affirm earnings seeking alpha

Affirm Holdings, Inc. (AFRM) consensus earnings estimates: forecast for revenue and EPS, high & low, YoY growth, forward PE and number of analysts. As we have said numerous times in the past, credit performance is a non-negotiable guardrail for Affirm. I think that drawing a straight line between data like the DQ 30 chart to eventual charge-offs is a pretty big step and probably not something that I would do. One of the preference drivers is how rewarding are these transactions. It does not appear Affirm is getting its 6% and I expect with Apple in BNPL we are looking at a competitive erosion of the percentage retailers will have to pay in a price war; driving percentages down. Rewards. Support: 888-992-3836 | NewsWire | Home | Split Pay GMV grew over 193% year-on-year and accounted for roughly 23% of GMV in the fourth quarter compared to 14% last year, as you can see on Slide 8 of our earnings supplement. And as you start to lap those, you are going to see, for the category that theyre over indexed in, some compression. And then on funding capacity, I appreciate the update there. Your line is now live. And so we havent given guidance and not going to today, but we feel really good about where were getting to once we are at scale. Contrary to the stock market rally that began in June 2022, the economy is not rebounding. In the language of the 1990s Internet, we're widening the top of our funnel while keeping a watchful eye on its bottom. WebAFRM - Affirm Holdings, Inc. NasdaqGS - NasdaqGS Real Time Price. Report here. Were way away from the guardrail. Just look, I think what youre seeing very recently in terms of the sequential build is what we consider to be a pretty normal seasonal pattern. Got it. So I think the let me speak to what happened in the prior quarter first because I think thats pretty illustrative of what we think will happen. And so thats what it looks like overall. We closed fiscal 2022 well ahead of our plan at nearly $15.5 billion in GMV, representing 87% growth in GMV and 114%, excluding Peloton. Of course, well put our own spin on it, and we are different and we like our differences. Now some of thats offset by the strong revenue profile of our interest-bearing product, although theres obviously a timing element to that as well. Thank you. What can Affirm do to deter the bears? Youve had some new entrances in the market that have grown really fast. Yes. Thank you. Michael Bloom a day ago As part of the new agreement with Amazon, Affirm will serve as the sole third-party buy now, pay later option for the e-commerce giant in But it will be a way to give consumers one more reason to choose Affirm when they have all the choices. I hope the transactions per active customer also ticked up pretty meaningfully sequentially as well. The last obvious but all important third side is our capital partners. Yes. Every one of these transactions is two sided. We feel very good about our ability to manage the small levels of stress that we have seen and are very optimistic and confident in our ability to do so through the rest of the fiscal year. This help to drive 139% growth in transactions, 85% of which came from repeat consumers. 138.35K Follower s. Follow. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. And you have the slide where you show delinquency trends by, I think, cohort. And thats part of the reason why were so confident in the long-term here is that we do have to grow out of this a little bit of a drag associated with a partner whos trying to write a troubled ship. Jun. And would growth in that product have any material effect on the target for adjusted operating profit to be positive by year-end? That number was accompanied by a $127 million operating loss. What does the outlook mean for investors? Please. In fact, we intend to, if anything, be quite conservative. And we think we have something really special there. Our next question is coming from Chris Brendler from D.A. And we just had the same trend to play out, albeit slightly more muted because, again, I think the explosive growth that we had in Q2 wont be repeated but the shape should look very similarly. Follows Warren Buffett's mantra: do not lose money. I want to embarrass the person, but I got a fantastic piece of advice when I asked a friendly investor, how to think about M&A to ask yourself, would this be asset best off if its owned by a firm? With our team's solid execution, we exceeded all of our guidance for fiscal 2022 despite increasingly volatile market conditions in the second half of the fiscal year. We expect transaction costs of $865 million to $915 million, reflecting a modest year-over-year reduction in transaction costs as a percentage of GMV. Its also the year, we brought on a whole lot of new consumers so the denominator has grown and the numerator outpaced it. But the biggest driver is just the growth in our low AOV business, which has a lower revenue take rate. With that, let me turn now to our outlook for fiscal 2023. Turning to expenses. Now PayPal trades at only about 2.5 times this year's sales estimates. We are confident that these differences