We are confident that these differences will only become more apparent over time. Invest and buy the stock. Affirm ( NASDAQ: AFRM) is scheduled to announce FQ3 earnings results on Tuesday, May 9th, after market close. And I think both of us in a partnership have noticed that it is, in fact, a very successful way of offering consumers a reason to buy now. Yes. Merchants like the elimination of network and third party processing fees, and consumers like honesty and delayed payment options as well. And we could be very growthful, because we were still launching and scaling these very large platform relationships like with Amazon and Shopify. Report here. I think its a new input into the model this year. You may disconnect your line at this time and have a wonderful day. Okay. For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release, which is available on our Investor Relations website. This past quarter saw our travel ticketing business really dominate the I think with people a little over 12% of GMV that quarter and that just shows you that this is not a single use product. We have a lot more tools at our disposal. Submit confidentially to our News team. So what weve been doing in the background, and not a lot of, it sounds like weve opened up significantly. Entering text into the input field will update the search result below, incredible momentum, as the huge moves left me to conclude to be very cautious, not seeing a compelling reason to buy shares after that run. The bearish short interest is 20.23%. So the ways that could impact us are, first and foremost, access to credit. Thank you everybody for joining the call. Entering text into the input field will update the search result below. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. And from our earliest days, we knew there was no winging it with capital markets. However, we are forecasting the second quarter to be the low point for the year-over-year GMV growth, given the nearly 370% growth in general merchandise GMV that we are comping against. Our plan is to launch Affirm Rewards in beta this September with a number of participating retailers. Operating losses narrowed modestly to $120 million, although relative losses came down quite a bit. I was very cautious and, even after the share was cut in half, the valuation still looks quite high, certainly given the deterioration in growth rates and margins. This implies things like tightening in durations, asking for a more down payment, in some cases, asking for incremental income information. That said, given how underpenetrated we are today, our growth is not limited by the growth of our merchants or even broadly to e-commerce. We do see secondary effects of inflation. At that level, this would reflect marginally less ABS execution proportionately this year. If we do see signs of significantly more stress or if rates were to increase much more than expected, we expect to utilize the various levers at our disposal to protect our unit economics. The company's fiscal second-quarter earnings were released on In this service we cover major earnings events, M&A, IPOs and other significant corporate events with actionable ideas. Furthermore, we provide coverage of situations and names on request! All that went really, really well and our partners have given us high marks on that front. We would expect to continue to execute across all of our funding strategies and keep equity capital required below 5% of total platform portfolio. We launched to general availability on a whole bunch of platforms and having able to scale with them. I wanted to first ask about the July and August delinquencies. Again, I think we feel very strong about where credit sits today. As a result, we have excluded all Debit+-related metrics from our forecast today. NASDAQ | $USD | Post-Market: $16.64 -0.03 (-0.18%) 7:59 PM. So at the time of origination, we make an estimate of the likelihood, the likely allowance needed for that loan. That hopefully makes it clear that these are predominantly merchant-funded. The reality is we dissolved the stress and we began to have to react to it. Our current expectations are that its something on the order of 4 points of GMV growth and 7 to 8 points of revenue growth that we are not getting this year or at least that we expect all come to drag against. With that context in mind, for our fiscal year ending June 30, 2023, we expect gross merchandise volume to increase between 32% and 42% from fiscal year 2022 to between $20.5 billion to $22 billion. And we do have a very clear road to profitability and have a quite a significant cash position. I am not receiving compensation for it (other than from Seeking Alpha). Diluted earnings per share increased 12% to $4.30 per share and adjusted diluted earnings per share increased 13% for $4.27 per share. