Affirm Holdings Gains on Upbeat Q3 Results, Shopify Partnership
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Affirm Holdings Gains on Upbeat Q3 Results, Shopify Partnership

Affirm Holdings, Inc. (NASDAQ: AFRM) posted a narrower-than-feared loss for the third quarter of Fiscal 2022 (ended March 31, 2022). The quarterly bottom line was 58.7% better than the consensus estimate. Also, revenues were 3.1% above the consensus estimate for the quarter.

Along with better-than-expected results, the company’s extended deal with Shopify Inc. (NYSE: SHOP) lifted the market’s sentiment for the stock. Shares of this $6.3-billion company are currently up over 22% on the day.

Affirm has expertise in providing payment solutions (at point-of-sale) for consumers. The company is headquartered in San Francisco, CA.

Financial Highlights

Affirm reported a loss of $0.19 per share in the third quarter, narrower than the consensus estimate of a $0.56 loss per share. Also, the bottom line was much better than the year-ago tally of a $1.23 loss per share.

Revenues came in at $354.8 million compared with the consensus estimate of $344 million. On a year-over-year basis, the top line expanded 53.8%, supported by a 29% rise in Network revenues and 42.4% growth in interest income.

Gross Merchandise Volume (GMV) in the quarter increased a whopping 73% year-over-year to $3.9 billion. The total transaction count was up 162%, to 10.5 million.

Total transaction costs (non-GAAP) in the quarter were $172.3 million, up 77.6% year-over-year. Adjusted operating income was $4 million in the quarter, lower than $4.9 million in the year-ago quarter. The adjusted operating margin decreased 100 basis points to 1.1%.

Balance Sheet and Cash Flow

Exiting the third quarter, Affirm had cash and cash equivalents of $2,261.9 million, reflecting an increase of 54.2% from the end of Fiscal 2021 (ended June 30, 2021). Its total liabilities were $4,455.7 million, up 94.4% from Fiscal 2021.

In the quarter, the company used net cash of $28 million for its operating activities versus net cash use of $123.3 million in the year-ago quarter. Funds used for purchases and origination of loans held for investment totaled $2,877 million, up 77.4% year-over-year.


For Fiscal 2022 (ending June 2022), Affirm anticipates revenues to be within the $1,330-$1,340 million range (versus the previous projection of at least $1,310 million) and GMV to be $15.04-$15.14 billion (compared with at least $14.78 billion expected earlier). Transaction costs are expected within $692-$697 million.

For the fourth quarter, revenues are expected to be $345-$355 million. GMV is predicted within $3.95-$4.05 billion, and transaction costs are expected to vary from $185 million to $190 million.

Management Commentary

Affirm’s CFO, Michael Linford, said, “With our superior technology, capital markets expertise, and business model advantage of underwriting every individual transaction before extending access to credit, Affirm is well-positioned for continued growth and long-term value creation.”

Partnership with Shopify

Affirm communicated that its agreement with Shopify has been extended in the U.S. This multi-year agreement between the two companies would mean that Adaptive Checkout provided by Affirm will be available to all merchants that offer Shop Pay installments.

Affirm’s CCO, Silvija Martincevic, said, “Together with Shopify, we set out to build a custom payment option that would help Shopify merchants of all sizes accelerate growth while empowering their millions of buyers with a transparent and flexible way to pay.”

He added, “Now we’re bringing even more options to Shopify’s merchants and their customers by serving a broader range of transactions with a wider range of payment schedules available to their U.S. network.”

Wall Street’s Take

Overall, the analysts have a cautiously optimistic view on Affirm and have a Moderate Buy consensus rating based on six Buys, five Holds, and two Sells. The average Affirm price forecast of $49.38 suggests upside potential of 122.9% from current levels.

Over the past year, shares of Affirm have declined about 64%.

Risk Analysis

According to the TipRanks Risk Factors tool, AFRM’s main risk category is Finance & Corporate, contributing 32 risks to the total 72 risks identified for the stock.


Though it is posting losses and is highly exposed to financial risks, Affirm seems well-positioned to grow its revenues in the quarters ahead. Also, multi-year partnerships will help the company penetrate deeper into the markets it serves.

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