Affirm Holdings, Inc. (AFRM) on Q3 2023 Results - Earnings Call Transcript

Operator: Good afternoon. Welcome to Affirm Holdings Third Quarter 2023 Earnings Conference Call. Following the speakers' remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded, and a replay of the call will be available on our Investor Relations website for a reasonable period of time after the call. I'd now like to turn the call over to Zane Keller, Director, Investor Relations. Thank you. You may begin. Zane Keller: Thank you, operator. Before we begin, I would like to remind everyone listening that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website. Actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them, except as required by law. In addition, today's call may include non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in our earnings supplement slide deck, which is available on our Investor Relations website. Hosting today's call with me are Max Levchin, Affirm's Founder and Chief Executive Officer; and Michael Linford, Affirm's Chief Financial Officer. In line with our practice with prior quarters, we will begin with brief opening remarks from Max before proceeding immediately into questions and answers. On that note, I will turn the call over to Max to begin. Max Levchin: Thank you, Zane. Thanks everyone for joining, and I hope you had a chance to read our quarterly letter as it packs lots of great information, but I will offer a very quick summary for you. We had an excellent quarter, beat across all of the important metrics we track, while continuing to maintain excellent credit results. On the execution side of things, I'm really proud of how the team performed this quarter. We shipped well over 100 projects from pricing to new credit model to dozens of user interface improvements. In isolation, each of these wins is probably relatively small, but they compounded to huge gains. One major project this quarter was our continued effort in rolling out Debit+. We delivered Debit+ into the main Affirm app, and while it's still quite early, we continue seeing strong signal to consumer demand. Debit+ user transaction frequency after 90 days from activation is about 7x that of a regular Affirm user. I'm truly excited about this product and what the team has planned for it and we intend to give you a significantly more fulsome update on Debit+ in the quarters to come. Seems that there is a once in a century event that happens every week lately, rattling capital markets, but we continue to deliver great returns for our capital market partners and it was rewarded by an incremental addition to our funding capacity in the quarter, as well as in April after we closed. So, in short, we had a great quarter, we compounded many small wins into big gains. We're very excited about Debit+ and the overall outlook for Affirm as a company. Back to you, Zane. Zane Keller: Great. Thank you, Max. With that, we will now begin our question-and-answer session. Operator, please open the line for our first question. Operator: Thank you. [Operator Instructions] Our first question comes from the line of Moshe Orenbuch with Credit Suisse. Please proceed. Operator: Our next question comes from the line of Bryan Keane with Deutsche Bank. Please proceed. Operator: Our next question comes from the line of Ramsey El-Assal with Barclays. Please proceed. Operator: Our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed. Operator: Jason, you're back in. Operator: I think we can hear you now. Try asking again. Operator: Yes. Operator: Our next question comes from the line of Andrew Jeffrey with Truist Securities. Please proceed. Operator: Our next question comes from the line of Eugene Simuni with MoffettNathanson. Please proceed. Operator: Our next question comes from the line of Rayna Kumar with UBS. Please proceed. Operator: Our next question comes from the line of Dan Dolev with Mizuho. Please proceed. Operator: Our next question comes from the line of James Faucette with Morgan Stanley. Please proceed. Operator: [Operator Instructions] And our next question comes from the line of Rob Wildhack with Autonomous Research. Please proceed. Operator: Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the call back to Zane Keller. Zane Keller: Well, thank you, everybody, for joining the call today, and we look forward to speaking with you again next quarter. Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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Affirm Holdings Inc. (NASDAQ: AFRM) Earnings Preview: Key Insights

  • Projected Earnings: Wall Street analysts anticipate an EPS of $0.11 and revenue of approximately $837 million.
  • Stock Volatility: Historically, Affirm's stock has shown a negative one-day return in 65% of cases post-earnings, with significant volatility.
  • Growth Drivers: The company's growth is attributed to an increase in GMV, active merchants and consumers, and virtual card usage.

Affirm Holdings Inc. (NASDAQ:AFRM) is a fintech company that specializes in buy now, pay later services and point-of-sale payment solutions. As the company prepares to release its quarterly earnings on August 28, 2025, Wall Street analysts have projected an earnings per share (EPS) of $0.11 and revenue of approximately $837 million. This announcement is highly anticipated, as it could influence the stock's performance.