will only become more apparent over time. And its definitely true that we have a more conservative posture today than we did a year ago. Split Pay has a different economic profile compared to our core 0% APR program, and the composition of these two products effectively reversed year-over-year as we have expanded into higher frequency transactions. Just to recap again, I do think we would expect our sporting good nature of business to show some headwind. Share price cut to half from previous high flyers is abundant in the sector. PayPal's market cap cratered from a high of about $360B to less than $70B in the recent declines. As proud as we are of our results this year and quarter, we know that many people are thinking about how the economic picture may unfold and so are we. Active Merchants Increase from 29,000 to 235,000 and Active Consumers Grow It's too early to tell how deep it will be and how long it will last. And at scale, it typically means job losses. If you have an ad-blocker enabled you may be blocked from proceeding. This part probably does not need to be said, but just because there still seems to be some confusion, unlike the folks in the marketplace lending businesses, we are not dealing with the decaying performance of loans made years ago in pursuit of growth at all costs. The second question was how much concerns are we having? I think the one thing that youre going to see less of this year, though, is ABS execution with the big caveat being that we just dont know. That being said, our direct-to-consumer product is much higher than that. This implies things like tightening in durations, asking for a more down payment, in some cases, asking for incremental income information. Is it the balances and the associated checking accounts? Thank you. and 3 downward. The profitability score of D+ will deter conservative investors from considering AFFRM stock. Roughly half of our outstanding loan book is expected to pay down within four months or so at about 80% within eight months. And there, you can see the trend we were talking about earlier where you saw the seasonal growth. Further, given timing within the quarter and the product mix, we expect to see a seasonal decline in both revenue and revenue less transaction cost as a percentage of GMV in the period due to how revenue is earned on these loans, similar to last year. Hi, thanks for taking my questions this afternoon. And a month later, depending upon actual repayment information or the flow rates from one delinquency bucket to the other, we update that view. Entering text into the input field will update the search result below. I am not receiving compensation for it (other than from Seeking Alpha). Those are signs of stress, I think youve seen reported in a lot of other contexts. Or can you adjust your credit box, as you kind of mentioned, to sort of engineer more of a plateau there? And then I have a follow-up question on funding. And this year, were really going to invest in just making this the very best product for the end consumer in every imaginable way. We grew GMV 77% and 89%, excluding Peloton. Short-sellers are ahead by 57% (before the post-market selling). Isn't BNPL (Buy Now Pay Later) a broader spread of loans to low credit score consumers akin to subprime mortgages handed out in 2008? As you know, theres two things to think about. This represents a key area of strength and resilience for Affirm, particularly as consumers shift spending patterns like they did in Q4. On our February call, we estimated that a 100 basis point rate increase beyond the forward curve at the time would result in an approximate 10 to 20 basis point impact to RLTC as a percentage of GMV for the second half of fiscal 2022 based on our mix at the time. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. And its hard to hire that team and its really hard to scale it and its hard to get it to be functioning. In reflecting the opportunities against its near-term risks, I rate Affirm stock between a hold and a buy. Were very were able to be very surgical. The goal is, first and foremost, is to compel consumers to transact with Affirm more. Despite this, we delivered 4.4% RLTC as a percentage of GMV for the second half of fiscal 2022, well above our implied 3.9% in our outlook at the time. The truth is, as we said in the call, as we see deterioration, we will pull extra levers, they may not show up as substantially less growth, but they will, nonetheless, show up with protecting our unit economics. