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Affirm (AFRM) Q4 Earnings Beat on High Transactions & GMV
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Affirm Holdings, Inc. (AFRM - Free Report) reported a fourth-quarter fiscal 2023 adjusted loss of 69 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 86 cents. However, the bottom line was wider than the prior-year quarter’s loss of 65 cents per share.
Net revenues amounted to $445.8 million, which rose 22.4% year over year in the quarter under review. The top line beat the consensus mark by 10.3%.
The better-than-expected quarterly results benefited from increased merchants, GMV, transactions and interest income. However, the positives were partially offset by rising operating expenses.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Active merchants climbed 8.2% year over year to 254,100. The Gross Merchandise Volume (GMV) of $5.5 billion improved 25% year over year and beat the Zacks Consensus Estimate by 3.9%. Total transactions jumped 45% year over year to $17.4 million in the quarter under review.
Servicing income was $23.2 million, which increased 7.8% year over year and beat the Zacks Consensus Estimate by 3.3%. Interest income grew 56.1% year over year to $214.8 million, beating the consensus mark by 15.1%.
Merchant network revenues of $141.4 million increased 19.7% year over year in the fourth quarter of fiscal 2023. The figure outpaced the Zacks Consensus Estimate by 8.7%. Card network revenues improved 7.8% year over year to $34 million and beat the consensus mark by 4.4%.
Total operating expenses of $689.7 million escalated 7.5% year over year, due to a rise in all the expense components, barring loss on loan purchase commitment, sales and marketing, and general and administrative expenses.
Loss on loan purchase commitment plunged 13.1% year over year to $35 million in the quarter under review.
Affirm reported a net loss of $206 million, which was wider than the year-ago quarter’s $186.4 million.
The adjusted operating margin was 3.3% in the June quarter, while the metric stood at negative 8% in the prior-year quarter.
Financial Position (as of Jun 30, 2023)
Affirm exited fourth-quarter fiscal 2023 with cash and cash equivalents of $892 million, which declined from $1,255.2 million at fiscal 2022-end. Total assets of $8.2 billion increased from $7 billion at fiscal 2022-end.
Funding debt amounted to $1,764.8 million, which increased from $672.6 million as of Jun 30, 2022. Total stockholders’ equity was $2.5 billion at the June quarter-end, down from the fiscal 2022-end level of $2.6 billion.
In the three months ended Jun 30, 2023, AFRM’s cash from operating activities came in at $43.8 million against cash used of $11 million in the prior-year period.
1Q24 Guidance
Affirm anticipates first-quarter fiscal 2024 GMV to be $5.3-$5.5 billion. Revenues are expected to be $430-$455 million. Transaction costs are estimated between $255 million and $265 million. The weighted average shares outstanding are expected to be 304 million. It expects adjusted operating margin to be within 2-4%.
FY24 Guidance
The company expects to reach fiscal 2024 profitability on an adjusted operating income basis, which will be a major milestone. As the company is including consumers’ student loan balances in underwriting decisions, when loan repayments resume (Oct 1, 2023), it will likely bring a modest headwind to its GMV level.
Affirm forecasts fiscal 2024 GMV of more than $24 billion. Revenues, as a percentage of GMV, are expected to be similar to the fiscal 2023 level of 7.9%. The adjusted operating margin is anticipated to be more than 2%, while the weighted average shares outstanding are likely to be 313 million.
Here are some companies from the Business Services space that have reported earnings for the June quarter: Visa Inc. (V - Free Report) , Mastercard Incorporated (MA - Free Report) and The Western Union Company (WU - Free Report) .
Visa reported third-quarter fiscal 2023 earnings of $2.16 per share, which beat the Zacks Consensus Estimate by 2.4%. Its strong quarterly results benefited on the back of higher payments, cross-border volumes and processed transactions. Solid cross-border travel growth and higher-than-expected data processing aided V’s results, partially offset by increased costs.
Mastercard reported second-quarter 2023 adjusted earnings of $2.89 per share, beating the Zacks Consensus Estimate by 1.8%. The quarterly results gained from strong consumer spending, specifically across the travel sector, and an enhanced services suite. Significant cross-border volume growth also contributed to the upside. Nevertheless, MA’s performance was partially offset by an escalating operating cost level.
Western Union reported second-quarter 2023 earnings per share of 51 cents, which outpaced the Zacks Consensus Estimate by 34.2%. Its earnings were supported by growth in business originating from Iraq, inflation in Argentina and better-than-expected C2C transactions. WU’s Evolve 2025 strategy’s momentum and strength in the Middle East business further benefited the results, partially offset by increased expenses.
