10-KPeriod: FY2024

Affirm Holdings, Inc. Annual Report, Year Ended Jun 30, 2024

Filed August 28, 2024For Securities:AFRM

Summary

Affirm Holdings, Inc. (AFRM) reported a net loss of $517.8 million for the fiscal year ended June 30, 2024, an improvement from a net loss of $985.3 million in the prior fiscal year. The company experienced significant revenue growth of 46% year-over-year, reaching $2.32 billion, driven by a 32% increase in Gross Merchandise Volume (GMV) to $26.6 billion. This growth was fueled by a 14% increase in active consumers to 18.7 million and a 26% increase in transactions per active consumer to 4.9. The company also saw a substantial increase in interest income, up 76%, as interest-bearing loans constituted a larger portion of its GMV mix (74% vs. 68% in the prior year). Despite the revenue growth, operating expenses also increased, particularly funding costs (up 88%) due to higher interest rates and increased borrowing. Affirm continues to focus on managing credit risk, with its allowance for credit losses increasing to $309.1 million, reflecting growth in loans held for investment. Financially, Affirm raised $913.1 million in financing activities, primarily through securitization trusts and funding debt, and ended the fiscal year with $2.14 billion in cash and cash equivalents and investments. The company's strategic focus includes expanding its network of merchants and consumers, driving in-store usage with the Affirm Card, and exploring international market expansion, with plans to launch in the UK by the end of fiscal 2025. Key risks remain related to competition, reliance on bank partners, funding sources, and the evolving regulatory environment, particularly concerning consumer protection and data privacy.

Financial Highlights

41 data points
Beta

Revenue

$2.32B

Net Income

-$517.76M

-22.3% Net Margin

EPS (Diluted)

$-1.67

Total Assets

$9.52B

Cash & Equivalents

$1.01B

Free Cash Flow

$290.84M

Financial Statements
Beta
Revenue$2.32B
Operating Expenses$2.94B
Operating Income-$615.85M
Interest Expense$344.25M
Net Income-$517.76M
EPS (Basic)$-1.67
EPS (Diluted)$-1.67
Shares Outstanding (Basic)309.86M
Shares Outstanding (Diluted)309.86M

Key Highlights

  • 1Affirm reported a net loss of $517.8 million for FY2024, an improvement from $985.3 million in FY2023.
  • 2Total revenue increased by 46% year-over-year to $2.32 billion.
  • 3Gross Merchandise Volume (GMV) grew by 32% to $26.6 billion.
  • 4Active consumers increased by 14% to 18.7 million, with transactions per active consumer rising 26% to 4.9.
  • 5Interest income increased significantly by 76% due to a higher proportion of interest-bearing loans.
  • 6Funding costs rose by 88% due to higher benchmark interest rates and increased funding debt.
  • 7The company ended the fiscal year with $2.14 billion in cash and cash equivalents and investments.

Frequently Asked Questions

Affirm reported total revenue of $2.32 billion, a 46% increase year-over-year, and Gross Merchandise Volume (GMV) of $26.6 billion, up 32% from the prior year. While the company saw significant growth, it also reported a net loss of $517.8 million for the fiscal year, although this represents an improvement from the $985.3 million net loss in the previous year. Key drivers for revenue growth included an increase in active consumers, higher transaction frequency per consumer, and a greater mix of interest-bearing loans.

Affirm's revenue growth is driven by several factors. The platform saw a 14% increase in active consumers to 18.7 million and a 26% rise in transactions per active consumer to 4.9. This indicates increased engagement and repeat usage by consumers. Additionally, there was a notable shift towards interest-bearing loans, which constituted 74% of GMV compared to 68% in the prior year, boosting interest income. Merchant network revenue also grew significantly, supported by overall GMV growth and an expanding merchant base.

Affirm faces several key challenges and risks, including intense competition from legacy payment methods and other 'buy now, pay later' providers. The company is heavily reliant on its originating bank partners, and any termination or change in these relationships could materially impact its operations. Funding costs have increased significantly due to rising interest rates, impacting profitability. Furthermore, Affirm operates in a highly regulated environment, and changes in consumer protection laws, data privacy regulations, or specific interpretations from bodies like the CFPB could impose significant compliance burdens and potential penalties. The company also carries a substantial accumulated deficit, indicating a history of operating losses, and its ability to achieve sustained GAAP profitability remains a key focus.

Affirm's growth strategy is multi-pronged, focusing on expanding its network of merchants and consumers, increasing transaction frequency and in-store usage (particularly through the Affirm Card), and expanding into new markets, with a planned launch in the UK by the end of fiscal 2025. The company also aims to innovate new consumer product solutions and enhance merchant feature functionality to further drive value for its partners.