Affirm Holdings Q1 Loss Narrower-Than-Expected, 2025 GMV View Up

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].