Company Provides Outlook for Fiscal Third Quarter and Fiscal Full Year 2021

Affirm Holdings, Inc. (NASDAQ: AFRM) (“Affirm” or the "Company”), a more flexible and transparent alternative to credit cards, today reported financial results for its fiscal 2021 second quarter ended December 31, 2020.

"Since we founded Affirm and through to this day, our mission has been to build honest financial products that improve lives. We've aligned our success with the success of both sides of the commerce ecosystem, winning when our consumers and our merchants win. And during the last quarter, we continued to demonstrate that this approach translates into results," said Max Levchin, Founder and CEO of Affirm. "We grew our active consumers 52% and our merchant base 90% year-over-year, driving revenue growth of 57% year-over-year and a 55% year-over-year increase in quarterly gross merchandise volume to a record $2.1 billion. As we look ahead, we remain committed to empowering consumers to take control of their finances, helping merchants grow their revenue on our platform, and developing new innovative solutions to establish the ubiquity of our network and breath of our platform."

Second Quarter of Fiscal Year 2021 Operating Highlights:

  • Gross merchandise volume ("GMV") for the second quarter of fiscal 2021 was $2.1 billion, an increase of 55% when compared to the second quarter of fiscal 2020
  • The Company had 4.5 million active consumers as of December 31, 2020, an increase of 52% when compared to the second quarter of fiscal 2020
  • Transactions per active consumer were approximately 2.2 as of December 31, 2020, an increase of 7% when compared to the second quarter of fiscal 2020

Second Quarter of Fiscal Year 2021 Financial Highlights:

  • Total revenue for the second quarter of fiscal 2021 was $204.0 million, a 57% increase when compared to the second quarter of fiscal 2020
  • Total revenue less transaction costs1 for the second quarter of fiscal 2021 was $89.9 million, a 141% increase when compared to the second quarter of fiscal 2020
  • Operating loss for the second quarter of fiscal 2021 was $31.7 million compared to $32.6 million in the second quarter of fiscal 2020, a decrease of 3%
  • Adjusted operating loss1 for the second quarter of fiscal 2021 was $1.8 million compared to $21.9 million in the second quarter of fiscal 2020, a decrease of 92%
  • Net loss for the second quarter of fiscal 2021 was $31.6 million compared to $31.0 million in the second quarter of fiscal 2020

     

Recent Developments

On January 1, 2021, the Company completed its acquisition of PayBright Inc., one of Canada’s leading buy now, pay later providers.

On January 15, 2021, the Company closed its initial public offering ("IPO") of 28,290,000 shares of Class A common stock, including 3,690,000 shares pursuant to the option granted to the underwriters to purchase additional shares of Class A common stock, at an offering price of $49.00 per share. The proceeds, before expenses, to the Company from the IPO were $1.3 billion.

Financial Outlook

The following table summarizes Affirm's guidance for the third quarter and full year fiscal 2021 periods1.

 

 

 

Fiscal Q3 2021

 

Fiscal Year 2021

GMV

 

$1.80 to $1.85 billion

 

$7.25 to $7.35 billion

Revenue

 

$185 to $195 million

 

$760 to $780 million

Transaction Costs

 

$125 to $130 million

 

$500 to $510 million

Revenue Less Transaction Costs

 

$60 to $65 million

 

$260 to $270 million

Adjusted Operating Loss2

 

$(47.5) to $(52.5) million

 

$(120) to $(130) million

Weighted Average Shares Outstanding

 

226 million

 

155 million

 

Conference Call

Affirm will host a conference call and webcast to discuss second quarter fiscal year 2021 financial results on Thursday, February 11, 2021, at 5:00pm ET. Hosting the call will be Max Levchin, Founder and Chief Executive Officer, and Michael Linford, Chief Financial Officer. The conference call will be webcast live from the Company's investor relations website at https://investors.affirm.com/. A replay will be available on the investor relations website following the call.

Key Operating Metrics and Financial Measures

The Company uses the following key operational, financial, and non-GAAP financial metrics to evaluate its business, measure its performance, develop forecasts, and make strategic decisions.

