Affirm is 'firing on all cylinders': CFO

Affirm (AFRM) shares soared after topping fourth quarter revenue estimates and posting narrower-than-expected losses per share. The buy now, pay later company also announced that it expects to be profitable by the fourth quarter of the next fiscal year, a projection ahead of Wall Street estimates. Affirm CFO Michael Linford joins Asking for a Trend to discuss the quarter and what lies ahead for the company.

"We had a lot of momentum in the business right now. We delivered really great results. We've got a fully engaged team, and there's so much opportunity ahead of us. You know, we're really firing on all cylinders and our outlook reflects that. We see strong growth, margin expansion, and we're signing up for 200 basis points of adjusted operating income margin expansion," Linford explains.

As for Affirm's guidance, Linford says it is a "reflection of things that we know are are tangible and real in the ground already shipped. And then we set out to try to do better than that." He continues, "We think it's really important that investors know when we make a commitment, we do everything we can to deliver on it."

Affirm has partnered with Amazon (AMZN) to offer customers a buy now, pay later option. Linford explains that Affirm's partnerships are "still in the very early innings" as customers adopt the new payment methods and move away from credit cards. As the consumer mindset shifts, he expects more opportunity ahead for the company.

For more expert insight and the latest market action, click here to watch this full episode of Asking for a Trend.

This post was written by Melanie Riehl

Video Transcript

A firm pleasing investors and that is an understatement.

After topping fourth quarter revenue estimates, the buy now pay later service also posting it narrower than expected losses per share company.

Also saying it expects to be profitable by the fourth quarter of the next fiscal year ahead of Wall Street estimates.

And joining us now for more is a firm's chief Financial Officer Michael Linford, Michael.

It is good to see you.

So listen, you reported investors like what they saw that stock really surged on on that release, walk us through the report, Michael, what are you seeing driving the business?

Yeah, thanks for, thanks for having me.

Look, we had a lot of momentum in the business right now.

We delivered really great results.

We've got a fully engaged team and there's so much opportunity ahead of us.

You know, we're really firing in all cylinders and our outlook reflects that we see strong growth margin expansion and we're signing up for 200 basis points of adjusted operating income margin expansion.

And we announced that we're on a path towards gap profitability.

Uh And I think it's always a reflection of the unstoppable team that we have here at a firm.

Let me ask you, Michael.

I was, I was chatting with a, a financial analyst today who covers you all smart guy and, and we were talking about the results and he said, you know, I just wonder how conservative Michael is being here with his guy just given the big volumes in apple pay.

He said the big opportunities with the rate cuts.

Um, he was curious whether you're being kind of just conservative, conservative with that forecast.

What's your response to that Michael?

We, we take our guidance very seriously.

So we set out to provide guidance for the fiscal year.

Uh a thing that we did this year and last year is we set a floor for what we expect the GMB to be for the business.

And that is a reflection of things that we know are, are tangible and real in the ground already shipped.

And then we, we set out to try to do better than that.

And we put a lot of blood sweat and tears into delivering more, more for our consumers, more for our merchants.

Uh Last year in fiscal 24 we did that very well.

We set a, we set a reasonable number to start the year out at and went out and did a lot more than we committed to at the beginning of the year.

And I really hope we can do that again this year.

But we're, we're very thoughtful about making sure that we size the the investment envelopes in the business and decide size the numbers we communicate externally to things that we're, we have a lot of confidence in.

As we think it's really important that investors know we, we make a commitment, we do everything we can to deliver on it.

Michael, another focus for investors is that Amazon relationship, how much bigger, um Do you think Amazon can become here as a, as a partner?

You know, for all of our partners, I think we're still in the very early innings.

Um The category as a whole is still in the secular shift where consumers are adopting these new payment methods, they're moving away from credit cards, they're finding better ways to pay for things over time.

And when you partner with the world's leading merchants, the world leading ecommerce and merchants broadly, you have a lot of opportunity ahead and our penetration is still very, very small.

We noted in our letter, we're still, you know, roughly 2% of us e commerce and that gives us a lot of confidence.

There's just, there's just tons of runway and so whether it's partners like Amazon or a partnership with Shopify or adding new merchants, we see a lot of runway ahead of us.