Summary: Affirm has announced that it will be laying off 19% of its employees following a disappointing earnings report. The company will focus on margin-improving projects and affected employees in the US will receive severance packages as expected.
Affirm, a San Francisco-based buy now, pay later tech company, announced on Wednesday that it would be laying off 19% of its employees following a disappointing earnings report. Founder and CEO Max Levchin shared an emotional letter with shareholders, calling the decision the most difficult one he has made as the company’s head.
According to a report in June 2022, the company had 2,552 employees, meaning that the cut will impact nearly 500 workers. Levchin explained that the company’s growth during the pandemic was justified by the revenue it was making at the time, but the economic situation worsened in the middle of 2022, making things more difficult.
For its fiscal Q2 2023, Affirm reported a loss per share of $1.10, which was higher than what analysts predicted, and its revenue expectations fell from the $416 million estimate to $400 million. Following the report, the company’s shares fell by 17% after trading hours on Wednesday.
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Going forward, the company will not be growing its workforce anytime soon, as macroeconomic changes have dampened consumer spending and increased its cost of borrowing. Affirm will instead focus on margin-improving projects, repeat consumer engagement, and Debit+.
Affected employees in the US will receive severance packages of at least 15 weeks of base pay and an extra week for every year they worked at the company. The company will also pay a $5,000 health stipend to all laid-off workers to cover their six-month healthcare plan.
Employees on employer-sponsored visas will still have their employment status until April 30, and they will be able to work something out with the company’s immigration lawyer. The company will not demand the return of any devices it provided, as it hopes they will help these employees find new employment.
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