Shares of consumer financing firm Affirm Holdings (AFRM) crashed in early trading on Friday on its December-quarter earnings report. Investors mulled new guidance for AFRM stock, which now includes Amazon.com (AMZN) transactions.
The company’s shares plunged as much as 33% on Thursday afternoon. It reported results with a third-quarter revenue forecast that missed some analyst estimates and a widened net loss.
Just hours earlier, investors were given a snapshot of what the company called “another great quarter” via an accidental Tweet, which was enough of a glimpse to send the shares surging.
Second Quarter of the Fiscal Year 2022 Financial Highlights:
All comparisons are made versus the same period in the fiscal year 2021 unless otherwise stated.
Total revenue was $361.0 million, a 77% increase, driven by increases in net revenue resulting from GMV growth, higher interest income related to growth in loans held for investment.
Gains on sales of loans due to higher forward flow volume, and greater servicing income as the platform portfolio scaled.
Total revenue less transaction costs increased 93% to $183.6 million, primarily as a result of the strong revenue growth, as well as slower growth in transaction costs as the Company achieved scale efficiencies. In the period, provision for credit losses increased by $40.1 million from the quarter ended December 31, 2020.
This increase was primarily driven by a release of excess loan allowance in the prior-year period and a more normal credit environment in the quarter ended December 31, 2021, compared to the prior year.
Operating loss was $196.2 million compared to $26.8 million in the second quarter of fiscal 2021. It includes an $82.0 million increase in stock-based compensation following the Company’s January 2021 initial public offering, as well as investments in product and engineering talent and marketing to realize the Company’s growth opportunities.
Adjusted operating loss for the second quarter of fiscal 2022 was $7.9 million, compared to adjusted operating income of $3.1 million for the second quarter of fiscal 2021.
Net loss for the second quarter of fiscal 2022 was $159.7 million compared to $26.6 million in the second quarter of fiscal 2021 and includes the above-mentioned increase in stock-based compensation following the Company’s IPO.
As well as $34.0 million of additional expense recognized based on the change in fair value of the contingent consideration liability associated with the Company’s acquisition of PayBright driven by increases in the value of its common stock.
Recent Business Highlights
Issued $1.725 billion in zero-coupon senior convertible notes in November 2021. The offering provides the Company with significant growth capital at an attractive borrowing cost, while minimizing shareholder dilution.
Replaced the Company’s prior corporate credit facility with a new $165 million revolving credit facility on February 4, 2022. The new facility provides the Company with improved economics, increased financial covenant flexibility, and lower fees.
Completed the Company’s first static (non-revolving) securitization designed to fund longer-term, interest-bearing financing programs on February 9, 2022. The deal, which is comprised of consumer loans totaling over $400 million, was priced in early February.
$AFRM HALTED 🚨 https://t.co/4ub8TzRNq3
— Markets & Mayhem (@Mayhem4Markets) February 10, 2022
The tweet suggested that Affirm would beat revenue expectations. Analysts polled by Refinitiv had expected a 61% rise. The stock was briefly up as much as 10% on that tweet.
Affirm said in another tweet later Thursday that its inadvertent release of financial results was due to human error.
Affirm is one of several hot “buy now, pay later” companies, which offer short-term and low-interest loans to users when they buy consumer goods online.
