Affirm, a leader in the buy now, pay later (BNPL) market, reported stronger-than-expected earnings for the prior quarter but issued a revenue forecast for the current quarter that fell short of analysts’ expectations. Following the release, Affirm’s stock fell 8% in after-hours trading.
For the quarter, Affirm posted earnings of 1 cent per share, compared to an expected loss of 3 cents. Revenue matched the $783 million anticipated by analysts, marking a 36% increase from the same period a year earlier. Gross merchandise volume (GMV), which measures the total value of transactions, was $8.6 billion, surpassing expectations of $8.2 billion and representing a 36% growth year-over-year.
The company’s key margin metric, revenue less transaction costs (RLTC), came in at 4.1%, slightly above its long-term target range of 3% to 4%. Affirm also reported an adjusted operating margin of 22%, which exceeded the expected 21.6%. Net income reached $2.8 million, a significant improvement compared to the $133.9 million loss during the same quarter last year.
Looking forward, Affirm’s revenue guidance for the current quarter is between $815 million and $845 million, with a midpoint of $830 million. This forecast is lower than the $841 million analysts had anticipated. Affirm’s business is heavily reliant on consumer spending, particularly in sectors such as electronics, apparel, and travel, all of which have been affected by broader economic conditions.
Despite this, Affirm reported strong growth in its active user base, which now stands at 22 million, including 2 million new consumers. The company’s Affirm Card, a major growth initiative, saw GMV rise 115% from the previous year, and the number of active cardholders more than doubled. Affirm’s partnerships with major players like Apple, Amazon, and Shopify continue to drive momentum.
The company also saw a 44% year-over-year increase in 0% interest loans, which merchants use as an alternative to traditional discounts. CEO Max Levchin emphasized that these promotional loans help build a long-term customer base and encourage future cardholder activity.
Affirm remains focused on achieving profitability by the end of its fiscal fourth quarter in 2025, despite the challenges posed by a shifting consumer landscape.
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