise volume (GMV). This corresponds to an increase of 68 percent over the previous year.
GMV Posts Fastest Growth Rate in Over a Year with 32 Percent Increase to $7.5 Billion USD, Results Also Surpass Analyst Expectations: Net Loss Cut by Half to $166.9 Million USD or 54 Cents per Share.
The analysts had expected a larger deficit in advance.
In the shareholders' letter, CEO Max Levchin proudly explains: "Last year, we announced that we would improve our operational leverage without sacrificing credit performance, volume growth, or innovation. The market was skeptical, but 12 months later, we have achieved exactly what we promised." Despite the positive results, the company's weak outlook must also be mentioned.
Affirm predicts a gross merchandise volume between $5.8 and $6.0 billion, while analysts had previously expected $5.8 billion.
The company expects revenue, minus transaction costs, to be between $205 and $215 million. In the shareholder letter, Affirm states: "We believe that credit performance has largely realigned with pre-pandemic trends, including the seasonal variations that have historically led to lower default rates in the second and third quarters and higher default rates in the first and fourth quarters."
The annual total forecast for gross merchandise volume has been raised to more than $25.25 billion, which represents a significant increase compared to the previous forecast. However, investors had apparently hoped for an even more optimistic target, especially in light of the strong second quarter that had already significantly exceeded the half-year target.
Analysts from Mizuho and Jefferies called the new forecast "conservative". The Affirm stock, which had risen by more than ten percent on Thursday due to the positive figures, ultimately recorded a loss of 10.89 percent to $43.86 in NASDAQ trading on Friday.
