This buy now, pay later company is growing nicely and could benefit from tailwinds that could make it profitable in the near future.As consumers grapple with rising credit card debt balances and elevated interest rates, recent interest rate cuts from the Federal Reserve offer hope for more affordable borrowing costs.Leading the charge in this space is Affirm (AFRM -4.81%), a standout in the buy now, pay later (BNPL) industry. With its expansion of partnerships and growing market presence, Affirm has grown n ...

Affirm Holdings, Inc. (AFRM) reported first-quarter fiscal 2025 results last week, wherein its earnings beat estimates. Results were aided by improved card network revenues and servicing income, along with growing repeat customers. However, the upside was partly offset by an escalating expense level from a significant increase in provision for credit losses.Now the question arises whether investors should consider buying the stake or hold tight to their current investments. Let us answer that question by as ...

Affirm Holdings (AFRM) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.Over the past month, shares of this operator of digital commerce platform have returned -1.3%, compared to the Zacks S&P 500 composite's +4.4% change. During this period, the Zacks Financial Transaction Services industry, which Affirm Holdings falls in, has gained 10.6%. The key question now is: What could be the st ...

Robinhood, Upstart, and Affirm are positioned to head higher.Many fintech stocks stumbled in 2022 and 2023 as inflation and rising interest rates curbed consumer spending, cooled the stock and crypto markets, and drove investors toward more conservative investments. But the Federal Reserve finally cut its benchmark rates in September as inflation cooled off.As interest rates decline, it might be smart to buy a few out-of-favor fintech stocks that have resilient business models but are still trading far belo ...

Core Viewpoint - Affirm Holdings, Inc. (AFRM) reported better-than-expected first-quarter fiscal 2024 results, driven by increased card network revenues and servicing income, although rising expenses, particularly in credit loss provisions, partially offset these gains [1][6]. Financial Performance - The company incurred a fiscal first-quarter loss of 31 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 36 cents per share, remaining flat year over year [2]. - Total net revenues reached $698.5 million, exceeding management's expectations of $640-$670 million, and surged 40.7% year over year, surpassing the consensus mark by 5.6% [2]. - Active merchants increased by 21.4% year over year to 323,000, with GMV of $7.6 billion, a 35.7% increase year over year, exceeding management's expected range [3]. - Total transactions rose to 27.2 million, a 45% increase year over year, driven by a significant rise in repeat customer transactions [4]. Revenue Breakdown - Servicing income improved by 28.9% year over year to $26 million, although it missed the consensus mark of $29.3 million [4]. - Interest income surged 44% year over year to $377.1 million, exceeding the consensus estimate of $348 million [4]. - Merchant network revenues totaled $184.3 million, growing 26.3% year over year but missing the Zacks Consensus Estimate of $194 million [5]. - Card network revenues rose 41.8% year over year to $47.5 million, attributed to higher usage of Affirm and single-use virtual debit cards, beating the consensus mark of $42.9 million [5]. Expense Analysis - Total operating expenses increased by 17.7% year over year to $831.1 million, primarily due to higher losses on loan purchase commitments and processing expenses [6]. - Provision for credit losses escalated by 60.3% to $159.8 million [6]. - Sales and marketing expenses decreased by 1.1%, while general and administrative expenses fell by 1.3% year over year [6]. Adjusted Metrics - Affirm generated an adjusted operating income of $130 million, up from $60 million in the prior-year quarter, with an adjusted operating margin of 19%, exceeding management's estimated range of 14-16% [7]. - The net loss of $100.2 million was narrower than the prior-year quarter's loss of $171.8 million [7]. Financial Position - As of September 30, 2024, Affirm had cash and cash equivalents of $1 billion, a 3.3% increase from the fiscal 2023-end figure [8]. - Total assets rose to $10.1 billion, a 6.5% increase from the fiscal 2023-end [8]. - Funding debt amounted to $1.74 billion, up 5.1% from the previous year [8]. - Total stockholders' equity grew by 3.8% to $2.8 billion [8]. Cash Flow - Affirm generated $196.9 million of net cash from operations during the September quarter, compared to $98.9 million in the prior-year quarter [9]. Future Guidance - For the second quarter of fiscal 2025, Affirm forecasts GMV in the range of $9.35-$9.75 billion and revenues between $770-$810 million [10]. - Management anticipates a GMV of over $34 billion for fiscal 2025, with revenues projected to expand at least 20 basis points from fiscal 2024 [11]. - The adjusted operating margin is estimated to be at least 20% for fiscal 2025 [11].

On Wall Street, what goes up must go down, and vice versa.A momentous week with a seesaw of volatility in the markets could be rightly chalked up to the seismic shifts from elections Tuesday (Nov. 5). So-called “Trump trades,” assets tied to President-elect Donald Trump and those likely to benefit from his administration, surged after his win.Headed into November, the FinTech IPO Index was up nearly 15% year to date. That overall return was outpaced by individual names that were up by high-double-digit and ...

