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Affirm Holdings, Inc.’s (AFRM - Free Report) shares dropped 18.2% since it reported second-quarter fiscal 2023 results on Feb 8, 2023. The quarterly results might have been hurt by an elevated operating expense level. A trimmed fiscal 2023 guidance with respect to GMV and revenue is also likely to have raised concerns for investors. Nevertheless, the downside has been partly offset by growing transactions and a significant increase in servicing income.
Affirm reported a second-quarter fiscal 2023 adjusted loss of $1.10 per share, which came wider than the Zacks Consensus Estimate of a loss of $1.01 per share. Additionally, the bottom line was wider than the prior-year quarter’s loss of 57 cents per share.
Net revenues amounted to $399.6 million, which rose 10.7% year over year in the quarter under review. The top line fell short of the consensus mark by 5%.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Active merchants climbed 45% year over year to 243,000, while Gross Merchandise Volume (GMV) of $5.7 billion improved 27% year over year. Total transactions surged 51% year over year to 18.4 million in the quarter under review.
Servicing income was recorded at $21.5 million, which jumped 89.9% year over year but missed the Zacks Consensus Estimate of $23.9 million. Interest income grew 12.3% year over year to $155.3 million, beating the consensus mark of $153 million.
Merchant network revenues of $134 million rose 5.5% year over year in the second quarter of fiscal 2023. The figure outpaced the Zacks Consensus Estimate of $133 million. Virtual card network revenues improved 9.6% year over year to $29.1 million but missed the consensus mark of $32.8 million.
Total operating expenses of $759.1 million escalated 36.2% year over year due to a rise in all the expense components barring loss on loan purchase commitment.
Loss on loan purchase commitment plunged 41.1% year over year to $38.4 million in the quarter under review.
Affirm reported a net loss of $322.4 million, which was wider than the prior-year quarter’s figure of $159.7 million.
The adjusted operating margin was at negative 16% in the December quarter, while in the prior-year quarter, the metric stood at negative 2%.
Financial Position (as of Jun 30, 2022)
Affirm exited second-quarter fiscal 2023 with cash and cash equivalents of $1.4 billion, which climbed 14.8% from fiscal 2022-end. Total assets of $7.8 billion increased 11.9% from the figure at fiscal 2022-end.
Funding debt amounted to $1.9 billion, which increased to nearly three-fold from the figure as of Jun 30, 2022. Total stockholders’ equity was at $2.5 billion at the December quarter end, down 4.1% from the fiscal 2022-end.
During the six months that ended Dec 31, 2022, AFRM generated operating cash flows of $22.7 million. Cash used in operating activities came in at $75.1 million in the prior-year comparable period.
FY Q3 2023 Guidance
Affirm anticipates third-quarter fiscal 2023 GMV to be within $4.40-$4.50 billion. Revenues are predicted in the $360-$380 million band. Transaction costs are estimated to lie between $220 million and $230 million. The weighted average shares outstanding are expected to be 298 million.
FY 2023 Guidance
Affirm forecasts fiscal 2023 GMV in the range of $19-$20 billion, down from the previous guidance of $20.5-$21.5 billion. Revenues are expected within $1.475-$1.550 billion, down from the earlier view of $1.600-$1.675 billion. Transaction costs are likely to stay in the $865-$890 million range, down from the prior outlook of $885-$910 million. The adjusted operating margin is anticipated to lie within negative 7.5-9%, while weighted average shares are likely to be at 296 million.
Of the other Business Services sector players that have already released quarterly results so far, the bottom-line results of Avis Budget Group, Inc. (CAR - Free Report) , Fidelity National Information Services, Inc. (FIS - Free Report) and Gartner, Inc. (IT - Free Report) beat the respective Zacks Consensus Estimate.
Avis Budget reported fourth-quarter 2022 adjusted earnings of $10.46 per share, which beat the Zacks Consensus Estimate by 52.7% and surged 47.7% year over year. Total revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 2.1% and improved 7.9% year over year. America’s revenues of $2.2 billion (79.5% of total revenues) were up 5% year over year. The adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of CAR was $658 million, down 4% year over year.
Fidelity National’s fourth-quarter 2022 adjusted earnings per share of $1.71 outpaced the Zacks Consensus Estimate by a whisker. However, the bottom line declined 11% year over year. Revenues inched up 1% year over year to $3,714 million. The top line beat the consensus mark by a whisker. The organic revenue growth came in at 4% in the quarter under review. Adjusted EBITDA of FIS fell 6% year over year to $1,605 million.
Gartner reported fourth-quarter 2022 adjusted earnings per share of $3.70, which beat the Zacks Consensus Estimate by 44% and increased 23.8% year over year. Revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.6% and improved 15.2% year over year on a reported basis and 20% on a foreign-currency-neutral basis. The total contract value of IT was $4.7 billion, up 12% year over year on a foreign-currency-neutral basis. Revenues in the Research segment increased 9% year over year on a reported basis and 13% on a foreign-currency-neutral basis to $1.18 billion.
