Affirm Jumps After New Deals Fuel Transaction Volume Growth

Paige Smith, Bloomberg News

Affirm Holdings Inc. website home screen on a smartphone arranged in Little Falls, New Jersey, U.S., on Wednesday, Dec. 9, 2020. Affirm Holdings Inc., which lets online shoppers pay for purchases such as Peloton bikes in installments, plans to go public this month. , Bloomberg

(Bloomberg) -- Affirm Holdings Inc. surged after reporting an increase in transactions on the buy now, pay later firm’s platforms as deals with new merchants helped offset challenges from rising interest rates.

The company reported $5.5 billion of gross merchandise volume — or the total dollar amount of all transactions on its platform — in the quarter ending June 30, it said in a statement late Thursday. The figure was 25% higher than the same period last year and beat analyst estimates. The company’s Affirm Card also gained traction, it said.

Affirm shares jumped by as much as 32% on Friday in New York, the most since May 2022 on an intraday basis, and traded at about $18 at 1:05 p.m.

“As much as I’m enjoying the stock market reaction, we’re very focused on the long-term,” Chief Executive Officer Max Levchin said in a Bloomberg TV interview on Friday. “We are definitely energized by the growth and in particular the growth of the card product. It’s finally showing real signs of stickiness and we’re very excited about that.”

As pandemic-era restrictions have ended, consumer demand for experiences like travel and ticketed events has bounced back. Affirm capitalized on the resurgent demand as it inked new deals with companies including Cathay Pacific and Booking.com and expanded existing projects with Royal Caribbean Group and Priceline.

“We saw the consumer out participating in the economy in those sort of event-driven, experiential-driven spending patterns,” Chief Financial Officer Michael Linford said on a call discussing earnings. “And because of our breadth of distribution there, we were real beneficiaries of that this quarter.”

The company also said revenue increased 22% to $446 million compared to the same period a year earlier, which also beat analyst estimates. Merchant count increased 8% to 254,000 and consumer count rose 18%, it said.

Still, the year wasn’t without challenges. Buy now, pay later companies have felt pain as a pandemic-era boom in online shopping dimmed. Affirm has also had to confront volatility amid higher interest rates and keep pace with the subsequent shifts in consumer demand.

“We definitely should acknowledge that 2023 was a challenging year for us,” Linford said in a separate interview with Bloomberg News. But after the company weathered months of volatility that impacted its short-term performance, it ended “strong,” he said.

Affirm, headquartered in San Francisco, was started by Levchin, one of the co-founders of PayPal Holdings Inc. and a former colleague of Elon Musk.

“We have been more productive than perhaps ever in our history over the last six months or so,” Levchin said on the earnings call. “Certainly, in the last three, we’ve really just built a lot of great stuff, and we have no intention of slowing down.”

The company will hold an investor forum on Nov. 14 in New York, where it’ll give an update on its commercial and product initiatives, Levchin said.

Affirm and Amazon.com Inc. announced in June that US retailers using the Amazon Pay service can now offer pay-over-time options for purchases of more than $50. The partnership was rolled out to increase sales and customer loyalty, Affirm said at the time.

--With assistance from Bre Bradham, Caroline Hyde and Ed Ludlow.

(Updates shares, adds CEO comments from third paragraph.)