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Affirm Holdings (AFRM)
NASDAQ:AFRM

Affirm Holdings (AFRM) AI Stock Analysis

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Affirm Holdings

(NASDAQ:AFRM)

57Neutral
Affirm Holdings shows strong revenue growth and strategic partnerships that enhance its market positioning. However, challenges in achieving profitability, high volatility, and valuation concerns temper the positive aspects. Technical indicators suggest market stability, but caution is warranted due to potential overbought conditions.
Positive Factors
Earnings
AFRM reported GAAP EPS of $0.01, above the estimate of a loss and consensus.
Product Development
The trajectory of app feature development continues to accelerate, helping Affirm to attract and retain higher income users over time.
Strategic Partnerships
The company benefits from strong relationships with Shopify and Amazon, contributing to its GMV diversification.
Negative Factors
Cost Management
Transaction costs were higher than estimated, mainly due to increased processing and servicing costs.
Market Risks
Macro noise creates risk around reserves, presenting potential challenges for Affirm.
Revenue Guidance
The revenue guidance raise is smaller than prior quarters, and RLTC was modestly below the estimate.

Affirm Holdings (AFRM) vs. S&P 500 (SPY)

Affirm Holdings Business Overview & Revenue Model

Company DescriptionAffirm Holdings, Inc. is a financial technology company that operates in the digital payments sector, primarily in the United States. Founded in 2012, Affirm provides consumers with a transparent and flexible payment option through its 'buy now, pay later' (BNPL) solutions. The company's core product allows customers to split purchases into installment payments over time, offering an alternative to traditional credit cards. Affirm partners with various merchants to integrate its services directly into the checkout process, enhancing consumer purchasing power while promoting financial responsibility.
How the Company Makes MoneyAffirm makes money primarily through merchant fees and interest income. When consumers use Affirm to finance purchases, merchants pay Affirm a fee for facilitating the transaction, which is typically a percentage of the purchase amount. This fee compensates Affirm for the increased conversion rates and higher average order values that merchants experience by offering flexible payment options. Additionally, Affirm earns interest income by charging consumers who choose longer-term financing options. These consumers may incur interest charges, depending on the terms of the installment loan. Furthermore, partnerships with major retailers like Amazon and Shopify have expanded Affirm's reach and contributed significantly to its earnings by integrating Affirm's services into their platforms, thus increasing transaction volumes. Affirm also benefits from strategic partnerships with financial institutions and technology platforms, further enhancing its revenue streams.

Affirm Holdings Key Performance Indicators (KPIs)

Any
Any
Active Consumers
Active Consumers
Counts the number of unique consumers using Affirm's services, indicating market penetration and user base expansion.
Chart InsightsAffirm Holdings has seen a robust increase in active consumers, with a 23% year-over-year growth, marking four consecutive quarters of acceleration. This growth is fueled by strategic expansion in zero percent APR loans, enhancing merchant partnerships and consumer financing options. Despite potential margin dilution from these loans, Affirm's strong capital market execution and international expansion, particularly in the UK, are promising. The company is leveraging its position to sustain growth while maintaining credit discipline, which is crucial for long-term stability.
Data provided by:Main Street Data

Affirm Holdings Financial Statement Overview

Summary
Affirm Holdings has demonstrated robust revenue growth, yet it continues to face challenges in achieving profitability and maintaining a stable financial structure. The company has made strides in improving cash flow, which could support future financial stability, but it remains crucial to address the ongoing net losses and manage leverage effectively.
Income Statement
Affirm Holdings has shown a significant increase in revenue over the years, with the TTM revenue at $2.18 billion compared to $1.35 billion in 2022, indicating strong growth. However, the company is struggling with negative profitability metrics, such as a negative net profit margin and EBIT margin, primarily due to its high operating expenses, which has led to net losses over the observed periods.
Balance Sheet
50
The company's balance sheet reveals a moderate debt-to-equity ratio of 0.41 for the TTM period, suggesting reasonable leverage, but it is important to note the substantial total liabilities compared to equity. The equity ratio is improving, indicating a strengthening financial position, but the overall stability is impacted by the ongoing losses.
Cash Flow
Affirm Holdings has shown improvement in its cash flow management, with positive operating cash flow and free cash flow in the TTM period. The free cash flow to net income ratio is positive due to better cash flow management, though the company has experienced fluctuations in cash flow from financing and investing activities.
Breakdown
Jun 2024Jun 2023Jun 2022Jun 2021Jun 2020
Income StatementTotal Revenue
2.32B1.59B1.35B870.46M509.53M
Gross Profit
1.48B714.82M772.84M540.62M337.32M
EBIT
-615.85M-1.20B-796.35M-326.49M-75.47M
EBITDA
-2.23M-671.60M-602.41M-370.69M-70.51M
Net Income Common Stockholders
-517.76M-985.35M-707.42M-430.92M-112.60M
Balance SheetCash, Cash Equivalents and Short-Term Investments
2.14B2.07B2.85B1.47B267.06M
Total Assets
9.52B8.16B6.97B4.87B1.40B
Total Debt
6.61B5.45B4.08B1.91B917.15M
Net Debt
5.60B4.56B2.82B440.80M650.09M
Total Liabilities
6.79B5.62B4.36B2.29B1.77B
Stockholders Equity
2.73B2.53B2.62B2.58B-367.10M
Cash FlowFree Cash Flow
290.84M-108.59M-225.50M-213.38M-92.32M
Operating Cash Flow
450.14M12.18M-113.80M-193.13M-71.30M
Investing Cash Flow
-1.33B-1.65B-2.03B-1.02B-253.07M
Financing Cash Flow
913.15M1.35B2.00B2.58B294.73M

