Affirm shares jump on updated revenue forecast, Dave & Buster’s posts major Q2 earnings beat

Yahoo Finance’s Brian Sozzi, Julie Hyman, and Brian Cheung break down the latest earnings from Dave & Buster’s, and Affirm after the company updated its revenue forecast.

Video Transcript

About three minutes into today’s trading session on this Friday, September 10, and we are seeing some strength, some early strength in the major averages. That’s Brian and Brian here with me this morning. We’re seeing some early strength in the major averages, up about 6/10 of 1% across the board here as we round out this holiday-shortened trading week. As our Jared Blikre I think pointed out earlier in the week, it’s really next week that you start to see volumes tick up in earnest as people get back to work and get back to school.

But let’s talk about some big movers this morning. The top trending ticker on this morning is Affirm Holdings, the buy now, pay later company. A lot of these companies have really been catching fire, this sort of fintech area. But Affirm just came out with its numbers. You can see the loss wider than estimated, but revenue considerably higher than estimated. And Brian Sozzi, that is sending that stock pretty spectacularly higher this morning.

BRIAN SOZZI: And this is really the second straight stock price explosion I think for [? an ?] Affirm. And that’s a fair term to use, skyrocket, you name it. The other one came a couple of weeks ago when they landed that deal with Affirm. And then here, really, the company I think highlighting that they’re more than just the Amazon deal, which has not kicked in just yet. Gross merchandise value, up 106%. If you do want to ding the company, adjusted operating profits came in at for $14.2 million, last year they were at $46.7 million.

But guys you really have to go back to I think the Amazon deal here. And there was a lot of talk about it on the conference call. You didn’t hear management give too many financial details on what this might mean, but analysts on the street have modeled that this Amazon deal alone could lead to close to $400 million in incremental sales next year, and about almost $100 million in extra profits for the company. So of course, that’s what the street is also baking in to hear in the early going as well.

BRIAN CHEUNG: And I think another big story here too is Peloton, because we know that Peloton makes up such a big part of Affirm’s revenues. But we have to remember that Affirm did see a bit of a hit when Peloton reported that was pretty disappointing earnings alongside their announcement not long ago that they’d actually be lowering the price on their bikes. Obviously, for a company that relies on these installment payments for a more expensive bike, that’s going to hurt the company.

That’s why it was interesting to see how Affirm was disclosing their quarterly numbers when it comes to gross merchandise value excluding Peloton because of the softer quarter. It actually looked a little bit better when you take those Peloton numbers out. But I think the big reason why you’re seeing the stock pop today is because of the revenue diversification that they’re chasing after with that Amazon deal that you detail, Brian.

And another thing that’s also worth mentioning is they have that massive Shop Pay installments partnership with Shopify for their merchandisers in the United States. They announced that in June. That’s another big reason why it’s not just Affirm and Peloton. Affirm has a number of other places where they can go for revenue as well. And I think it’s that revenue diversification that might be giving the stock a bit of a bump after reporting those earnings, guys.

Yeah, and those Peloton shares are up, as you can see, a little bit more than 1% in today’s session sort of drafting off of Affirm. Just like as you mentioned, Affirm sort of drafted off of Peloton as well. Dave and Buster’s, you guys watching that one closely this morning. Big Dave and Buster’s fans apparently here at Yahoo Finance. That company coming out with revenue of almost $378 million, well above estimates.

Also, look at that earnings per share number, much better than estimated. And we here at Yahoo Finance love it when companies give us their two-year comps. Given the pandemic, that’s just what Dave and Buster’s did. Comp store sales up 3.6% compared with the same period of 2019. So seen growth over 2019 levels. Brian Cheung, when’s the last time you went to a Dave and Buster’s? Did they have skee-ball there? That’s my jam. I don’t know if that’s one of their things.

BRIAN CHEUNG: I got to say, it’s embarrassingly not long ago, I think it was shortly before the pandemic I went with some of my high school friends to the one in Wayne, New Jersey in the Willowbrook Mall, great mall by the way. But when it comes to Dave and Buster’s, I think the big story really is that apparently the Delta variant hasn’t necessarily affected their business all that much when you consider that their second quarter numbers really go up until the beginning of August, essentially. So it did cover the bit of that uptick that we saw in Delta variant cases at the end of July.

But despite all of that, as you mentioned, they beat their 2019 comparisons. And by the way, the CEO Brian Jenkins saying on a call that we’re more profitable than we’ve ever been in our history, which means you’d have to rewind even before I was born in 1993 to the beginning of 1982 the founding of Dave and Buster’s to get numbers on this level.

BRIAN SOZZI: My birth year.

BRIAN CHEUNG: It’s no surprise. Have you ever played Flappy Bird? It’s this game that they have there at Dave Buster’s. It’s like Frogger but on juice. It’s like it’s so much fun though. But the thing is, it’s expensive. I guess maybe that’s the reason why the revenue numbers hit it out of the park.

Wait, wait. Hold on, hold on. Is this the first time we’re breaking news Sozz, is this the first time we’re learning of your birth year? I mean, Cheung mentions it every time he’s on. But Sozz, is this the first time? 1982?

BRIAN SOZZI: We’ll let Brian Cheung just corner that market on sharing his birth year. I will not confirm that ’82 was or was not my birthday. I will let him own that market. But you know just staying on Dave and Buster’s here, got a good note from my man Andy Barish over at Jefferies here noting a new menu for Dave and Buster’s, new games and events, accelerating mobile adoption, a new summer marketing campaign has helped lift the fortune Dave and Buster’s.

Also, Dave and Buster’s noted their third quarter has started well, same store sales up by a low single digit percentage including Labor Day weekend through the first five weeks of this quarter. And guys, I’m on the Dave and Buster’s site right now looking at this new menu. I typed in the one near me in Islandia, New York, it’s on Long Island. I kind of want to go there. Whatever they’ve done visually to the menu is interesting. I’m looking on the site right now, voodoo pasta for $15.95. Smokehouse barbecue ribs, a full rack, only $23.75. And it looks to be they’ve just invested in their menu. It looks visually pleasing, and I might go this weekend even if it’s by myself.

BRIAN CHEUNG: We’ll all go. We’ll all go. Class field trip.

Yeah, I think that sounds better. I think you’re not allowed to go to Dave and Buster’s by yourself, Sozz, sorry. That’s against the rules.

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