Affirm Holdings (AFRM) - Get Affirm Holdings Report shares soared higher Friday after the 'buy now, pay later' network blasted Street sales estimates and forecast 2022 revenues of more than $1.1 billion.
Affirm said gross merchandise volumes for the three months ending in June, the group's fiscal fourth quarter, more than doubled from the same period last year to $2.5 billion as its active customer base rose 97% to 7.1 million. Revenues from the fees it charges merchants to offer small 'point of sale' loans to its customers rose 70% to $261.8 million
Looking into the 2022 financial year, Affirm said it sees gross merchandise volumes rising by a much as 70%, with revenues of between $1.16 billion and $1.19 billion, with both figures excluding the impact of its recent partnership with Amazon Inc. (AMZN) - Get Amazon.com, Inc. Report.
"The secular shift toward flexible and transparent financial products continues to accelerate. With our superior technology, Affirm is strongly positioned to build a more valuable two-sided network for consumers and merchants," said CEO Max Levchin. "We remain focused on extending our leadership position with our core products, while capitalizing on our vast opportunities to empower more people with the new ones we continue to launch.”
Affirm shares were marked 16.6% higher in early trading Friday to change hands at $107.53 each.
Affirm said last month that its trial agreement with Amazon, the world's biggest retailer, will allow buyers to split purchases for $50 or more into monthly payments on the group's payment network. The addition of Amazon now means Affirm is working with three of the most important e-commerce groups in the world, following earlier deals with Walmart (WMT) - Get Walmart Inc. Report and Shopify (SHOP) - Get Shopify, Inc. Class A Report.
Credit Suisse analyst Timothy Chiodo estimates that around 2/3rds of Amazon's gross merchandise volume -- which hit $305 billion last year and could rise to $600 billion by 2024 -- is based on order values below the $50 mark. A 5% penetration for Affirm could translate to an incremental gain of $20 billion a year in GMV for the San Francisco-based group.
Earlier this week, PayPal Holdings expanded its footprint in the 'buy now, pay later' sector with the $2.7 billion purchase of Japan-based Paidy.
Paidy, which counts Visa Inc. V and Soros Capital Management among it financial backers, has around 6 million registered users in the world's third largest economy.
The deal followed a move by PayPal's upstart rival Square SQ, which is run by Twitter TWTR CEO Jack Dorsey, agreed to buy Australia's buy now, pay later group Afterpay for around $29 billion as tech companies scramble to establish a foothold in the fintech sector's hottest space.