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. Your next question is coming from Michael Ng from Goldman Sachs. As you know, theres two things to think about. Got it. Given inflationary pressures, we began to see the signs of stress during the quarter within certain low credit segment consumers. I'll stop here, but there are numerous other initiatives we're plowing away on while keeping credit performance top of mind. Still, the company started with $2.676 billion in cash and cash equivalents. However, we do take it very seriously. Finding value that gets unlocked in M&A, IPOs and other corporate events. Total transaction costs of $179.8 million grew 58% year-over-year. We often talk about Affirm as a two-sided network of consumers and merchants. However, the inherent advantages of our underwriting every application at the transaction level and the high turnover nature of our book provides natural agility. The short answer is too early to tell. I am not receiving compensation for it (other than from Seeking Alpha). When looking at key online payment processors and their ecosystems like PayPal and Square (SQ), which were trading at 10-13 times sales while posting strong growth as well, I turned cautious. Among others, these include merchant and consumer pricing, duration shortening, approval rate changes and downpayment rates. One of the preference drivers is how rewarding are these transactions. All the while, our approval rates have actually gone up. The net loss increased from $123.4 million last year to $186.4 million. Peloton and, in general, the mix shift towards lower take rate products. As we have said numerous times in the past, credit performance is a non-negotiable guardrail for Affirm. I just wanted to start with a two-part question on GMV. Click on the "follow" button beside my name.JoinDIY investingtoday.. I dont even think of it as a primary factor. WebAffirm (NASDAQ:AFRM) is scheduled to announce Q2 earnings results on Thursday, February 10th, after market close.The consensus EPS Estimate is -$0.22 and the To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. This comes even as top-line growth Sorry, I know this came up earlier on the call, but could you just talk a little bit more about the trajectory of revenue less transaction margins throughout the year? We continue to see strong demand for the simple idea of paying overtime and, in particular, for our take on it, supporting many transaction types and sizes and keeping away from gimmicks and hidden fees. We are not going to caveat it or characterize it in any way, except its our guidance. We believe we managed this to a great outcome despite the environment. Individual investor with three decades of experience who runs DIY Value Investing. We have both the underwriting technology and the control systems to deliver on this goal. Taking this concept a step further, we are delivering a full self-service console to participating brands and manufacturers to enable them to deploy promotions on the Affirm network seamlessly. Hope yall bought when it went under $50. Turning to expenses. I wanted to just ask a clarifying question on the rising delinquencies. Last month featured our very first Prime Day, which was as much a test of our product as it was of our systems and scalability, and we were quite pleased with the results. Affirm's post-earnings sell-off is warranted. Okay. Thank you. Obviously recognize that you dont want to give away your secret sauce. Michael Bloom a day ago As part of the new agreement with Amazon, Affirm will serve as the sole third-party buy now, pay later option for the e-commerce giant in While the funding markets remain volatile, we enjoy a strong position without any current concerns on funding our growth. Is this happening to you frequently? The fourth quarter capped off an exceptionally strong fiscal 2022 for Affirm. Well give away a little bit of the secret sauce, and hopefully, it does not help my competitors too much. I think the forward flow market also remains very attractive with a robust pipeline of forward flow buyers who are interested in partnering with us. Approximately 70% of this capacity came from existing and new warehouse and forward flow agreements, including a new $0.5 billion multi-year forward flow commitment. Last year, we hosted an event where we discussed our product road map in detail and plan to do 1 again late this year. It needs more customers buying more products and generating more transactions. What you saw in the back half of fiscal 2022 was a huge shock in rates. We like to put numbers out there that we can achieve. Our outlook for the first quarter also contemplates transaction costs of $176 million to $188 million; revenue less transaction cost of $169 million to $177 million; adjusted operating loss as a percentage of revenue of 12% to 10%; and weighted average shares outstanding of 292 million. So can you just help us reconcile all of that, I guess, just given whats going on in the macro? And I hope to brag about them on the next call, but Ill stop now because Im taking up your time because Michaels gotten so many really good questions, but yes, we have a lot planned on the consumer side for sure. Being able to request a transaction-specific down payment or additional income information and offer risk appropriate term selection are just some of the powerful tools we have built over the years. Value can be found in both long and short ideas and uses options to enhance the risk-return profile of investment ideas. We expect transaction costs of $865 million to $915 million, reflecting a modest year-over-year reduction in transaction costs as a percentage of GMV. So you have our guide for Q1 and then what youll expect to see in Q2 is originations spiking, lots of originations later in the quarter. Theres not a lot of risk in