Why Affirm Holdings Shares Are Soaring Today

Affirma Holdings (AFRM 33.86%) the stock is soaring in Thursday trading. The buy-now-pay-later specialist’s share price was up 33.9% at 11 a.m. ET, according to data from S&P Global Market Intelligence.

After the market closed yesterday, Affirm released results for the fourth quarter of its latest fiscal year (which ended June 30). The company delivered fiscal fourth-quarter sales and earnings that beat Wall Street targets, and the company combined the impressive results with guidance that crushed market expectations.

It says it smashed Wall Street’s earnings target in the fiscal fourth quarter

Affirm posted a loss of $0.14 per share on revenue of $659.18 million. Meanwhile, the average analyst estimate called for a loss per share of $0.44 on revenue of $653.8 million. Revenue rose 47.9% year-over-year in the period, and the company’s loss was much smaller than Wall Street had anticipated.

The Affirm buy now pay later platform continued to have strong momentum in Q4. Gross merchandise volume (GMV) increased 31% to $7.2 billion, and the total number of transactions on the company’s network increased 42% to 24.7 million. The average number of transactions per active customer rose to 4.9 in the quarter — up from 4.6 in fiscal Q3.

Guidance crushes expectations

For the first quarter of the current fiscal year, Affirm is recommending GMV to be between $7.1 billion and $7.4 billion. Management expects sales for the period to be between $640 million and $670 million, well above the average analyst estimate for sales of $625 million. The company also said it expects adjusted operating income margin to be between 14% and 16% in the quarter. It looks like margins should improve as the year goes on.

For the full year, Affirm is proposing an adjusted operating margin of 18.4% — and expects to turn to profitability in the fiscal fourth quarter. The company also guided for annual GMV of more than $33.5 billion, beating Wall Street expectations. Even better, the company said revenue as a percentage of GMV will be at least 10 basis points higher than last fiscal year. With the company forecasting approximately 26% annual GMV growth and indicating that take rates will improve slightly, revenue growth should exceed this level based on management’s targets.