Affirm's stock has a history of volatility following earnings releases. Over the past five years, the stock has shown a negative one-day return in 65% of cases, with a median decline of 10.9%. The most significant single-day drop reached 22.6%. This pattern may attract traders who focus on event-driven strategies, as highlighted by Investors Business Daily.

The company's growth in the fourth quarter is driven by an expansion in Gross Merchandise Volume (GMV), an increase in active merchants and consumers, and a rise in virtual card usage. Affirm's stock has risen by 30.5% year-to-date, outperforming its peers and the S&P 500. However, the stock is currently trading at a high valuation, which may pose challenges.

Affirm continues to benefit from strong consumer growth and strategic partnerships. The company's price-to-sales ratio stands at 8.36, indicating that investors are willing to pay $8.36 for every dollar of sales generated. The enterprise value to sales ratio is 10.36, reflecting the company's valuation in relation to its revenue.

Affirm's financial metrics reveal a mixed picture. The enterprise value to operating cash flow ratio is 39.54, providing insight into the company's cash flow generation relative to its valuation. The debt-to-equity ratio is 2.56, indicating that the company has more than twice as much debt as equity. However, the current ratio is an impressive 63.09, suggesting that Affirm has a strong ability to cover its short-term liabilities with its short-term assets.

Affirm Holdings, Inc. (NASDAQ:AFRM) Insider Sale and Market Performance

  • Robert O'Hare, CFO of Affirm, sold 77,800 shares at $80.09 each, indicating significant insider activity.
  • Zacks Investment Research ranks AFRM as a top momentum stock, suggesting strong market performance and potential for investors.
  • AFRM's current trading price is $79.49, with a 6.71% increase today, reflecting its market volatility and investor interest.

Affirm Holdings, Inc. (NASDAQ:AFRM) is a financial technology company that offers buy now, pay later services, allowing consumers to make purchases and pay for them over time. The company competes with other fintech firms like Afterpay and Klarna. On August 22, 2025, Robert O'Hare, the CFO of Affirm, sold 77,800 shares of Class A Common Stock at $80.09 each.

Despite this insider sale, Affirm is recognized as a top-ranked momentum stock by Zacks Investment Research. This indicates strong market performance, suggesting that AFRM could be an attractive option for investors. The Zacks Style Scores highlight AFRM's potential to outperform the market, making it appealing for those seeking market-beating stocks.

Currently, AFRM is trading at $79.49 on the NASDAQ, showing a $5 increase today, which is a 6.71% rise. The stock's price today ranged from $74.15 to $80.41. Over the past year, AFRM's price has varied significantly, with a high of $82.53 and a low of $30.02, reflecting its volatility.

Affirm's market capitalization is approximately $25.65 billion, indicating its size and market presence. The trading volume today is 8,376,596 shares, showing active investor interest. Despite the insider sale, the stock's recent performance and recognition by Zacks suggest continued investor confidence in AFRM.

Affirm Holdings, Inc. (NASDAQ: AFRM) Stock Update

Affirm Holdings, Inc. (NASDAQ:AFRM) is a prominent player in the financial technology sector, offering innovative payment solutions that facilitate installment loans for consumers at the point of sale. This positions Affirm as a direct competitor with other fintech giants in the buy-now-pay-later market, such as Afterpay and Klarna. Here's a closer look at the company's recent stock performance and upcoming financial announcements.

  • Katherine Adkins, the Chief Legal Officer of Affirm, sold 1,329 shares at $75 each, still holding 113,400 shares.
  • Affirm's stock has shown a 5% increase over the past four weeks, signaling investor confidence.
  • The company is scheduled to release its Q4 fiscal year 2025 financial results on August 28, 2025.

Despite a recent sale by a key executive, Affirm's stock has demonstrated resilience and potential for growth, surpassing its 20-day moving average—a sign that may indicate a short-term bullish trend. With a 5% rally in the past four weeks, investor optimism seems to be on the rise.

