Affirm, the provider of buy now, pay later loans, gave a revenue forecast for the current quarter that trailed analysts’ estimates even as profit for the prior quarter was better than expected. The stock fell 8% in extended trading on Thursday.
Here’s how the company did, compared to analysts’ consensus estimates from LSEG:
- Earnings per share: 1 cent vs. an expected loss of 3 cents
- Revenue: $783 million vs. $783 million expected
Affirm reported gross merchandise volume, or GMV, of $8.6 billion, topping the average estimate of $8.2 billion, according to StreetAccount. GMV, a key metric that helps gauge the total value of transactions, increased 36% from a year earlier.
Revenue in the quarter rose 36% from $576 million a year ago. The company’s key margin metric — revenue less transaction costs, or RLTC —came in at 4.1%, slightly above its long-term target range of 3% to 4%.
Adjusted operating margin was 22%, compared to StreetAccount’s estimate of 21.6%. Affirm reported net income of $2.8 million, or a penny a share, compared to a loss a year earlier of $133.9 million, or 43 cents a share.
For the current quarter, Affirm is guiding for revenue between $815 million and $845 million — with a midpoint of $830 million, below the average estimate of $841 million, according to LSEG.
Affirm’s business is closely tied to consumer spending, as its online loan offering has become popular with sellers of electronics, apparel and travel. The U.S. economy contracted in the first three months of 2025 on an import surge at the start of President Donald Trump‘s second term in office, as companies and consumers sought to get ahead of the Trump tariffs implemented in early April.
As CNBC reported late last month, citing first-quarter results from credit card lenders, lower-income earners are reining in their transactions to focus on essentials, while the wealthy continue to spend on high-priced meals and and luxury travel.
“Right now, we’re seeing credit outcomes that are very in line with expectations,” Chief Financial Officer Rob O’Hare said in an interview. “We haven’t seen any signs of stress on the consumer side.”
Affirm is forecasting fourth-quarter GMV between $9.4 billion and $9.7 billion, with a midpoint of $9.55 billion, above StreetAccount’s estimate of $9.2 billion. Adjusted operating margin is expected between 23% and 25%, compared to the 23.8% StreetAccount estimate.
Affirm reiterated its commitment to achieving profitability on a GAAP basis by the end of its fiscal fourth quarter in 2025. Affirm’s active consumer base increased to 22 million, including 2 million new to Affirm consumers.
The Affirm Card, which is the company’s big bet for driving greater usage overall, saw GMV rise 115% from a year earlier, and the number of active cardholders more than doubled.
The company’s partnerships with Apple, Amazon and Shopify continue to drive momentum. In June, Affirm and Apple announced plans for U.S. Apple Pay users on iPhones and iPads to be able to apply for loans directly through Affirm.
Earlier this week, the Consumer Financial Protection Bureau said it will stop enforcing a Biden-era rule that complicated compliance for BNPL providers, in what was largely viewed as a win for lenders like Affirm.
The quarter saw a notable rise in 0% interest loans, a strategy in which merchants — and sometimes manufacturers — subsidize borrowing costs to drive sales. That marked a 44% increase from a year earlier.
O’Hare said that for merchants, 0% loans serve as an alternative to traditional discounts.
“It may be an expensive net discount rate, but it’s better than 10% off,” he said.
Affirm CEO Max Levchin said that 0% loans help build a pipeline of higher-value customers.
“Every time we sign someone new through a 0% promo, some number of months or quarters from now, that’s a prime candidate for the Affirm Card, and that’s a lifetime value booster,” Levchin said on the earnings call.
Meanwhile, credit quality held steady, with losses below 1% in the company’s core offering that allows users to repay loans in four installments.
Affirm shares are down 11% for the year, excluding the after-hours move, while the Nasdaq has fallen abut 7%.
(Source)