Dj Western Union Corporate Stock Rises Wednesday, Outperforms Market

Affirm Holdings, Inc. AFRM posted better-than-expected first-quarter fiscal 2024 results, which were driven by higher card network revenues and servicing income. Higher transactions coupled with robust repeat customers also boosted the results. However, the results were partly offset by an escalating expense level, which was primarily due to a significant increase in provision for credit losses.

AFRM incurred a fiscal first-quarter loss of 31 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 36 cents per share. The metric remained flat year over year.

Total net revenues amounted to $698.5 million (exceeded management’s expectation of $640-$670 million), which surged 40.7% year over year. The top line surpassed the consensus mark by 5.6%.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Affirm Holdings, Inc. Price, Consensus and EPS Surprise

Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote

Q1 Performance of Affirm Holdings

Active merchants of Affirm Holdings increased 21.4% year over year to 323,000 as of Sept. 30, 2024. The GMV of $7.6 billion increased 35.7% year over year on the back of strength in general merchandise and travel and ticketing categories. The metric crossed management’s expected range of $7.1-$7.4 billion and came higher than the Zacks Consensus Estimate of $7.3 billion.

Total transactions of 27.2 million soared 45% year over year on the back of a significant rise in repeat customer transactions.

Servicing income improved 28.9% year over year to $26 million, which missed the consensus mark of $29.3 million. The uptick can be attributed to growth in the off-balance sheet platform portfolio. Interest income of $377.1 million surged 44% year over year, higher than the consensus mark of $348 million.

Merchant network revenues totaled $184.3 million, which grew 26.3% year over year but missed the Zacks Consensus Estimate of $194 million. The metric gained from a growing GMV. Card network revenues rose 41.8% year over year to $47.5 million, attributable to the higher usage of Affirm and single-use virtual debit cards. The metric beat the consensus mark of $42.9 million.

Total operating expenses of $831.1 million increased 17.7% year over year due to higher loss on loan purchase commitment, funding costs, and processing and servicing expenses. Provision for credit losses escalated 60.3% to $159.8 million. Nevertheless, sales and marketing and general and administrative expenses decreased 1.1% and 1.3%, respectively, on a year-over-year basis.

Affirm Holdings generated an adjusted operating income of $130 million. It had an adjusted operating income of $60 million in the prior-year quarter. Adjusted operating margin was 19%, exceeding management’s estimated 14-16% range. The metric was 12% in the year-ago quarter. Net loss of $100.2 million was narrower than the prior-year quarter’s loss of $171.8 million.

Financial Position of Affirm Holdings (as of Sept. 30, 2024)

Affirm Holdings exited the fiscal first quarter with cash and cash equivalents of $1 billion, which increased 3.3% from the fiscal 2023-end figure. Total assets of $10.1 billion rose 6.5% from the fiscal 2023-end.

Funding debt amounted to $1.74 billion, which rose 5.1% from the figure as of Sept. 30, 2023. Total stockholders’ equity of $2.8 billion grew 3.8% from the fiscal 2023-end figure.

AFRM generated $196.9 million of net cash from operations during the September quarter compared with $98.9 million in the prior-year quarter.

2Q25 Guidance

Affirm Holdings forecasts second-quarter fiscal 2025 GMV to be in the range of $9.35-$9.75 billion. Revenues are anticipated to be within the range of $770-$810 million. Transaction costs are estimated to be between $420 million and $440 million. The weighted average shares outstanding are expected to be 322 million. It projects the adjusted operating margin to be within 21-23%.

Fiscal 2025 View

Management anticipates a GMV of more than $34 billion in fiscal 2025. Revenues, as a percentage of GMV, is now projected to expand at least 20 basis points from the fiscal 2024 figure. Adjusted operating margin is now estimated to be at least 20%. Weighted average shares outstanding were estimated at 322 million.