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Affirm (AFRM) Falls 18% on Q2 Earnings Miss, Trims '23 View
Affirm Holdings, Inc.’s (AFRM - Free Report) shares dropped 18.2% since it reported second-quarter fiscal 2023 results on Feb 8, 2023. The quarterly results might have been hurt by an elevated operating expense level. A trimmed fiscal 2023 guidance with respect to GMV and revenue is also likely to have raised concerns for investors. Nevertheless, the downside has been partly offset by growing transactions and a significant increase in servicing income.
Affirm reported a second-quarter fiscal 2023 adjusted loss of $1.10 per share, which came wider than the Zacks Consensus Estimate of a loss of $1.01 per share. Additionally, the bottom line was wider than the prior-year quarter’s loss of 57 cents per share.
Net revenues amounted to $399.6 million, which rose 10.7% year over year in the quarter under review. The top line fell short of the consensus mark by 5%.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
Q2 Performance
Active merchants climbed 45% year over year to 243,000, while Gross Merchandise Volume (GMV) of $5.7 billion improved 27% year over year. Total transactions surged 51% year over year to 18.4 million in the quarter under review.
Servicing income was recorded at $21.5 million, which jumped 89.9% year over year but missed the Zacks Consensus Estimate of $23.9 million. Interest income grew 12.3% year over year to $155.3 million, beating the consensus mark of $153 million.
Merchant network revenues of $134 million rose 5.5% year over year in the second quarter of fiscal 2023. The figure outpaced the Zacks Consensus Estimate of $133 million. Virtual card network revenues improved 9.6% year over year to $29.1 million but missed the consensus mark of $32.8 million.
Total operating expenses of $759.1 million escalated 36.2% year over year due to a rise in all the expense components barring loss on loan purchase commitment.
Loss on loan purchase commitment plunged 41.1% year over year to $38.4 million in the quarter under review.
Affirm reported a net loss of $322.4 million, which was wider than the prior-year quarter’s figure of $159.7 million.
The adjusted operating margin was at negative 16% in the December quarter, while in the prior-year quarter, the metric stood at negative 2%.
Financial Position (as of Jun 30, 2022)
Affirm exited second-quarter fiscal 2023 with cash and cash equivalents of $1.4 billion, which climbed 14.8% from fiscal 2022-end. Total assets of $7.8 billion increased 11.9% from the figure at fiscal 2022-end.
Funding debt amounted to $1.9 billion, which increased to nearly three-fold from the figure as of Jun 30, 2022. Total stockholders’ equity was at $2.5 billion at the December quarter end, down 4.1% from the fiscal 2022-end.
During the six months that ended Dec 31, 2022, AFRM generated operating cash flows of $22.7 million. Cash used in operating activities came in at $75.1 million in the prior-year comparable period.
FY Q3 2023 Guidance
Affirm anticipates third-quarter fiscal 2023 GMV to be within $4.40-$4.50 billion. Revenues are predicted in the $360-$380 million band. Transaction costs are estimated to lie between $220 million and $230 million. The weighted average shares outstanding are expected to be 298 million.
FY 2023 Guidance
Affirm forecasts fiscal 2023 GMV in the range of $19-$20 billion, down from the previous guidance of $20.5-$21.5 billion. Revenues are expected within $1.475-$1.550 billion, down from the earlier view of $1.600-$1.675 billion. Transaction costs are likely to stay in the $865-$890 million range, down from the prior outlook of $885-$910 million. The adjusted operating margin is anticipated to lie within negative 7.5-9%, while weighted average shares are likely to be at 296 million.
Zacks Rank
Affirm currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Business Services Sector Releases
Of the other Business Services sector players that have already released quarterly results so far, the bottom-line results of Avis Budget Group, Inc. (CAR - Free Report) , Fidelity National Information Services, Inc. (FIS - Free Report) and Gartner, Inc. (IT - Free Report) beat the respective Zacks Consensus Estimate.
Avis Budget reported fourth-quarter 2022 adjusted earnings of $10.46 per share, which beat the Zacks Consensus Estimate by 52.7% and surged 47.7% year over year. Total revenues of $2.77 billion surpassed the Zacks Consensus Estimate by 2.1% and improved 7.9% year over year. America’s revenues of $2.2 billion (79.5% of total revenues) were up 5% year over year. The adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of CAR was $658 million, down 4% year over year.
Fidelity National’s fourth-quarter 2022 adjusted earnings per share of $1.71 outpaced the Zacks Consensus Estimate by a whisker. However, the bottom line declined 11% year over year. Revenues inched up 1% year over year to $3,714 million. The top line beat the consensus mark by a whisker. The organic revenue growth came in at 4% in the quarter under review. Adjusted EBITDA of FIS fell 6% year over year to $1,605 million.
Gartner reported fourth-quarter 2022 adjusted earnings per share of $3.70, which beat the Zacks Consensus Estimate by 44% and increased 23.8% year over year. Revenues of $1.5 billion beat the Zacks Consensus Estimate by 2.6% and improved 15.2% year over year on a reported basis and 20% on a foreign-currency-neutral basis. The total contract value of IT was $4.7 billion, up 12% year over year on a foreign-currency-neutral basis. Revenues in the Research segment increased 9% year over year on a reported basis and 13% on a foreign-currency-neutral basis to $1.18 billion.