Affirm Holdings Inc. website home screen on a laptop computer in an arranged photograph taken in Little Falls, New Jersey.
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To assert announced the reduction of 19% of its workforce on Wednesday. The news broke as she reported it second quarter results which fell below analyst estimates on both the upper and lower lines.
Shares were down more than 17% after hours.
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In his letter to shareholders on Wednesday, founder and CEO Max Levchin called the decision “the most difficult” of all the cuts the company has chosen to make, and said the layoffs would be effective that day.
Affirm said in June 2022 that it had 2,552 employees, meaning the layoffs affect around 485 people.
In a message Levchin sent to employees earlier Wednesday which he later shared publicly, he said that at the start of the pandemic, the company “consciously hired ahead of the revenue needed to sustain the size of the team. “, with revenue growth justifying the strategy.
“Everything changed in mid-2022,” Levchin said, pointing to Federal Reserve policy that he said “has dampened consumer spending and dramatically increased Affirm’s cost of borrowing.”
“The root cause of the current situation is that I moved too slowly as these macroeconomic shifts unfolded,” Levchin wrote.
The company reported a loss of $1.10 per share for its fiscal second quarter of 2023, while analysts had expected a loss of 98 cents per share, according to Refinitiv. It also missed revenue expectations, reporting $400 million in revenue for the quarter compared to analysts’ estimates of $416 million, according to Refinitiv.
Levchin told shareholders that Affirm expects to keep the workforce “essentially flat for the foreseeable future.”
“During the second quarter of 2023, we redirected the vast majority of our R&D efforts to margin improvement projects, repeat consumer engagement and Debit+ and expect to continue executing this targeted roadmap for multiple quarters. “, said Levchin.
Levchin told employees that laid-off workers in the United States would be offered a minimum of 15 weeks of base pay as severance pay, plus an additional week per year of service. Laid-off U.S. workers would also receive a $5,000 health allowance, regardless of their enrollment status, covering six months of employee health care. Non-U.S. employees would receive severance and health care “in accordance with local practices,” Levchin said.
Workers who rely on an employer-sponsored visa will remain employed by Affirm until April 30, Levchin said, and they could access one-on-one counseling with an Affirm immigration attorney.
Levchin also said laid-off workers can keep their Affirm-issued devices to help them with their job search, and can access three months of career advice and an alumni directory.
WATCH: Affirm lacks top and bottom, announces it cuts 19% of squad