 

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2019

 

2020

 

2019

 

2020

 

 

(in millions, except GMV and percent data) (unaudited)

GMV (in billions)

 

$

1.3

 

 

$

2.1

 

 

$

2.2

 

 

$

3.6

 

Total Revenue, net

 

$

130.0

 

 

$

204.0

 

 

$

217.9

 

 

$

378.0

 

Total Revenue as a % of GMV

 

9.7

%

 

9.8

%

 

9.9

%

 

10.6

%

Transaction Costs

 

$

92.7

 

 

$

114.1

 

 

$

155.3

 

 

$

244.1

 

Transaction Costs as a % of GMV1

 

6.9

%

 

5.5

%

 

7.0

%

 

6.9

%

Revenue Less Transaction Costs1

 

$

37.3

 

 

$

89.9

 

 

$

62.6

 

 

$

133.9

 

Revenue Less Transaction Costs as a % of GMV1

 

2.8

%

 

4.3

%

 

2.8

%

 

3.8

%

Operating Loss

 

$

(32.6)

 

 

$

(31.7)

 

 

$

(65.6)

 

 

$

(76.3)

 

Adjusted Operating Loss1

 

$

(21.9)

 

 

$

(1.8)

 

 

$

(44.3)

 

 

$

(21.1)

 

Operating Margin

 

(25.1)

%

 

(15.5)

%

 

(30.1)

%

 

(20.2)

%

Adjusted Operating Margin1

 

(16.9)

%

 

(0.9)

%

 

(20.3)

%

 

(5.6)

%

Net Loss

 

$

(31.0)

 

 

$

(31.6)

 

 

$

(61.8)

 

 

$

(46.8)

 

   

 

December 31, 2019

 

June 30, 2020

 

December 31, 2020

 

 

(in millions, except Total Platform Portfolio, per consumer,

and percent data) (unaudited)

Active Consumers

 

3.0

 

 

3.6

 

 

4.5

 

Transactions per Active Consumer

 

2.1

 

 

2.1

 

 

2.2

 

Total Platform Portfolio (in billions)

 

$

2.2

 

 

$

2.5

 

 

$

3.7

 

Equity Capital Required1

 

$

220.1

 

 

$

220.8

 

 

$

277.3

 

Equity Capital Required as a % of Total Platform Portfolio1

 

10.2

%

 

8.9

%

 

7.5

%

Allowance for Credit Losses as a % of Loans Held for Investment

 

8.5

%

 

9.2

%

 

6.9

%

 

Gross Merchandise Volume ("GMV")

The Company measures gross merchandise volume to assess the volume of transactions that take place on its platform. The Company defines GMV as the total dollar amount of all transactions on the Affirm platform during the applicable period, net of refunds. GMV does not represent revenue earned by Affirm. However, the GMV processed through its platform is an indicator of the success of its merchants and the strength of its platform.

Transaction Costs

The Company defines transaction costs as the sum of loss on loan purchase commitment, provision for credit losses, funding costs, and processing and servicing expense.

Revenue Less Transaction Costs

The Company defines revenue less transaction costs as its GAAP total revenue less transaction costs as defined above.

Adjusted Operating Loss

The Company defines adjusted operating loss as its GAAP operating loss, excluding: (a) depreciation and amortization; (b) stock-based compensation included in GAAP operating loss; (c) the amortization of its commercial agreement asset; and (d) certain other non-recurring items.

Adjusted Operating Margin

The Company defines adjusted operating margin as its adjusted operating loss, as defined above, as a percentage of its GAAP total revenue.

Active Consumers

The Company assesses consumer adoption and engagement by the number of active consumers across its platform. Active consumers are the primary measure of the size of its network. The Company defines an active consumer as a consumer who engages in at least one transaction on its platform during the 12 months prior to the measurement date.

Transactions per Active Consumer

The Company believes the value of its network is amplified with greater consumer engagement and repeat usage, highlighted by increased transactions per active consumer. Transactions per active consumer is defined as the average number of transactions that an active consumer has conducted on its platform during the 12 months prior to the measurement date.

Total Platform Portfolio

The Company defines total platform portfolio as the unpaid principal balance outstanding of all loans facilitated through its platform as of the balance sheet date, including both those loans held for investment and those loans owned by third-parties.

Equity Capital Required

The Company defines equity capital required as the sum of the balance of loans held for investment and loans held for sale, less the balance of funding debt and notes issued by securitization trusts as of the balance sheet date.

Use of Non-GAAP Financial Measures

To supplement the Company's interim condensed consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States ("GAAP"), the Company presents the following non-GAAP financial measures: Transaction costs, transaction costs as a percentage of GMV, revenue less transaction costs, revenue less transaction costs as a percentage of GMV, adjusted operating loss, adjusted operating margin, equity capital required, and equity capital required as a percentage of total platform portfolio. Definitions of each of these non-GAAP financial measures are included above, and reconciliations of each non-GAAP financial measure with the most directly comparable GAAP financial measure are included in the tables below.

Management uses these non-GAAP financial measures in conjunction with financial measures prepared in accordance with GAAP for planning purposes, including the preparation of its annual operating budget, as a measure of its operating results and the effectiveness of its business strategy, and in evaluating its financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, and use of these non-GAAP financial measures has limitations as analytical tools. Some of these limitations are as follows:

  • Revenue less transaction costs and revenue less transaction costs as a percentage of GMV are not intended to be a measure of operating profit or loss as they exclude key operating expenses such as technology and data analytics, sales and marketing, and general and administrative expenses;
  • Adjusted operating income and adjusted operating margin exclude certain recurring, non-cash charges such as depreciation and amortization, although the assets being depreciated and amortized may need to be replaced in the future, and share-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense and an important part of its compensation strategy; and
  • Other companies, including companies in the same industry, may calculate these non-GAAP financial measures differently from how the Company calculates them or not at all, which reduces its usefulness as a comparative measure.

Accordingly, you should not consider these non-GAAP financial measures in isolation or as substitutes for analysis of the Company's financial results as reported under GAAP, and these non-GAAP measures should be considered along with other operating and financial performance measures presented in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliations of these non-GAAP financial measures to their most directly comparable GAAP financial measures and not rely on any single financial measure to evaluate the business.

Cautionary Note About Forward-Looking Statements

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. All statements other than statements of historical fact are forward-looking statements, including statements regarding: the Company's strategy and future operations; the Company's future financial position, gross market value, revenue, transaction costs, operating income, provision for credit losses, and cash flows; and general economic trends and trends in the industry and markets. These statements involve known and unknown risks, uncertainties and other important factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Risks, uncertainties and assumptions include factors relating to: the Company's need to attract additional merchants and consumers and retain and grow its relationships with existing merchants and consumers; its need to maintain a consistently high level of consumer satisfaction and trust in its brand; the concentration of a large percentage of its revenue with a single merchant partner; its ability to sustain its revenue growth rate or the growth rate of its related key operating metrics; the highly competitive nature of its industry; risks relating to its agreement with one of its originating bank partners; the risk that its existing funding arrangements may not be renewed or replaced or its existing funding sources may be unwilling or unable to provide funding to it on terms acceptable to it, or at all; its ability to effectively underwrite loans facilitated through its platform and accurately price credit risk; the performance of loans facilitated through its platform; risks associated with changes in market interest rates; risks relating to its securitizations, warehouse credit facilities and forward flow agreements; the impact on its business of general economic conditions, the financial performance of its merchants, and fluctuations in the U.S. consumer credit market; its ability to grow effectively through acquisitions or other strategic investments or alliances; risks associated with expanding its operations internationally; the potential impact of any cyber-attacks, misconduct, computer viruses, or physical or electronic break-ins that it might experience; risks associated with its business being subject extensive regulation, examination, and oversight in a variety of areas; and other risks that are described in its prospectus relating to its initial public offering filed on January 14, 2021 pursuant to Rule 424(b) under the Securities Act and in its other filings with the U.S. Securities and Exchange Commission.

