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Sep 30, 2022
Affirm Q1 2023 Earnings Report
Affirm delivered strong financial results, growing GMV and total revenue while managing credit outcomes and optimizing marketing spend.
Key Takeaways
Affirm had a strong quarter with GMV up 62% year-over-year and revenue up 34% year-over-year. The company is managing credit results to track pre-pandemic numbers and delivered 12 percentage points of improvement in Adjusted Operating Margin year-over-year.
Affirm took market share by significantly outpacing e-commerce growth, with GMV increasing by 62% year-over-year.
The company grew its top line, with Total Revenues up 34% year-over-year.
Affirm delivered strong unit economics by driving positive credit outcomes with delinquency rates remaining at or below pre-pandemic levels.
The company continued to march towards achieving Adjusted Operating Income profitability.
Affirm
Affirm
Affirm Revenue by Segment
Revenue by Segment
Merchant Network Revenue
CapyFin.comCard Network Revenue
CapyFin.comInterest Income Revenue
CapyFin.comLoan Sales Gain Revenue
CapyFin.comServicing Income Revenue
CapyFin.com Forward Guidance
Affirm provided financial outlook for FQ2 2023 and fiscal year 2023, taking into account the macroeconomic environment, operational efficiencies, seasonality, product mix, and the impact of external factors such as Peloton and interest rates.
Positive Outlook
- The company plans to achieve a sustained profitability run rate, on an Adjusted Operating Income basis, by the end of fiscal year 2023.
- Affirm expects to utilize various levers at its disposal to protect its unit economics and path to adjusted operating income profitability.
- The company is meaningfully reducing its hiring plan for the remainder of FY’23, which is anticipated to drive significant savings beginning next fiscal year.
- Affirm expects to continue hiring across product, technology, and data analytics.
- The company is also focused on filling a large portion of the remaining hires in lower-cost geographies, such as its engineering center in Poland.
Challenges Ahead
- The current forward interest rate curve and negative consumer sentiment will persist throughout the remainder of the fiscal year with no improvement in macroeconomic conditions.
- The company expects to see a seasonal increase in GMV and a seasonal decline in Revenue and RLTC as a % of GMV in FQ2’23.
- The updated full year outlook takes into account the reduced internal forecast for GMV associated with Peloton.
- As benchmark interest rates rise, this puts pressure on our Funding Costs and Gain on Sales of Loans, each of which are components of RLTC.
- The terminal rate of the current forward interest rate curve has increased by approximately 150 basis points since the earnings call in August.
Revenue & Expenses
Visualization of income flow from segment revenue to net income