BNPL Fintech Affirm Reports Latest Financial Results

Affirm Holdings, Inc. (NASDAQ: AFRM), the payment network that empowers consumers and helps merchants drive growth, recently reported financial results “for its fiscal 2022 third quarter ended March 31, 2022.”

Max Levchin, Founder and CEO of Affirm, stated:

“We continue to deliver strong growth with attractive unit economics as we rapidly scale our network. The number of active merchants on our platform grew from 12,000 to 207,000 year over year, and active consumers increased 137% to 12.7 million people. The secular trend toward adopting honest financial products and our ability to drive strong demand among merchants resulted in GMV growing by 73% year over year.”

Levchin added:

“We are especially proud of the re-engagement we are driving with consumers as 81% of our transactions were from repeat Affirm users. This represents our highest repeat transaction rate we have ever reported.”

Levchin continued:

“As we advance our strategy to drive growth, maintain attractive unit economics, and deploy superior risk management, we plan to achieve a sustained profitability run rate on an adjusted operating income basis by July 1, 2023.”

Third Quarter of Fiscal Year 2022 Operating Highlights:

(Note: All comparisons are made versus the same period in fiscal year 2021 unless otherwise stated.)

  • GMV was $3.9 billion, an increase of 73%.
  • Active merchants increased from 12,000 to 207,000, driven primarily by the adoption of Shop Pay Installments by merchants on Shopify’s platform.
  • Active consumers grew 137% to 12.7 million and increased by 1.5 million, or 13%, on a sequential basis compared to as of December 31, 2021.
  • Total transactions grew to 10.5 million, an increase of 162%.
  • Transactions per active consumer increased 19% to 2.7 as of March 31, 2022, and 81% of total transactions were from repeat Affirm consumers.

Third Quarter of Fiscal Year 2022 Financial Highlights:

(Note: All comparisons are made versus the same period in fiscal year 2021 unless otherwise stated.)

  • Total revenue was $354.8 million, a 54% increase, driven by continued GMV and merchant network revenue growth, higher interest income related to mix shift towards shorter term loans with greater relative loan discount, greater gains on sales of loans due to higher loan sale volume, and greater servicing income as the loan portfolio held by third-parties scaled.
  • Total revenue less transaction costs increased 37% to $182.4 million, primarily as a result of strong revenue growth, funding cost efficiencies, and a decrease in loss on loan purchase commitment, offset by increased provision for credit losses. Provision for credit losses grew from negative $1.1 million a year ago to $66.3 million, as the year-ago figure included a significant release of excess COVID-related loan allowance, while this year’s figure reflects the more normalized credit environment. Excluding the provision for credit losses, revenue less transaction costs increased by $116.1 million or 88%.
  • Operating loss was $226.6 million compared to $209.3 million in the third quarter of fiscal 2021 driven by continued investment in sales and marketing, which includes $102.4 million of expense related to warrants granted to Amazon in November 2021. Partially offsetting the increase in sales and marketing expense was a decrease in stock-based compensation expense of $81.3 million compared to the prior-year period, which included higher stock-based compensation expense due to the Company’s January 2021 initial public offering.
  • Adjusted operating income was $4.0 million, compared to adjusted operating income of $4.9 million for the third quarter of fiscal 2021.
  • Net loss was $54.7 million compared to $287.1 million in the third quarter of fiscal 2021. The improved loss was primarily driven by a gain of $136.2 million recognized in the current-year period, based on the change in fair value of the contingent consideration liability associated with the Company’s acquisition of PayBright, compared with a loss of $78.5 million in the prior-year period, driven by a decrease in the value of its common stock.

Business Highlights

  • Affirm announced today a multi-year extension of its partnership in the U.S. with Shopify. The expanded agreement cements Affirm as the exclusive pay-over-time provider for Shop Pay Installments in the U.S. Beginning this summer, all eligible U.S. merchants offering Shop Pay Installments will have access to Affirm’s Adaptive Checkout™, which dynamically offers biweekly and monthly payment options side-by-side in a single integrated checkout. Consumers will be able to use Shop Pay Installments for cart sizes that range from $50 to $17,500, with payment terms ranging from six weeks to 12 months, and biweekly interest-free payments to monthly simple interest-bearing installments. Additional details are included in a Form 8-K filing that will be available here.
  • Affirm entered into a strategic partnership with Stripe that will make Affirm’s Adaptive Checkout™ available to all Stripe users in the U.S., unlocking streamlined distribution to millions of merchants and consumers.
  • The Company saw GMV growth accelerate in categories with pent-up demand, such as Travel and Ticketing, which grew by 122% from the third quarter of fiscal 2021, and 50% on a sequential basis from the second quarter of fiscal 2022.
  • On May 4, 2022, the Company completed a $500 million asset-backed securitization. The offering included five classes of fixed-rate notes, all of which were rated by DBRS-Morningstar, with assigned ratings ranging between AAA (sf) and BB (sf). The notes were placed with a diversified mix of institutional investors in a private offering pursuant to Rule 144A under the Securities Act of 1933, as amended. This was the Company’s first transaction to achieve a AAA rating on a class of notes, and represented Affirm’s ninth asset-backed security transaction since launching its program in early fiscal year 2021.

Michael Linford, CFO of Affirm, commented:

“Our strong performance demonstrates our ability to drive growth with attractive unit economics, despite volatile market conditions. We outperformed our outlook, especially on revenue less transaction costs, as we rapidly scale our network while driving operating leverage and greater capital efficiencies. With our superior technology, capital markets expertise, and business model advantage of underwriting every individual transaction before extending access to credit, Affirm is well-positioned for continued growth and long-term value creation.”

Affirm shares closed up dramatically on Friday rising over 30% on the positive report. Year to date, Affirm is far off its high of over $95/share and far below its 52-week high of over $176/share. Affirm shares are not alone in their poor performance as the market has cratered due to rising inflation and concern of a possible recession.



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