These forward-looking statements reflect the Company's views with respect to future events as of the date hereof and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, you should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of the date hereof, and the Company assumes no obligation and do not intend to update these forward-looking statements.

About Affirm

Affirm’s mission is to deliver honest financial products that improve lives. With that in mind, Affirm is building the next generation platform for digital and mobile-first commerce, making it easier for consumers to spend responsibly and with confidence, easier for merchants to convert sales and grow, and easier for commerce to thrive.

 

AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share and per share amounts)

 

 

June 30, 2020

 

December 31, 2020

Assets

Cash and cash equivalents

$

267,059

 

 

$

520,741

 

Restricted cash

61,069

 

 

116,049

 

Loans held for sale

4,459

 

 

12,302

 

Loans held for investment

1,034,312

 

 

1,888,432

 

Allowance for credit losses

(95,137)

 

 

(131,165)

 

Loans held for investment, net

939,175

 

 

1,757,267

 

Accounts receivable, net

59,001

 

 

67,046

 

Property, equipment and software, net

48,140

 

 

49,358

 

Other assets

23,348

 

 

185,359

 

Total Assets

$

1,402,251

 

 

$

2,708,122

 

Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit

 

 

 

Liabilities:

 

 

 

Accounts payable

$

18,361

 

 

$

26,224

 

Payable to third-party loan owners

24,998

 

 

33,043

 

Accrued interest payable

1,860

 

 

3,133

 

Accrued expenses and other liabilities

27,810

 

 

44,629

 

Convertible debt

74,222

 

 

 

Notes issued by securitization trusts

 

 

818,446

 

Funding debt

817,926

 

 

804,960

 

Total liabilities

965,177

 

 

1,730,435

 

Redeemable convertible preferred stock, $0.00001 par value, 124,453,009 and 149,860,292

 

 

 

 

 

shares authorized as of June 30, 2020 and December 31, 2020; 122,115,971 and 148,396,979 shares issued and outstanding as of June 30, 2020 and December 31, 2020, respectively; liquidation preference of $809,032 and $1,305,240 as of June 30, 2020 and December 31, 2020, respectively

804,170

1,327,271

Stockholders’ deficit:

 

 

 

Common stock, $0.00001 par value, 232,000,000 and 304,000,000 shares authorized as of

 

 

 

June 30, 2020 and December 31, 2020; 47,684,427 and 59,239,370 shares issued and outstanding as of June 30, 2020 and December 31, 2020, respectively

Additional paid in capital

80,373

 

 

142,477

 

Accumulated deficit

(447,167)

 

 

(493,999)

 

Accumulated other comprehensive gain (loss)

(302)

 

 

1,938

 

Total stockholders’ deficit

(367,096)

 

 

(349,584)

 

Total Liabilities, Redeemable Convertible Preferred Stock and Stockholders’ Deficit

$

1,402,251

 

 

$

2,708,122

 

 

AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

(in thousands, except share and per share amounts)

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2019

 

2020

 

2019

 

2020

Revenue

 

 

 

Merchant network revenue

$

67,764

 

$

99,630

 

 

$

104,153

 

$

192,895

 

Virtual card network revenue

7,110

 

10,820

 

 

10,711

 

16,778

 

Interest income

45,073

 

73,857

 

 

85,241

 

128,094

 

Gain on sales of loans

4,738

 

14,560

 

 

10,463

 

30,994

 

Servicing income

5,291

 

5,174

 

 

7,355

 

9,258

 

Total Revenue, net

$

129,976

 

 

$

204,041

 

 

$

217,923

 

 

$

378,019

 

Operating Expenses

 

 

 

Loss on loan purchase commitment

$

42,661

 

$

67,768

 

 

$

62,622

 

$

133,636

 

Provision for credit losses

30,178

 

17,468

 

 

55,022

 

57,735

 

Funding costs

8,167

 

12,060

 

 

16,295

 