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. I just wanted to start with a two-part question on GMV. Yes. What is concerning is that third quarter sales are seen at just $190 million, at the midpoint of the guidance, as adjusted operating losses are expected to increase significantly to $50 million, a near $50 million deterioration on a sequential basis. So I dont know that were making a statement about things into the future beyond that. Michael, I think you partially answered this in one of your earlier comments, but could you talk a little more about the credit tightening steps that you took and what impacts they have on the GMV in fiscal 2023? GAAP total operating expenses, excluding transaction costs, grew by 76% to $461.6 million, driven by year-over-year growth in enterprise warrant and share-based expense of $102.7 million. We are excited by what we see in the usage so far and are committed to making Debit+ a massive long-term success, expanding our reach, frequency and profitability. So whatever you could share there would be helpful. If you have an ad-blocker enabled you may be blocked from proceeding. Being able to request a transaction-specific down payment or additional income information and offer risk appropriate term selection are just some of the powerful tools we have built over the years. Amidst all of this and still volatile conditions in the technology market, I do not see appeal yet. Following the speakers' remarks, we will open the lines for questions. And then interest-bearing, Ill just note that some of our strongest and most profitable programs are direct-to-consumer interest-bearing products. Thank you. Click on the "follow" button beside my name.JoinDIY investingtoday.. We have the ability to manage the short-term impacts in the forward curve with the tools inherent in our product, which Max shared moments ago, and staggered renewal periods on our funding facilities. Revenue as a percentage of GMV contracted by 226 basis points to 8.3%, driven by a mix shift away from longer-duration 0% loans and towards short-term Split Pay loans. Aug. 24, 2022, 09:01 AM On August 25, Affirm will be reporting earnings from the most recent quarter. And every one of these things is an opportunity to increase our margins. So first of all, were launching a beta. Affirm only funded 5% of platform GMV with equity and had $7-billion in third-party funding capacity. Stock chart is not supported by Let me spend some time on both of these topics. I think the three points of incredible approvals have been added. BNPL will more than double from 3.8% of e-commerce spending in 2021 to 8.5% by 2025. And I was curious if that was something that you saw in the calendar second quarter. This is important because it enables Affirm to invest costly equity capital elsewhere and is a critical piece of Affirm's growth story. And its a little bit difficult for us to want to be prescriptive on where that number needs to be. I wanted to first ask about the July and August delinquencies. Stretched for disposable income, BNPL (buy now, pay later) will become a critical driver to stimulating spending online. Thanks to our excellent capital team, we added just over $1.6 billion of net new committed capital. And we manage credit and look at credit metrics. So we have been keeping our eyes very, very open and have been optimizing credit and credit performance all throughout the calendar year. So this is not a new thing at all. Thanks. Apple and Citi and any other banks wanting to play this game can undermine Affirm's ability to generate profits. So one anecdote that I was going to share is theres a really interesting -- as much as Michael just pointed out, growing a straight line from DQ 30 into the ultimate charge-off is a bad idea, in my opinion, because theres a lot of opportunities to cure, theres a lot of tools we have. The Federal Reserve will unveil the results of its annual stress tests on the 23 biggest U.S. lenders. Please. And anything that we should be aware of either in terms of upcoming renewals or where the way terms of those commitments could change, et cetera? And then on Debit+, I appreciate that its still early but now that, thats generally available, how do the unit economics there compare to the 3% to 4% revenue less transaction cost yield that youre always talking about and emphasizing? Value can be found in both long and short ideas and uses options to enhance the risk-return profile of investment ideas. So the ways that could impact us are, first and foremost, access to credit. We made all of those moves to manage the early signs of stress. Theres not a lot of risk in there at all. And I think both of us in a partnership have noticed that it is, in fact, a very successful way of offering consumers a reason to buy now. I was very cautious and, even after the share was cut in half, the valuation still looks quite high, certainly given the deterioration in growth rates and margins. Your line is now live. Weve shown that we can continue to move that number up and up and up. I'll stick with V. When Citi announces that retailers will pay 3% for their BNPL service and Affirm has said they need closer to 6% to generate profitability which to me always means profitability that Wall Street finds acceptable. And its good that there are products available to everyone and were excited to overall see the shift from credit cards and cash to buy now, pay later. Its about everything that theyre buying and you saw that last quarter. -For Q2, the estimated earnings decline for the S&P 500 is -6.5%. Furthermore, we provide coverage of situations and names on request! For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release, which is available on our Investor Relations website. Were really going to put it on