Affirm Holdings Q2 Earnings Beat on Higher Transactions, Stock Up 22%

Affirm Holdings, Inc.’s AFRM shares gained 21.8% on Feb. 7, reflecting investor optimism about the company's prospects, after a robust quarter. AFRM’s strong quarterly results benefited from higher network revenues and servicing income. Higher transactions, robust repeat customer engagement and a successful holiday shopping season also boosted performance. However, the results were partly offset by an escalating expense level, which was primarily due to a significant increase in provision for credit losses.See the Zacks Earnings Calendar to stay ahead of market-making news.The company posted fiscal second-quarter earnings of 23 cents per share, which beat the Zacks Consensus Estimate of a loss of 20 cents per share. The metric rose nearly six-fold year over year.Total net revenues amounted to $866.4 million (exceeded management’s expectation of $770-$810 million), which surged 46.6% year over year. The top line surpassed the consensus mark by 7.7%.Affirm Holdings, Inc. Price, Consensus and EPS Surprise Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. QuoteQ2 Performance of Affirm HoldingsActive merchants of Affirm Holdings increased 20.8% year over year to 337,000 as of Dec. 31, 2024. The Gross Merchandise Value (GMV) of $10.1 billion increased 34.7% year over year on the back of strength in general merchandise, travel and ticketing categories and a robust holiday season. The metric crossed management’s expected range of $9.35-$9.75 billion and came higher than the Zacks Consensus Estimate of $9.6 billion.Total transactions of 38.1 million soared 45.4% year over year, driven by a significant rise in repeat customer transactions.Servicing income improved 27.9% year over year to $28.7 million but missed the consensus mark of $29 million. The uptick can be attributed to growth in the off-balance sheet platform portfolio. Interest income of $409.4 million surged 42% year over year but missed the consensus mark of $414.4 million.Merchant network revenues totaled $244.9 million, which grew 30% year over year and beat the Zacks Consensus Estimate of $232.8 million. The metric gained from a growing GMV.  Card network revenues rose 48.1% year over year to $58.1 million, attributable to the higher usage of Affirm and single-use virtual debit cards. The metric beat the consensus mark of $52.3 million.Total operating expenses of $870.7 million increased 14.1% year over year due to higher loss on loan purchase commitment, funding costs, and processing and servicing expenses. Provision for credit losses escalated 26.6% year over year to $153 million. Nevertheless, sales and marketing decreased 15.6% on a year-over-year basis.Affirm Holdings generated an adjusted operating income of $237.8 million compared with $92.6 million in the prior-year quarter. Adjusted operating margin was 27.4%, exceeding management’s estimated 21-23% range. The metric was 15.7% in the year-ago quarter. Net income was $80.4 million in the fiscal second quarter against a net loss of $166.9 million in the prior-year quarter.Financial Position of Affirm Holdings (as of Dec. 31, 2024)Affirm Holdings exited the fiscal second quarter with cash and cash equivalents of $1.2 billion, which increased 18.5% from the fiscal 2024-end figure. Total assets of $10.5 billion rose 10.1% from the fiscal 202-end.Funding debt amounted to $2.2 billion, which rose 18% from the fiscal 2024-end figure. Total stockholders’ equity of $2.8 billion grew 2% from the fiscal 2024-end figure.AFRM generated $312 million of net cash from operations during the December quarter compared with $74.3 million in the prior-year quarter.3Q25 GuidanceAffirm Holdings forecasts third-quarter fiscal 2025 GMV in the range of $8-$8.3 billion. Revenues are anticipated to be in the range of $755-$785 million. Transaction costs are estimated to be between $415 million and $430 million. The weighted average shares outstanding are expected to be 324 million. It projects the adjusted operating margin within 20-22%.4Q25 GuidanceAffirm Holdings forecasts fourth-quarter fiscal 2025 GMV in the range of $9-$9.3 billion. Revenues are anticipated to be in the range of $810-$840 million. Transaction costs are estimated to be between $435 million and $450 million. The weighted average shares outstanding are expected to be 328 million. It projects the adjusted operating margin to be within 23-25%.Fiscal 2025 ViewManagement anticipates GMV to be in the range of $34.74-$35.34 billion in fiscal 2025. Revenues are anticipated to be in the range of $3.13-$3.19 billion.  