Affirm Holdings Zacks Rank

Affirm Holdings currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Business Services Sector Releases

Of the Business Services sector players that have already released September-quarter results so far, the bottom-line results of The Western Union Company WU, Equifax Inc. EFX and Robert Half Inc. RHI beat the respective Zacks Consensus Estimate.

Western Union reported third-quarter adjusted EPS of 46 cents, which surpassed the Zacks Consensus Estimate by 4.6%. The bottom line advanced 7% year over year. However, total revenues declined 6% on a reported basis to $1.04 billion. Additionally, the top line beat the consensus estimate by 0.4%. Adjusted operating margin was 19.1%, which deteriorated 50 bps year over year. Operating income fell 22% year over year to $164.9 million.

The Consumer Money Transfer, or CMT, segment recorded revenues of $932.2 million, which tumbled 9% on a reported basis and 8% on an adjusted basis. Transactions within the CMT segment grew 3% year over year, attributable to 15% transaction growth in the Branded Digital business. Branded Digital revenues, which accounted for 25% of CMT’s third-quarter revenues, advanced 8% on a reported basis and 9% on an adjusted basis. The CS segment’s revenues climbed 32% on a reported basis and 15% on an adjusted basis to $103.8 million.

Equifax’s third-quarter 2024 adjusted earnings (excluding 72 cents from non-recurring items) were $1.8 per share, which outpaced the Zacks Consensus Estimate by a slight margin and increased 5.1% from the year-ago quarter’s actual. Total revenues of $1.4 billion missed the consensus estimate by a slight margin but grew 9.3% on a year-over-year basis. Revenues in the Workforce Solutions segment totaled $620 million, up 7% from the year-ago quarter. Within the segment, Verification Services’ revenues of $524.9 million were up 14% from the year-ago quarter’s actual. Employer Services’ revenues of $95.1 million were down 19% on a year-over-year basis.

USIS segment’s revenues were $476.9 million, which grew 12% from the year-ago quarter and outpaced our expectation of $459.4 million. Within the segment, Online Information Solutions’ revenues of $381.1 million grew 9% year over year. Mortgage Solutions’ revenues of $38 million increased 39% from the year-ago quarter. Financial Marketing Services’ revenues were $57.8 million, which gained 14% on a year-over-year basis. Adjusted EBITDA amounted to $471.9 million, up 8% on a year-over-year basis.

Robert Half reported third-quarter earnings of 64 cents per share, which beat the consensus mark by 1.6% but declined 28.9% year over year. Revenues of $1.47 billion beat the consensus mark by 1.7% but decreased 6.3% year over year. Talent Solutions’ revenues of $954 million decreased 13% year over year on an as-adjusted basis. U.S. Talent Solutions’ revenues of $725 million were down 13% year over year. Non-U.S. Talent Solutions revenues also decreased 13% year over year on an adjusted basis to $229 million.

Protiviti revenues were $511 million, which were up 5% year over year on an as-adjusted basis and surpassed our expectation of $490.2 million. The U.S. Protiviti revenues of $411 million increased 8% year over year on an adjusted basis. Non-U.S. Protiviti revenues of $90 million declined 8% year over year on an as-adjusted basis. Adjusted gross profit was $577.8 million, down 9.5% year over year. The adjusted gross profit margin of 39.4% declined 140 basis points year over year.

Zacks Investment Research

Fidelity National Information Services, Inc. FIS reported third-quarter 2024 adjusted earnings per share (EPS) of $1.40, which beat the Zacks Consensus Estimate by 8.5%. Also, the bottom line increased 48.9% year over year.

Revenues grew 3.2% year over year to $2.6 billion. Also, the top line beat the consensus mark by a whisker.

The strong third-quarter results benefited from strong recurring revenue growth in both segments and new sales momentum. It witnessed improved results from both the Banking Solutions and Capital Market Solutions units. However, higher expenses partially offset the positives.

Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.

