Affirm Holdings Q4 Loss Narrows Y/Y, GMV Outlook Raised

Core Insights - Affirm Holdings, Inc. (AFRM) reported better-than-expected fourth-quarter fiscal 2024 results, driven by improved servicing income, card network revenues, and higher transaction volumes, despite rising expenses primarily due to increased provisions for credit losses [1][2][3] Financial Performance - The fiscal fourth-quarter loss was 14 cents per share, significantly better than the Zacks Consensus Estimate of a loss of 45 cents and the prior year's loss of 69 cents [1] - Total net revenues reached $659.2 million, exceeding management's expectations of $585-$605 million, and representing a 47.8% year-over-year increase [1][2] - Active merchants increased by 19% year over year to 303,000, with Gross Merchandise Volume (GMV) climbing 31% year over year to $7.2 billion, surpassing management's expectations [2] - Total transactions rose 42% year over year to 24.7 million, driven by a significant increase in repeat customer transactions [2] Revenue Breakdown - Servicing income improved by 18.9% year over year to $27.6 million, exceeding the consensus mark of $25.4 million [2] - Interest income surged 57% year over year to $337.6 million, higher than the consensus estimate of $325.7 million [2] - Merchant network revenues totaled $181 million, growing 28% year over year, and card network revenues rose 26.2% year over year to $43 million [3] Expense Analysis - Total operating expenses increased by 6.2% year over year to $732.6 million, primarily due to higher loan purchase commitments and funding costs [3] - Provision for credit losses escalated by 24.5% to $117.6 million, while technology and data analytics, sales and marketing, and general and administrative expenses decreased year over year [3] Adjusted Operating Metrics - Affirm generated an adjusted operating income of $150 million, significantly up from $15 million in the prior-year quarter, with an adjusted operating margin of 23% [4] - The net loss of $45.1 million was narrower than the prior year's loss of $206 million [4] Financial Position - As of June 30, 2024, cash and cash equivalents stood at $1 billion, a 13.6% increase from the fiscal 2023-end figure, while total assets rose 16.7% to $9.5 billion [5] - Funding debt amounted to $1.84 billion, up 4.1% from the previous year, and total stockholders' equity grew by 7.8% to $2.7 billion [5] Future Guidance - For Q1 fiscal 2025, Affirm forecasts GMV in the range of $7.1-$7.4 billion and revenues between $640-$670 million [6] - Management anticipates a GMV of over $33.5 billion for fiscal 2025, with revenues projected to expand as a percentage of GMV [7]