Consumer financing firm Affirm Holdings on Wednesday reported a smaller-than-expected loss in its fiscal fourth quarter while revenue and other financial metrics topped Wall Street targets. Affirm stock surged as guidance came in above expectations amid the company's new partnership with Apple.
Also, Affirm said it expects "to achieve operating income profitability on a GAAP basis in fiscal Q4 2025."
The San Francisco-based company reported June-quarter earnings after the market close. The company reports results using generally accepted accounting principles, or GAAP.
"AFRM delivered another strong quarter with upside to Street estimates across the board," said RBC Capital analyst Daniel Perlin in a report. "More importantly, fiscal 2025 guidance embeds an expectation to achieve GAAP operating income profitability in fiscal Q4 2025, as well as potential for incremental benefit to fiscal 2025, depending on the timing of its Apple Pay commercialization and ramping of its international initiatives."
In the Affirm earnings report, the company reported a narrower-than-expected loss of 14 cents per share. That compared with a 69-cent per-share loss in the year-earlier period. Analysts polled by FactSet had projected a loss of 48 cents per share.
Affirm said revenue climbed 48% to $659 million vs. estimates of $604 million. The company said gross merchandise volume rose 31% to $7.2 billion vs. estimates at $6.87 billion.
On the stock market today, Affirm stock surged 34.6% to 42.52 in afternoon trading.
Buy Now, Pay Later Leader
Affirm is one of the biggest providers of buy now, pay later installment payment services. With BNPL options, consumers pay off purchases in monthly installments, either with low interest or none at all. Also, Affirm is expanding into other financial services.
In fiscal Q4, the new Affirm Card had GMV of $507 million compared to $374 million in the previous quarter and $129 million last year, with about 1.2million active cards at the end of the quarter.
In fiscal Q4, total active customers on the company's platform increased to 18.7 million versus vs 18.1 million in the previous quarter and 16.5 million in the year-ago period.
For the first quarter of fiscal 2025, which starts with the current September-ending quarter, Affirm said it expects revenue of $655 million at the midpoint of its outlook. Analysts had predicted fiscal Q1 revenue of $625 million.
The company forecast fiscal Q1 gross merchandise volume in a range of $7.1 billion to $7.4 billion versus estimates of $7.02 billion.
"The momentum in AFRM`s business continues to persist as BNPL adoption rises and it continues to efficiently manage credit," said Deutsche Bank analyst Bryan Keane in a report. "While AFRM's fiscal 2025 GMV guidance of greater than $33.5 billion was essentially in line with our previewed expectations, it does not incorporate any material contribution from emerging initiatives such as its Apple partnership and international expansion. Furthermore, while lower interest rates should benefit AFRM as funding costs come down in the aggregate, management noted it will continue to remain cautious on broader economic trends."
Meanwhile, the company announced that current Chief Financial Officer, Michael Linford, would be shifting to chief operating officer.
Affirm Stock: Technical Ratings
AFRM stock had retreated 35% in 2024 before the release of fiscal Q4 earnings.
But AFRM stock rallied recently on positive developments on the regulation of BNPL services. Federal regulators view BNPL companies as credit card providers but how they will be regulated is still somewhat undecided.
Further, high interest rates have pressured Affirm stock.
The initial public offering for AFRM stock in January 2021 raised $1.2 billion. Affirm gets most of its revenue from transaction fees paid by online retailers. In addition, Affirm gets about one-third of its revenue from interest income paid by consumers.
Aside from Apple, partners include e-commerce firms Amazon.com and Shopify.
Heading into the Affirm earnings report, the stock had a Relative Strength Rating of 80 out of a best-possible 99, according to IBD Stock Checkup.
Follow Reinhardt Krause on Twitter @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.
