On August 28, 2024, Affirm Holdings Inc (AFRM, Financial) released its 8-K filing detailing the financial results for the fourth fiscal quarter and full fiscal year 2024. Affirm Holdings Inc offers a platform for digital and mobile-first commerce, providing point-of-sale payment solutions for consumers, merchant commerce solutions, and a consumer-focused app. The company generates a majority of its revenue from the United States.
Performance and Challenges
Affirm Holdings Inc reported a significant improvement in its financial performance for Q4 2024. The company achieved a Gross Merchandise Volume (GMV) of $7.2 billion, marking a 31% year-over-year increase. Revenue for the quarter was $659 million, a 48% increase from the same period last year, surpassing the analyst estimate of $603.66 million. Despite these gains, the company reported a net loss of $45 million, an improvement from the $206 million loss in Q4 2023. The estimated earnings per share (EPS) was -0.48, while the actual EPS was not explicitly mentioned in the filing.
Financial Achievements
Affirm Holdings Inc's financial achievements are noteworthy, especially in the context of the software industry. The company reported an adjusted operating income of $150 million for Q4 2024, a significant increase from $15 million in Q4 2023. This improvement is attributed to continued product enhancements, merchant growth, attentive risk management, and excellent capital execution. The company's revenue less transaction costs (RLTC) grew by 70% year-over-year to $309 million, representing 4.3% of GMV, which is within their long-term target range of 3-4%.
Income Statement Highlights
| Metric | Q4 2024 | Q4 2023 | Change |
|---|---|---|---|
| Revenue | $659M | $446M | +48% |
| GMV | $7.2B | $5.5B | +31% |
| Net Loss | ($45M) | ($206M) | +161M |
| Adjusted Operating Income | $150M | $15M | +135M |
Balance Sheet and Cash Flow
Affirm Holdings Inc reported total assets of $9.52 billion as of June 30, 2024, up from $8.16 billion a year earlier. The company's cash and cash equivalents stood at $1.01 billion, with an additional $282 million in restricted cash. The total liabilities were $6.79 billion, compared to $5.62 billion in the previous year. The company also reported a total liquidity of $2.1 billion, which includes cash and securities available for sale.
Key Metrics and Analysis
Key metrics such as active consumers and active merchants showed positive trends. Active consumers increased by 19% year-over-year to 18.6 million, while active merchants grew by 19% to 303,000. Transactions per active consumer also increased to 4.9 in Q4 2024 from 3.9 in Q4 2023. These metrics indicate strong consumer and merchant engagement, which is crucial for the company's growth trajectory.
Commentary and Future Outlook
"We delivered excellent results in both the fourth fiscal quarter as well as the full 2024 fiscal year. Our adjusted operating income is $381 million for the full FY’24, $150 million of it earned in the fourth fiscal quarter – thanks to continued product improvements, merchant growth, attentive risk management, and excellent capital execution." - Max Levchin, Founder and CEO
Affirm Holdings Inc's performance in Q4 2024 demonstrates its ability to grow and improve its financial metrics significantly. The company's focus on increasing consumer engagement and expanding its network reach has yielded positive results. However, challenges such as achieving GAAP profitability and managing credit risks remain. The company's commitment to maintaining GAAP profitability in the future is a positive sign for investors.
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Explore the complete 8-K earnings release (here) from Affirm Holdings Inc for further details.