Affirm currently holds a Zacks Rank #3 (Hold), with positive earnings estimate revisions hinting at the possibility of further upward movement in the stock price. However, it's noteworthy that AFRM's stock experienced a 4% decline over the past month, a contrast to the Zacks S&P 500 composite's 0.6% increase and the Zacks Internet - Software industry's 2.6% gain. This discrepancy highlights the volatile nature of the fintech market and the challenges Affirm faces amidst stiff competition. The upcoming release of Affirm's fourth-quarter fiscal year 2025 financial results could provide critical insights into the company's performance and strategic direction. Investors and analysts will be keenly watching for these results, available on the company's investor relations website, followed by a detailed conference call and webcast.

As of now, AFRM's stock price stands at $74.86, with a slight increase of 0.09%. The stock has seen fluctuations between $71.41 and $75.13 on the trading day, with a yearly high of $82.53 and a low of $23.89. With a market capitalization of approximately $24.15 billion and a trading volume of 6,500,831 shares on the NASDAQ exchange, Affirm continues to be a significant entity in the fintech space, navigating through market dynamics and investor expectations.

Affirm Holdings Inc (NASDAQ:AFRM) Targets Growth in the BNPL Sector

Affirm Holdings Inc (NASDAQ:AFRM) is a key player in the Buy Now, Pay Later (BNPL) sector. The company is known for its innovative approach to consumer financing, allowing customers to make purchases and pay over time. AFRM competes with other BNPL companies like Afterpay and Klarna. On July 21, 2025, Rayna Kumar from Oppenheimer set a price target of $80 for AFRM, suggesting a potential upside of 16.11% from its current price of $68.90.

AFRM is focusing on vertical integration to boost profitability in a competitive market. By handling underwriting, loan origination, and collections internally, the company aims to cut costs and improve margins. This strategy is crucial as AFRM faces challenges from regulators, high interest rates, and competition. The company uses proprietary algorithms and funding to enhance loan performance and net interest margins.

In the third quarter of fiscal year 2025, AFRM's revenues increased by 36%, and its adjusted operating margin improved by 860 basis points compared to the previous year. This growth highlights the effectiveness of AFRM's strategic initiatives. The company is taking control of more aspects of the BNPL value chain to gain a significant market advantage.

Currently, AFRM's stock price is $68.90, reflecting a decrease of 0.82% or $0.57. During the trading day, the stock fluctuated between $66.94 and $70.40. Over the past year, AFRM's stock reached a high of $82.53 and a low of $22.25. The company has a market capitalization of approximately $22.23 billion, with a trading volume of 4.21 million shares today.

Affirm Holdings, Inc. Faces Setback and Investigation

  • Affirm Holdings, Inc. (NASDAQ:AFRM) stock price dropped by $6.38 per share, or 12.74%, following Klarna's announcement as Walmart's new BNPL provider.
  • Pomerantz LLP investigates potential securities fraud or unlawful business practices by Affirm and its executives.
  • Affirm's stock continues to decline, with a current price of $35.02, amidst ongoing volatility and market scrutiny.

Affirm Holdings, Inc. (NASDAQ:AFRM) is a leading financial technology company that offers Buy Now, Pay Later (BNPL) services, enabling consumers to make purchases and pay for them over time. The company recently encountered a significant challenge when Klarna, a competitor in the BNPL space, announced it would replace Affirm as Walmart's exclusive BNPL provider. This news led to a sharp decline in Affirm's stock price.

Following Klarna's announcement, Affirm's stock price dropped by $6.38 per share, or 12.74%, closing at $43.70 on March 18, 2025. This decline prompted Pomerantz LLP to investigate potential securities fraud or unlawful business practices by Affirm and its executives. Pomerantz LLP, known for its expertise in securities class actions, has a history of securing substantial damages for investors.

In the wake of these events, Rabois Keith, a director at Affirm, sold 4,600 shares of Class A Common Stock at $44.77 per share on April 1, 2025. Despite this sale, Keith still holds 56,920 shares in the company. This transaction was reported on Form 4, filed with the SEC on April 3, 2025, and is available on the SEC's website.

Currently, Affirm's stock is priced at $35.02, reflecting a further decrease of approximately 10% or $3.89. During the trading day, the stock fluctuated between a low of $30.91 and a high of $36.11. Over the past year, Affirm's stock has experienced significant volatility, with a high of $82.53 and a low of $22.25.

