Shares of Affirm tumbled 14% on higher earnings, but the outlook is down

Shares of Affirm Holdings Inc. tumbled nearly 14% in after-hours trading Thursday after the buy-now-pay-later company beat expectations with its latest results but delivered a lower-than-expected forecast that its chief financial officer called reasonable given macroeconomic uncertainty .

The company generated a comprehensive loss for the fiscal fourth quarter of $201.2 million, or 65 cents per share, compared with a loss of $121.4 million, or 46 cents per share, in the year-ago period. The FactSet consensus was for a loss of 58 cents per share on a GAAP basis.


revenue rose to $364.1 million from $261.8 million, while analysts expected $355 million.

The company’s number of active merchants rose to 235,000 from 207,000 on a sequential basis, while the number of annual active users reached 14.0 million from 12.7 million in the March quarter.

“As online commerce growth returns to pre-COVID levels, the secular trend towards the adoption of honest financial products is gaining momentum,” CEO Max Levchin said in a release.

On the call, he emphasized the largely short-term nature of Affirm’s funding.

“This part probably doesn’t need to be said, but just because there still seems to be some confusion, unlike people in the marketplace lending business, we’re not at all concerned with the deteriorating performance of loans made years ago in pursuit at the cost of growth,” said Levchin. “Roughly half of our outstanding loan portfolio is expected to be repaid in about four months and about 80% within eight months.”

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Gross merchandise volume (GMV) was $4.4 billion, up 77% from a year earlier, while analysts were modeling $4.1 billion.

For the first fiscal quarter, Affirm’s management expects GMV of $4.2 billion to $4.4 billion, along with revenue of $345 million to $365 million. The FactSet consensus was for $4.55 billion in GMV and $386 million in revenue.

Looking at the full fiscal year, Affirm executives are modeling $20.5 billion to $22.0 billion in GMV and $1.625 billion to $1.725 billion in revenue. Analysts polled by FactSet had forecast $19.15 billion in GMV and $1.91 billion in revenue.

“In light of the uncertain macroeconomic backdrop, we are cautiously approaching our next fiscal year while maintaining our focus on driving responsible growth and continuing to invest in strengthening our leadership position,” Chief Financial Officer Michael Linford said in a statement. “We continue to expect to achieve a sustainable rate of return, on an adjusted operating income basis, through the end of fiscal 2023.”

Mizuho analyst Dan Dolev wrote that “GMV [guidance] may simply be conservative and wait for the stock’s decline to taper off…and potentially even reverse course tomorrow.”

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Affirm shares are down 69% so far this year like the S&P 500

has fallen by 12%.

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