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Confirm Shares rose as much as 16% in after-hours trading on Wednesday after the quick loan provider reported a better-than-expected fiscal 12 months Fourth quarter results.
This is how the corporate performed in comparison with the consensus estimates of LSEG analysts.
- Loss per share: 14 cents adjusted in comparison with 51 cents expected
- Revenue: $659 million versus expected $604 million
Affirm reported gross merchandise volume (GMV) of $7.2 billion, up 31% 12 months over 12 months. GMV is a key industry metric that measures the whole value of transactions through the reporting period.
Revenue increased 48% year-over-year and Affirm’s net loss narrowed to $45.1 million from $206 million in the identical period last 12 months. The company’s energetic merchant base reached greater than 300,000 and its energetic consumer base also increased 19% to 18.6 million.
In a note to shareholders, Affirm CEO Max Levchin said the corporate has set a brand new goal of achieving GAAP operating profitability by the fourth fiscal quarter of 2025.
For the present quarter, Affirm expects revenue of between $640 million and $670 million. Analysts surveyed by LSEG forecast revenue of $625 million.
Affirm shares were down 36 percent for the 12 months as of Wednesday’s close, but have recently shown an upward trend, rising 12 percent in August. Federal Reserve Chairman Jerome Powell hinted on Friday that lower rates of interest could come as early as September.
Bank of America analysts said in a note last month that rate cuts can be positive for Affirm’s funding costs and take advantage of loan sales. The company has set a 36% annual percentage rate cap for its merchants, up from 30% previously. Analysts said this could “remain a tailwind for earnings and GMV growth.”
The analysts said Affirm’s latest relationship with Apple and further partnerships with Amazon And Shopify also help. In June, Affirm and Apple announced plans for US Apple Pay users on iPhones and iPads to use for loans directly through Affirm.
Affirm also plans to launch within the UK by the top of this 12 months.
Gina Sanchez, chief market strategist at Lido Advisors, told CNBC’s “The Exchange” on Wednesday that the slowdown in consumption could make it difficult for the corporate to satisfy its profitability targets.
“This is a buy now, pay later business in an environment of declining consumer spending,” Sanchez said. “You have to be prepared for a pretty quiet period, which could be in the first half of 2025, until the rate cuts really take hold, because that’s just the reality of being in a consumer business that requires consumption volume.”
REGARD: Affirm CEO on consumer behavior
