Affirm Grows Thanks to Apple Partnership and Increasing Demand for Flexible BNPL Payment Options
Affirm Holdings (AFRM), a leader in the Buy Now, Pay Later (BNPL) space, saw its shares rise sharply by over 14% on Wednesday, August 28, after the company reported impressive fiscal Q4 results that significantly exceeded Wall Street expectations. These results are particularly notable in a persistently challenging economic environment in which Affirm proved its resilience and even raised its guidance.
Quarterly results exceed expectations
For the fiscal 4th quarter ended June 30, Affirm reported a loss of only 14 cents per share, well below the 48 cents per share loss analysts had expected and a significant improvement over the prior year loss of 69 cents per share. Total revenue increased an impressive 48% to $659 million, well above the consensus forecast of $604 million. Gross merchandise volume (GMV) - a key indicator of transaction volume on the platform - grew 31% to $7.2 billion and also exceeded expectations of $6.87 billion.
These strong results underline the growing demand for flexible payment options such as BNPL, especially as consumers are increasingly under financial pressure. Affirm has managed to continue to grow despite an uncertain economic environment and consolidate its position as a leading provider in this sector.
Future forecasts and strategic partnerships
For Q1 FY2025, Affirm forecasts revenue of approximately $655 million, which is above analysts' estimates of $625 million. The company also expects GMV to be between $7.1 billion and $7.4 billion, compared to estimates of $7.02 billion. For the full fiscal year 2025, Affirm forecasts a GMV of over $33.5 billion, exceeding analysts' expectations of $32.6 billion.
CEO Max Levchin emphasized in a letter to shareholders that Affirm plans to become operationally profitable - by the 4th quarter of fiscal 2025. This long-term goal is supported by strategic partnerships, including a new collaboration with Apple that enables US Apple Pay users to apply for loans directly through Affirm. Other key partnerships with Amazon and Shopify are also helping to further increase Affirm's reach and adoption. These partnerships not only provide Affirm with access to a broader customer base, but also the opportunity to significantly increase volume and profitability.
Market conditions and regulatory developments
Despite a 35% decline in Affirm's share price year to date, the stock has recently recovered due to positive developments in the regulatory environment. Federal regulators increasingly view BNPL companies as credit card issuers, although the exact regulatory framework is still a work in progress. Bank of America analysts noted that potential interest rate cuts could lower Affirm's financing costs and increase credit sales revenue. The increase in the maximum interest rate (APR) from 30% to 36% is also seen as a positive factor for Affirm's GMV growth and returns. A higher APR gives Affirm the opportunity to lend at higher interest rates, resulting in higher revenues and improved profitability.
Rising customer satisfaction strengthens Affirm's position
Increasing consumer satisfaction with BNPL services, as evidenced by a survey in which 79% of users expressed satisfaction with the plans, strengthens Affirm's position as a leading provider in this growing market. Affirm plans to capitalize on this positive momentum to increase cardholder spending and reach its goal of 20 million active cards. In a changing market environment, Affirm remains well positioned to continue to lead the consumer credit space and realize its long-term goals.
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