Shares of Affirm Holdings Inc. fell on Tuesday afternoon after executives cut their annual guidance for the buy-now-pay-late company amid problems at one of its most important partners in recent years, Peloton Interactive Inc.
Shares fell more than 18% in after-hours trading immediately after the results were reported, having closed up 0.1% at $15.64. After-hours prices would be record lows for the new company, which went public in early 2021 at $49 a share. the stock hasn’t traded below $13.64 in regular session since then, but traded below $13 in extended session Tuesday afternoon.
The company reported a comprehensive first-quarter fiscal loss of $278.3 million, or 86 cents per share, compared with a loss of $311 million, or $1.13 per share, in the prior quarter. The FactSet consensus was for a loss of 84 cents on a GAAP basis.
Affirm’s revenue rose to $361.6 million from $269 million, while analysts were expecting $360 million. The company’s total revenue excluding transaction costs was $182.3 million.
The company’s number of active merchants rose to 244,900 from 235,000 sequentially, while Affirm’s annual active customer count rose to 14.7 million in the September quarter from 14 million in the June quarter. Affirm reported $4.4 billion in gross merchandise volume, or the dollar value of transactions on its platform during the quarter.
The problem appeared to be in Affirm’s forecast, with executives cutting their full-year guidance after the fiscal first quarter and missing revenue guidance for the second quarter as they face a huge drop in demand for bikes from the Peloton PTON.
“In light of the current volatile macroeconomic environment and the ongoing and sharp slowdown with a certain major trading partner, we are lowering our outlook for FY23,” executives said in a letter to shareholders. “While we are actively working to mitigate these headwinds and drive profitable growth, we remain excited about the opportunity ahead.”
While the executives declined to mention Peloton by name there, they did not hesitate to detail how the decline of the exercise bike company that became popular early in the COVID-19 pandemic was affecting their business elsewhere in the letter.
“During the pandemic, we experienced a significant GMV mix shift toward Peloton, which had customers with excellent credit quality,” executives wrote in a letter to shareholders. “However, Peloton accounted for less than 2% of our GMV in FQ1’23, compared to 23% and 18% of GMV in FY’20 and FY’21, respectively.”
Affirm executives forecast $20.5 billion to $21.5 billion in gross merchandise volume for the full fiscal year, along with $1.6 billion to $1.68 billion in revenue. Management’s previous full-year forecast called for $20.5 billion to $22.0 billion in GMV and $1.625 billion to $1.725 billion in revenue.
For the fiscal second quarter, executives forecast volume of $5.73 billion to $5.83 billion and revenue of $400 million to $420 million. Analysts on average had expected volume of $5.56 billion and revenue of $434 million, according to FactSet
On the company’s earnings call, investors focused on how Affirm’s business is holding up in the current economic climate and how loan financing has fared.
“The details of how the company manages the effects of a higher interest rate environment, the tight credit box and funding costs will be … key issues,” Bank of America’s Jason Kupferberg wrote ahead of the report.
Shares of Affirm have lost about 90% over the past 12 months as the S&P 500 SPX,
has fallen 19%.