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Affirm Reports Smaller-Than-Expected Quarterly Loss, Stock Jumps

By REINHARDT KRAUSE

Consumer financing firm Affirm Holdings reported a smaller-than-expected loss in the March quarter while revenue topped Wall Street targets. AFRM stock, one of 2022's worst technology performers, surged on the earnings report and guidance.

The San Francisco-based company reported fiscal third-quarter earnings after the market close on Thursday. AFRM stock jumped 31.4% to close at 23.71 on the stock market today.

In the Affirm earnings report, the company reported a 19-cent per share loss for the three months ended March 31. That compared with a $1.06 per-share loss in the year-earlier period. Analysts polled by FactSet had projected a loss of 46 cents per share.

AFRM Stock: Revenue Tops Estimates

Affirm said revenue climbed 54% to $354.8 million vs. estimates of $344 million. Revenue minus transaction expenses came in at $182.4 million vs. estimates of $152 million.

The company said gross merchandise volume rose 73% to $3.9 billion vs. estimates at $3.85 billion.

"Affirm delivered an across-the-board strong quarter with sustained pace of volume growth and better-than-expected unit economics, assuaging some of the market's worst fears about the company," said Eugene Simuni, analyst at MoffettNathanson, in a report.

For the June quarter, Affirm said it expects revenue of $350 million at the midpoint of its outlook, just below estimates of $352 million.

"As we advance our strategy to drive growth, maintain attractive unit economics, and deploy superior risk management, we plan to achieve a sustained profitability run rate on an adjusted operating income basis by July 1, 2023," Chief Executive Max Levchin said in the earnings news release.

Affirm on Thursday said it has extended a partnership with e-commerce firm Shopify. Amazon.com is another partner.

Buy Now, Pay Later Services

Affirm is one of the biggest providers of buy now, pay later installment payment services.

The initial public offering for AFRM stock in January 2021 raised $1.2 billion. Affirm gets most of its revenue from transaction fees paid by online retailers. In addition, Affirm gets about one-third of its revenue from interest income paid by consumers.

AFRM had dived 82% in 2022. Heading into Affirm's earnings, the stock had a Relative Strength Rating of 1 out of a best-possible 99, according to IBD Stock Checkup.

If you're new to IBD, consider taking a look at its stock trading system and CAN SLIM basics.

Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on 5G wireless, artificial intelligence, cybersecurity and cloud computing.

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