EPS of $-0.43 increased by 37.7% from previous year
Gross margin of 84.7%
Net income of -133.94M
"We don't run the business on a quarter-by-quarter basis. It is just a fundamentally wrong way to look at a payments company that wants to be around 100 years from now like what are you going to do next quarter, like we're trying to grow, we're trying to make sure that we grow really well, yet carefully we take risk. But most importantly, the fact that we have a forecast to share with you or guide to share with you for next quarter has barely a little impact on our planned growth initiatives on some randomly chosen time boundary that is not measured in quarters. And so I think it's just really important to know that I certainly do not think of Q4 numbers through from a growth point of view. Like I definitely care about other numbers like risk, et cetera that's really important. But growth is measured in years and that's certainly how we think about it from a product point of view." - Max Levchin
Affirm reported solid topline growth in Q3 FY2024, with revenue of $576.2 million, up 51% year over year, and gross profit of $487.9 million, yielding a robust gross margin of 84.7%. However, the quarter showed a continued bottomâline depreciation as the company continues to invest heavily in growth initiatives, most notably the Affirm Card product, international expansion (UK) and platform enhancements, leading to a GAAP net loss of $133.9 million and an adjusted operating income of approximately negative $21.0 million. On the positive side, operating cash flow was $208.2 million and free cash flow was $161.7 million, driving a strong liquidity position (cash and equivalents of about $1.62 billion) despite meaningful debt load (longâterm debt around $6.28 billion). Management signaled a longâhorizon growth focus, noting that growth is measured in years rather than quarters, and reiterated disciplined underwriting and unitâeconomic targets as it scales. The Q4 guidance points to seasonally stronger demand in travel/ticketing categories and an adjusted operating margin target of 15%â17%, indicating an intent to sustain topâline growth while improving operating leverage as unit economics mature and incremental scale benefits accrue.
Net Income: -$133.936 million; Net Margin: -23.25%; EPS (diluted): -$0.43; Weighted Avg Shares: 312.627 million
Financial Highlights
Quarters and figures (USD, IFRS/GAAP conventions where applicable):
- Revenue: $576.157 million (+51.2% YoY; -2.5% QoQ)
- Gross Profit: $487.948 million; Gross Margin: 84.69%
- Operating Expenses: R&D $124.828 million; G&A $128.721 million; Selling & Marketing $132.95 million; Total Operating Expenses $508.942 million; Cost of Revenue $88.209 million; Operating Income: -$20.994 million; Operating Margin: -3.64%
- EBITDA: -$5.485 million; EBITDA Margin: -0.95%
- Net Income: -$133.936 million; Net Margin: -23.25%; EPS (diluted): -$0.43; Weighted Avg Shares: 312.627 million
- Cash Flow: Net cash from operating activities $208.152 million; Free cash Flow $161.676 million; Net cash used for investing activities $-146.755 million; Net cash provided by financing activities $112.029 million; Cash and cash equivalents at period end $1.619 billion; Cash at beginning of period $1.448 billion
- Balance Sheet (selected): Total assets $9.201 billion; Total liabilities $6.578 billion; Total stockholdersâ equity $2.624 billion; Cash & cash equivalents $1.619 billion; Longâterm debt $6.279 billion; Net debt around $4.663 billion; Current ratio 14.54x; Quick ratio 17.01x; Debt/Equity 2.39x; Debt/Capitalization 0.705; Gross Margin 84.7%; Operating Margin (GAAP) -3.64%; Net Margin -23.2%
- Key operating metrics cited by management include GMV growth of ~36% YoY for the quarter and a continued emphasis on positive unit economics as revenue offsets funding and transaction costs. Management noted a transition toward reinvesting gains into growth (e.g., APR subsidies, card ecosystem enhancements) while maintaining disciplined risk controls.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
576.16M
51.23%
-2.53%
Gross Profit
487.95M
216.94%
28.05%
Operating Income
-20.99M
91.89%
87.80%
Net Income
-133.94M
34.88%
19.75%
EPS
-0.43
37.68%
20.37%
Key Financial Ratios
currentRatio
14.54
grossProfitMargin
84.7%
operatingProfitMargin
-3.64%
netProfitMargin
-23.2%
returnOnAssets
-1.46%
returnOnEquity
-5.11%
debtEquityRatio
2.39
operatingCashFlowPerShare
$0.67
freeCashFlowPerShare
$0.52
priceToBookRatio
4.15
priceEarningsRatio
-20.32
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management insights and quotes, grouped by theme:
- Strategy and longâterm orientation:
- Max Levchin: We donât run the business on a quarterâbyâquarter basis; growth is measured in years and thatâs how we think about it from a product point of view.
- Max Levchin: The network itself is a little bit more of the same, but the actual deal is profoundly interesting, particularly from Capital Oneâs point of view; the breadth of network effects and merchant coverage remains a core driver of Affirmâs growth trajectory.
- Credit risk and unit economics:
- Michael Linford: The yearâoverâyear change in revenue less transaction cost roughly offsets the increase in funding costs and incentive costs; the real governor is posting positive unit economics.
- Max Levchin: We are not super rate sensitive as long as rate moves are in subtle increments; we intend to grow regardless of rate cuts, maintaining disciplined underwriting and risk controls.
- Product strategy and Affirm Card:
- Max Levchin: The Affirm Card is on a path to become a multiâbillion dollar business; there are a lot of features to roll out and the product is still in an early phase with substantial room to grow.
