Newly listed fintech company To confirm (NASDAQ: AFRM) reported earnings for the third quarter of the fiscal year on Tuesday and investors were not impressed. The stock was down as much as 18% in early trading but has since rebounded, down only 7% as of 12:30 p.m. EST.
This is what investors need to know about Affirm’s initial public listing.
Affirm’s headline results
Revenue for the third quarter of fiscal year increased 67% to $ 230.7 million, above the consensus estimate of $ 198.2 million in revenue. Gross Goods Volume (GMV) increased 83% to $ 2.3 billion. When excluding the effects of Peloton (NASDAQ: PTON), which recently announced a major recall of its Tread and Tread + products, Affirm’s GMV rose 100%.
It all resulted in a net loss of $ 247.2 million, or $ 1.06 per share. Wall Street analysts modeled in red ink for $ 0.31 per share. Affirm saw a $ 131.8 million increase in stock-based compensation expense related to the IPO, which is common for post-IPO companies.
The number of active merchants on the Affirm platform more than doubled to 12,000, while the number of active consumers increased by 60% to 5.4 million. The average transactions per active consumer were 2.3.
What else happened this quarter
Affirm recently started expanding its partnership with the e-commerce powerhouse Shopify (NYSE: SHOP). This partnership was originally announced last summer and will allow Shopify merchants to take advantage of Affirm’s BNPL (Buy-Now-Pay-Later) offerings. Over 10,000 Shopify merchants now have access to Affirm’s platform, and all merchants will be able to use Affirm by the end of June.
Peloton is one of Affirm’s most prominent partners, and the fitness leader announced a voluntary recall last week following safety concerns about its Tread and Tread + products. Affirm recorded a $ 3.5 million decrease in revenue for the quarter related to the recall.
Affirm has now completed the $ 300 million acquisition of Returnly announced last month. This deal will help the company streamline the returns process and improve the customer experience after the purchase.
looking ahead
Affirm noted that certain categories such as travel and ticketing are already booming due to pent-up demand. GMV in this category grew over 50% year-over-year and nearly tripled in sequence.
“We are encouraged by this momentum and believe that the strengthening economy will provide Affirm with further tailwind,” said CEO Max Levchin on the conference call with analysts. “Americans have significant purchasing power resulting from the pandemic after paying off record debts of $ 83 billion and saving $ 1.7 trillion in 2020.”
Fiscal fourth quarter guidelines put GMV in the $ 2.2 to $ 2.25 billion range, which should result in revenue of $ 215 to $ 225 million. This should bring GMV from $ 8.01 billion to $ 8.06 billion in fiscal 2021, with revenue of $ 824 million to $ 834 million for fiscal 2021. The outlook includes estimated impacts related to the above peloton recall.
