Affirm(US:AFRM)2025-11-06 22:04Financial Performance - Total revenue for the three months ended September 30, 2025, was $933,337,000, representing a 34% increase from $698,479,000 in the same period of 2024[218] - Operating income improved to $63,661,000 compared to a loss of $132,623,000 in the prior year, marking a 148% increase[218] - Net income for the quarter was $80,694,000, a significant recovery from a net loss of $100,222,000 in the same quarter of 2024, reflecting an 181% improvement[218] - For the three months ended September 30, 2025, GMV was $10.8 billion, representing a 42% increase compared to $7.6 billion in the same period in 2024[241] - Merchant network revenue increased by $66.8 million, or 36%, for the three months ended September 30, 2025, compared to the same period in 2024[254] - Interest income rose by $77.1 million, or 20%, for the three months ended September 30, 2025, compared to the same period in 2024, driven by a 19% increase in the average balance of loans held for investment[258] - Gain on sales of loans increased by $55.4 million, or 87%, for the three months ended September 30, 2025, compared to the same period in 2024, with loan sales volume rising to $4.9 billion[259] - Servicing income increased by $13.7 million, or 53%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to a 57% increase in the average unpaid principal balance of off-balance sheet loans[262] - Loss on loan purchase commitment increased by $17.3 million, or 32%, for the three months ended September 30, 2025, compared to the same period in 2024, due to a 36% increase in total volume of loans purchased[264] Consumer Metrics - Active consumers reached approximately 24.1 million as of September 30, 2025, up 24% from approximately 19.5 million as of September 30, 2024[246] - Transactions per active consumer increased to 6.1 for the three months ended September 30, 2025, up 20% from 5.1 for the same period in 2024[250] Loan and Funding Information - Approximately $1.9 billion in loans were directly originated by the company, representing 18% of total GMV for the quarter[225] - For the three months ended September 30, 2025, Pay-in-X represented 15% of total GMV, while 0% APR installment loans accounted for 13%[220] - GMV from 0% APR monthly installment loans was $1.4 billion, representing a 74% increase from $826 million for the same period in 2024[244] - The company has drawn an aggregate of $1.2 billion on its warehouse credit facilities as of September 30, 2025, with a total borrowing capacity of $5.2 billion[286] - The company intends to add necessary funding capacity to support growth objectives as it expands into new geographies[288] - The company has a revolving credit facility with an aggregate commitment amount of $330.0 million, maturing on June 26, 2027, with no borrowings outstanding as of September 30, 2025[293] - The convertible senior notes have an aggregate principal balance of $1.1 billion, with the 2026 Notes maturing on November 15, 2026, and the 2029 Notes maturing on December 15, 2029[294] Cash Flow and Investments - Net cash provided by operating activities was $374.6 million for the three months ended September 30, 2025, compared to $196.9 million for the same period in 2024, reflecting a significant increase[296][298] - Net cash used in investing activities was $139.6 million for the three months ended September 30, 2025, with cash outflows primarily driven by purchases and origination of loans held for investment totaling $9.8 billion[300] - Net cash provided by financing activities was $110.1 million for the three months ended September 30, 2025, driven by $9.1 billion in proceeds from the issuance of secured debt[302] Risk Management - The company continues to monitor macroeconomic conditions, including elevated interest rates and consumer demand fluctuations, which may impact future performance[233] - The company maintains an interest rate risk management program, estimating that a hypothetical 100 basis point upward shock to interest rates would have a less than $70.0 million adverse impact on cash flows over the next 12 months[319] - The company is exposed to credit risk on $7.2 billion of loans held within its balance sheet as of September 30, 2025, with approximately 11% of loan receivables related to customers in California[322] - The company is exposed to credit risk due to nonperformance by financial institutions holding cash and cash equivalents[324] - The company manages credit risk by diversifying counterparties and adhering to guidelines regarding credit ratings and investment maturities[324] - A failure of multiple financing sources to fulfill funding obligations could materially adversely affect the company's financial condition and cash flows[324] Regulatory and Compliance - Regulatory oversight from the Consumer Financial Protection Bureau (CFPB) remains a factor, with ongoing requests for reports concerning the company's business conduct and activities[237] Expenses - Processing and servicing expenses increased by $38.7 million, or 41%, for the three months ended September 30, 2025, driven by a $2.9 billion, or 41%, increase in payment volume[269][270] - Technology and data analytics expenses increased by $33.8 million, or 25%, for the three months ended September 30, 2025, with a 43% rise in amortization of internally-developed software[273] - Sales and marketing expenses decreased by $66.7 million, or 46%, primarily due to a $66.3 million, or 62%, decrease in Amazon warrant expense[275] - General and administrative expenses increased by $6.5 million, or 5%, due to higher professional services costs, including consulting and legal fees[277] - Other income, net, decreased by $14.9 million, or 44%, primarily due to an $18.1 million, or 92%, reduction in gains from early extinguishment of convertible debt[280]