Dive Brief:

• Buy now, pay later provider Affirm gave a conservative outlook on gross merchandise volume for the remainder of its fiscal year, despite recording 32% growth in that metric for the quarter that ended Dec. 31.
• The company, which reported fiscal second-quarter earnings Thursday, is prudent in how it builds on that quarter for its outlook for the remainder of the year, given its seasonality, said CFO Michael Linford. The quarter included the year-end holiday shopping season.
• “The full-year outlook for us is just a floor,” Linford told analysts during a Thursday earnings webcast when pressed about the cautious forecast. The San Francisco-based company raised its GMV guidance by $1 billion, to about $25.25 billion for the full year, which is “a pretty big step up,” Linford said.

Dive Insight:

Affirm’s fiscal second-quarter revenue and GMV increase outpaced growth experienced in the same quarter one year earlier, according to the company’s earnings presentation. Its fiscal second-quarter revenue jumped 48%, to $591 million, and its loss narrowed, to $166.9 million, compared to the year-earlier period. 

Volume growth at Affirm, led by CEO and founder Max Levchin, was “broadly distributed across merchant partners and product categories, with all categories except sporting goods and outdoor growing on a year-over-year basis,” according to the company’s quarterly shareholder letter. The Black Friday to Cyber Monday weekend in particular was a boon for BNPL providers because of strong e-commerce sales.   

It’s not out of character, however, for Affirm to give conservative estimates when looking ahead, said Autonomous Research Analyst Rob Wildhack in an email.

Mizuho Securities Analyst Dan Dolev viewed the company’s updated GMV guidance as “conservative,” he wrote in a Friday note to investor clients. “Over the last 8 quarters, (Affirm) has beaten midpoint GMV guidance by 5% on average,” Dolev noted.

Linford acknowledged the December quarter’s seasonality in addressing analyst questions about the second-half outlook.  

“The really strong second quarter isn't something that we would ever take and say, ‘That's a fundamental change in the business,’” he said. “It’s something we would take credit for, be very happy with, but we'd be pretty cautious about how it would build up the outlook for the balance of the year, and want to be mindful of all of the factors that can go into that.”

Still, “there's nothing in our business that would suggest that we're slowing down right now,” Linford said. 

The company also flagged that seasonal bump in its quarterly shareholder letter, as it related to Affirm’s card product. Affirm expects the card’s GMV and user additions “to begin reflecting normal seasonality,” which could affect quarterly volume growth rates compared to the December quarter.