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: Affirm boosts outlook but stock falls amid concerns about ‘cyclical risk’

Affirm Holdings Inc. boosted its outlook Monday as the buy-now, pay-later company said that it’s seen better-than-expected performance thus far in the March quarter.

The company now expects revenue of at least $335 million for its fiscal third quarter, compared with the prior guidance for $325 million to $335 million that Affirm
AFRM,
-15.57%

issued Feb. 10. Affirm also anticipates quarterly revenue less transaction costs of at least $148 million, whereas its prior forecast was for $138 million to $143 million.

Affirm projects that it will see gross merchandise volume (GMV) of at least $3.71 billion for the quarter, whereas its prior outlook had been for $3.61 billion to $3.71 billion. The company is also anticipating that its adjusted operating loss as a percentage of revenue will be 15% or better. The company previously had been targeting 19% to 21%.

Meanwhile, shares of Affirm were off more than 6% in premarket trading Monday, which put them on track to open at a record low. The stock has lost 71% over the past three months as the S&P 500 SPX has declined about 9%.

Affirm noted in a release that its GMV growth “remained strong, driven in particular by the company’s enterprise partnerships.” The higher outlook for revenue less transaction costs reflects “outperformance in both network revenue and transaction costs, including provision for credit losses,” the company continued.

The financial-technology company boosted its forecast for the full fiscal year as well. Affirm now expects revenue of $1.31 billion, whereas it had previously called for $1.29 billion to $1.31 billion. Affirm also projects revenue less transaction costs of $600 million, ahead of its prior forecast, which was for $585 million to $595 million.

Affirm anticipates that its adjusted operating loss as a percentage of revenue will be 11 percent to 13 percent for the full fiscal year. Its earlier outlook called for 12 percent to 14 percent. Affirm models at least $14.78 billion in GMV, whereas its prior forecast called for $14.58 billion to $14.78 billion.

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