Affirm (AFRM) Explodes 24% on Robust Revenue Growth and Guidance, Analysts Impressive Amid Faster Than Expected Merchant and Customer Growth
Shares of Affirm Holdings (NASDAQ: AFRM) are trading about 24% higher in pre-open Friday on strong fiscal Q4 results.
Affirm reported Q4 EPS of negative $0.48 to miss on the analyst estimate of negative $0.29. Revenue for the quarter came in at $261.8 million versus the consensus estimate of $225.29 million.
“Affirm’s strong results this quarter and fiscal year demonstrate the progress we are making in rapidly expanding our network. More consumers and merchants are continuing to choose Affirm because of our ability to offer a variety of ways to pay, thanks to our unrivaled technology. During the fourth quarter, we increased the number of merchants on our platform by more than fivefold, more than doubled gross merchandise volume and grew active consumers by 97% year over year,” said Max Levchin, Founder and Chief Executive Officer of Affirm.
AFRM projects Q1 revenue between $240 and $250 million to beat the analyst consensus of $233.9 million. Full-year revenue is seen at $1.175 billion at the midpoint of the guidance, higher than the $.1.17 billion consensus.
Morgan Stanley analyst James Faucette raised the price target on AFRM to $140.00 per share from the prior $120.00 on the Overweight-rated stock as he sees a faster-than-expected merchant and customer growth.
“We are raising our FY22and FY23 estimates on the back of faster than expected merchant and customer growth, although we are taking a slightly more conservative view on a ramp at Amazon given that management commentary seems to indicate that a full rollout is likely a bit further out than we had anticipated (we now look for Affirm to capture ~0.5% of Amazon GMV
exiting FY23vs our previous estimate of 0.9%). At the same time, we are adding a small incremental contribution in FY23 from the company's new Affirm Debit Plus Card product (none in FY22), which we expect will help accelerate frequency of engagement and overall loan origination,” Faucette said in a client note.
“Our OW thesis continues to be driven largely by the view that ~40% of the US population does not currently have a full suite of financial services, but will in the next 20 years. And as long as interest rates remains low/capital availability high, we think AFRM has the opportunity to build a substantial customer base,and then mature with that base through their economic life cycle,” the analyst adds.
Similarly, BofA analyst Jason Kupferberg maintained a Buy rating and hiked the price target to $119.00 per share from the prior $82.00 on strong revenue, GMV, and outlook beats.
“Consistent with our bullish thesis, Affirm (AFRM)’s F4Q print and F22 guidance reflect increased momentum in the non-Peloton business, which should be further bolstered by the ramp in the Shopify (SHOP) relationship, and then by the recent Amazon (AMZN) partnership as well. Credit metrics remains quite healthy and unit economics are trending positively. We raise F22 GMV/revs to $12.74B/$1.18B from $12.70B/$1.15B, F23 to $19.84B/$1.57B from $18.66B/$1.53B, and introduce F24 estimates of $29.64B/$2.13B. Our new PO of $119 (vs. $82 prior) is rolled forward on a C23E EV/revs multiple of 20x (vs. 18x C22E prior) as we now apply a higher 50% premium to the peer group (vs 20% prior), based on increasing visibility and the favorable trajectory of the non-Peloton business,” the analyst said in a note sent to clients.