Affirm Holdings Technical Analysis

Technical Analysis Sentiment
Positive
Last Price51.54
Price Trends
50DMA
47.93
Positive
100DMA
56.38
Negative
200DMA
50.04
Positive
Market Momentum
MACD
1.64
Negative
RSI
63.76
Neutral
STOCH
75.04
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AFRM, the sentiment is Positive. The current price of 51.54 is above the 20-day moving average (MA) of 46.77, above the 50-day MA of 47.93, and above the 200-day MA of 50.04, indicating a bullish trend. The MACD of 1.64 indicates Negative momentum. The RSI at 63.76 is Neutral, neither overbought nor oversold. The STOCH value of 75.04 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AFRM.

Affirm Holdings Risk Analysis

Affirm Holdings disclosed 57 risk factors in its most recent earnings report. Affirm Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Affirm Holdings Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
76
Outperform
$7.35B28.0530.28%27.39%115.40%
75
Outperform
$20.34B1.46%28.33%
DLDLO
74
Outperform
$2.55B19.5726.10%33.84%0.29%
69
Neutral
$2.61B22.1015.97%14.86%-0.94%
MQMQ
65
Neutral
$1.83B82.805.01%-25.02%
60
Neutral
$10.77B10.41-6.71%2.99%7.69%-13.12%
57
Neutral
$16.45B-7.34%46.27%74.39%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AFRM
Affirm Holdings
54.26
19.45
55.87%
FOUR
Shift4 Payments
85.43
24.40
39.98%
PAYO
Payoneer
6.33
0.46
7.84%
MQ
Marqeta
4.49
-1.41
-23.90%
DLO
DLocal
9.00
-4.43
-32.99%
TOST
Toast Inc
36.65
9.83
36.65%

Affirm Holdings Earnings Call Summary

Earnings Call Date:May 08, 2025
(Q3-2025)
|
% Change Since: -5.01%|
Next Earnings Date:Aug 21, 2025
Earnings Call Sentiment Positive
The earnings call reflected strong overall performance, highlighted by significant growth in GMV, positive financial outlook, and successful strategic partnerships. However, challenges such as increased loan loss reserves and competitive pressures were noted. Despite these concerns, the sentiment remains optimistic due to healthy credit performance and strategic initiatives.
Q3-2025 Updates
Positive Updates
Strong Growth in Gross Merchandise Volume (GMV)
GMV growth was broad-based, with a 40% year-on-year increase in March, driven by strong performance across various merchant categories and direct-to-consumer services.
Improved Financial Outlook
The company is pleased to improve its outlook for the current quarter and the fiscal year, leaning into growth opportunities with excellent credit quality while balancing growth and profitability.
Successful 0% APR Promotions
Affirm experienced excellent traction with its 0% APR product, which drives brand halo and consumer attachment, leading to high credit quality and increased conversion rates.
Partnerships and Expansions
Affirm announced a partnership with Costco and renewed its agreement with Shopify through 2028, indicating strong merchant relationships and expansion opportunities.
Healthy Credit Performance
The company reports healthy repayment rates and an increase in prepayments, indicating strong consumer credit performance.
Negative Updates
Increased Allowance for Loan Losses
There was a slight uptick in the reserve on loan losses, although the company attributes it to changes in loan mix due to higher prepayments.
Competitive Market Environment
The market remains highly competitive, with pressures on merchant discount rates and the need for Affirm to continuously drive impact for merchant partners.
Impact of Regulatory Environment
Affirm is mindful of potential impacts from student loan enforcement and regulatory scrutiny, although it currently doesn't anticipate significant issues.
Company Guidance
In the Affirm Holdings Third Quarter Fiscal 2025 earnings call, the company provided guidance indicating an improvement in their outlook for the current quarter and fiscal year. They highlighted a strategic focus on growth opportunities with strong credit quality and lifetime value (LTV) characteristics. The call emphasized Affirm's commitment to balancing growth with profitability as they aim to become a GAAP profitable business. The company noted that they will continue to be prudent with their spending to seize market opportunities, while ensuring excellent credit performance. Affirm also mentioned positive traction with their 0% APR product, which, despite lower revenue and return on loan-to-cost (RLTC) compared to interest-bearing loans, offers superior credit quality and long-term customer value. Additionally, the company reported broad-based growth in Gross Merchandise Volume (GMV), with March showing a peak 40% year-on-year increase, driven by strong performance across both direct-to-consumer services and their merchant base.

Affirm Holdings Corporate Events

Product-Related AnnouncementsBusiness Operations and Strategy
Affirm Holdings Signs New Agreement with Shopify
Positive
Feb 20, 2025

On February 14, 2025, Affirm, Inc., a subsidiary of Affirm Holdings, Inc., entered into a new Global Customer Installment Program Agreement with Shopify Inc., replacing the previous agreement. This partnership makes Affirm the exclusive provider of Shop Pay Installments in the U.S. and Canada and aims to expand into new markets, including the U.K. The agreement, effective for an initial three-year term, enhances Affirm’s market positioning by broadening its reach and maintaining exclusivity with Shopify, impacting stakeholders by potentially increasing merchant adoption and consumer usage globally.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.