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Jun 30, 2023
Affirm Q4 2023 Earnings Report
Affirm completed its fourth fiscal quarter and exceeded its outlook across all key metrics.
Key Takeaways
Affirm reported a strong Q4 with all financial metrics exceeding expectations. Revenue from merchants and consumers accelerated, credit results remained strong, and the company achieved profitability on an adjusted operating income basis exiting FY'23. The company expects to be profitable on an adjusted operating income basis for the full year FY'24.
GMV grew 25% year-over-year to $5.5 billion.
Total revenue increased by 22% year-over-year to $446 million.
Active consumer count grew 18% year-over-year to 16.5 million.
The company achieved profitability on an adjusted operating income basis exiting FY'23.
Affirm
Affirm
Affirm Revenue by Segment
Revenue by Segment
Merchant Network Revenue
CapyFin.comInterest Income Revenue
CapyFin.comLoan Sales Gain Revenue
CapyFin.comServicing Income Revenue
CapyFin.com Forward Guidance
Affirm expects to achieve full year profitability, on an Adjusted Operating Income basis, in FY’24.
Positive Outlook
- The current forward interest rate curve and negative consumer sentiment will persist through the remainder of the fiscal year ending June 30, 2024, with no improvement in macroeconomic conditions.
- We assume that student loan payments will resume on October 1, 2023.
- We expect increased consumer demand for our financing products in the fourth quarter of the calendar year, which is our second fiscal quarter, resulting in a quarterly high point for GMV.
- We expect to continue to realize year-over-year increases in the weighted-average APRs for interest-bearing loans.
- Our outlook includes the expected financial impact of the continued ramp of our Affirm Card offerings.
Challenges Ahead
- We are incorporating consumers’ student loan balances into our underwriting decisions, and therefore expect the resumption of loan repayments to be a modest headwind to our FY’24 GMV.
- We expect our second fiscal quarter to represent a quarterly low point for both Revenue as a percentage of GMV and RLTC as a percentage of GMV driven by the timing mismatch of Revenue and the Provision for Credit Losses in our business.
- The reduced Revenue and RLTC as a percentage of GMV in our second fiscal quarter may result in adjusted operating losses in the period.
- We expect Equity Capital Required (“ECR”) as a percentage of Total Platform Portfolio (“ECR Ratio”) to peak at approximately 6.5% in our first fiscal quarter and decrease thereafter.
Revenue & Expenses
Visualization of income flow from segment revenue to net income