Affirm(US:AFRM)2024-11-07 22:05Financial 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].