Fidelity National Information Services, Inc. Price, Consensus and EPS Surprise

Fidelity National Information Services, Inc. price-consensus-eps-surprise-chart | Fidelity National Information Services, Inc. Quote

Q3 Performance

The cost of revenues was $1.59 billion in the quarter under review, which rose 4% year over year. Selling, general and administrative expenses of Fidelity National increased 7.6% year over year to $521 million and were lower than our estimate of $539.8 million. Net interest expenses declined 60.5% year over year to $64 million and was lower than our estimate of $80.1 million.

Adjusted EBITDA from continuing operations declined 0.5% year over year to $1.1 billion but beat our model estimate of $1 billion. Adjusted EBITDA margin of 41.3% deteriorated 140 basis points (bps) year over year in the third quarter.

Segmental Update

Revenues from the Banking Solutions unit increased 3% year over year to $1.78 billion, missing the Zacks Consensus Estimate by 0.3%. Improved adjusted recurring revenues shaped the segment’s quarterly performance. Adjusted EBITDA margin of 45.2% improved 10 bps year over year, attributable to cost efficiencies and operating leverage.

The Capital Market Solutions segment recorded revenues of $730 million, which grew 8% year over year in the third quarter and beat both the Zacks Consensus Estimate and our model estimate by a whisker. The metric improved as a result of strong recurring revenue growth. Adjusted EBITDA margin increased 90 bps year over year to 49.9% thanks to operating leverage and improved high-margin license revenue.

The Corporate and Other segment’s revenues amounted to $61 million, which declined 27% year over year in the quarter under review. The reported figure beat the Zacks Consensus Estimate of $54.5 million and our estimate of $55.1 million. Adjusted EBITDA loss was $108 million in the quarter under review.

Financial Update (As of Sept. 30, 2024)

Fidelity National exited the third quarter with cash and cash equivalents of $1.3 billion, up from $440 million at 2023-end. Total assets of $34.3 billion fell from $55.1 billion at 2023-end.

Long-term debt, excluding the current portion, amounted to $10.5 billion, down from $13 billion at 2023-end. The current portion of long-term debt totaled $317 million. Short-term borrowings amounted to $112 million at the third-quarter end.

Total equity of $16.6 billion dropped from $19.1 billion at 2023-end.

Fidelity National generated net cash from operations of $1.4 billion in the first nine months of 2024, which improved 7.1% year over year. Adjusted free cash flows increased 22.7% year over year to $1.1 billion.

Share Repurchase & Dividend Update

Fidelity National rewarded $699 million to its shareholders to the tune of share buybacks worth $500 million and dividends of $199 million in the third quarter.

Management reiterated its target of $4 billion of share buybacks in 2024. Fidelity National reiterates its aim to achieve a dividend payout ratio of 35% of adjusted net earnings, excluding equity method investment earnings (loss).

4Q24 View

Management forecasts revenues between $2.612 billion and $2.642 billion. Adjusted EBITDA is projected to be in the range of $1.104-$1.119 billion. Adjusted EPS is estimated to be between $1.32 and $1.37. Adjusted EBITDA margin is projected to be in the range of 42.3-42.4%.

2024 Guidance Updated

Revenues are now expected to be within $10.14-$10.17 billion for 2024, indicating 4.1-4.4% adjusted revenue growth. The Banking Solutions and Capital Market Solutions units are estimated to record year-over-year increases of 3-3.5% and 6.5-7%, respectively.

Adjusted EBITDA is projected to be between $4.125 billion and $4.140 billion in 2024, increasing from the 2023 figure of $4 billion. Adjusted EBITDA margin is anticipated around 40.7%.

Adjusted EPS guidance is revised upward between $5.15 and $5.20, which implies a significant growth from the 2023 figure of $3.37. Net interest expenses are likely to stay within $310-$315 million for 2024.