Adjusted operating margin is now estimated to be within 22.5-23.5%. Weighted average shares outstanding are estimated to be 323 million.Affirm Holdings Zacks RankAffirm Holdings currently sports a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.Other Business Services Sector ReleasesOf the other Business Services sector industry players that have reported December-quarter results so far, the bottom-line results of Mastercard Incorporated MA, Visa Inc. V and Trane Technologies plc TT beat the Zacks Consensus Estimate.Mastercard reported fourth-quarter 2024 adjusted earnings of $3.82 per share, which surpassed the Zacks Consensus Estimate by 3.8%. The bottom line improved 20% year over year. Net revenues of the leading technology company in the global payments industry advanced 14% year over year to $7.5 billion. The top line beat the consensus mark by 1.4%. Gross dollar volume increased 12% on a local-currency basis to $2.6 trillion. Cross-border volumes rose 20% on a local currency basis. Switched transactions improved 11% year over year to 42.2 billion. Value-added services and solutions’ net revenues of $3.1 billion advanced 16% year over year. Mastercard’s clients issued 3.5 billion Mastercard and Maestro-branded cards as of Dec. 31, 2024. Adjusted operating income was $4.22 billion, which grew 15% year over year. Adjusted operating margin improved 10 bps year over year to 56.3%.Visa’s first-quarter fiscal 2025 EPS of $2.75 outpaced the Zacks Consensus Estimate of $2.66 by 3.4%. The bottom line increased 14% year over year. Net revenues of $9.5 billion improved 10% year over year. The top line beat the consensus mark by 1.8%. Visa's payments volume increased 9% year over year on a constant-dollar basis in the fiscal first quarter. Processed transactions (implying transactions processed by Visa) grew 11% year over year to 63.8 billion. On a constant-dollar basis, the cross-border volume of Visa rose 16% year over year. Excluding transactions within Europe, its cross-border volume (that boosts a company’s international transaction revenues) also rose 16% year over year on a constant-dollar basis. Service revenues increased 8% year over year to $4.2 billion in the December quarter. Data processing revenues of $4.75 billion grew 9% year over year. International transaction revenues rose 14% year over year to $3.44 billion. Trane Technologies reported fourth-quarter 2024 adjusted EPS of $2.61, which surpassed the Zacks Consensus Estimate by 2.8% and increased 20.3% year over year. Revenues of $4.9 billion beat the consensus mark by 2.2% and rose 10.2% year over year on a reported basis and organically. Bookings were up 11% year over year on a reported basis and organically. The Americas segment’s revenues of $3.8 billion increased 12.2% year over year on a reported basis and organically. Bookings were up 1% on a reported basis and organically to $3.7 billion.The Europe, Middle East and Africa segment’s revenues were $690.3 million, up 5% year over year on a reported basis and 7% organically. Bookings were up 8% year over year on a reported basis and 9% organically to $614.8 million. Revenues from the Asia Pacific segment were up 1% year over year on a reported basis and organically to $381.2 million.Just Released: Zacks Top 10 Stocks for 2025Hurry – you can still get in early on our 10 top tickers for 2025. Handpicked by Zacks Director of Research Sheraz Mian, this portfolio has been stunningly and consistently successful. From inception in 2012 through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Sheraz has combed through 4,400 companies covered by the Zacks Rank and handpicked the best 10 to buy and hold in 2025. You can still be among the first to see these just-released stocks with enormous potential. See New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Mastercard Incorporated (MA): Free Stock Analysis Report Visa Inc. (V): Free Stock Analysis Report Trane Technologies plc (TT): Free Stock Analysis Report Affirm Holdings, Inc. (AFRM): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks