Is Affirm now profitable on a GAAP basis?

No. Affirm reported a GAAP operating loss of ($73) million and a net loss of ($45) million in FQ4'24. Management expects to reach GAAP operating income profitability in FQ4'25 and to maintain it afterward. Enterprise warrant expense of $114 million in the quarter is a key reason GAAP results lag adjusted results, and that expense is expected to fall to about $5 million per quarter in FQ3'25 and FQ4'25.

How sustainable is the RLTC margin improvement?

Part of the strength was one-time. The 2024-X1 securitization contributed roughly $30 million to RLTC in the quarter, which pushed RLTC above the 3–4% target range. Management said RLTC would still have reached the high end of the range without it, and it expects benchmark rate declines in FY'25 to be a tailwind. Guidance calls for RLTC at least 10 basis points above FY'24 as a percentage of GMV.

What drove the improvement in credit-related costs and funding?

Average funding costs rose about 70 basis points year over year but have held near 7.7% for three quarters, and management believes funding debt now fully reflects higher benchmark rates. Credit performance was described as in line with expectations, with recent loan vintages tracking at or better than pre-pandemic cohorts. However, 30+ day delinquencies excluding Pay in 4 and Peloton rose slightly both year over year and sequentially, and seasonal increases are expected.

What does FY'25 guidance imply for investors?

The company guided to FY'25 GMV of more than $33.5 billion, FQ1'25 revenue of $640 to $670 million, and FQ1'25 RLTC of $265 to $280 million. Adjusted operating margin is expected to be at least 18.4%, and weighted average shares are projected at 323 million for the year. Guidance excludes material contributions from the Affirm Money Account, the B2B product, the UK launch, and a newly announced wallet partnership.

How is Affirm managing its balance sheet and convertible debt?

Affirm had $2.1 billion in total liquidity against $1.3 billion of convertible debt at quarter end. It repurchased $77 million of face value in FQ4 for about $64 million, and a further $141 million between quarter end and August 23, 2024, for about $120 million, generating gains on repurchase. About $582 million remains under the $800 million repurchase authorization. Management said it will keep evaluating opportunities to optimize the debt structure.

AFRM 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed August 28, 2024. Cited figures are marked; the original filing is the authoritative source.

Affirm Holdings reported fiscal Q4 2024 (quarter ended June 30, 2024) results that marked a clear inflection toward profitability.

GMV grew 31% year over year to $7.2 billion^a, total revenue rose 48% to $659 million, and revenue less transaction costs (RLTC) jumped 70% to $309 million, or 4.3% of GMV. Operating loss narrowed by $170 million to ($73) million, adjusted operating income reached $150 million (a 23% adjusted operating margin), and net loss improved $161 million to ($45) million. For the full fiscal year 2024, adjusted operating income was $381 million, a swing from a ($72) million loss in FY'23.

Management set a new public goal of achieving GAAP profitability in fiscal Q4 2025 and maintaining it thereafter. FY'25 guidance calls for GMV of $33.5 billion^b or more, revenue of $640 to $670 million in the first quarter, and RLTC at least 10 basis points above FY'24 as a percentage of GMV. Guidance also calls for an adjusted operating margin of 18.4% or more for the year, and the company expects GAAP operating income profitability in FQ4'25.

Investors should note that the RLTC beat was flattered by roughly $30 million^c from the 2024-X1 securitization, and that enterprise warrant expense, which was $114 million in the quarter, remains a major drag on GAAP results until it declines in FY'25. Funding and capital position strengthened during the period. Funding capacity rose to $16.1 billion, the company issued $3.4 billion of ABS across six deals in FY'24, and a $1.4 billion forward flow commitment from CPP Investments was expanded.

Liquidity stood at $2.1 billion^d against $1.3 billion of convertible debt, and the company repurchased convertible notes at a gain. Credit metrics were described as in line with expectations, though 30+ day delinquencies ex-Pay in 4 and Peloton rose slightly year over year and quarter over quarter.

02—Key points

Key Highlights

GMV grew 31% YoY to $7.2B; total revenue grew 48% YoY to $659M, with revenue as a percentage of GMV rising 100 bps to 9.1%.
RLTC grew 70% YoY to $309M (4.3% of GMV), above the 3–4% long-term target, though roughly $30M of the benefit came from the 2024-X1 securitization.
Operating loss improved $170M to ($73M), and net loss narrowed $161M to ($45M), driven by RLTC growth and lower operating expenses and stock-based compensation.
Adjusted operating income reached $150M in FQ4'24 (23% margin) and $381M for FY'24 (16% margin), versus ($72M) for FY'23.
Management set a new goal of GAAP profitability in FQ4'25 and guided FY'25 GMV to at least $33.5B and adjusted operating margin to at least 18.4%.
Active consumers rose 19% to 18.6M (ex-Returnly), active merchants rose 19% to 303K, and Affirm Card GMV reached $507M with about 1.2M active cardholders.
Funding capacity rose to $16.1B, FY'24 ABS issuance totaled $3.4B, and the company repurchased $77M of convertible debt in FQ4 under its $800M authorization.

03—Questions

Frequently Asked Questions

Is Affirm now profitable on a GAAP basis?
No. Affirm reported a GAAP operating loss of ($73) million and a net loss of ($45) million in FQ4'24. Management expects to reach GAAP operating income profitability in FQ4'25 and to maintain it afterward. Enterprise warrant expense of $114 million in the quarter is a key reason GAAP results lag adjusted results, and that expense is expected to fall to about $5 million per quarter in FQ3'25 and FQ4'25.
How sustainable is the RLTC margin improvement?
Part of the strength was one-time. The 2024-X1 securitization contributed roughly $30 million to RLTC in the quarter, which pushed RLTC above the 3–4% target range. Management said RLTC would still have reached the high end of the range without it, and it expects benchmark rate declines in FY'25 to be a tailwind. Guidance calls for RLTC at least 10 basis points above FY'24 as a percentage of GMV.
What drove the improvement in credit-related costs and funding?
Average funding costs rose about 70 basis points year over year but have held near 7.7% for three quarters, and management believes funding debt now fully reflects higher benchmark rates. Credit performance was described as in line with expectations, with recent loan vintages tracking at or better than pre-pandemic cohorts. However, 30+ day delinquencies excluding Pay in 4 and Peloton rose slightly both year over year and sequentially, and seasonal increases are expected.
What does FY'25 guidance imply for investors?
The company guided to FY'25 GMV of more than $33.5 billion, FQ1'25 revenue of $640 to $670 million, and FQ1'25 RLTC of $265 to $280 million. Adjusted operating margin is expected to be at least 18.4%, and weighted average shares are projected at 323 million for the year. Guidance excludes material contributions from the Affirm Money Account, the B2B product, the UK launch, and a newly announced wallet partnership.
How is Affirm managing its balance sheet and convertible debt?
Affirm had $2.1 billion in total liquidity against $1.3 billion of convertible debt at quarter end. It repurchased $77 million of face value in FQ4 for about $64 million, and a further $141 million between quarter end and August 23, 2024, for about $120 million, generating gains on repurchase. About $582 million remains under the $800 million repurchase authorization. Management said it will keep evaluating opportunities to optimize the debt structure.

04—Continue

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