By Senad Karaahmetovic
Affirm (NASDAQ:AFRM) saw its shares drop by over 15 % in U.S. pre-market trading after the buy-now-pay-later (BNPL) firm slashed its full-year forecast.
Affirm reported an FQ1 loss per share of $0.86 on revenue of $361.62 million. Analysts were expecting a loss per share of $0.84 on revenue of $360.4M.
For its second fiscal quarter, FQ2 revenue is seen in the range of $400M to $420M, a miss compared to the $438.5M. At the midpoint of the range, Affirm’s guidance implies a 13.5% quarter-over-quarter growth while analysts were looking for nearly a 22% increase.
As a result of the bigger-than-expected slowdown, Affirm now sees full-year revenue at $1.64B (up or down $40M), down from the prior outlook of $1.63-1.73B. Analysts were expecting a full-year revenue forecast of $1.71B.
While FQ1 results were “solid,” RBC analysts say a “faster-than-expected reduction in business from Peloton as well as overall macro conditions” prompted AFRM to cut its full-year outlook. They slashed the price target to $23 per share from $31.
“Despite these pressures, management reiterated its plans to achieve 'sustained' adj. operating income profitability, on a run rate basis, by the end of FY23,” they wrote in a note.
Morgan Stanley analysts believe the investor focus is likely to be on ongoing credit deterioration.
“Updates around demand, RLTC margin, & profitability should be reassuring while we're mixed on funding as the market remains challenged but AFRM expanded capacity in the Sept qtr,” the analysts wrote to clients.