Affirm Holdings [$AFRM] Mar 21 Earnings Highlights:
I just finished reviewing the report and the call.
Thread Outline⬇️
i) 10 key takeaways from the report;
ii) What trends are happening across the Fintech & BNPL Industry;
iii) And Key observations from Shopify & Peloton.
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1/ $AFRM Top-line highlights - Revenue:
Jun 20 - 120% YoY Growth
Sep 20 - 98% YoY "
Dec 20 - 57% YoY "
Mar 21 - 67% YoY "
*8 sequential QoQ growth
Yes, growth slowed down but it was primarily due to the Covid shutdown. But now, it is accelerating as the economy is reopening.
2/ $AFRM Gross Merchandise Volume (GMV)
• GMV is growing 83% YoY though AoV slowed down
+ Increases in network revenue
• Travelling is growing triple digits (already in Feb!)
• Everyone talks about $PTON, but if you remove $PTON, the business is accelerating over 100% YoY.
3/ $AFRM GMV is driven by these:
• 60% YoY in active consumers adopting BNPL (growth QoQ)
• Transactions per active consumer was 2.3 as of Mar, 2021, up 10%
• Merchants growth grew >90% (12.5K today)
• Ticketing grew 50% YoY
Great network effect btw merchants x consumers!
4/ $AFRM Bottom-line highlights:
• Net loss for fiscal 2021 was $247M (getting too big, but this is growth stage)
• Operating loss: $169M
• On a QoQ, Adjusted operating income for the quarter was $4.9M which actually improved
+ Transaction Costs as a % of GMV was 4.3%
5/ $AFRM x $SHOP
- $AFRM's partnership allowed them to bring more Shopify merchants on $AFRM’s platform to more than 10,000K (10k growth)
- Almost all $SHOP Merchants will have $AFRM Shop Pay Installed.
Gradually, I personally see $SHOP driving $AFRM to new heights! This is big
6/ On Peloton:
The impact is much smaller than feared.
They expect revenue loss of $3.5M in relation to the financial impact of $PTON's recall of Tread+ & Tread products.
As mentioned, $PTON's Rev impact is getting smaller, but $PTON's business is doing well & it still helps
7/ $AFRM acquired Returnly: a leader in online return experiences & post-purchase payments that serves 1,800 merchants and used by over 8-million shoppers.
This is a great acquisition bc'os if you buy expensive products, if you want to return it, you can now easily use $AFRM.
8/ Outlook & Guidance:
- $AFRM raised guidance by a slightly big mile. They have incorporated impact of $PTON.
- Next Qtr: $225M - 63% YoY
- They expect to beat the guide since Economic reopening is getting stronger - More marriages & demand for expensive items are expected.
9/ As it relates to BNPL & FinTech trends according to Adobe Industry Trends.
- The first couple months of 2021 has seen over 215% growth in adoption of BNPL Solutions. $PYPL also showed this too
- There are major trends also happening across e-Commerce providers.
More below⬇️
10/ Finally, my thesis on affirm is intact.
$AFRM is unique because of the flexibility they provide for high/ low transactions that consumers and merchants need. A great network effect flywheel with superior tech.
I've mentioned it before that $AFRM is a great reopening play.
2) Secondly, I am a big believer in the Founder to maximize the optionality, scale and competitive advantage of $AFRM to be a leader in the BNPL Market!
• Marketplace Revenue- 141% YoY
+ Marketplace- 165%
+Services - 90% YoY
- Marketplace = combination of visits+conversion+AoV)
• Home improvement is still one of highest spend
CFO indicated that April is already momentum. Essential part.
My Q1 High level overview:
• Q1 Non-GAAP EPS: $0.28
• Revenue of $198M (50% YoY) beats
• Chegg Services subscribers, up 64% YoY to 4.8M from Q4's 4.4M
• Notable is the 32% EBITDA margin acceleration & QoQ sequential growth across the business⬇️
2/ As a refresher, this is a business breakdown/ structure of $CHGG
-Revenues come from $CHGG Services & Required Materials.
- $CHGG Services primarily includes Chegg Study, Writing, Math Solver, Study Pack, Thinkful, and Mathway.
-Required Materials includes print/e-textbooks
3/ $CHGG - Solid description of the value proposition.
This line stood-out from the earnings call as it best describes the company.
Outline of this Thread - What To Do:
• Pre & Post Earnings
• During the Earnings Call
• Key Metrics to track
• The Psychology
Earning can be a merging of multiple expectations (h/t @jackbutcher)
A Comprehensive guide below:🧵
2/ Why should you care:
• Earnings report (ER) are crucial times
• *Many* Institutions have their expectations & are ready to increase/Initiate/Decrease position which lead to big stock movements
• It determines future of a stock