Affirm Holdings (AFRM) reported $698.48 million in revenue for the quarter ended September 2024, representing a year-over-year increase of 40.7%. EPS of -$0.31 for the same period compares to $0.00 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $661.39 million, representing a surprise of +5.61%. The company delivered an EPS surprise of +13.89%, with the consensus EPS estimate being -$0.36.While investors scrutinize revenue and earnings changes year-over-year and how they compare ...

Affirm Holdings (AFRM) came out with a quarterly loss of $0.31 per share versus the Zacks Consensus Estimate of a loss of $0.36. This compares to break-even earnings per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 13.89%. A quarter ago, it was expected that this operator of digital commerce platform would post a loss of $0.45 per share when it actually produced a loss of $0.14, delivering a surprise of 68.89%.Over the last fou ...

Financial Data and Key Metrics Changes - The company reported strong unit economics with improvements in revenue as a percentage of GMV and RLTC margins increasing from 10 to 20 basis points, driven by interest income and capital market benefits [8][15][39] - Adjusted operating income margin guidance is now above 20%, with expectations for the fiscal second quarter to be between 21% to 23% [22][23] Business Line Data and Key Metrics Changes - The company is experiencing healthy consumer growth, with active consumer growth accelerating due to deeper approvals and more compelling new consumer deals [25] - The company is focused on increasing transaction frequency among existing users, achieving a new record of five transactions per user [25] Market Data and Key Metrics Changes - The company is entering the UK market, where there is strong demand for longer-term payment products, which are currently underserved [28] - The competitive landscape in the UK is noted to be challenging, but the company believes its unique business model and underwriting capabilities will provide a competitive advantage [30] Company Strategy and Development Direction - The company is preparing for a strong holiday season, leveraging 0% promotions to attract new consumers and drive sales [20] - The company aims to harmonize its financial programs across multiple channels, enhancing consistency and consumer engagement [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the margin performance in the second half of the year, with expectations for continued growth in margins and operating leverage [15][23] - The company is confident in its ability to navigate regulatory scrutiny and maintain growth, particularly with the Affirm card rollout [34] Other Important Information - The company is focused on maintaining a stable funding base while benefiting from favorable capital market conditions [17] - Management emphasized the importance of underwriting expertise and data utilization in sustaining competitive advantages [31][35] Q&A Session Summary Question: Can you unpack the uplift to revenue as a percentage of GMV for the full year? - The company highlighted strong unit economics and benefits from interest income and capital markets [8] Question: What is the current underwriting posture and expected RLTC margin trend? - Management indicated a stable underwriting posture with expectations for healthy margins in the upcoming quarters [12][15] Question: How does secondary market activity impact balance sheet management? - The company noted strong demand for whole loan purchasers and emphasized careful management of funding channels [17] Question: What is the outlook for 0% promotions during the holiday season? - Management expressed confidence in leveraging 0% promotions to drive consumer engagement and sales [20] Question: What are the expectations for long-term operating income margins? - The company reiterated its long-term margin framework while acknowledging current performance above expectations [22][23] Question: What are the early thoughts on the UK launch and competitive landscape? - Management reported strong initial reception in the UK and emphasized the unique value proposition of their offerings [28][30] Question: Will increased regulatory scrutiny impact the growth of the Affirm card? - Management assured that regulatory scrutiny would not hinder growth and emphasized their strong compliance framework [34] Question: Are there nuances in underwriting consumers in the UK versus the US? - Management indicated readiness to apply their underwriting expertise in the UK while monitoring early performance metrics [35][36]

