AFRM Earnings Affirm Its Strength as Share Prices Soar by Over 28%
Key takeaways
- As more people use buy now, pay later services, Affirm sees impressive results
- Affirm’s year-on-year gross merchandise value (GMV) increased by 25%
- Forecasts anticipate BNPL growth from 360m customers to 900m by 2027
Investors keenly awaited Affirm (AFRM) earnings for Q4 2023, and the buy now, pay later (BNPL) company had positive news to share. With 10% of US customers regularly using BNPL options at checkout, it’s no wonder the company is doing well.
Let’s find out more about Affirm and its recent earnings call.
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What is Affirm?
Affirm is a US FinTech company that offers flexible buy now, pay later (BNPL) to consumers. These instalment-based loans break the cost of purchases down, making them more affordable (in the short term, at least).
Affirm offers two BNPL payment options: Pay in 4 and monthly instalments. Pay in 4 has no interest or fees, it doesn’t impact your credit score, and you pay once every two weeks. On the other hand, monthly instalments require an eligibility check, with interest ranging from 0–36% interest, depending on your credit rating.
Another offering is its Affirm Card, which offers debit and BNPL facilities through the Affirm app. It provides interest-free and interest-bearing payment options.
Speaking of interest, Affirm also provides an FDIC-insured, high-yield savings account through Cross River Bank, so it’s not just about spending money.
AFRM’s earnings report
Analysts anticipated an 85-cent loss per share, but AFRM came up on top at 69 cents. It also beat revenue estimates by $40m, reaching $446m.
It’s projecting $430m–$450m for the first quarter, beating analyst expectations of $430m.
Affirm’s GMV had an impressive year-on-year increase. GMV (gross merchandise value) measures the total transactions over a set period, and AFRM noted a 25% rise. This once again beat analyst expectations.
The company also recorded a net loss of $206m (69 cents a share) compared to last year’s $186.4m (65 cents a share).
What’s happened to Affirm’s stock price?
After the earnings call, AFRM shot up by almost 29% to $17.79. That somewhat makes up for a disappointing start to August, where the stock price tumbled by almost 30% from $19.61 to $13.81.
Currently, Affirm’s stock price is trending higher than analyst recommendations of $15.71.
The bottom line
While this is great news for Affirm, we’ll see if it maintains the upward momentum against macro concerns of higher interest rates and recession. Lending is more now expensive, making defaults riskier for the company’s bottom line. Still, projections say BNPL users will grow from 360m to 900m by 2027, so Affirm has plenty more customers to get on board.
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