a conveyor belt by creating a self-service console for that and integrating in a bunch of places. Theres some really clever promotions around specific items. Submit confidentially to our News team. Your next question is coming from Michael Ng from Goldman Sachs. Please. Obviously, 2.7 [ph] transactions per week is a massive, massive opportunity to create more value for consumers. I have no business relationship with any company whose stock is mentioned in this article. Next question is coming from Reggie Smith from JPMorgan. Approximately 70% of this capacity came from existing and new warehouse and forward flow agreements, including a new $0.5 billion multi-year forward flow commitment. That is true. Well give away a little bit of the secret sauce, and hopefully, it does not help my competitors too much. This past quarter saw our travel ticketing business really dominate the I think with people a little over 12% of GMV that quarter and that just shows you that this is not a single use product. I know Michael want to quantify for us. Already mentioned above, it cost Affirm over $100 million in warrants to earn this deal. So we would continue to expect that to be a declining business. This should result in addressable market share growth. This estimate is based on data compiled by Seeking Alpha from 16 analysts. As I mentioned before, our approval rates are actually up, so both the demand and our ability to underwrite. If you have an ad-blocker enabled you may be blocked from proceeding. You may disconnect your line at this time and have a wonderful day. The price-to-book ratio is good enough. We have both the underwriting technology and the control systems to deliver on this goal. In these credit segments, were trying to differentiate us is that we actually have the levers to control it and we did. Some failures, mergers and the potential for price competition or government regulation due to these businesses essentially extending credit. Did the 0% loans gain traction? To report a factual error in this article. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. I'd now like to turn the call over to Rob OHare, Senior Vice President of Finance to begin. Folks that are buying something that is pretty short term or sorry, pretty low AOV tend to select short term because those transactions we can generally speaking do on no interest at all. And a decade of operating gives you a lot of really interesting use cases that you just wouldnt have seen if youre small. On the flip side, we see quite a lot more loan volume, which is great, and were excited about the incremental usage that we get in the credit that we provide there. Any color there would be great on just consumer behavior recently? A substitute metric is price/sales. August 25, 2022. The company's mission statement is to deliver honest financial products that improve lives. You see transaction usage growing, transaction per consumers. And we have about $200 million out of $4.3 billion of forward flow capacity thats even up for renewal in the entire fiscal year. Thanks. For example, I marked fashion/beauty, travel, and electronics as product categories consumers spend less on. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Home Stock forecasts AFRM 2025 Affirm Holdings (AFRM) stock forecast for 2025 Last update: June 23, 2023 (05:18) Sector: Technology The share price of Affirm Holdings, Inc. (AFRM) now What analysts predict: $13.6 52-week High/Low: $40.97 / $8.62 50/200 Day Moving Average: $13.24 / $14.44 It seems AFRM sits nicely at EV/Revenue at around ~3-5x, with GMV growing below expectations and SBC being at ~40% of revenue nice short to $10 bucks? Hey, thanks, guys. Accordingly, we expect revenue of $1.625 billion to $1.725 billion, representing year-over-year growth of 20% to 28% and a two-year compound annual growth rate of between 37% and 41%. Affirm scores a D+ in that category. Thanks, operator. But before that, thats actually a reflection of consumer sentiment about their potential for job loss, which is a second-order metric but we care a lot of those. We've said it before and we'll say it again. The company's revenue forecast of $1.625 billion to $1.725 billion is below the consensus estimate of $1.9 billion. The high cash burn rate increases the risk of the company raising cash. Good evening, everyone. It lost 65 cents a share on a GAAP EPS basis. Think about Q2 as being lower on a vertical basis, although again, we feel really good about the economic content that well be originating in that quarter such that the back half of the year will be improving from there. We believe we managed this to a great outcome despite the environment. We continue to leverage unique features of the Affirm network, most importantly, SKU awareness. Affirm looks like a lose lose proposition that has a valuation that will not be justified. Or is it more something that you were seeing in this particular quarter? Affirm (NASDAQ:AFRM) went public early this year, as I reviewed the investment thesis on the name, as I came to conclude that Affirm was only the most recent high-flier in a very hot IPO market. Were still seeing healthy