Investor Forum Takeaways: Medium-Term Guidance Inline GMV, Lower RLTC, But Seems Too Conservative to be Believable

Research evidence excerpt

Investor Forum Takeaways: Medium-Term Guidance Inline GMV, Lower RLTC, But Seems Too Conservative to be Believable

One area where we were wrong versus our previous forecasts, was that Affirm did increase its operating income margin guidance;

we had thought it would keep operating income margin guide unchanged. While we think the market will be primarily wringing

its hands on the GMV guide (is 25% y/y growth guidance really all they can get, versus buy-side expectations for 30%-40%?) we

think the market is underappreciating the earnings upside from relatively slow GMV growth. Medium-term GAAP EPS guide of

$3-$4 is about double where we and consensus were.SPECIALTY

Additional takeaway bullets from the Investor Forum:

■ CEO Max Levchin foretold the slower GMV growth by saying that Affirm will get to $100 billion annual GMV, but it will take

longer to get there, and that Affirm will not compromise credit quality for GMV. We'd note, however, that it only took 3yrsFINANCE for Affirm to reach the $50 billion annual GMV that Affirm aspired to at the last Investor Forum.

■ It does not seem that removing Walmart (WMT, Not Rated) from the y/y comp will actually make y/y GMV comparisons

easier. From our interpretation of Affirm's comments, it appears that Walmart GMV is larger today than it was when its Affirm

integration partnership was terminated.EQUITY

■ To our statement above about the dissonance between very sanguine commentary from Affirm: management spent most of

the three hours talking about innovations that should rapidly accelerate GMV from current levels. These include:

■ Out of 250 addressable eCommerce/travel merchants, Affirm has integrated only 75.

■ Affirm is generating 66% GMV CAGR in "adjacent" verticals, but which is only $2 billion/year.