What happened
Shares of several payments and e-commerce companies shot up today after reporting earnings results for the three months ending March 31.
As of 10:50 a.m. ET, shares of Affirm Holdings (AFRM -2.08%) traded roughly 21% higher, Payoneer Global (PAYO -4.06%) was up more than 30%, and Toast (TOST -0.52%) gained more than 12%.
So what
Buy now, pay-later (BNPL) company Affirm reported a net loss of $0.19 earnings per share on total revenue of nearly $355 million, both numbers that beat analyst estimates for the quarter. Gross merchandise volume (GMV) for the quarter was roughly $3.9 billion, up 73% year over year, while active consumers jumped to 13.7 million, up 137% year over year.
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Along with its quarterly results, Affirm announced that it had reached an agreement for a multiyear extension of its partnership with Shopify to continue to be the company's exclusive U.S. provider of installment payment plans on the platform.
Affirm also raised its outlook for the full fiscal year of 2022, which goes until the end of June. At the midpoint of its range, Affirm is now guiding for full-year GMV of $15.1 billion, revenue of $1.33 billion, revenue less transaction costs of $640 million, and an adjusted operating margin of -7.1%.
Payoneer Global in the quarter reported a loss of $0.06 earnings per share on total revenue of nearly $137 million. While earnings were roughly in line with what analysts had expected, revenue beat.
The company also announced a positive development related to its business in Ukraine, Russia, and Belarus. As a result of Russia's ongoing invasion of Ukraine, several payments companies have either suspended operations or significantly lowered revenue estimates for this part of their business. Payoneer said that while it had assumed zero revenue from this business earlier this year, it now expects to retain roughly 50% of its initially forecast revenue from these countries prior to when the war started.
Payoneer also raised guidance and now expects full-year revenue of $555 million and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of -$15 million.
Finally, Toast, an end-to-end payments platform specifically for restaurants, reported a diluted earnings-per-share loss of $0.20 on total revenue of $535 million, both of which beat estimates. The company added more than 5,000 new locations to its platform in the quarter.
Toast also increased its full-year guidance for 2022 and now expects to generate revenue of at least $2.5 billion and an adjusted EBITDA loss of roughly $185 million.
Now what
Investors seem pleased that, despite what has been a tough start to the year, all three of these companies generated solid quarterly results and are increasing guidance across the board. Payments companies can do well in times of inflation and rising interest rates because their fees increase as the cost of goods and services rises. However, a significant recession that lowers consumer spending levels would be a headwind to these businesses.
Affirm had a good quarter, but I still have some concerns given that it holds loans on its balance sheet and is reliant on the capital markets for funding. Again, the company is doing fine, but the environment is filled with uncertainty right now and could change quickly.
