BNPL demand slows! Affirm lays off 19% of staff after announcing losses

It is learned that on February 9, Affirm, a buy now, pay later (BNPL) service provider, released its second quarter financial report for fiscal year 2023. Affirm announced that due to the slowdown in BNPL demand, it lost $322.5 million in the second fiscal quarter and laid off 19% of its employees.

Data shows that Affirm's gross merchandise volume growth rate slowed to 27% in the second fiscal quarter, compared with 115% a year ago; the number of active consumers increased by 39% to 15.6 million in the second fiscal quarter, compared with 150% last year; revenue increased by 11% to US$400 million, compared with 77% last year.

In addition, the number of active merchants offering BNPL continues to decline. Looking ahead, Affirm plans to reallocate resources to research and development, projects to improve profit margins, and Affirm's debit card Debit+.

BNPL providers like Affirm are struggling to attract new customers while turning a profit amid inflation, rising Federal Reserve rates and more government regulation. They want to reduce their zero-interest and long-term loans and offer more loans that charge interest.

The use of BNPL is declining in some categories due to weak consumer demand, and the number of merchants and retailers offering this service has also declined.

Affirm's report shows that the categories with a decline in BNPL usage in the second fiscal quarter include sporting goods and outdoor products (down 49% year-on-year), electronics (down 11% year-on-year), and home and lifestyle (up only 2% year-on-year).

At the same time, Affirm's active merchants offering BNPL also declined, with 243,000 active merchant accounts in the second quarter, down from 245,000 in the first quarter.

In addition, merchants with GMV of less than $1,000 sold using BNPL decreased to 153,000 from 157,000 in the first fiscal quarter. Merchants with GMV of more than $1,000 increased 61% year-on-year and accounted for 99% of total GMV. Amazon-related Affirm loans accounted for more than 20% of Affirm's total merchandise volume in the last three months of 2022.

In the 2022 Digital Commerce 360 ​​Top 1000 Retailer Database, 14.4% of retailers offer Affirm at checkout, including Amazon, Walmart, Target, Wayfair, etc., and usage has increased by 11%.

Affirm also showed some bright spots, such as improved engagement metrics, with BNPL transactions per active consumer increasing 38% year-over-year to 3.5, and 86% of transactions coming from returning customers.

Credit metrics also improved, with delinquencies falling sequentially. Supplementary data showed the 30-day delinquency rate was 2.4%, down from 2.7% in the September quarter.

Affirm's chief financial officer also revealed that the company's cooperation with Shopify is still expanding and has good prospects in the future. Regarding its cooperation with Amazon, Affirm said that it still has a certain share in Amazon, but there is still a lot of room for growth.

Editor✎ Ashley/

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