Zacks Rank

Fidelity National currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Business Services Sector Releases

Of the other Business Services sector industry players that have reported September-quarter results so far, the bottom-line results of Visa Inc. V, The Western Union Company WU and Trane Technologies plc TT beat the Zacks Consensus Estimate.

Visa reported fourth-quarter fiscal 2024 earnings of $2.71 per share, which outpaced the Zacks Consensus Estimate of $2.58 by 5%. The bottom line increased 16% year over year. Net revenues of $9.6 billion improved 12% year over year. The top line beat the consensus mark by 1.2%. Visa's payments volume increased 8% year over year on a constant-dollar basis. Processed transactions (implying transactions processed by Visa) grew 10% year over year to 61.5 billion. On a constant-dollar basis, the cross-border volume rose 13% year over year.

Service revenues (depending on payments volume in the previous quarter) advanced 8% year over year to $4.2 billion in the September quarter. Data processing revenues of $4.61 billion grew 8% year over year. International transaction revenues advanced 9% year over year to $3.47 billion. Client incentives (a contra-revenue item) increased 6% year over year to $3.6 billion

Western Union reported third-quarter 2024 adjusted EPS of 46 cents, which surpassed the Zacks Consensus Estimate by 4.6%. The bottom line advanced 7% year over year. However, total revenues declined 6% on a reported basis to $1.04 billion. Additionally, the top line beat the Zacks Consensus Estimate by 0.4%. Adjusted operating margin was 19.1%, which deteriorated 50 basis points (bps) year over year.

Operating income fell 22% year over year to $164.9 million, which fell short of our estimate of $201.7 million. The Consumer Money Transfer (CMT) segment recorded revenues of $932.2 million, which tumbled 9% on a reported basis and 8% on an adjusted basis. Transactions within the CMT segment grew 3% year over year. The Consumer Services segment’s revenues climbed 32% on a reported basis and 15% on an adjusted basis to $103.8 million.

Trane Technologies reported third-quarter 2024 adjusted EPS of $3.37, which surpassed the Zacks Consensus Estimate by 4.3% and increased 20.8% year over year. Revenues of $5.4 billion beat the consensus mark by 2.4% and increased 11% year over year on a reported basis and organically. Bookings were up 5% year over year on a reported basis and organically. The Americas segment’s revenues of $4.5 billion were higher than our estimate of $4 billion and increased 15% year over year on a reported basis and organically. Bookings of $4.3 billion were up 8% on a reported basis and organically.

Europe, Middle East and Africa segment’s revenues were $667.8 million, up 8% year over year on a reported basis and organically. Bookings of $637 million were up 9% year over year on a reported basis and organically. Revenues from the Asia Pacific segment were down 21% year over year on a reported basis and organically to $298.5 million. Adjusted operating income was $56.9 billion, down 31% year over year. Adjusted operating margin declined 290 basis points to 19.1%.

Zacks Investment Research

The most oversold stocks in the financials sector presents an opportunity to buy into undervalued companies.

The RSI is a momentum indicator, which compares a stock’s strength on days when prices go up to its strength on days when prices go down. When compared to a stock’s price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered oversold when the RSI is below 30, according to Benzinga Pro.

Here's the latest list of major oversold players in this sector, having an RSI near or below 30.

Western Union Co

• On Oct. 23, Western Unio posted better-than-expected quarterly earnings. “We are pleased with third quarter results, which demonstrate continued progress of our Evolve 2025 strategy,” said Devin McGranahan, President and Chief Executive Officer. “We’ve maintained mid-single digit transaction growth in our Consumer Money Transfer business for five quarters in a row and are now seeing the effect on revenue, with positive adjusted consolidated revenue growth for two consecutive quarters, excluding Iraq.” The company's stock fell around 8% over the past month and has a 52-week low of $10.69.
• RSI Value: 27.25
• WU Price Action: Shares of Western Union fell 0.2% to close at $10.74 on Friday.
• Benzinga Pro's real-time newsfeed alerted to latest WU news.