Affirm Holdings, Inc. AFRM reported a third-quarter fiscal 2023 adjusted loss of 69 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 91 cents. However, the bottom line was wider than the prior-year quarter’s loss of 19 cents per share.
Net revenues amounted to $381 million, which rose 7.1% year over year in the quarter under review. The top line beat the consensus mark by 3.9%.
The better-than-expected quarterly results benefited from improving virtual card network revenues and interest income. However, the positives were partially offset by deteriorating servicing and merchant network revenues and rising operating expenses.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
Active merchants climbed 19% year over year to 246,000, whereas the Gross Merchandise Volume (GMV) of $4.6 billion improved 18% year over year. Total transactions jumped 36.2% year over year to $14.3 million in the quarter under review.
Servicing income was $21.4 million, which declined 8.7% year over year and missed the Zacks Consensus Estimate of $22.9 million. Interest income grew 32.4% year over year to $178.3 million, beating the consensus mark of $166 million.
Merchant network revenues of $119 million declined 1.7% year over year in the third quarter of fiscal 2023. The figure outpaced the Zacks Consensus Estimate of $111 million. Virtual card network revenues improved 27.2% year over year to $29.5 million and beat the consensus mark of $25.8 million.
Total operating expenses of $691 million escalated 18.9% year over year due to a rise in all the expense components, barring loss on loan purchase commitment, sales and marketing, and general and administrative expenses.
Loss on loan purchase commitment plunged 33.4% year over year to $31.2 million in the quarter under review.
Affirm reported a net loss of $205.7 million, which was wider than the prior-year quarter’s $54.7 million.
The adjusted operating margin was negative 2% in the March quarter, while the metric stood at positive 1% in the prior-year quarter.
Financial Position (as of Mar 31, 2023)
Affirm exited third-quarter fiscal 2023 with cash and cash equivalents of $972.5 million, which declined from $1,255.2 million at fiscal 2022-end. Total assets of $7,507.8 million increased from $6,973.8 million at fiscal 2022-end.
Funding debt amounted to $1,514.1 million, which increased from $672.6 million as of Jun 30, 2022. Total stockholders’ equity was $2,511.1 million at the March quarter-end, down 4.1% from the fiscal 2022-end.
In the three months that ended Mar 31, 2023, AFRM’s cash used in operating activities came in at $54.3 million compared with $28 million in the prior-year period.
Affirm anticipates fourth-quarter fiscal 2023 GMV of $5.20-$5.35 billion. Revenues are predicted to be $390-$415 million. Transaction costs are estimated between $245 million and $255 million. The weighted average shares outstanding are expected to be 300 million.
Affirm forecasts fiscal 2023 GMV of $19.89-$20.04 billion, up from the previously mentioned $19-$20 billion. Revenues are expected to be $1.532-$1.557 billion, up from the earlier stated $1.475-$1.550 billion.
Transaction costs are likely to be $894-$904 million, up from the prior mentioned $865-$890. The adjusted operating margin is anticipated to be negative 7-5.9%, while weighted average shares are likely to be $295 million.
Affirm currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Business Services Sector Releases
Of the other Business Services sector players that have already released quarterly results so far, the bottom-line results of Avis Budget Group, Inc. CAR, Fidelity National Information Services, Inc. FIS and Gartner, Inc. IT beat the Zacks Consensus Estimate.
Avis Budget reported impressive first-quarter 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $7.72 per share beat both the Zacks Consensus Estimate and our estimate by more than 100% but plunged 22.7% year over year.
Total revenues of $2.56 billion surpassed the consensus estimate by 2.2% and our estimate by 7.6%, and improved 5.1% year over year. The top line was backed by strong demand and pricing.
Fidelity National Information Services reported first-quarter 2023 adjusted earnings per share of $1.29, which outpaced the Zacks Consensus Estimate by 7.5% and our estimate of $1.17. However, the bottom line declined 12.2% year over year.
Revenues inched up 1% year over year to $3,510 million. The top line beat the consensus mark by 3.1% and our estimate of $3,381.8 million. Organic revenue growth was 3% in the quarter under review.
Gartner reported better-than-expected first-quarter 2023 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings (excluding 49 cents from non-recurring items) per share of $2.88 beat the Zacks Consensus Estimate by 41.2% and increased 23.6% year over year. Revenues of $1.41 billion beat the Zacks Consensus Estimate by 1.3%, and improved 11.6% year over year on a reported basis and 14.3% on a foreign-currency-neutral basis.
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