Please note that Affirm’s fiscal year ends on June 30. Thus, Affirm’s Fiscal Year Q1 2023 (referred to as FY Q1 2023) is Calendar Year Q3 2022 (r

Affirm Fiscal Q1 2023 Earnings Review: can a BNPL business be profitable?

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2023-01-27 20:30:08

Please note that Affirm’s fiscal year ends on June 30. Thus, Affirm’s Fiscal Year Q1 2023 (referred to as FY Q1 2023) is Calendar Year Q3 2022 (referred to as Q3 2022). I will mostly operate with calendar year quarters in the text below.

That’s been two years since Affirm (NASDAQ: AFRM 0.00 ) went public, and the company’s growth since its last quarter of being private has been nothing short of spectacular. The number of active consumers increased from 4.5 million at the end of Q4 2020 to 14.7 million at the end of Q3 2022. Quarterly Gross Merchandise Volume grew from $2.1 billion to $4.4 billion, and quarterly revenue grew from $204.0 million to $361.6 million. Affirm also stroke partnerships with such companies as Amazon, Shopify, and Target.

However, Affirm’s Operating Loss increased from $26.8 million in Q4 2020 to $287.5 million in Q3 2022. The company’s management is committed to achieving profitability on an adjusted basis by the end of the Fiscal Year 2023 (Q2 2023), but the path to GAAP profitability is very unclear. Don’t get me wrong, I genuinely want Affirm to succeed, and the company has close to $2.8 billion in cash and equivalents, so is unlikely to run out of money. Nevertheless, it would be good to see at least some proof that Buy Now Pay Later model is financially viable.