10-QPeriod: Q1 FY2024

Affirm Holdings, Inc. Quarterly Report for Q1 Ended Sep 30, 2023

Filed November 8, 2023For Securities:AFRM

Summary

Affirm Holdings, Inc. (AFRM) reported its financial results for the fiscal first quarter ended September 30, 2023. The company demonstrated significant revenue growth of 37% year-over-year, reaching $496.5 million. This growth was primarily driven by a substantial increase in interest income, up 92%, and a 28% rise in Gross Merchandise Volume (GMV) to $5.6 billion, indicating strong consumer adoption and engagement. Despite revenue growth, Affirm reported a net loss of $171.8 million, a decrease from the prior year's loss of $251.3 million. The company has also focused on operational efficiencies, with several operating expense lines decreasing year-over-year, including technology and data analytics, sales and marketing, and general and administrative expenses. Affirm's balance sheet shows a healthy increase in cash and cash equivalents to over $1 billion. The company's loan portfolio held for investment grew by 70% year-over-year to $4.5 billion, supported by increased funding capacity. While the provision for credit losses increased by 55% due to portfolio growth, the allowance for credit losses as a percentage of loans held for investment slightly improved. Management's focus on managing costs, expanding its merchant and consumer network, and optimizing its funding structure appear to be showing progress, although profitability remains a key area to watch.

Financial Highlights

37 data points
Beta

Revenue

$496.55M

Net Income

-$171.78M

-34.6% Net Margin

EPS (Diluted)

$-0.57

Total Assets

$8.41B

Cash & Equivalents

$1.08B

Free Cash Flow

$63.09M

Financial Statements
Beta
Revenue$496.55M
Operating Expenses$705.99M
Operating Income-$209.45M
Interest Expense$73.93M
Net Income-$171.78M
EPS (Basic)$-0.57
EPS (Diluted)$-0.57
Shares Outstanding (Basic)303.84M
Shares Outstanding (Diluted)303.84M

Key Highlights

  • 1Total revenue increased by 37% year-over-year to $496.5 million.
  • 2Gross Merchandise Volume (GMV) grew by 28% year-over-year to $5.6 billion.
  • 3Interest income surged by 92% year-over-year, driven by an increase in interest-bearing loans and higher APRs.
  • 4Net loss decreased by 32% year-over-year to $171.8 million.
  • 5Technology and data analytics, sales and marketing, and general and administrative expenses all decreased year-over-year, reflecting cost management efforts.
  • 6Cash and cash equivalents increased to $1.08 billion, while total assets grew to $8.41 billion.
  • 7Allowance for credit losses as a percentage of loans held for investment slightly improved to 5.1%.

Frequently Asked Questions

Affirm reported a 37% year-over-year increase in total revenue to $496.5 million for the first fiscal quarter ended September 30, 2023. Key drivers include a 92% increase in interest income, largely due to a higher volume of interest-bearing loans and recent pricing initiatives, and a 28% increase in Gross Merchandise Volume (GMV) to $5.6 billion, indicating strong consumer and merchant adoption.

Affirm has focused on operational efficiencies, with several key operating expense categories showing year-over-year decreases. Technology and data analytics expenses decreased by 8%, sales and marketing by 10%, and general and administrative by 13%. These cost management efforts contributed to a reduction in the net loss to $171.8 million, a 32% improvement compared to the prior year's net loss. However, the company continues to invest in growth, and profitability remains a key focus area.

The company's loans held for investment grew by 70% year-over-year to $4.5 billion. The provision for credit losses increased by 55% to $99.7 million, reflecting the portfolio growth. Despite this increase, the allowance for credit losses as a percentage of loans held for investment slightly improved to 5.1% from 5.7% in the prior year, suggesting better credit quality normalized for portfolio size due to enhanced underwriting models and collection processes.

Affirm maintains a strong liquidity position with $1.08 billion in cash and cash equivalents and over $1.05 billion in marketable securities available for sale as of September 30, 2023. The company also has significant available funding capacity through warehouse credit facilities and securitization trusts, indicating ample resources to support ongoing operations and growth.