Retail sales saw an unexpected jump in the month of August, a welcomed surprise for this payment software company that recently went public. The company is a financial technology (fintech) company that provides a state-of-the-art “buy now, pay later” lending platform for e-commerce transactions.
Shares of Affirm Holdings, Inc. (AFRM) have rallied 56% over the past three months, outperforming its benchmark, the Global X FinTech Thematic ETF (FINX), as well as the S&P 500, which have gained 4% and 3.86%, respectively. In addition, in AFRM’s Q4 earnings report, released on September 9th, the company forecasted strong Q1 revenue guidance and FY2022 outlook. As a result the stock rallied significantly.
In this article we will take a closer look at the company’s quantitative and qualitative metrics to determine whether it still has room to run after its recent rally.
On August 27th, Affirm Holdings announced that it has partnered up with Amazon to provide its “Buy Now, Pay Later” option for their customers. This feature is currently being tested with select customers.
Under the terms of the collaboration, Amazon (AMZN) clients could split the total cost of purchase of an amount greater than $50 into monthly payments utilizing AFRM. If approved, the company may see a solid improvement of its operating metrics such as revenue and Gross Merchandise Volume (“GMV”). Management plans to provide additional information about the financial impact of this deal in subsequent quarters.
Recent Quarterly Performance
AFRM’s total revenue for its fiscal fourth quarter, ended June 30th, 2021, increased 70.7% year-over-year to $261.78 million, beating analysts’ estimates by $37.39 million. The revenue growth was driven by growth in network revenue as well as interest income. However, the company reported GAAP EPS of ($0.48), missing Wall Street consensus by $0.15.
The company’s GMV increased 106% to $2.5 billion as of June 30th, 2021. Affirm calculates GMV as a total dollar value of all transactions during a specified period, excluding refunds. Besides, the company’s active customers increased 98% to 7.1 million compared to the 4Q20 figure. The number of transactions per active customer also grew by 9.5% to 2.3.
Finally, one of the most important is that the company issued a strong FY2022 outlook. AFRM sees its first-quarter revenue of $240 – $250 million, which at the midpoint locates near average analysts’ projections of $246.67 million. Also, the company plans to receive revenues of $1.16 – $1.19 billion in FY2022, implying a 34% year-over-year growth at the midpoint. Moreover, the company has seen upward EPS revisions after posting FY2022 guidance, which could be considered a bullish sign.
Options Traders Betting On A Rise
During the September 17th trading session, there was a…
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