Affirm Holdings Reports Third-Quarter Earnings with Strong Growth

Affirm Holdings has reported strong growth in its third-quarter earnings, and it's worth taking a closer look at the numbers.

The company's revenue grew to $725 million, up 97% from the same period last year.

This significant increase in revenue is a testament to the growing demand for Affirm's products and services.

Affirm's active merchant base has also expanded to over 150,000 merchants, a 50% increase from the previous year.

Affirm Holdings reported a significant beat in its third-quarter earnings, with a profit of 1 cent per share against the expected loss of 9 cents.

The company's revenue rose 36% year over year to $783.1 million, near the upper end of its guidance range of $755-$785 million.

Gross Merchandise Value (GMV) reached $8.6 billion, up 36% from the prior year and ahead of the $8.1 billion Zacks Consensus Estimate.

Transactions totaled 31.3 million, up 45.6% year over year, driven largely by repeat customers.

The company's guidance for the fourth quarter fell short of Wall Street expectations, with revenue expected between $815-$845 million and GMV between $9.4-$9.7 billion.

Affirm's Earnings ESP is a positive +63.27%, indicating a likely earnings beat.

The company's Zacks Rank is #1, further increasing the odds of an earnings beat.

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Affirm Holdings' growth drivers remain intact, with repeat customer growth becoming a significant strength for the company. 94% of transactions in the fiscal third quarter came from returning customers, highlighting growing brand loyalty and potential for more predictable revenue.

The company is expanding internationally, with plans to extend operations into Western Europe, starting with France, Germany, and the Netherlands, in partnership with Shopify. This global push, backed by existing merchant relationships, could unlock significant growth potential.

Affirm's model benefits both merchants and consumers by reducing cart abandonment and offering flexible, transparent payment options. Notably, 0% APR plans rose 44% year over year in the fiscal third quarter and accounted for 13% of GMV.

However, Affirm faces challenges, including a funding debt of $1.9 billion and a long-term debt-to-capital ratio of 72.8%, significantly higher than the industry's average. The company needs to demonstrate sustained earnings over the coming quarters to assure investors about its capacity to service its debt obligations.

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Affirm's Long-Term Growth Drivers Remain Intact. The company's repeat customer growth is a significant strength, with 94% of transactions coming from returning customers in the fiscal third quarter.

This growing brand loyalty is a testament to the company's ability to build strong relationships with its customers. Affirm's move into everyday consumer categories, such as home goods and lifestyle, is also supporting this shift toward more stability.

The company is expanding internationally, entering the U.K. market and planning to extend operations into Western Europe, starting with France, Germany, and the Netherlands, in partnership with Shopify. This global push has the potential to unlock significant growth.

Affirm's model benefits both merchants and consumers by reducing cart abandonment and offering flexible, transparent payment options, including 0% APR monthly installments. Notably, 0% APR plans rose 44% year over year in the fiscal third quarter and accounted for 13% of GMV.

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Affirm's long-term debt-to-capital ratio of 72.8% is significantly higher than the industry's average of 12.9%, which remains a concern.

Operating expenses have been rising rapidly, increasing 76.6%, 25.9%, and 5.4% in fiscal 2022, 2023, and 2024, respectively.

The company needs to demonstrate sustained earnings over the coming quarters to assure investors about its capacity to service its debt obligations.

Affirm is facing intense competition in the BNPL space, with traditional financial institutions and credit card companies entering the market.

Walmart's decision to switch from Affirm to Klarna illustrates the competitive landscape and may signal challenges to Affirm's merchant retention efforts.

The rising operating expenses will be critical to protecting margins as Affirm continues to invest in growth and innovation.

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Affirm Holdings reported a significant improvement in its financial performance during the third quarter of fiscal 2025.

Revenue rose 36% year over year to $783.1 million, near the upper end of the company's guidance range of $755–$785 million.

The company's Gross Merchandise Value (GMV) reached $8.6 billion, up 36% from the prior year and ahead of the $8.1 billion Zacks Consensus Estimate.

Transactions totaled 31.3 million, up 45.6% year over year, driven largely by repeat customers.

Affirm's financial performance was driven by strong performance across its largest merchant partner, wallet integrations, and direct-to-consumer channels.

The company's Q3 earnings of 1 cent per share exceeded the Zacks Consensus Estimate of a loss of nine cents and the prior-year quarter's loss of 43 cents.

Despite the strong Q3 performance, Affirm's fiscal fourth-quarter 2025 guidance fell short of Wall Street expectations, with revenue expected to be between $815-$845 million and GMV between $9.4-$9.7 billion.

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Affirm's stock has soared 67% over the past year, significantly outperforming the broader industry and the S&P 500 Index.

This impressive growth can be attributed to the company's strong performance in the Buy Now, Pay Later (BNPL) market. PayPal Holdings, Inc. grew 13.2% during the same period, while Block, Inc. declined 18.6%.

Affirm's valuation looks relatively cheap compared with the industry average. The company is trading at 4.34X forward 12-month sales, below the industry's average of 5.12X.

This indicates that there's still room for growth in Affirm's share price, making it an attractive investment opportunity for those who believe in the company's potential.

Affirm's fiscal Q3 performance showed strong revenue growth, improved margins, and rising transaction volumes, particularly from loyal customers.

This growth is a promising sign, but it's essential to consider the company's elevated debt levels and rising expenses, which may impact margin stability.

Affirm currently has a Zacks Rank #3 (Hold), indicating that investors should exercise patience before adding or expanding positions.

The delay of Klarna's IPO due to a broader tech sell-off and tariff-related uncertainties has eased competitive pressure in the BNPL space, benefiting Affirm.

Analysts expect concerns about Walmart dropping Affirm to be overblown, as the retailer only contributed a small portion to Affirm's revenue and adjusted operating income.

Affirm's long-term outlook remains promising, with the company expanding internationally, entering the U.K. as a gateway to Europe, and diversifying beyond BNPL with new debit products and banking features.

This expansion and diversification position Affirm to compete with giants like Visa and PayPal, which is a significant advantage.

With Affirm's focus on profitability, tightening underwriting standards, and improving margins, investor confidence should increase, supporting its case for durable growth.

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Affirm Holdings reported third-quarter fiscal 2025 earnings of 1 cent per share, a significant improvement from the prior-year quarter's loss of 43 cents.

Revenue rose 36% year over year to $783.1 million, near the upper end of the company's guidance range of $755-$785 million.

Gross Merchandise Value (GMV) reached $8.6 billion, up 36% from the prior year and ahead of the $8.1 billion Zacks Consensus Estimate.

Transactions totaled 31.3 million, up 45.6% year over year, driven largely by repeat customers.

The company anticipates Q4 revenue between $815-$845 million and GMV between $9.4-$9.7 billion.

The Zacks Consensus Estimate for merchant network revenues is pegged at $199.5 million, indicating a 25.2% rise from the prior-year quarter's figure.

The consensus mark for GMV for the fiscal third quarter implies 29.2% growth from the prior-year quarter's number.

Management anticipates the metric to be in the range of $8-$8.3 billion.

The Zacks Consensus Estimate for active consumers indicates 17.4% year-over-year growth.

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Card network revenues are expected to have benefited from an increase in the usage of Affirm's virtual cards, with the consensus mark indicating a 30% improvement from the year-ago quarter's number.

Interest income is pegged at $414.4 million, which implies a 31.3% year-over-year rise.

Servicing income is expected to have risen due to a growing off-balance sheet platform portfolio, with the consensus mark pegged at nearly $31.3 million, indicating a 23.6% jump from the year-ago quarter.