there at all. If you have an ad-blocker enabled you may be blocked from proceeding. Nothing new here, just churn and burn the consumer. So I think the overall behavior of our credit and risk teams has really not changed in the last, what, our months were in nine. That said, when you look at early delinquencies and how the flow rates change is a really good predictor of at least one kind of behavior. Further, given timing within the quarter and the product mix, we expect to see a seasonal decline in both revenue and revenue less transaction cost as a percentage of GMV in the period due to how revenue is earned on these loans, similar to last year. And we significantly broadened our relationship with Stripe, unlocking streamlined distribution to more merchants and more consumers. Yes. Our funding costs increased 24% year-over-year, in line with the 24% growth in loans held for investment despite the higher rate environment and significantly below the 53% growth in our total platform portfolio. And yes, were proud that 85% came from repeat users, but the total gross number of transactions is a really good measure of just how much there. We have once again posted a very healthy set of numbers, beating our own financial targets. Thank you, Michael. The high cash burn rate increases the risk of the company raising cash. And thats part of the reason why were so confident in the long-term here is that we do have to grow out of this a little bit of a drag associated with a partner whos trying to write a troubled ship. So thematically, the way Ive been thinking about overall strategy for this fiscal year and the strategy set a little bit earlier than in the year. Please go ahead, sir. I believe thats for your held portfolio. Well see you next quarter. Affirm wants to win customer trust. Thanks for the question, and Ill start and Michael can help quantify it. Okay. We were very pleased with our Prime Day performance, frankly, as much technically and ability to approve and ability to scale all the thing from underwriting to the web systems. So Im just trying to understand, I guess, a couple of the major drivers. Besides the honest mission, Affirm is taking over default risk as which makes it hard to compare apples-to-apples. I have no business relationship with any company whose stock is mentioned in this article. And so they are thinking longer, they are buying a little bit less, but I dont think that impacts buy now, pay later if anything, that accretes to buy now, pay later in other forms of credit too. Through top DIY model holdings, members learn how to manage their trading and investments. A substitute metric is price/sales. As it happens, well certainly report on it. So probably the most important headline is that we are in full control. Appreciate you taking the question here. Underwriters aimed to sell shares in a range of $33-$38 per share a few weeks before the public offering, as this guidance was hiked and final pricing took place at $49 per share. And as you start to lap those, you are going to see, for the category that theyre over indexed in, some compression. Maybe thats the way I should have characterized it. This is really the year of the consumer. Affirm Q3 Earnings Preview: Exit Now, Before It's Too Late (NASDAQ:AFRM) Affirm's business model is far from reaching self-sustainability, As proud as we are of our results this year and quarter, we know that many people are thinking about how the economic picture may unfold and so are we. And its showing up in the network effects. Were obviously not there yet, and hopefully, it wont get too far. We expect that growth to drive total revenue of $345 million to $365 million. I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. If you think about how that informs the plan going forward, I think its maybe a tertiary factor. Did the 0% loans gain traction? Our delinquency levels are healthy for our business, and we have demonstrated our ability to grow while controlling them. Thank you. Please disable your ad-blocker and refresh. Youll notice that the ranges are wider this year. Theyre not for us anyway. Obviously, 2.7 [ph] transactions per week is a massive, massive opportunity to create more value for consumers. Please. Its also the year, we brought on a whole lot of new consumers so the denominator has grown and the numerator outpaced it. Analysts Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. And on top of all that, we are hitting the seasonal peak for delinquencies and therefore would expect the seasonality trend to work into our favor from here. And the impact to us was frankly impossible for anybody to see as we crushed our revenue less transaction cost numbers in that period. WebPayment options through Affirm are provided by these lending partners: affirm.com/lenders. This help to drive 139% growth in transactions, 85% of which came from repeat consumers. So theres we think lots of opportunity will be very judicious will be extremely good stewards of shareholder capital, not a thing were going to execute imminently. I mean, as we talked about, the delinquencies are up a little bit. Were still seeing healthy application levels. This resulted in a year-over-year decline in revenue take rates, which we express as a percentage of GMV. It does not appear Affirm is getting its 6% and I expect with Apple