application levels. The company has seen rapid adoption of its services as it has attracted more than 6,000 merchants and 6 million end customers to its platform, as Affirm's platform has processed over $10 billion in gross merchandise value to date. Or whats kind of the right range for us to think about where those should be at? It was low-single digits percent of our business in Q4, for example, and yet, we still havent lapped all of the contribution. Affirm Holdings, Inc. ( NASDAQ: AFRM) Q4 2022 Earnings Conference Call The short answer is too early to tell. We constantly monitor the credit performance of our portfolio as well as the broader environment. Those obviously have a very different revenue profile. However, we do take it very seriously. The risk associated with these transactions is new to us. Warrants granted to Amazon (AMZN) in November 2021 accounted for $108.0 million. Just as a general statement, you will see that folks that need credit to improve their buying capacity dont care as much of our rewards. Thank you, Michael. $16.67 -0.61 ( -3.53%) 4:00 PM 06/16/23. 27, 2023 5:18 PM ET Transphorm, Inc. (TGAN) SA Transcripts. Yes. Youll notice that the ranges are wider this year. Affirm Holdings was one of the hottest public offerings at the start of the year. Thats a great question. Have a tip? Halfway through February, the company reported its second quarter results as growth slowed down quite a bit. And on top of all that, we are hitting the seasonal peak for delinquencies and therefore would expect the seasonality trend to work into our favor from here. Affirm's 2023 revenue growth outlook is not enough to satisfy shareholders. And from our earliest days, we knew there was no winging it with capital markets. As such, our outlook for fiscal year 2023 does not include any material GMV or revenue impact from this product. And I think thats a factor thats probably very difficult for you to read through. As we roll the program out, Affirm consumers will begin to earn points on eligible point-of-sale, Affirm Anywhere and Debit+ transactions, with redemptions in the Affirm app. I think its a new input into the model this year. Active consumers and gross merchandise volume both soared by 96% and 77% year-on-year, respectively. And you mentioned M&A, I imagine theres a lot of concern of the smaller players and I think setting capital and seeing growth slow. Market open. Our exciting mission, market leadership and a strong cash position make Affirm an exit of choice for teams with great talent now that the prices and the parlance of our times have corrected a bit. We have 14 million active users that are very excited about this product. Travel and ticketing increased to $545 million, up 87% from last year and a staggering 443% compared to pre-pandemic levels of Q4 in 2019, highlighting the success of our investments in partnerships in the category. Your line is now live. And so at that point, consumers tend to choose the longest term possible because that lowers their overall cash exposure on a monthly basis that obviously increases our risk, increases the number of opportunities that consumer has to go delinquent or default. As a percentage of volume, revenue this year was 8.7% and the midpoint of the guidance is for 7.9%. When looking at key online payment processors and their ecosystems like PayPal and Square (SQ), which were trading at 10-13 times sales while posting strong growth as well, I turned cautious. However, at the time of the IPO, a $31 billion valuation looked steep with an annualized revenue run rate around $700 million, for a 44 times sales multiple. Our Q4 earnings supplement is also posted on our IR website. Our strategy remains exactly the same as before, to continue building our network, more partners, more active consumers and more transaction volume. Affirm's profitability profile notably improved in the quarter. Gross merchandise volumes rose in line, up 55% to $2.1 billion, which suggests that the ''cut'' is largely the same. Accordingly, we expect adjusted operating loss as a percentage of revenue of 6.5% to 4.5% for the full year. So the first question, in terms of Peloton, were very proud that weve expanded our merchant and category mix where Peloton continues to deconcentrate in our business. That said, we think it is important to acknowledge the current macroeconomic backdrop as we give our initial guidance for fiscal 2023 and attempt to estimate these factors through June of next year. on scaling its network. The forecasted contraction in total revenue as a percentage of GMV in fiscal 2023 is partially driven by our aforementioned interest rate expectations and the continued mix shift to expand into higher frequency purchases. Got it. We would expect to continue to execute across all of our funding strategies and keep equity capital required below 5% of total platform portfolio. Affirm's flywheel depends on a healthy economy. Great question. So how do we think about that in the long run? The latter is that we expect significant growth from new partnerships, new products and new geographies.

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