Consumer financing firm Affirm Holdings swung to a profit in its fiscal second quarter as revenue handily beat views. Affirm stock climbed as investors mulled market share gains in the buy now, pay later market.
The San Francisco-based company reported December-quarter earnings after the market close on Thursday.
"Robust BNPL adoption and a solid holiday shopping season helped drive results above expectations," said Deutsche Bank analyst Bryan Keane in a report. "Affirm is clearly taking share vs. the BNPL and e-commerce market. The company is making progress on key initiatives including international expansion and digital wallet partnerships (Apple)."
Affirm Stock: New Business Initiatives
Meanwhile, Affirm Chief Executive Max Levchin talked about new initiatives in this recent IBD interview.
A new debit card is picking up traction with consumers, said William Blair analyst Andrew Jeffrey in a report.
"Affirm Card reached 1.7 million second-card users in the second quarter, generating $845 million of gross merchandise volume, or 8.4% of total, up from 5.3% last year," he said in a report.
In the Affirm earnings report, the company reported a profit of 23 cents per share on an adjusted basis. That compared with a 54-cent loss in the year-earlier period. Analysts polled by FactSet had projected a loss of 16 cents per share.
"The revised operating margin guidance of 22.5% to 23.5% is up from prior guide of at least 20% as Affirm continues to see operating leverage across its expense categories," said UBS analyst Timothy Chiodo in a report.
Affirm said revenue climbed 47% to $866 million vs. estimates of $807.2 million. The company said gross merchandise volume rose 35% to $10.1 billion vs. estimates at $9.637 billion.
On the stock market today, Affirm stock surged over 18% to 73.24 in morning trading.
'Buy Now, Pay Later' Leader
Affirm is one of the biggest providers of so-called "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 third quarter of fiscal 2025, which ends in March, Affirm said it expects revenue of $770 million at the midpoint of its outlook, roughly in line with views. Analysts had predicted fiscal Q3 revenue of $772 million.
The company forecast fiscal Q3 gross merchandise volume in a range of $8 billion to $8.3 billion vs. estimates of $8.27 billion amid the holiday shopping season.
Affirm Stock Technical Ratings
AFRM stock was up 2.5% in 2025 heading into the Affirm earnings report.
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.
Affirm stock holds a Relative Strength Rating of 96 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.