in BNPL we are looking at a competitive erosion of the percentage retailers will have to pay in a price war; driving percentages down. It strikes me that for Affirm to be really successful in the long run, youve got to really spread out monetization. The price-to-book ratio is good enough. In after-hours trade after the Q4 report, Affirm issued guidance for Q1/2023 and the full year of 2023. Were still optimizing exactly, for example, what sort of insufficient funds rate well see as the transactions flow through to checking accounts? Can you talk to, I guess, what the trends look like for the entire platform portfolio? And every one of these things is an opportunity to increase our margins. How did that go for you? Now some of thats offset by the strong revenue profile of our interest-bearing product, although theres obviously a timing element to that as well. As we shared in our May earnings call, we expect to achieve a sustained profitability run rate on an adjusted operating income basis by the end of this fiscal year. But the biggest driver is just the growth in our low AOV business, which has a lower revenue take rate. The writer is a long term value investor and M.Sc graduate in Financial Markets with over 10 years experience. The goal is, first and foremost, is to compel consumers to transact with Affirm more. Those obviously have a very different revenue profile. In comparison to a more normalized fiscal third quarter of 2022, provision for credit losses grew just 10%, and provision expense as a percentage of GMV declined by 4 basis points sequentially to 1.65%. Thank you. Your line is now live. The width of the range reflects the fact that we do have a lot more factors at play that we cant control. But as we sit here today, we do think that theres a lot more volatility in that market. And then every month, we update what we would consider to be the back books drift or improvement. Hosting today's call are Max Levchin, Affirm's Founder and Chief Executive Officer; and Michael Linford, Affirm's Chief Financial Officer. As a reminder, loss on loan purchase commitment mainly occurs with the core long-term 0% APR loans. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. According to Seeking Alpha Quant, analysts are expecting Bank of America to report $25.17 billion in revenue and $0.85 in EPS in its I think what you saw, though, in the quarter was all of our tools to manage that on full display. And you have the slide where you show delinquency trends by, I think, cohort. Excluding transaction costs, non-GAAP operating expense grew 60% to $215.2 million or 59% of total revenue. Of course, well put our own spin on it, and we are different and we like our differences. I wanted to just touch base on the transaction cost ramp. This partnership came at a cost. Now to move on to my second topic, consumer credit performance. Affirm debit+ has 0% APR installment loans. And obviously, youll see some lower total growth and net take rates, revenue take rates and RLTC take rates on the pay now or debit transactions that happen on the card. It's still quite early, so as usual, a warning about reading too deeply into the fine grain metrics. And so for example, we might estimate a loan or pooled loans will have a 5% total loss content to origination. Yes. Revenue rose just 57% compared to the year before, to $204 million, for a run rate of just over $800 million. Fast forward a quarter and shares are cut in half which, because of the definition alone, improves appeal. UniFirst's Q3 2023 latest financial report present an uplifting narrative, with consolidated revenues experiencing a PayBright more than doubled, posting year-over-year GMV growth of 116%. And is there anything that you could potentially talk about as it relates to categories, whether its faster or slower than that consolidated growth rate? Through our brand-sponsored promotions product, manufacturers have the ability to sponsor low and 0 APR deals at specific retailers on an item-by-item basis. Theres some really clever promotions around specific items. Two quick ones. What convinces you that Affirm is the long-term winner? Folks that have lots of choices tend to select their paying instrument in part based on how rewarding it is. Get them exclusively at Value In Corporate Events. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. And then I have a follow-up. Fast forward a quarter and shares are cut in half which, because of the definition alone, improves appeal. In the language of the 1990s Internet, we're widening the top of our funnel while keeping a watchful eye on its bottom. And that has a lot more to do with the timing and type of loans that we originated, much like it did last year. Under his leadership, we are investing in the United Kingdom market this fiscal year and plan to continue from there. Similar to fiscal 2022, we expect holiday-driven seasonal GMV strength in the second quarter of fiscal 2023. This improvement is expected to be driven primarily with the loss on loan purchase commitment line. Yes. And thats because approval rate, yes or no, isnt the only lever that we have. Well now be conducting a question-and-answer session. More worrisome is the adjusted operating margin forecast of negative 12% to negative 10%. And as a follow-up, at the beginning of the call, Max had mentioned