Consumer financing firm Affirm Holdings reported a smaller-than-expected loss in its fiscal first quarter while key financial metrics topped Wall Street targets. Affirm stock retreated on Friday, although some analysts expect upside from the company's new debit card in 2025.
The San Francisco-based company reported September-quarter earnings after the market close on Thursday.
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.
For the second quarter of fiscal 2025, which starts with the current December-ending quarter, Affirm said it expects revenue of $790 million at the midpoint of its outlook, slightly above views. Analysts had predicted fiscal Q2 revenue of $785 million.
The company forecast fiscal Q2 gross merchandise volume of $9.55 billion versus estimates of $9.48 billion amid the holiday shopping season.
Affirm Debit Card Customer Base Grows
In fiscal Q1, the new Affirm Card had 1.4 million users, up from 1.2 million active cards in the June quarter. Active users of buy now, pay later services rose 15% to 19.5 million.
The Affirm Card continues to see strong growth," said said James Friedman, a Susquehanna analyst in a report." Affirm Card gross merchandise volume grew 171% year-over-year. Management also reported that in-store usage of the Affirm Card grew to 45%, up from 40% in Q4 2024. We believe as its adoption increases, Affirm can further penetrate in-store shopping, thus growing its usage in everyday transactions and potentially moving up in wallet placement."
RBC Capital analyst Daniel Perlman also is upbeat.
"The Affirm card generated $607 million in fiscal Q1, versus $507 million last quarter," said Perlman in a report. "Management highlighted that card-related unit economics and credit performance are in line with (or better than) other Affirm transactions. In addition to card growth, the company launched on Apple Pay in September and in the U.K. during the quarter."
Affirm Stock: New Apple Partnership
A new partnership with Apple is expected boost financial results in 2025.
The company reports results using generally accepted accounting principles, or GAAP.
In the Affirm earnings report, the company reported a loss of 31 cents per share. That compared with a 57-cent per-share loss in the year-earlier period. Analysts polled by FactSet had projected a loss of 32 cents per share.
Affirm said revenue climbed 41% to $698 million vs. estimates of $664 million. The company said gross merchandise volume rose 35% to $7.6 billion vs. estimates at $7.3 billion.
On the stock market today, Affirm stock fell 6.6% to 45.54 in early trading.
Also, Affirm has stated that it expects "to achieve operating income profitability on a GAAP basis in fiscal Q4 2025."
Affirm Stock: Technical Ratings
AFRM stock was roughly even in 2024 before the release of fiscal Q4 earnings.
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.
Heading into the Affirm earnings report, the stock had a Relative Strength Rating of 96 out of a best-possible 99, according to IBD Stock Checkup.
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