22,412

 

Processing and servicing

11,652

 

16,802

 

 

21,347

 

30,300

 

Technology and data analytics

31,612

 

41,634

 

 

56,980

 

75,402

 

Sales and marketing

7,651

 

39,112

 

 

12,870

 

61,694

 

General and administrative

30,688

 

40,916

 

 

58,392

 

73,182

 

Total Operating Expenses

162,609

 

 

235,760

 

 

283,528

 

 

454,361

 

Operating Loss

$

(32,633)

 

 

$

(31,719)

 

 

$

(65,605)

 

 

$

(76,342)

 

Other income, net

1,730

 

240

 

 

4,003

 

29,685

 

Loss Before Income Taxes

$

(30,903)

 

 

$

(31,479)

 

 

$

(61,602)

 

 

$

(46,657)

 

Income tax expense

93

 

 

78

 

 

189

 

 

175

 

Net Loss

$

(30,996)

 

 

$

(31,557)

 

 

$

(61,791)

 

 

$

(46,832)

 

Excess return to preferred stockholders on repurchase

 

(13,205)

 

 

 

 

(13,205)

 

 

 

Net Loss Attributable to Common Stockholders

 

$

(44,201)

 

 

$

(31,557)

 

 

$

(74,996)

 

 

$

(46,832)

 

Other Comprehensive Income (Loss)

 

 

 

Foreign currency translation adjustments

$

(15)

 

$

1,834

 

 

$

10

 

$

2,240

 

Net Other Comprehensive Income (Loss)

(15)

 

1,834

 

 

10

 

2,240

 

Comprehensive Loss

$

(31,011)

 

 

$

(29,723)

 

 

$

(61,781)

 

 

$

(44,592)

 

Per share data:

 

Net loss per share attributable to common stockholders:

 

 

 

Basic

$

(0.92)

 

 

$

(0.45)

 

 

$

(1.55)

 

 

$

(0.69)

 

Diluted

$

(0.92)

 

 

$

(0.45)

 

 

$

(1.55)

 

 

$

(1.07)

 

Weighted average common shares outstanding

 

 

 

Basic

48,079,867

 

 

70,801,521

 

 

48,241,444

 

 

67,795,598

 

Diluted

48,079,867

 

 

70,801,521

 

 

48,241,444

 

 

69,534,680

 

 

AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

Three Months Ended December 31,

 

Six Months Ended December 31,

2019

 

2020

 

2019

 

2020

Cash Flows from Operating Activities

 

 

 

 

Net Loss

$

(30,996)

 

 

$

(31,557)

 

 

$

(61,791)

 

$

(46,832)

 

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

Provision for credit losses

30,178

 

 

17,468

 

 

55,022

 

57,735

 

Amortization of premiums and discounts on loans

(6,891)

 

 

(20,330)

 

 

(13,194)

 

(31,453)

 

Gain on sales of loans

(4,738)

 

 

(14,560)

 

 

(10,463)

 

(30,994)

 

Changes in fair value of servicing assets and liabilities

1,643

 

 

(92)

 

 

902

 

(188)

 

Changes in fair value of convertible debt derivative

 

 

 

 

 

(30,106)

 

Changes in fair value of residual trust certificates

 

 

 

(274)

 

 

 

 

(274)

 

Amortization of commercial agreement asset

 

 

17,039

 

 

 

31,300

 

Amortization of debt issuance costs

542

 

 

1,278

 

 

1,142

 

2,361

 

Stock-based compensation

8,369

 

 

6,521

 

 

16,794

 

12,724

 

Depreciation and amortization

2,432

 

 

3,351

 

 

4,544

 

7,071

 

Deferred tax expense

93

 

 

78

 

 

189

 

175

 

Other

(15)

 

 

1,834

 

 

12

 

2,241

 

Purchases of loans held for sale

(741,322)

 

 

(687,037)

 

 

(1,084,810)

 

(1,033,915)

 

Proceeds from the sale of loans held for sale

718,965

 

 

662,747

 

 

