Affirm wants more from consumers to boost buy now pay later | PaymentsSource

Affirm is drawing more consumers for its buy/now pay later loans and is now doubling down on getting those borrowers to use the firm more often.

For the quarter ended Sept. 30, revenue increased almost 41% year over the prior year to $698 million, besting analysts’ estimates of $664 million, according to S&P Global Capital IQ. The company posted a net GAAP loss of $100.2 million, or a 31-cent loss per share, lower than analyst’s estimates of a $107.2 million loss, or a 33-cent loss per share, during the quarter. 

Gross merchandise value jumped 35% to $7.6 billion, while active customers increased 21% to 19.5 million, and transactions per active customer increased to 5.1, up from 4.2 in the same period a year prior. 

“We were able to enjoy some very healthy consumer growth in the numbers from in Q1 because we found ourselves with capital to put forward towards some incredible approvals,” Max Levchin, founder and CEO, said on a call with analysts Thursday night. Active merchants increased 21% to 323,000.

“This quarter’s explicit goal was: We want more users. We want more active users with higher frequency,” Levchin said. “We’re also just getting smarter and smarter about re-engaging consumers that had one transaction a year to transact three times a year.”

Analysts at JPMorgan described the results as “another strong, drama-free quarter.” 

“Credit performance remains solid (which should not come as a surprise, at this point), and Affirm cardholder growth accelerated sequentially,” Reginald Smith wrote in the note. “We look forward to getting more updates on Apple Pay adoption and UK expansion,” the latter of which launched last week.  

The company continues to expect to reach GAAP operating income profitability in the fourth quarter of the current fiscal year, according to the letter from shareholders.

Chief Operating Officer Michael Linford remained confident in the lender’s ability to tap both forward flow and capital markets funding.  

“Whenever we have one funding channel that is in high demand or we can maybe benefit from in the near term, we’re still very careful to make sure that we create a stable funding base across all of our channels,” Linford said. “You’ve seen our [asset-backed securities] execution also be very consistent, and that has served us very well. And in fact, our ABS execution helps our forward flow execution — the two work together.” 

Linford also said that he expects the company’s warehouse line of credit to “maintain, but not grow as a percentage.” 

Affirm is coming off a hot quarter, when its faster path to profitability sent it stock soaring by more than 30% three months ago. The buy now/pay later company has been grappling with increased oversight from the Consumer Financial Protection Bureau over how BNPL is classified, and President-elect Donald Trump’s administration is likely to change the regulator’s stance, although executives made no mention of the election results during the call.