Affirm's (AFRM) Q4 Earnings Miss, Revenues Beat, Stock Gains
Despite incurring a wider loss in the fiscal fourth quarter, shares of Affirm (AFRM) gain on a bullish guidance.
Affirm Holdings, Inc.’s AFRM fourth-quarter fiscal 2021 loss of 48 cents per share was wider than the Zacks Consensus Estimate of a loss of 27 cents.
Despite the earnings miss, shares gained 5.16% in the last trading day post the result announcement on the back of an upbeat earnings guidance issued for fiscal 2022.
Revenues of $262 million surpassed estimates by 16.7%. The same grew 71% year over year, driven by higher network revenues and an increased interest income.
Gross merchandise volume (GMV) which denotes total sale volumes through its platform was $2.5 billion, up 106%
Active merchants grew 412% to nearly 29,000 for the fourth quarter of fiscal 2021 including several thousand newly-integrated Shopify merchants while active consumers soared 97% to 7.1 million. Transactions per active consumer increased 8% to 2.3 as of Jun 30, 2021. Strength in these metrics reflects the company’s strong business.
Last week, Affirm, the leader in the buy now pay later (BNPL) solutions space, announced its partnership with Amazon.com, Inc. AMZN to provide its shoppers with flexible payment options. This deal is, however, non-exclusive which implies that Amazon can also pick other companies to provide the same services.
In June, Affirm agreed to become the exclusive provider of BNPL services for Shopify Inc. SHOP.
In May, Affirm completed the acquisition of Returnly, a leader of online return experiences and post-purchase payments. This deal hints at the company’s efforts to diversify into other services besides BNPL.
For 2022, the company expects GMV in the range of $12.45-$12.75 billion, revenues between $1.16 billion and $1.19 billion and adjusted operating loss between $145 million and $135 million.
This guidance does not include estimates of potential contributions to GMV or revenues from the recently-announced partnership with Amazon, which is currently being tested with select customers. It also does not take up any contribution from the rollout of Affirm Debit+, its physical debit card, which was launched in February.
Earnings might weigh from a decline in contribution from Peloton Interactive, Inc. PTON, one of the company’s biggest clients. Management expects a moderation in GMV and revenues from Peloton in the next fiscal year.
The company is perfectly poised to grow in the BNPL space. However, the stock currently carries a Zacks Rank #4 (Sell) due to concerns that its revenues might come under pressure as its largest customer Peloton is expecting a weakness in sales and recalled its products, recently.
Also, the Amazon deal was a positive for the company but it is nonexclusive, which means that other competitors can also join Amazon, eating into its business share. Thus, a near-term overhang on the company’s top-line growth persists.
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