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Mar 31, 2023
Affirm Q3 2023 Earnings Report
Affirm delivered a strong third quarter, outperforming its outlook despite macroeconomic and funding volatility.
Key Takeaways
Affirm reported a solid Q3 2023, exceeding expectations with GMV growth, impressive RLTC performance, and increased Funding Capacity despite economic challenges. The company is progressing towards adjusted operating income profitability as it exits FY'23.
Gross Merchandise Volume was $4.6 billion, exceeding the $4.4-$4.5 billion outlook.
Revenue was $381 million, surpassing the $360-$380 million outlook.
Revenue Less Transaction Costs (RLTC) reached $167 million, compared to the $140-$150 million outlook.
Transactions per active consumer grew by 34%.
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 anticipates achieving a sustained profitability run rate, on an Adjusted Operating Income basis, as they exit fiscal year 2023. They are also slightly improving the midpoint of their full-year outlook across all metrics.
Positive Outlook
- Loan delinquency rate to increase in FQ4'23 in line with normal seasonality.
- Allowance for credit losses as a percentage of loans held for investment to increase modestly.
- Savings from the February restructuring will be greater in FQ4 than in FQ3 due to the timing of implementation.
- The current forward interest rate curve and negative consumer sentiment will persist through the remainder of the fiscal year ending June 30, 2023.
- No improvement in macroeconomic conditions is expected.
Challenges Ahead
- Credit performance: in line with normal seasonality, we expect our loan delinquency rate to increase in FQ4’23.
- We also expect our allowance for credit losses as a percentage of loans held for investment to increase modestly.
- Workforce and operating expense reductions: because the cost restructuring measures announced in February were not implemented until mid-FQ3’23, the savings from the February restructuring will be greater in FQ4 than in FQ3.
- Interest rates and macroeconomic environment: the current forward interest rate curve and negative consumer sentiment will persist through the remainder of the fiscal year ending June 30, 2023, with no improvement in macroeconomic conditions.
- These factors are reflected in our RLTC outlook.
Revenue & Expenses
Visualization of income flow from segment revenue to net income