Affirm Holdings’ Earnings Call Highlights Strategic Growth

Affirm Holdings, Inc. ((AFRM)) has held its Q1 earnings call. Read on for the main highlights of the call.

Affirm Holdings, Inc. recently held its earnings call, showcasing a positive sentiment driven by strategic achievements and market positioning. The company celebrated a long-term extension with Amazon, successful execution in the ABS market, and notable growth in both 0% monthly installment loans and Affirm Card membership. Despite a slight deviation in RLTC from their target, Affirm’s performance underscores its robust market stance.

Extended U.S. Agreement with Amazon

Affirm has secured a significant milestone by extending its U.S. agreement with Amazon for an additional five years, lasting through January 2031. This extension marks a long-term commitment from both companies, reinforcing Affirm’s strategic partnerships and market presence.

Execution in the ABS Market

Affirm demonstrated strong execution in the asset-backed securities (ABS) market, expanding its relationships with blue-chip forward flow buyers and scaling its ABS program. This success highlights Affirm’s ability to leverage market opportunities and strengthen its financial position.

Growth in 0% Monthly Installment Loans

The 0% monthly installment loans have emerged as Affirm’s fastest-growing loan product, fueled by consumer demand and promotional activities. This growth signifies Affirm’s effective consumer engagement and product appeal.

Significant Increase in Affirm Card Members

Affirm reported a substantial increase in Affirm Card members, adding 0.5 million new members in the quarter. This growth indicates strong consumer adoption and the expanding reach of Affirm’s financial products.

Positive Consumer Trends and Underwriting

Affirm’s underwriting practices are yielding positive results, with healthy 30-day delinquency trends that reflect strong consumer credit quality. This trend underscores Affirm’s effective risk management and consumer trust.

Revenue Less Transaction Cost (RLTC) Above Target

The company’s RLTC take rates were slightly above the target, at around 4.2%. While this suggests a need for adjustments, it also reflects favorable provision performance and strategic financial management.

Potential Deceleration in RLTC

Looking ahead, Affirm anticipates a potential deceleration in RLTC, with expectations of it nearing 4% based on second-quarter guidance. This forecast indicates a cautious approach to maintaining financial targets.

Forward-Looking Guidance

During the earnings call, Affirm provided forward-looking guidance, emphasizing its extended partnership with Amazon and robust RLTC performance. The company aims to maintain a strong operating margin, raising its full-year guide from over 6% to more than 7.5%. Affirm’s strategic focus includes leveraging promotional events and expanding its consumer base through partnerships with platforms like Worldpay and Shopify.

In summary, Affirm Holdings, Inc.’s earnings call reflected a positive sentiment, driven by strategic partnerships, market execution, and product growth. The company’s forward-looking guidance suggests continued focus on maintaining strong financial performance and expanding its market presence.