During the first two years of the pandemic, when demand for everything was soaring, stimulus cash was bolstering household budgets, and interest rates were near zero, buy now, pay later company Affirm (NASDAQ: AFRM) never turned much of a profit. If the business didn't really work then, when all the conditions were right, I find it hard to believe that it can work now.
Affirm's fiscal second-quarter report paints a troubling picture. While gross merchandise value rose 27% year over year, total revenue increased by just 11% as the company shifted toward interest-bearing loans. That sluggish growth is despite a dramatic rise in the number of active merchants over the past year. The company ended the quarter with 243,000 merchants in the network, up from 168,000 one year prior.
Revenue less transaction costs (RLTC) tumbled 21% year over year as the company generated less revenue from its network of merchants than expected. This led to a net loss of $322 million on about $400 million in revenue. Adjusted operating income, the company's preferred metric, was a loss of $62 million.
Source Fool.com