Affirm Holdings, Inc. AFRM recently partnered with an online travel platform, Booking.com, a part of Booking Holdings Inc. BKNG. The deal enables Affirm to provide flexible payment options to consumers for travel bookings, which will boost its transaction volumes.
The deal comes at an opportune time for AFRM as demand for flexible payment options in travel booking is rapidly increasing. Its travel and ticketing purchase volume surged almost 50% year over year in the June quarter. The latest move is expected to make Affirm’s payment options available at checkout across multiple travel brands of Booking Holdings. The deal expands on existing alliances with Agoda, KAYAK and Priceline.
This move adds Booking.com to Affirm’s network of over 254,000 merchants. The massive network includes merchants like Cathay Pacific, American Airlines, CheapOair and many others. The collaboration is expected to boost Booking.com’s sales, help to reach new consumers, increase average order value and improve conversion rates. As Affirm will not charge late and hidden fees, it is expected to witness significant demand growth.
Affirm’s focus on expanding its network positions it for long-term growth. With growing dependence on buy now, pay later solutions and similar services due to high inflation, companies like AFRM are expected to continue benefiting from higher volumes. Increased active merchants, Gross Merchandise Volume (GMV) and transactions are aiding its results.
Moves like this will help the company attain its goal of reaching profitability in fiscal 2024 on an adjusted operating income basis. Also, the adjusted operating margin is estimated to be more than 2% in fiscal 2024, indicating a significant improvement from negative 4.6% witnessed in fiscal 2023.
Over the year-to-date period, shares of Affirm have jumped 132.4% compared with the 14.1% growth of the industry it belongs to.
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Zacks Rank & Key Picks
Affirm currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Business Services sector are PagSeguro Digital Ltd. PAGS and FirstCash Holdings, Inc. FCFS, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for PagSeguro’s current year bottom line suggests 13% year-over-year growth. Based in Sao Paulo, Brazil, PAGS beat earnings estimates in all the past four quarters, with an average surprise of 9.3%.
The Zacks Consensus Estimate for FirstCash’s current year earnings indicates a 6.4% year-over-year increase. Fort Worth, TX-based FCFS beat earnings estimates in all the past four quarters, with an average surprise of 7.3%.
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