10-QPeriod: Q2 FY2025

Affirm Holdings, Inc. Quarterly Report for Q2 Ended Dec 31, 2024

Filed February 6, 2025For Securities:AFRM

Summary

Affirm Holdings, Inc. (AFRM) reported strong revenue growth and a significant swing towards profitability in its second fiscal quarter ending December 31, 2024. Total revenue increased by 47% year-over-year to $866.4 million, driven by robust performance in merchant network revenue, card network revenue, and interest income. Notably, the company achieved a net income of $80.4 million, a substantial improvement from the net loss of $166.9 million in the prior year's quarter. This turnaround was bolstered by a significant increase in gains on sales of loans and improved operating expense management, particularly in sales and marketing. Key drivers of this quarter's performance include a 35% increase in Gross Merchandise Volume (GMV) to $10.1 billion, indicating strong consumer adoption and merchant activity. The company also saw a 19% rise in active consumers to 21 million and a 22% increase in transactions per active consumer, highlighting growing engagement on the platform. Affirm successfully managed its credit risk, with the provision for credit losses increasing by 27% but remaining manageable relative to loan portfolio growth. The company also benefited from a favorable interest rate environment, which helped reduce funding costs. Affirm ended the quarter with a strong liquidity position, holding $1.9 billion in cash and cash equivalents and available-for-sale securities.

Financial Highlights

39 data points
Beta

Revenue

$866.38M

Net Income

$80.36M

9.3% Net Margin

EPS (Diluted)

$0.23

Total Assets

$10.48B

Cash & Equivalents

$1.20B

Free Cash Flow

$268.11M

Financial Statements
Beta
Revenue$866.38M
Operating Expenses$870.70M
Operating Income-$4.32M
Interest Expense$107.76M
Net Income$80.36M
EPS (Basic)$0.25
EPS (Diluted)$0.23
Shares Outstanding (Basic)322.28M
Shares Outstanding (Diluted)345.20M

Key Highlights

  • 1Total revenue surged by 47% to $866.4 million, driven by broad-based growth across network revenue and interest income.
  • 2Affirm returned to profitability with a net income of $80.4 million, a significant turnaround from a net loss of $166.9 million in the prior year period.
  • 3Gross Merchandise Volume (GMV) increased by 35% year-over-year to $10.1 billion, reflecting strong consumer demand and merchant adoption.
  • 4Active consumers grew by 19% to 21.0 million, with transactions per active consumer increasing by 22% to 5.3, demonstrating increased platform engagement.
  • 5Gain on sales of loans significantly increased by 138% to $125.3 million, contributing substantially to improved profitability.
  • 6The company successfully managed its debt, issuing $920 million in new convertible senior notes due 2029 and repurchasing a portion of its 2026 notes, enhancing its capital structure.
  • 7Affirm ended the quarter with a solid liquidity position, holding $1.9 billion in cash, cash equivalents, and available-for-sale securities.

Frequently Asked Questions

Affirm reported a strong total revenue of $866.4 million for the three months ended December 31, 2024, representing a 47% increase compared to the same period in the prior year. Key drivers include a 33% increase in total network revenue to $303.0 million, driven by growth in merchant network revenue and card network revenue. Interest income also saw a significant increase of 42% to $409.4 million, alongside a substantial 138% rise in gain on sales of loans to $125.3 million. This overall revenue growth is underpinned by a 35% increase in Gross Merchandise Volume (GMV) to $10.1 billion.

Affirm has significantly improved its profitability, reporting a net income of $80.4 million for the three months ended December 31, 2024, a substantial turnaround from a net loss of $166.9 million in the prior year's quarter. This improvement was driven by a combination of factors including strong revenue growth, a significant increase in gains on sales of loans, and more controlled operating expenses, particularly a decrease in sales and marketing expenses by 16%. The company also benefited from lower funding costs due to a favorable interest rate environment and improved operational efficiencies.

Affirm's balance sheet shows total assets of $10.5 billion as of December 31, 2024. The company maintained a strong liquidity position, with $1.2 billion in cash and cash equivalents and $666.7 million in securities available for sale. Total debt stands at $7.7 billion. The company successfully raised capital by issuing $920 million in convertible senior notes due 2029 and repurchased a portion of its 2026 notes. Affirm ended the quarter with $1.9 billion in cash, cash equivalents, and investments in debt securities, indicating sufficient resources to meet its operating and capital needs.

Affirm continues to manage credit risk through its proprietary underwriting models and by closely monitoring portfolio performance. The provision for credit losses increased by 27% to $153.0 million, reflecting the growth in its loan portfolio. Loans held for investment increased by 30% year-over-year to $6.8 billion. The allowance for credit losses as a percentage of loans held for investment increased slightly from 5.0% to 5.4%. Key metrics like delinquency rates and charge-offs are closely monitored, and Affirm employs loan modification programs to assist borrowers experiencing financial difficulty. Despite loan portfolio growth, the company appears to be managing credit risk effectively, with no significant increase in bad debt relative to the loan book.