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Affirm (AFRM) Q4 Earnings Beat on High Transactions & GMV
Affirm Holdings, Inc. (AFRM - Free Report) reported a fourth-quarter fiscal 2023 adjusted loss of 69 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 86 cents. However, the bottom line was wider than the prior-year quarter’s loss of 65 cents per share.
Net revenues amounted to $445.8 million, which rose 22.4% year over year in the quarter under review. The top line beat the consensus mark by 10.3%.
The better-than-expected quarterly results benefited from increased merchants, GMV, transactions and interest income. However, the positives were partially offset by rising operating expenses.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
Q4 Performance
Active merchants climbed 8.2% year over year to 254,100. The Gross Merchandise Volume (GMV) of $5.5 billion improved 25% year over year and beat the Zacks Consensus Estimate by 3.9%. Total transactions jumped 45% year over year to $17.4 million in the quarter under review.
Servicing income was $23.2 million, which increased 7.8% year over year and beat the Zacks Consensus Estimate by 3.3%. Interest income grew 56.1% year over year to $214.8 million, beating the consensus mark by 15.1%.
Merchant network revenues of $141.4 million increased 19.7% year over year in the fourth quarter of fiscal 2023. The figure outpaced the Zacks Consensus Estimate by 8.7%. Card network revenues improved 7.8% year over year to $34 million and beat the consensus mark by 4.4%.
Total operating expenses of $689.7 million escalated 7.5% year over year, due to a rise in all the expense components, barring loss on loan purchase commitment, sales and marketing, and general and administrative expenses.
Loss on loan purchase commitment plunged 13.1% year over year to $35 million in the quarter under review.
Affirm reported a net loss of $206 million, which was wider than the year-ago quarter’s $186.4 million.
The adjusted operating margin was 3.3% in the June quarter, while the metric stood at negative 8% in the prior-year quarter.
Financial Position (as of Jun 30, 2023)
Affirm exited fourth-quarter fiscal 2023 with cash and cash equivalents of $892 million, which declined from $1,255.2 million at fiscal 2022-end. Total assets of $8.2 billion increased from $7 billion at fiscal 2022-end.
Funding debt amounted to $1,764.8 million, which increased from $672.6 million as of Jun 30, 2022. Total stockholders’ equity was $2.5 billion at the June quarter-end, down from the fiscal 2022-end level of $2.6 billion.
In the three months ended Jun 30, 2023, AFRM’s cash from operating activities came in at $43.8 million against cash used of $11 million in the prior-year period.
1Q24 Guidance
Affirm anticipates first-quarter fiscal 2024 GMV to be $5.3-$5.5 billion. Revenues are expected to be $430-$455 million. Transaction costs are estimated between $255 million and $265 million. The weighted average shares outstanding are expected to be 304 million. It expects adjusted operating margin to be within 2-4%.
FY24 Guidance
The company expects to reach fiscal 2024 profitability on an adjusted operating income basis, which will be a major milestone. As the company is including consumers’ student loan balances in underwriting decisions, when loan repayments resume (Oct 1, 2023), it will likely bring a modest headwind to its GMV level.
Affirm forecasts fiscal 2024 GMV of more than $24 billion. Revenues, as a percentage of GMV, are expected to be similar to the fiscal 2023 level of 7.9%. The adjusted operating margin is anticipated to be more than 2%, while the weighted average shares outstanding are likely to be 313 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
Here are some companies from the Business Services space that have reported earnings for the June quarter: Visa Inc. (V - Free Report) , Mastercard Incorporated (MA - Free Report) and The Western Union Company (WU - Free Report) .
Visa reported third-quarter fiscal 2023 earnings of $2.16 per share, which beat the Zacks Consensus Estimate by 2.4%. Its strong quarterly results benefited on the back of higher payments, cross-border volumes and processed transactions. Solid cross-border travel growth and higher-than-expected data processing aided V’s results, partially offset by increased costs.
Mastercard reported second-quarter 2023 adjusted earnings of $2.89 per share, beating the Zacks Consensus Estimate by 1.8%. The quarterly results gained from strong consumer spending, specifically across the travel sector, and an enhanced services suite. Significant cross-border volume growth also contributed to the upside. Nevertheless, MA’s performance was partially offset by an escalating operating cost level.
Western Union reported second-quarter 2023 earnings per share of 51 cents, which outpaced the Zacks Consensus Estimate by 34.2%. Its earnings were supported by growth in business originating from Iraq, inflation in Argentina and better-than-expected C2C transactions. WU’s Evolve 2025 strategy’s momentum and strength in the Middle East business further benefited the results, partially offset by increased expenses.