Affirm Shares Surge After Q4 Earnings Beat, Profitability Milestone
The buy-now, pay-later firm's strong revenue and volume growth, coupled with a positive outlook, signals a strategic win in a competitive market.
Affirm Holdings Inc. shares rallied in after-hours trading on Wednesday after the company posted fourth-quarter financial results that surpassed analyst expectations, showcasing robust growth and a significant step towards sustained profitability.
The San Francisco-based buy-now, pay-later provider reported revenue of $876.4 million for the quarter, a 33% year-over-year increase that comfortably beat the consensus estimate of $837.02 million. Earnings per share came in at $0.20, double the analyst forecast of $0.10. The strong performance was underpinned by a 43% surge in Gross Merchandise Volume (GMV) to $10.4 billion, reflecting growing consumer and merchant adoption.
A key highlight of the report was Affirm's achievement of profitability, posting a net income of $69.2 million, a significant turnaround from a net loss of $45.1 million in the same quarter last year. The company also reached a pivotal milestone with a positive GAAP operating income of $58 million, reinforcing its trajectory towards long-term financial health.
The direct-to-consumer Affirm Card was a standout performer, with its GMV soaring 132% and active consumers growing 97% to 2.3 million. This indicates the success of Affirm's strategy to build direct relationships with users, reducing its reliance on merchant-integrated solutions. The company's active consumer base grew by 24% to 23 million, with transactions per consumer up 19%.
Looking ahead, Affirm provided an optimistic forecast for fiscal year 2026, projecting GMV to exceed $46 billion. The company anticipates maintaining its profitability, with adjusted operating margins expected to be over 26.1% and GAAP operating margins above 6.0%. For the upcoming first quarter, Affirm expects GMV to be between $10.10 billion and $10.40 billion.
In a statement, the company expressed confidence in its future, noting, “Profitability is of course a point in the journey, not the destination. The size of Affirm’s total addressable opportunity still rounds up to infinity.” The strong results and bullish forecast suggest Affirm is well-positioned to navigate the competitive landscape of the fintech and payments sector.