10-QPeriod: Q1 FY2025

Affirm Holdings, Inc. Quarterly Report for Q1 Ended Sep 30, 2024

Filed November 7, 2024For Securities:AFRM

Summary

Affirm Holdings, Inc. reported significant revenue growth of 41% year-over-year for the fiscal first quarter ending September 30, 2024, reaching $698.5 million. This top-line expansion was primarily driven by a substantial 35% increase in Gross Merchandise Volume (GMV) to $7.6 billion, fueled by growth in active merchants, consumers, and transactions per consumer. The company also saw strong performance in interest income, up 44%, and gain on sales of loans, up 86%, indicating effective loan portfolio management and capital markets activities. Despite the robust revenue growth, Affirm continued to operate at a net loss, albeit reduced by 42% to $100.2 million compared to the prior year. This loss was influenced by a notable increase in the provision for credit losses (up 60%) and funding costs (up 41%), reflecting the growing loan portfolio and the prevailing interest rate environment. The company's balance sheet shows an increase in total assets to $10.1 billion and total liabilities to $7.3 billion, with a growing loan portfolio now at $5.96 billion net of allowance for credit losses.

Financial Highlights

36 data points
Beta

Revenue

$698.48M

Net Income

-$100.22M

-14.3% Net Margin

EPS (Diluted)

$-0.31

Total Assets

$10.14B

Cash & Equivalents

$1.05B

Free Cash Flow

$152.72M

Financial Statements
Beta
Revenue$698.48M
Operating Expenses$831.10M
Operating Income-$132.62M
Interest Expense$104.14M
Net Income-$100.22M
EPS (Basic)$-0.31
EPS (Diluted)$-0.31
Shares Outstanding (Basic)318.23M
Shares Outstanding (Diluted)318.23M

Key Highlights

  • 1Total revenue increased by 41% to $698.5 million, driven by strong GMV growth.
  • 2Gross Merchandise Volume (GMV) surged by 35% to $7.6 billion, indicating increased platform adoption and transaction activity.
  • 3Net loss narrowed by 42% to $100.2 million, showing improved operational efficiency relative to revenue growth.
  • 4Provision for credit losses increased by 60% to $159.8 million, reflecting prudent risk management and portfolio growth.
  • 5Funding costs rose by 41% to $104.1 million, impacted by increased debt levels and interest rates.
  • 6Active consumers grew by 15% to 19.5 million, and transactions per active consumer increased by 25% to 5.1, signaling enhanced user engagement.
  • 7Total assets grew to $10.1 billion, with loans held for investment, net, increasing to $5.96 billion.

Frequently Asked Questions

Affirm's revenue grew by 41% to $698.5 million, primarily driven by a 35% increase in Gross Merchandise Volume (GMV) to $7.6 billion. This growth in GMV was supported by an expanding active merchant base, increased active consumers, and higher transaction frequency per consumer.

The provision for credit losses increased by 60% to $159.8 million. This rise is mainly attributed to the substantial growth in the company's loan portfolio, with loans held for investment increasing to $5.96 billion. The increase also reflects adjustments to credit criteria and the prevailing interest rate environment, indicating prudent risk management in anticipation of potential future losses.

Funding costs increased by 41% to $104.1 million, reflecting higher average outstanding balances of funding debt and notes issued by securitization trusts, as well as the impact of interest rates. Affirm utilizes a diverse funding strategy including warehouse credit facilities, securitization trusts, and forward flow arrangements to manage these costs and maintain flexibility. The company also uses interest rate derivatives to mitigate some of the impact of interest rate volatility.

Affirm reported a net loss of $100.2 million, a 42% reduction compared to the prior year's quarter. While revenue growth outpaced the increase in operating expenses, the company continues to invest in growth and manage credit provisions. The company's balance sheet shows a growing loan portfolio, and management believes its liquidity sources are sufficient to meet operational and growth requirements for at least the next 12 months.