Affirm stock soars 34% after earnings ‘put to bed some persistent bear themes’

The shares of Affirmar Holdings Inc. they rose in out-of-hours trading on Thursday after the buying company now and later paying gave an increase in revenue and tried to reassure investors about its position in a fall.

Admission to Affirm AFRM,
+ 23.31%
it rose to $ 354.8 million in the third fiscal quarter from $ 231 million a year earlier, while analysts had been shaping $ 344 million.

Affirmar processed $ 3.9 billion in gross volume of goods (GMV) during the quarter, 73% more than the previous year. Analysts had forecast $ 3.85 billion.

“Our good performance demonstrates our ability to drive growth with an attractive unit economy, despite volatile market conditions,” Chief Financial Officer Michael Linford said in a statement.

Shares of the stock rose 34% in the aftermarket trading on Thursday, after a 23% gain in Thursday’s regular session.

“After great anxiety, the very strong results of F3Q should offer a great sigh of relief,” Dan Dolev of Mizuho wrote in a note to clients.

Amid recent market turmoil, fintech names have been particularly affected and Affirmar’s shares have fallen by around 61% over the past three months, in part due to concerns about the fate of companies. credit-oriented in a recession.

CEO Max Levchin seemed to address these fears at the company’s profit call.

As Affirm does not charge late or rotating fees, “we have a structural incentive to reject a transaction that we believe is a bad financial decision for you, because approving it is guaranteed to be a bad financial decision for us.” to say.

Levchin also said the “very short weighted average life” of Affirma’s loans, which he said was about five months. This means that “as the business cycle changes, the loans we made in the past will have a rapidly declining impact on Affirmar’s future financial performance,” he continued.

Affirmar hopes that people will be even more interested in the idea of ​​paying for items over time without incurring late fees during a crisis, but Levchin said that while the company intends to “improve the lives of people “also aims to” just extend the credit we believe can and will be paid “.

Linford added that Affirm feels “very, very good” about where it stands in terms of capital commitments.

“We’ve seen the general macro market change, so rates change, distribution changes, but the asset below, the asset we create, is still something that all our capital partners understand and value.” , he said. named.

Barclays analyst Ramsey El-Assal introduced some of Affirm’s funding comments in a note following the report.

“They cited having more than $ 10.1 billion in financing capacity at the time of the call (May 12) and recently received an AAA rating of some of the securitized debts,” he wrote. While El-Assal noted that Affirm acknowledged that rising interest rates could reach its cost of financing, he stressed management’s assertion that “it is a mistake to think of it as a total flow. linearly “.

He claims to “put to bed some persistent bear issues,” El-Assal said in summary.

For the June quarter, Affirm expects $ 3.950 billion to $ 4.05 billion in GMV, while analysts expect $ 3.70 billion. The company also expects revenue of $ 345 million to $ 355 million for the June quarter, while the FactSet consensus was $ 352 million.

Levchin added to the call that Affirm’s plan is to achieve a tightly maintained rate of return by the end of next fiscal year.

The company’s discussion of long-term goals beyond the current quarter seemed to fit in well with Wall Street, El-Assal suggested.

“It’s important that management indicated that the company would reach break-even point profitability in July 2023, which is earlier than investors expected, we believe, and also said no capital will need to be issued before the company reach break-even point profitability, ”he wrote in his note to clients.

In the most recent quarter, the company posted a net loss of $ 54.7 million, or 19 cents per share, compared to a loss of $ 287 million, or $ 1.23 per share, in the the previous year. Analysts followed by FactSet expected a loss of 46 cents per share.

The company also shared in its earnings statement that it was extended for several years to its Shopify Inc. STORE,
+ 10.96%
partnership, which means Affirm will be the sole provider of “on-time payment” technology for the company’s in-store payment payment product.

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