1,052,121

 

1,001,673

 

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

(1,075)

 

 

(19,255)

 

 

(3,058)

 

(9,080)

 

Other assets

(6,587)

 

 

(17,275)

 

 

(7,252)

 

(16,906)

 

Accrued interest payable

296

 

 

1,001

 

 

1,256

 

1,799

 

Accounts payable

4,170

 

 

1,752

 

 

1,991

 

7,862

 

Accrued expenses and other liabilities

5,090

 

 

17,817

 

 

5,081

 

16,802

 

Payable to third-party loan owners

3,729

 

 

11,839

 

 

6,869

 

8,046

 

Net Cash Used in Operating Activities

(16,117)

 

 

(47,655)

 

 

(34,645)

 

 

(49,959)

 

Cash Flows from Investing Activities

 

 

 

 

 

Purchases of loans

(781,546)

 

 

(1,404,972)

 

 

(1,339,851)

 

(2,582,741)

 

Origination of loans

 

 

 

(109,047)

 

 

 

 

(109,047)

 

Proceeds from the sale of loans

78,975

 

 

129,911

 

 

137,057

 

204,960

 

Principal repayments of loans

505,844

 

 

951,681

 

 

943,486

 

1,700,809

 

Acquisition funds in transit

 

 

 

(113,628)

 

 

 

 

(113,628)

 

Additions to property, equipment and software

(8,091)

 

 

(2,894)

 

 

(13,502)

 

(7,063)

 

Net Cash Used in Investing Activities

(204,818)

 

 

(548,949)

 

 

(272,810)

 

 

(906,710)

 

Cash Flows from Financing Activities

 

 

 

 

 

Proceeds from funding debt

559,248

 

 

759,441

 

 

969,782

 

1,533,379

 

Payment of debt issuance costs

(1,371)

 

 

(2,170)

 

 

(1,371)

 

(6,787)

 

Principal repayments of funding debt

(376,382)

 

 

(653,946)

 

 

(739,608)

 

(1,544,502)

 

Proceeds from issuance of notes and certificates by securitization trusts

 

 

378,223

 

 

 

896,455

 

Principal repayments of notes issued by securitization trusts

 

 

(55,613)

 

 

 

(70,390)

 

Proceeds from issuance of redeemable convertible preferred stock, net

(2)

 

 

108

 

 

15,481

 

434,542

 

Repurchases of redeemable convertible preferred stock

 

(22,591)

 

 

 

 

(22,591)

 

 

 

Proceeds from issuance of common stock

478

 

 

21,676

 

 

1,221

 

23,417

 

Repurchases of common stock

(17,589)

 

 

(199)

 

 

(18,454)

 

(783)

 

Net Cash Provided by Financing Activities

141,791

 

 

447,520

 

 

204,460

 

 

1,265,331

 

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash

(79,144)

 

 

(149,084)

 

 

(102,995)

 

308,662

 

Cash and cash equivalents and restricted cash, beginning of period

333,920

 

 

785,874

 

 

357,771

 

328,128

 

Cash and Cash Equivalents and Restricted Cash, end of period

$

254,776

 

 

$

636,790

 

 

$

254,776

 

 

$

636,790

 

Supplemental Disclosures of Cash Flow Information

 

 

 

 

Cash payments for interest

$

7,329

 

 

$

9,782

 

 

$

13,924

 

$

16,716

 

Supplemental Disclosures of Non-Cash Investing and Financing Activities

 

 

 

 

 

Stock-based compensation included in capitalized internal-use software

$

785

 

 

$

253

 

 

$

1,683

 

$

1,225

 

Additions to property and equipment included in accrued expenses

1,559

 

 

9

 

 

1,559

 

24

 

Issuance of warrants in exchange for commercial agreement

 

 

 

 

 

67,645

 

Conversion of convertible debt

 

 

 

 

 

88,559

 

 

Reconciliation of Non-GAAP Financial Measures

The following tables present a reconciliation of transaction costs, revenue less transaction costs, adjusted operating loss, adjusted operating margin, and equity capital required to their most directly comparable financial measures prepared in accordance with GAAP for each of the periods indicated.

