Confirm stock down 14% as earnings beat, but outlook fades

Shares of Affirm Holdings Inc. fell nearly 14% in after-hours trading on Thursday after the buy-now-pay-later company beat expectations with its latest results but gave a lower-than-expected forecast that its chief financial officer called prudent given macroeconomic uncertainty.

The company posted a fourth-quarter comprehensive loss of $201.2 million, or 65 cents per share, compared with a loss of $121.4 million, or 46 cents per share, in the prior period. The FactSet consensus was for a loss of 58 cents per share on a GAAP basis.

AFRM Confirmation,
Revenue rose to $364.1 million from $261.8 million, while analysts were looking for $355 million.

The company’s number of active merchants rose to 235,000 from 207,000 sequentially, while the number of annual active consumers reached 14.0 million from 12.7 million in the March quarter.

“While online commerce growth is falling back to pre-COVID levels, the global trend toward adoption of honest financial products is gaining momentum,” CEO Max Levchin said in a statement.

On the call, he emphasized the largely short-term nature of Affirm’s funding.

“This part probably doesn’t need to be said, but just because there still seems to be some confusion, unlike people in the marketplace lending business, we’re not at all dealing with the disintegration of loans that were made years ago to pursue development. cost,” Levchin said. “About half of our loan portfolio is expected to be repaid in about four months and about 80% within eight months.”

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

For the fiscal first 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 for $4.55 billion in GMV and $386 million in revenue.

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

“In light of the uncertain macroeconomic environment, we are approaching the next fiscal year cautiously, while 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 solid rate of profitability, on an adjusted operating income basis, through the end of fiscal 2023.”

Mizuho analyst Dan Dolev wrote that “GMV [guidance] may just be conservative and wait for the stock’s decline to peter out…and potentially reverse course tomorrow.”

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Shares of Affirm are down 69% so far this year, as the S&P 500 SPX,
has fallen 12%.

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