the rewards program. Agree with the authors cautious suggestion. I think the three points of incredible approvals have been added. We would continue to expect that to be a drag. Is this happening to you frequently? This disappointed investors. The company's revenue forecast of $1.625 billion to $1.725 billion is below the consensus estimate of $1.9 billion. We have the ability to manage the short-term impacts in the forward curve with the tools inherent in our product, which Max shared moments ago, and staggered renewal periods on our funding facilities. Id love to know how the impact of rising interest rates will impact these businesses. Disclaimer: This article provides opinions and information, but does not contain recommendations or personal investment advice to any specific person for any particular purpose. AFRM Affirm Holdings Inc Affirm FQ1 2022 Earnings Preview. Despite this, we delivered 4.4% RLTC as a percentage of GMV for the second half of fiscal 2022, well above our implied 3.9% in our outlook at the time. La-Z-Boy Incorporated ( NYSE: LZB) manufactures upholstery furniture products and casegoods furniture products. I wanted to drill down a bit on the revenue outlook. No moat whatsoever, a consumer loan portfolio in need of tighter underwriting as we go into recession, market share for the taking by a muriad of other lenders, not to mention payments companies like Paypal and Block. Frankly, there are huge opportunities in demand discovery and demand generation, which were just scratching the surface if you go into the Affirm app, youll find weve made a lot of really interesting improvements in item level search. And Im not prepared to declare it to be ready to be given to everyone. Its a pretty normal thing to see sequential increases going to late summer months as you have seasonally low period coming off of the tax season. Accolade, Inc. (NASDAQ:NASDAQ:ACCD) Q1 2024 Earnings Conference Call June 29, 2023 4:30 PM ETCompany ParticipantsTodd Friedman - SVP, IRRajeev Singh It seems AFRM sits nicely at EV/Revenue at around ~3-5x, with GMV growing below expectations and SBC being at ~40% of revenue nice short to $10 bucks? That being said, our direct-to-consumer product is much higher than that. Hi, thanks for taking my questions this afternoon. In the last quarter, Affirm posted revenue growing by 39.1% Y/Y to $365.13 million. Affirm could potentially double its revenue. And you mentioned M&A, I imagine theres a lot of concern of the smaller players and I think setting capital and seeing growth slow. So we have lots of really, really exciting things planned for the consumer for this year. On a non-GAAP basis, sales and marketing expense declined 1% year-over-year. Hey, thanks, guys. Thanks. We closed fiscal 2022 well ahead of our plan at nearly $15.5 billion in GMV, representing 87% growth in GMV and 114%, excluding Peloton. Afterpay and Zip keep shooting the lights out and everyone reports strong revenue gains. Thank you. They already integrate bill payments with financial services. That seasonal pattern should begin to abate and go down. WebVisible Alpha extracts the forecasts, assumptions and logic from full working sell-side models to create consensus data with full granularity and transparency. Youve had some new entrances in the market that have grown really fast. We grew GMV 77% and 89%, excluding Peloton. Yes. I have no business relationship with any company whose stock is mentioned in this article. Split Pay GMV grew over 193% year-on-year and accounted for roughly 23% of GMV in the fourth quarter compared to 14% last year, as you can see on Slide 8 of our earnings supplement. Today, we are proud to call some of the most sophisticated investors in the world our long-term partners. However, with respect to forward flow, that capital is very committed. Every one of these transactions is two sided. But Id love to hear if you have any sort of recent color on consumer demand for buy now, pay later even in the inflationary environment. And so thats what it looks like overall. Readers fared better if they sold AFRM stock in the rally above $40.00. One good metric or [indiscernible] anecdote to offer, so we have been taking a fairly conservative posture, as youve probably heard on the call, or in the prerecorded part of the call, we have been keeping an extremely careful eye on the credit performance. Look, our guide is our guide. So if you can figure a transaction that has no interest at all, its pretty great. Thank you for standing by. Your line is now live. Folks that are buying something that is pretty short term or sorry, pretty low AOV tend to select short term because those transactions we can generally speaking do on no interest at all. 27, 2023 5:18 PM ET Transphorm, Inc. (TGAN) SA Transcripts. Please [+]Follow me for coverage on deeply-discounted stocks. So we have as much to say about these terms as the consumer does, if not more, but theres definitely some differentiated behavior. Is it consistent with that or any differences worth calling out between the two? Banks have a similar offering to Affirm's SuperApp. I can certainly appreciate you have more insight than maybe the traditional credit card guys. And as a result, we manage our risk by being judicious about just how long were willing to take this term out to for a transaction.