Affirm(US:AFRM)2023-02-07 16:00Financial Performance - Total revenue for the three and six months ended December 31, 2022, was approximately $399.6 million and $761.2 million, respectively, compared to $361.0 million and $630.4 million for the same periods in 2021, representing increases of 10.5% and 20.7%[212] - The company incurred net losses of $322.4 million and $573.7 million for the three and six months ended December 31, 2022, compared to losses of $159.7 million and $466.4 million for the same periods in 2021[212] - Total Revenue increased by $38.5 million, or 11%, for the three months ended December 31, 2022, and by $130.8 million, or 21%, for the six months ended December 31, 2022, compared to the same periods in 2021[237] - Operating Loss for the three months ended December 31, 2022, was $359.5 million, an increase of 83% compared to the same period in 2021[234] - Net Loss for the six months ended December 31, 2022, was $573.7 million, compared to a net loss of $466.4 million in the same period of 2021, representing a 23% increase[234] Gross Merchandise Volume (GMV) - Gross Merchandise Volume (GMV) for the three months ended December 31, 2022, was $5.7 billion, a 27% increase from $4.5 billion in the same period of 2021[224] - For the six months ended December 31, 2022, GMV was $10.0 billion, representing a 40% increase compared to $7.2 billion for the same period in 2021[225] - GMV on the platform increased by $1.2 billion and $2.9 billion for the three and six months ended December 31, 2022, reaching $5.7 billion and $10.0 billion, respectively[237] Consumer and Merchant Metrics - Active consumers reached 15.6 million as of December 31, 2022, a 39% increase from 11.2 million a year earlier[226] - Transactions per active consumer increased to approximately 3.5 for the twelve months ended December 31, 2022, up 38% from 2.5 in the prior year[228] - Active merchant base grew from 168,030 as of December 31, 2021, to 243,371 as of December 31, 2022, while active consumers increased from 11.2 million to 15.6 million[237] Operating Expenses and Losses - Total Operating Expenses increased by $201.9 million, or 36%, for the three months ended December 31, 2022, and by $415.5 million, or 42%, for the six months ended December 31, 2022[234] - The percentage of long-term 0% APR loans decreased from 13% of total GMV in the prior year to 4% and 5% for the three and six months ended December 31, 2022, respectively[241] - Average Order Value (AOV) decreased to $307 and $317 for the three and six months ended December 31, 2022, compared to $365 and $379 in the same periods of 2021[241] Loan Originations and Funding - The company originated approximately $261.3 million, or 5%, of loans in Canada for the three months ended December 31, 2022, compared to $293.4 million, or 7%, for the same period in 2021[220] - Directly originated loans increased by 4.6% to $1.1 billion and 25.9% to $1.9 billion for the three and six months ended December 31, 2022, respectively, compared to the same periods in 2021[242] - The company has drawn an aggregate of $1.9 billion on its warehouse credit facilities as of December 31, 2022, with a total borrowing capacity of $3.4 billion[272] Cash and Liquidity - As of December 31, 2022, the company had $2.4 billion in cash and cash equivalents and available for sale securities, with $1.6 billion in remaining funding capacity across primary funding channels[267] - The company had $205.0 million in borrowing capacity available under its revolving credit facility as of December 31, 2022[267] - The company recorded a net loss of $573.7 million for the six months ended December 31, 2022, with a positive adjustment for non-cash items of $521.2 million[281] Regulatory and Compliance Risks - The company’s operations are subject to extensive regulatory oversight, which may change and impact business operations[327] - The company is subject to regulatory scrutiny from the CFPB, which may require compliance efforts and could lead to significant expenses and management focus[329] - Investigations by the CFPB or state attorneys general could result in substantial costs and divert management resources[330] - Non-compliance with legal and regulatory requirements may result in audits, investigations, and potential sanctions, adversely impacting the company's reputation and financial condition[334] Strategic Initiatives and Market Position - The company expects competition in the pay-over-time industry to intensify, which may affect its market position and pricing strategies[315] - The company has begun diversifying its loan origination sources by engaging new bank partners[321] - The company has implemented cost-saving measures, including workforce reductions, to align operations with strategic priorities[326]