Affirm Holdings, Inc. ( AFRM Quick Quote AFRM - Free Report) reported a fourth-quarter fiscal 2022 adjusted loss of 65 cents per share, which missed the Zacks Consensus Estimate by 44.4%. The bottom line also deteriorated from a loss of 46 cents per share a year ago. Increased operating costs affected the company’s bottom line in the quarter under review.
Net revenues improved 39.1% year over year to $364.1 million. The top line beat the consensus mark by 2.7%. The strong revenues were supported by higher transactions, servicing income and merchant growth.
Active merchants increased to 235,000 from 29,000 while GMV increased 77% to $4.4 billion. Total transactions were recorded at 12 million, up 139% from the year-ago quarter.
Servicing income of $21.5 million was up from $7.5 million a year ago and beat the Zacks Consensus Estimate of $19.2 million. Interest income of $137.6 million was up from $103.8 million and beat the Zacks Consensus Estimate of $151.4 million.
Merchant network revenues of $118.1 million were higher than $88.7 million in the prior-year quarter but missed the Zacks Consensus Estimate of $140.3 million. Virtual card network revenues of $31.6 million were up from $19.3 million but missed the consensus mark of $30.7 million.
Total operating expenses of $641.4 million escalated from $376 million a year ago, primarily due to higher technology and data analytics, sales and marketing, and processing and servicing costs. Meanwhile, loss on loan purchase commitment declined to $40.3 million in the quarter under review from $51 million a year ago.
Net loss of $186.4 million widened from $123.4 million in the year-ago quarter.
Adjusted operating margin was at negative 8%. In the prior-year period the adjusted operating margin was at 5.4%.
Financial Position (as of Jun 30, 2022)
AFRM exited the fourth-quarter fiscal 2022 with cash and cash equivalents of $1,255.2 million, which declined from $1,466.6 million a year ago. Total assets of $6,973.8 million fell from $4,867 million.
At the fourth-quarter end, the company had $4,078.2 million in long-term debt, up from $1.907.4 million a year ago. Total stockholders’ equity was at $2,618.3 million at June-quarter end.
Net cash used in operating activities was $10.7 million, down from $15.7 million a year ago.
Affirm expects the fiscal year 2023 GMV within $20.5-$22 billion. Revenues are expected within the range of $1,625-$1,725 million. Transaction costs are likely to be in the range of $865-$915 million. The adjusted operating margin is likely to be within negative 6.5-4.5%. AFRM, which currently has a Zacks Rank #3 (Hold), expects weighted average shares outstanding at fiscal 2023-end to be at 298 million.
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Business Services space that have reported earnings for the June quarter: Mastercard Incorporated ( MA Quick Quote MA - Free Report) , Visa Inc. ( V Quick Quote V - Free Report) and The Western Union Company ( WU Quick Quote WU - Free Report) .
Mastercard reported second-quarter 2022 adjusted earnings of $2.56 per share, which beat the Zacks Consensus Estimate by 8.5%. The quarterly results were driven by improved consumer spending, solid cross-border volume growth, higher gross dollar volume (GDV) and increased switched transactions.
Visa reported fiscal third-quarter 2022 earnings of $1.98 per share, which outpaced the Zacks Consensus Estimate by 13.8%. The quarterly results were aided by continued growth in payments volume, cross-border volume and processed transactions.
Western Union reported second-quarter 2022 earnings per share of 51 cents, which outpaced the Zacks Consensus Estimate by 24.4%. WU’s earnings gained momentum from an improved operating margin and reduced share count.