- Max Levchin: Pay now usage has increased, with ongoing improvements to UX, merchant acceptance, and spend categories (e.g., restaurants and travel) contributing to stronger engagement.
- International expansion and funding:
- Reginald Smith / Max Levchin: UK is the next international market; funding will be localized to fit local funding markets; the company expects to learn and temper rollout accordingly.
- Operational execution and AI/efficiency:
- Max Levchin: We are aggressively deploying AI to support customer service and dispute resolution; the focus is on making interactions efficient while preserving access to human support where needed.
We don't run the business on a quarter-by-quarter basis. It is just a fundamentally wrong way to look at a payments company that wants to be around 100 years from now like what are you going to do next quarter, like we're trying to grow, we're trying to make sure that we grow really well, yet carefully we take risk. But most importantly, the fact that we have a forecast to share with you or guide to share with you for next quarter has barely a little impact on our planned growth initiatives on some randomly chosen time boundary that is not measured in quarters. And so I think it's just really important to know that I certainly do not think of Q4 numbers through from a growth point of view. Like I definitely care about other numbers like risk, et cetera that's really important. But growth is measured in years and that's certainly how we think about it from a product point of view.
â Max Levchin
We are not super rate sensitive so long as rates move in subtle increments, 25 bps up or down just doesn't change our cost-of-capital in a dramatic way.
â Max Levchin
Forward Guidance
Management guidance includes a Q4 adjusted operating margin target of 15%â17% supported by seasonality in travel/ticketing categories and ongoing improvements in unit economics. The company expects Q4 YoY growth to be faster than the yearâago quarter, with a twoâyear growth trajectory around ~58% at the high end of guidance, indicating a longerâterm, highâgrowth path despite nearâterm profit volatility.
Assessment: The guidance aligns with Affirmâs strategic emphasis on scale, subscriber/merchant adoption, and deeper integration into everyday consumer spend (Affirm Card, inâcheckout experiences, and card usage growth). Achievability hinges on several factors: continued monetization of the card ecosystem, favorable discretionary consumer spend in travel and ticketing categories, and successful localization of funding for international markets (e.g., UK). Risks to guidance include higher delinquency cycles driven by seasonal factors, potential increases in funding costs if capital markets tighten, and competitive pressures from open and closed BNPL networks.
Key monitorables for investors:
- Card adoption and monetization trajectory (GMV per user, payânow vs payâlater mix, and AOV dynamics).
- International expansion progress (UK launch timing, funding localization, and credit performance in new geographies).
- Credit performance metrics (delinquencies, loss rates, and provision levels) under evolving macro conditions.
- Unit economics stability (revenue less transaction costs vs funding costs) and ASPs/subsidies in response to pricing and competition.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AFRM Focus
84.69%
-3.64%
-5.11%
-20.32%
UPST
96.30%
-32.60%
-6.29%
-14.94%
SOFI
1.00%
6.94%
0.99%
34.65%
RBLX
77.70%
-30.40%
-1.26%
-30.10%
HOOD
76.10%
23.70%
2.08%
34.51%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Affirm remains in a growthâatâscale phase. The combination of a high gross margin, positive operating cash flow, and a sizable cash position supports continued investment in highâleverage growth initiatives, notably the Affirm Card and international expansion. The Q4 margin target (15%â17% adjusted) suggests management intends to improve profitability as scale drives leverage, while topâline growth remains robust (YoY revenue up ~51%). Investors should weigh the nearâterm losses against the longâterm opportunity of a diversified BNPL platform with an embedded card product and global footprint. Key sensitivities to monitor include delinquencies in seasonally weak periods, funding market volatility, and UK/European rolloutsâ credit performance. If Affirm can sustain positive unit economics during faster growth and successfully monetize international markets, the stock could transition to a higher multiple as profitability improves and the platform attains broader consumer spend penetration.
Key Investment Factors
Growth Potential
Affirmâs growth runway is anchored in (i) continued expansion of the Affirm Card with multiâcategory spending and improved usability, (ii) international market rollout beginning with the UK and supported by localized funding structures, (iii) expanded merchant distribution through direct and channel partnerships, and (iv) AIâdriven improvements in customer service and operational efficiency, which should bolster unit economics as scale increases.
Profitability Risk
Key risks include (i) rising delinquencies or changes in credit performance in a higherârate environment, (ii) funding and liquidity risk tied to capital markets dynamics and funding mix localization in international markets, (iii) competitive pressure from other BNPL networks and digital wallets, (iv) execution risk in international expansion and product localization, and (v) regulatory and compliance risks across multiple geographies.
Financial Position
Liquidity remains strong with cash and cash equivalents of approximately $1.62B and free cash flow of about $161.7M in the quarter, supporting continued investment in growth initiatives. However, Affirm carries a substantial total debt load (~$6.28B) and negative equity dynamics with a net debt position (~$4.66B), resulting in leverage metrics such as debt to capitalization ~70.5% and debt to equity ~2.39x. The company maintains very high current and liquidity ratios (current ~14.54x, quick ~17.01x, cash ratio ~9.57x), reflecting ample balance sheet liquidity to fund growth while incurring nearâterm losses due to strategic investments.
SWOT Analysis
Strengths
High gross margin (~84.7%), signaling pricing power and scalable platform economics
Large, diversified merchant network and growing Affirm Card ecosystem