Affirm, a leading provider of buy now, pay later loans, reported better-than-expected results for the first quarter of fiscal 2024. The company’s gross merchandise volume (GMV) grew by 35.7% year over year, reaching $7.6 billion. This exceeded both management’s forecast and analysts’ consensus estimates.
Total net revenues increased by 40.7% to $698.5 million, surpassing expectations. The strong performance was driven by higher card network revenues, servicing income, and increased transactions from repeat customers. Affirm’s partnerships have played a significant role in its growth.
The company recently collaborated with Apple, allowing U.S. Apple Pay users to apply for loans directly through Affirm. Kevin Kennedy, an analyst at Third Bridge, highlighted Affirm’s quality underwriting as a differentiator in the competitive buy now, pay later market. Despite the positive results, Affirm’s expenses also increased, mainly due to higher provision for credit losses.
affirm’s robust growth and strategic partnerships
However, the company still managed to narrow its net loss to $100.2 million, compared to $171.8 million in the previous year. Looking ahead, Affirm expects its GMV to exceed $34 billion for fiscal 2025.
The company projects revenues to range between $770 million and $810 million in the second quarter, with an adjusted operating margin of 21-23%. Max Levchin, CEO of Affirm, stated that the company aims to achieve profitability on a GAAP basis by the fourth quarter of fiscal 2025. Affirm’s focus on large-ticket, interest-bearing purchases is seen as a protective measure against commoditization risks in the payments space.
As of September 30, 2024, Affirm maintained a strong financial position with cash and cash equivalents of $1 billion and total assets of $10.1 billion. The company generated $196.9 million in net cash from operations during the quarter, nearly doubling the amount from the previous year. Affirm’s shares have surged over 70% since late August, largely due to its strategic partnerships and robust growth.
Analysts remain optimistic about the company’s future, with many upgrading their ratings and price targets.
