Affirm, a US-based financial technology company, has announced that it has laid off 19% of its workforce, according to its second-quarter earnings report. Founder and CEO Max Levchin acknowledged that the move was the most difficult decision since the company’s founding but emphasized that it was the right one. The layoffs come as the company “consciously hired ahead of the revenue required to support the size of the team” during the early stages of the pandemic.
The fintech firm also revealed that it would be phasing out several initiatives, including Affirm Crypto. Levchin told shareholders that the company plans to keep its headcount “essentially flat for the foreseeable future”. Affirm is redirecting the majority of its research and development efforts towards margin-improving projects, repeat consumer engagement, and Debit+ with plans to continue executing this roadmap for several quarters.
The laid-off employees in the US will receive a minimum of 15 weeks of base pay as severance in addition to an extra week per year of tenure. The decision to lay off employees comes after the firm reported Q2 revenue of $261.8m, up 71% from the same quarter last year. Despite the layoffs, Affirm’s shares rose 5.5% in after-hours trading.
In conclusion, Affirm’s decision to lay off 19% of its workforce and sunset several initiatives, including Affirm Crypto, marks a challenging time for the fintech firm. However, the company’s CEO believes that this move is necessary for the company’s future growth. The company plans to focus its efforts on margin-improving projects and will continue to execute its roadmap in the coming quarters.
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