Affirm Sees Sharp Snapback In Travel Spending, Growth In Shop Pay Installments

Buy now, pay later (BNPL) platform Affirm’s fiscal third quarter earnings results posted Monday (May 10) showed continued embrace of BNPL and pointed toward a significant rebound in the travel vertical.

In terms of headline numbers, revenues surged to $230.7 million from $138.3 million in the year-ago period, outpacing the $198 million analysts had expected.

Gross merchandise volume (GMV) was up 83 percent year on year to $2.3 billion. Active user count was up 60 percent over the same period to 5.4 million. Transactions per active customer, the firm said, grew to 2.3, up 10 percent from last year.

Supplemental materials released by the company showed that the GMV by vertical was significant in sporting goods, which represented 28 percent of the mix; home and lifestyle with 17 percent; and fashion and beauty with 17 percent.

Near the end of the quarter, said Affirm CEO Max Levchin on a conference call with analysts, the company began to see a “sharp uptick” in spending across categories that were pressured by the pandemic. Drilling down, GMV for the travel space nearly tripled from the second quarter’s levels “and grew more than 50 percent versus Q2 of last year,” which was a pre-pandemic period quarterly high mark in travel. (In the latest quarter, the segment accounted for 9 percent of GMV.)

Travel Biz Hits Pre-Pandemic Levels

During the question-and-answer session with analysts, Levchin noted that “travel ticketing is seeing what would be described as a resurgence.”

He said that momentum should continue through partnerships with firms like Vrbo and American Airlines, among others.

“The overall organic recovery is huge in the travel ticketing space, and we’re well positioned to benefit,” he said.

The company also said that the allowance for losses shrank on a sequential basis, from $125 million to $114 million, and down significantly from $145 million last year.

Management noted in commentary that the active merchants nearly doubled year on year to a recent 12,000.

During the conference call with analysts, Levchin said that the company was seeing “pent up demand” in the travel space. Consumers, he said, “are booking with greater confidence.” Elsewhere, he stated that more than 10,000 merchants went live with Shop Pay Installments in April and May (up from 100 merchants in the pilot earlier in the year). That tally should grow when the offering becomes generally available by June.

“Americans have significant spending power coming out of the pandemic,” said Levchin, after paying down billions of dollars in credit card debt and amassing $1.7 trillion in savings through the pandemic.

The waitlist for the Affirm Card, Levchin said on the call, has been “excellent.”

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