Financial Performance - Total revenue for the three months ended September 30, 2024, was $698.5 million, a 41% increase from $496.5 million in the same period of 2023[219]. - Total operating expenses increased to $831.1 million, up 18% from $706.0 million year-over-year[219]. - The operating loss improved to $(132.6) million, a 37% reduction compared to $(209.4) million in the prior year[219]. - Net loss for the quarter was $(100.2) million, down 42% from $(171.8) million in the same quarter of 2023[219]. - For the three months ended September 30, 2024, Gross Merchandise Volume (GMV) was $7.6 billion, representing a 35% increase compared to $5.6 billion in the same period of 2023[241]. - Merchant network revenue increased by $38.4 million, or 26%, for the three months ended September 30, 2024, driven by a $2.0 billion increase in GMV[253]. - Card network revenue grew by $14.0 million, or 42%, for the three months ended September 30, 2024, correlating with a 38% increase in GMV processed through card-issuing partners[255]. - Interest income rose by $114.4 million, or 44%, for the three months ended September 30, 2024, attributed to a 34% increase in the average balance of loans held for investment[257]. - Gain on sales of loans increased by $29.3 million, or 86%, for the three months ended September 30, 2024, with loan sales totaling $2.8 billion compared to $2.2 billion in the same period of 2023[258]. - The net loss for the three months ended September 30, 2024, was $100.2 million, a 42% improvement from a net loss of $171.8 million in the same period of 2023[248]. Loan and Credit Metrics - Pay-in-X loans represented 14% of total GMV for Q3 2024, slightly down from 15% in Q3 2023, while 0% APR installment loans remained stable at 11%[221]. - Interest-bearing loans accounted for 75% of total GMV in Q3 2024, compared to 74% in Q3 2023[222]. - Approximately $1.3 billion, or 17%, of loans were directly originated by the company in Q3 2024, consistent with the previous year[226]. - The company has expanded its loan modification programs, resulting in a modest benefit to delinquency rates, with modified loans representing 0.18% and 0.42% of the outstanding principal balance as of September 30, 2024[239]. - Provision for credit losses increased by $60.1 million, or 60%, for the three months ended September 30, 2024, with loans held for investment rising to $6.3 billion, a 39% increase compared to the same period in 2023[266]. - The company was exposed to credit risk on $6.3 billion of loans held on its balance sheet, an increase from $5.7 billion as of June 30, 2024[317]. - Approximately 11% of loan receivables were related to customers in California, with no other state exceeding 10%[317]. - The company sold $5.6 billion of unpaid principal balance of loans subject to risk sharing arrangements as of September 30, 2024, compared to $4.2 billion as of June 30, 2024[317]. - The maximum exposure to losses from risk sharing arrangements was $101.5 million as of September 30, 2024, up from $81.2 million as of June 30, 2024[317]. Cash Flow and Funding - Net cash provided by operating activities for the three months ended September 30, 2024, was $196.9 million, compared to $98.9 million for the same period in 2023[293][296]. - Net cash used in investing activities was $575.0 million for the three months ended September 30, 2024, primarily due to $6.4 billion in purchases and origination of loans held for investment[297]. - Net cash provided by financing activities was $465.6 million for the three months ended September 30, 2024, mainly from net cash inflows of $750.0 million from new issuance and repayment of notes[299]. - As of September 30, 2024, the company had $2.1 billion in cash and cash equivalents and available for sale securities, with $3.9 billion in available funding debt capacity[282]. - As of September 30, 2024, the company has drawn an aggregate of $1.3 billion on its U.S. warehouse credit facilities, which allow borrowing up to $5.0 billion[286]. - The aggregate commitment amount of Canadian credit facilities was $652.9 million, with $407.0 million drawn as of September 30, 2024[287]. - The company had $22.4 million and $34.5 million in debt outstanding under sale and repurchase agreements as of September 30, 2024, and June 30, 2024, respectively[288]. Expenses and Cost Management - Total operating expenses for the three months ended September 30, 2024, were $831.1 million, an 18% increase from $706.0 million in the same period of 2023[248]. - Loss on loan purchase commitment rose by $19.4 million, or 56%, for the three months ended September 30, 2024, primarily due to a 40% increase in total volume of loans purchased, from $4.6 billion to $6.4 billion[264]. - Funding costs increased by $30.2 million, or 41%, for the three months ended September 30, 2024, attributed to a 34% increase in average total funding debt from $4.0 billion to $5.4 billion[268]. - Processing and servicing expense increased by $19.5 million, or 26%, for the three months ended September 30, 2024, driven by a 38% increase in payment processing fees[270]. - Technology and data analytics expense increased by $1.3 million, or 1%, for the three months ended September 30, 2024, with amortization of internally-developed software rising by 44% due to a 127% increase in capitalized projects[272]. - Sales and marketing expense decreased by $1.6 million, or 1%, during the three months ended September 30, 2024, primarily due to a 92% decrease in the amortization of intangible assets[274]. - General and administrative expense decreased by $1.9 million, or 1%, during the three months ended September 30, 2024, mainly due to an 8% decrease in payroll and personnel-related costs[276]. - Other income, net, decreased by $4.4 million, or 11%, during the three months ended September 30, 2024, primarily due to a decrease in non-operating income related to the wind-down of the Returnly business[279]. Market and Economic Conditions - The company continues to monitor macroeconomic conditions, noting that elevated borrowing costs and economic uncertainty may impact consumer demand and transaction costs[234][235]. - The company estimates that a hypothetical instantaneous 100 basis point upward shock to interest rates would have a less than $55.0 million adverse impact on cash flows associated with market risk sensitive instruments over the next 12 months[313]. - Continued volatility in interest rates may adversely impact consumers' spending levels and their ability to pay outstanding amounts owed[311]. - The company has not experienced any credit losses related to its financial institutions but acknowledges potential material adverse effects if multiple financing sources fail to fulfill obligations[318]. - The company maintains cash deposits in highly-rated, federally-insured financial institutions, managing credit risk through diversification and established guidelines[318].