 

 

 

Three Months Ended December 31,

 

Six Months Ended December 31,

 

 

2019

 

2020

 

2019

 

2020

 

 

(in thousands, except percent data) (unaudited)

Operating Expenses

 

 

 

 

 

 

 

 

Loss on loan purchase commitment

 

$

42,661

 

 

$

67,768

 

 

$

62,622

 

 

$

133,636

 

Provision for credit losses

 

30,178

 

 

17,468

 

 

55,022

 

 

57,735

 

Funding costs

 

8,167

 

 

12,060

 

 

16,295

 

 

22,412

 

Processing and servicing

 

11,652

 

 

16,802

 

 

21,347

 

 

30,300

 

Transaction Costs (Non-GAAP)

 

$

92,658

 

 

$

114,098

 

 

$

155,286

 

 

$

244,083

 

Technology and data analytics

 

31,612

 

 

41,634

 

 

56,980

 

 

75,402

 

Sales and marketing

 

7,651

 

 

39,112

 

 

12,870

 

 

61,694

 

General and administrative

 

30,688

 

 

40,916

 

 

58,392

 

 

73,182

 

Total Operating Expenses

 

$

162,609

 

 

$

235,760

 

 

$

283,528

 

 

$

454,361

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

129,976

 

 

$

204,041

 

 

$

217,923

 

 

$

378,019

 

Less: Transaction Costs (Non-GAAP)

 

(92,658)

 

 

(114,098)

 

 

(155,286)

 

 

(244,083)

 

Revenue Less Transaction Costs (Non-GAAP)

 

$

37,318

 

 

$

89,943

 

 

$

62,637

 

 

$

133,936

 

 

 

 

 

 

 

 

 

 

Operating Loss

 

$

(32,633)

 

 

$

(31,719)

 

 

$

(65,605)

 

 

$

(76,342)

 

Add: Depreciation and amortization

 

2,432

 

 

3,351

 

 

4,544

 

 

7,071

 

Add: Stock-based compensation included in operating expenses

 

8,294

 

 

6,521

 

 

16,719

 

 

12,724

 

Add: Amortization of Shopify Inc. commercial agreement asset

 

 

 

17,039

 

 

 

 

31,300

 

Add: Other non-recurring items3

 

 

 

2,971

 

 

 

 

4,162

 

Adjusted Operating Loss (Non-GAAP)

 

$

(21,907)

 

 

$

(1,837)

 

 

$

(44,342)

 

 

$

(21,085)

 

Divided by: Total Revenue, net

 

$

129,976

 

 

$

204,041

 

 

$

217,923

 

 

$

378,019

 

Adjusted Operating Margin (Non-GAAP)

 

(16.9)

%

 

(0.9)

%

 

(20.3)

%

 

(5.6)

%

 

 

 

December 31,

2019

 

June 30,

2020

 

December 31,

2020

 

 

(in thousands) (unaudited)

Loans held for investment

 

$

1,012,987

 

 

$

1,034,312

 

 

$

1,888,432

 

Add: Loans held for sale

 

6,255

 

 

4,459

 

 

12,302

 

Less: Funding debt

 

(799,178)

 

 

(817,926)

 

 

(804,960)

 

Less: Notes issued by securitization trusts

 

 

 

 

 

(818,446)

 

Equity Capital Required (Non-GAAP)

 

$

220,064

 

 

$

220,845

 

 

$

277,328

 

1 Information about Affirm's use of non-GAAP financial measures is provided under "Use of Non-GAAP Financial Measures" below, and reconciliations of GAAP results to non-GAAP results are provided in the tables at the end of this press release. 2 A reconciliation of adjusted operating loss to the comparable GAAP measure is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future. 3 Other non-recurring items consists of one-time expenses incurred in the period associated with the Company's initial public offering and its acquisition of PayBright Inc.

AFRM-F

Investor Relations ir@affirm.com Media press@affirm.com