Prime Highlights:
Affirm’s shares surged over 15% after reporting better-than-expected fiscal Q2 results.
Revenue for Q2 reached $866 million, surpassing the expected $807 million, reflecting a 47% year-over-year growth.
Key Background:
Affirm Holdings Inc., a prominent provider of buy-now-pay-later (BNPL) loans, experienced a significant surge in its stock price, rising more than 15% in after-hours trading on Thursday after reporting better-than-expected fiscal second-quarter results. The company’s performance exceeded Wall Street estimates, bolstered by a substantial increase in both gross merchandise volume (GMV) and revenue.
For the quarter, Affirm reported revenue of $866 million, surpassing analyst expectations of $807 million. This represents a 47% year-over-year growth from $591 million. The company also exceeded expectations in GMV, which reached $10.1 billion, a 35% increase from the same period last year, and marking the first time it surpassed the $10 billion mark. The strong growth in GMV reflects the increasing popularity of BNPL services.
Affirm’s growth in revenue outpaced that of GMV, signaling strong unit economics. Revenue less transaction costs (RLTC) saw a robust 73% increase, rising to $419 million, with a margin of 4.1%, above the company’s long-term target range of 3%-4%. This growth was partially fueled by a one-time $60 million gain from the repurchase of convertible debt in December, although business fundamentals were the primary driver of the results.
The company’s active consumer base grew 23% year-over-year to 21 million, with its Affirm Card seeing impressive growth. Active users of the card more than doubled to 1.7 million, marking an increase of over 136% from the previous year. Partnerships with major retailers, including Apple, Amazon, and Shopify, continue to contribute to Affirm’s growth, particularly in driving demand for 0% interest loans during promotional periods. Looking ahead, the company expects revenue for the next quarter to range between $755 million and $785 million, with the midpoint of $770 million in line with analysts’ projections. The company remains committed to achieving GAAP profitability by the end of its fiscal fourth quarter in 2025.