Affirm's market capitalization stands at approximately $11.2 billion, with a trading volume on the NASDAQ exchange of 12,968,714 shares. As the investigation by Pomerantz LLP unfolds, investors are keenly watching for any developments that could impact Affirm's stock performance and overall market position.

Affirm Holdings, Inc. Faces Setback and Investigation

  • Affirm Holdings, Inc. (NASDAQ:AFRM) stock price dropped by $6.38 per share, or 12.74%, following Klarna's announcement as Walmart's new BNPL provider.
  • Pomerantz LLP investigates potential securities fraud or unlawful business practices by Affirm and its executives.
  • Affirm's stock continues to decline, with a current price of $35.02, amidst ongoing volatility and market scrutiny.

Affirm Holdings, Inc. (NASDAQ:AFRM) is a leading financial technology company that offers Buy Now, Pay Later (BNPL) services, enabling consumers to make purchases and pay for them over time. The company recently encountered a significant challenge when Klarna, a competitor in the BNPL space, announced it would replace Affirm as Walmart's exclusive BNPL provider. This news led to a sharp decline in Affirm's stock price.

Following Klarna's announcement, Affirm's stock price dropped by $6.38 per share, or 12.74%, closing at $43.70 on March 18, 2025. This decline prompted Pomerantz LLP to investigate potential securities fraud or unlawful business practices by Affirm and its executives. Pomerantz LLP, known for its expertise in securities class actions, has a history of securing substantial damages for investors.

In the wake of these events, Rabois Keith, a director at Affirm, sold 4,600 shares of Class A Common Stock at $44.77 per share on April 1, 2025. Despite this sale, Keith still holds 56,920 shares in the company. This transaction was reported on Form 4, filed with the SEC on April 3, 2025, and is available on the SEC's website.

Currently, Affirm's stock is priced at $35.02, reflecting a further decrease of approximately 10% or $3.89. During the trading day, the stock fluctuated between a low of $30.91 and a high of $36.11. Over the past year, Affirm's stock has experienced significant volatility, with a high of $82.53 and a low of $22.25.

Affirm's market capitalization stands at approximately $11.2 billion, with a trading volume on the NASDAQ exchange of 12,968,714 shares. As the investigation by Pomerantz LLP unfolds, investors are keenly watching for any developments that could impact Affirm's stock performance and overall market position.

Affirm Holdings, Inc. (NASDAQ:AFRM) Struggles with Capital Efficiency Compared to Peers

Affirm Holdings, Inc. (NASDAQ:AFRM) is a leading financial technology company that offers innovative buy now, pay later (BNPL) services. It enables consumers to make purchases and spread the cost over time without incurring hidden fees. Affirm is in direct competition with other fintech entities such as Upstart Holdings, Inc. (UPST), SoFi Technologies, Inc. (SOFI), and traditional financial institutions.

Affirm's Return on Invested Capital (ROIC) is -3.09%, which is significantly lower than its Weighted Average Cost of Capital (WACC) of 16.38%. This negative ROIC indicates that Affirm is not generating sufficient returns to cover its cost of capital, posing a potential concern for investors. The ROIC to WACC ratio of -0.19 further underscores this inefficiency.

In comparison, Upstart Holdings has an even lower ROIC of -17.03% against a WACC of 12.10%, resulting in a ROIC to WACC ratio of -1.41. This suggests that Upstart is also facing challenges in generating returns that surpass its cost of capital. Similarly, SoFi Technologies has a ROIC of -0.17% and a WACC of 16.19%, with a ROIC to WACC ratio of -0.01, indicating slight underperformance.

Roblox Corporation and Snowflake Inc. also exhibit negative ROICs of -30.41% and -25.32%, respectively, with WACCs of 10.74% and 8.82%. Their ROIC to WACC ratios of -2.83 and -2.87 reflect significant inefficiencies in capital utilization. However, Robinhood Markets, Inc. stands out with a positive ROIC of 9.01% and a WACC of 12.43%, resulting in a ROIC to WACC ratio of 0.72