Affirm beats on earnings, but stock pulls back after a sharp rally

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Affirm Holdings Inc. shares ran up sharply Thursday in the lead up to the company’s earnings report, but they pulled back once the results came out, even as the company beat expectations.

Shares of Affirm
were down about 6% in after-hours trading after soaring 10% during the regular session.

The buy-now-pay-later company posted fiscal second-quarter revenue of $591 million, up from $400 million a year before and well above the FactSet consensus, which called for $521 million.

Revenue less transaction costs came in at $242 million, up 68% from a year before and equating to 3.2% of gross merchandise volume (GMV).

GMV increased 32% to $7.5 billion and saw its fastest growth rate in over a year.

“This time last year, we reiterated our commitment to building operating leverage without sacrificing credit performance, volume growth, or innovation,” Chief Executive Max Levchin said in its shareholder letter. “The market wasn’t exactly convinced then, but 12 months later, we have done exactly what we said we would.”

The company said that its credit quality was “strong” with 30-plus-day delinquencies for monthly installment loans flat both on a year-over-year and a sequential basis, even though GMV growth accelerated.

“We believe credit performance has largely returned to pre-pandemic trends,” the company said in its shareholder letter. “This includes normal seasonality, which has historically led to seasonally lower delinquency rates during the second and third fiscal quarters and seasonally elevated delinquency rates in the first and fourth fiscal quarters.”

Affirm roughly halved its December-quarter net loss, which came in at $166.9 million, or 54 cents a share, compared with $322.4 million, or $1.10 a share, a year before. Analysts were modeling a 72-cent loss per share.

For the March quarter, Affirm models $5.8 billion to $6.0 billion in gross merchandise volume, while analysts had been looking for nearly $5.8 billion.

The company also anticipates $205 million to $215 million in revenue less transaction costs.

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