Affirm Holdings, the buy now, pay later giant, reported strong fiscal fourth-quarter earnings and a better-than-expected outlook. However, CEO Max Levchin cautioned that high gas prices are significantly impacting U.S. consumers, who are increasingly using Affirm’s services to manage overall inflationary pressures.
Despite posting robust fiscal fourth-quarter earnings and an encouraging financial outlook, Max Levchin, the CEO of buy now, pay later giant Affirm, has voiced concerns over the impact of elevated gas prices on American consumers. Levchin indicated that the ongoing surge in fuel costs is a significant factor affecting shopper behavior.
In an interview with CNBC's "Squawk Box," Levchin stated, "The U.S. consumer undoubtedly sees the higher gas prices, so can't, can't ignore that." He further elaborated that consumers are turning to Affirm to help manage these and other inflationary pressures. The national average gas price stood at $4.09 per gallon as of Friday, according to AAA. While this is a decrease from the peak above $4.50 seen in May, it remains considerably higher than pre-war levels, and the last time the average dipped below $3 was on March 2.
Affirm Holdings (AFRM) stock concluded Friday's trading session nearly flat, following the release of its fiscal fourth-quarter financial results. CEO Max Levchin's comments regarding the strain of high gas prices on U.S. consumers provided a counterpoint to the company's strong financial performance.
Levchin observed that consumers are increasingly utilizing Affirm's services to navigate rising costs across various inflationary fronts. "In times of inflation, we see more demand because folks are budgeting," Levchin explained to CNBC. "They're more thoughtful about how they want to use the money, and we're there to help."
Inflationary pressures are a key consideration for the Federal Reserve and its Chair, Jerome Powell, ahead of their September policy meeting. The latest personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, showed a 3.7% annual rate in July, with a 0.2% monthly increase. However, other economic indicators, such as a 0.4% rise in personal income and a 0.2% increase in personal spending for July, suggest underlying consumer resilience.
Levchin acknowledged the general health of the consumer but cautioned against complacency. "I do think that sustained pressure on prices isn't great in the long term, and so can't ignore that either," he said.
Fintech company Affirm reported fourth-quarter revenue of $1.17 billion, surpassing the $1.11 billion LSEG estimate. The company also issued an upbeat forecast for fiscal first-quarter revenue, projecting between $1.19 billion and $1.22 billion, exceeding the Street's expectation of $1.16 billion. Gross merchandise volume (GMV) was another highlight, reaching $14.1 billion, significantly higher than the $13.39 billion anticipated by StreetAccount.
