CEO Max Levchin Takes “Full Responsibility” for Layoff Decisions
cite economic turmoilBuy now, pay later giant Affirm announced today that it will cut its workforce by 19%, or about 500 jobs, and close its cryptocurrency division.
This leaves the company with approximately 2,000 employees.
In a written statement, founder and CEO Max Levchin said he “takes full responsibility for this decision and everything leading up to it.” The company has not identified which departments will be affected by the move.
Going forward, Levchin said the company will “refocus” on its core business and that headcount growth will be “less than revenue growth.”
He added: Going forward, we will launch a new, more disciplined initiative, greenlighting only those long-term bets we are confident about. ”
Regarding the cryptocurrency offering, Levchin wrote: letter to shareholders The company also said Affirm would “discontinue” the unit as it worked to “match operating expenses with revenues” and delayed projects with “uncertain revenue timelines.”
Affirm also today announced results for the second quarter of fiscal year 2023. His GMV of $5.7 billion set a new record, but still falls short of the forecast Affirm itself provided him in November.
Both revenue and profit fell short of analyst expectations. Earnings were up 11% year-over-year for his $400 million, but below analysts’ expectations for his $415 million. Meanwhile, the loss of $1.10 per share beat analyst expectations of a loss of 98 cents per share.
Affirm shares are steep descent In all the news today – it fell nearly 7% at $16.02 and dropped another 17.1% to $13.28 after hours.
When the economy was booming, the buy-now-pay-later space flourished.But as inflation and interest rates rise, players in this space are had a hard time Defaults increase and discretionary spending decreases.
As New York Times author James Ledbetter recently I have written: “The industry is currently facing an existential crisis as profits remain elusive, valuations plummet, competition intensifies and regulators ask tough questions about the lending practices behind BNPL. I have.”
In fact, last September, the U.S. Consumer Financial Protection Bureau (CFPB) announced today that companies such as Klarna, Affirm and Afterpay that allow customers to pay in installments for products and services should be subject to greater scrutiny.
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