Please note that Affirm’s fiscal year ends on June 30. Thus, Affirm’s Fiscal Year Q1 2023 (referred to as FY Q1 2023) is Calendar Year Q3 2022 (referred to as Q3 2022). I will mostly operate with calendar year quarters in the text below.

That’s been two years since Affirm (NASDAQ: AFRM 0.00) went public, and the company’s growth since its last quarter of being private has been nothing short of spectacular. The number of active consumers increased from 4.5 million at the end of Q4 2020 to 14.7 million at the end of Q3 2022. Quarterly Gross Merchandise Volume grew from $2.1 billion to $4.4 billion, and quarterly revenue grew from $204.0 million to $361.6 million. Affirm also stroke partnerships with such companies as Amazon, Shopify, and Target.

However, Affirm’s Operating Loss increased from $26.8 million in Q4 2020 to $287.5 million in Q3 2022. The company’s management is committed to achieving profitability on an adjusted basis by the end of the Fiscal Year 2023 (Q2 2023), but the path to GAAP profitability is very unclear. Don’t get me wrong, I genuinely want Affirm to succeed, and the company has close to $2.8 billion in cash and equivalents, so is unlikely to run out of money. Nevertheless, it would be good to see at least some proof that Buy Now Pay Later model is financially viable.

If you are new to Affirm, I suggest reading my previous reviews:
👉🏻 Affirm Fiscal Q2 2022 Earnings: expect further volatility
👉🏻 Affirm Fiscal Q3 2022 Earnings: investors are in panic, but growth continues
👉🏻 Affirm Fiscal Q4 2022 Earnings: is the guide too optimistic?

Active Consumers and Merchants

Affirm reported 14.7 million active consumers at the end of Q3 2022 (FY Q1 2023), which represents a 69.1% growth compared to Q3 2021, and a 5.0% growth compared to Q2 2022. In addition, the company continued to increase customer engagement, growing the average number of transactions per active consumer from 2.3 in Q3 2021 to 3.3 in Q3 2022. Affirm defines an active consumer as a consumer, who engages in at least one transaction during the last 12 months.

Affirm reported 0.25 million active merchants at the end of Q3 2022 (FY Q1 2023), which represents a 139.6% increase compared to Q3 2021, and a 4.3% increase compared to Q2 2022. As a reminder, in June 2021 Affirm partnered with Shopify on Shop Pay Installments, which allowed merchants, that use the Shopify platform, to offer Affirm as a payment option at their online stores. Affirm defines an active merchant as a merchant, which engages in at least one transaction during the last 12 months.

Gross Merchandise Volume

Affirm reported $4.39 billion in Gross Merchandise Volume in Q3 2022 (FY Q1 2023), which represents a 61.8% growth compared to Q3 2021, and a 0.3% decline compared to Q2 2022. The “Average Order Value” (AOV), or the average transaction amount, declined from $402 in Q3 2021 to $331 in Q3 2022. As noted earlier, the average number of transactions per active user increased from 2.3 to 3.3 during the same timeframe, suggesting an increase in spend per active customer over the last year (average number of transactions multiplied by AOV).

This quarter, Affirm provided a breakdown of Gross Merchandise Volume by product (see the chart below). Thus, the share of interest-bearing loans increased from 54.6% in Q3 2021 to 63.7% in Q3 2022 (FY Q1 2023). In absolute terms, the volume of interest-bearing loan originations increased from $1.48 billion in Q3 2021 to $2.80 billion in Q3 2021 (88.5% YoY growth), the volume of “Pay in 4” loan originations increased from $0.42 billion to $0.78 billion (86.7% YoY growth), while the volume of “Core 0%” loan originations remained unchanged at $0.82 billion.

Finally, Affirm continues to provide a breakdown of its Gross Merchandise Volume by the category of the retailer. In Q3 2022 (FY Q1 2023), similar to the previous quarter, the largest category was “General merchandise” (29% of GMV), which includes such retailers as Amazon, Walmart, and Target, followed by “Fashion / Beauty” (19% of GMV), “Travel / Ticketing” (12% of GMV), “Home / Lifestyle” (11% of GMV) and others. The share of the “General merchandise” category increased from 23% in the previous quarter, as it continues to grow at an incredible pace of 508% YoY.

The company’s management guided for GMV of $5.73 to $5.83 billion in Q4 2022 (FY Q2 2023), which implies a 29-31% growth compared to Q4 2021, and GMV of $20.50 to $21.50 billion for the full Fiscal Year 2023 (Q3 2022 - Q2 2023). Previously, the company’s management guided for GMV of $20.50 to $22.0 billion for the full Fiscal Year 2023.