Affirm, the prominent buy now, pay later (BNPL) service provider, has recently announced its fiscal first-quarter results that have surpassed analysts’ expectations. The company reported an adjusted loss of 31 cents per share, outperforming the anticipated loss of 35 cents. Furthermore, its revenue reached a remarkable $698 million, exceeding the $664 million forecasted by market experts. This performance not only highlights Affirm’s resilience in a competitive financial landscape but also underscores its growth potential, particularly in the booming BNPL sector.
A critical measure of Affirm’s success lies in its gross merchandise volume (GMV), which came in at an impressive $7.6 billion. This figure significantly surpassed the average estimate of $7.28 billion, marking a notable 35% increase from the previous year. GMV serves as a pivotal metric in assessing the total value of transactions facilitated by Affirm, reinforcing the firm’s position as a major player in the BNPL market. Additionally, the first-quarter revenue experienced a dramatic 41% uptick compared to the year-ago figure of $496.5 million, solidifying Affirm’s robust financial health.
Notably, the company reported revenue less transaction costs (RLTC) of $285 million, falling well within its earlier guidance range of $265 million to $280 million. This impressive outcome illustrates Affirm’s adeptness at managing its operational expenses while simultaneously focusing on enhancing its service offerings.
Looking forward, Affirm’s leadership is optimistic about future growth trajectories. The company anticipates achieving profitability on a Generally Accepted Accounting Principles (GAAP) basis by the fiscal fourth quarter of 2025. In the previous earnings report, CEO Max Levchin emphasized a new goal of reaching operational profitability by the end of the fiscal year, signaling aggressive strategic planning. For the upcoming second quarter, Affirm projects a revenue range of $770 million to $810 million, with a midpoint estimate of $790 million, slightly ahead of the $785 million consensus from LSEG analysts.
Affirm’s expectations for GMV in the second quarter also reflect a positive outlook, with predictions ranging between $9.35 billion to $9.75 billion. Analysts anticipate GMV to average around $9.48 billion, showcasing a solid growth trajectory for the company as it continues to innovate and capture market share.
Affirm’s strategic partnerships have been instrumental in enhancing its market presence, particularly its collaboration with well-established tech giants such as Apple. The partnership allows U.S. Apple Pay users to apply for loans directly through Affirm, potentially driving significant transaction volumes in the upcoming quarters. Analysts like Kevin Kennedy from Third Bridge posit that the addition of strategic distribution partners has been crucial for Affirm’s continued growth, stating that Affirm’s quality of underwriting — especially for high-ticket and interest-bearing BNPL products — sets the firm apart from its competitors.
However, the BNPL industry, while burgeoning, is not without its challenges. Analysts caution that the payments landscape is susceptible to commoditization risks, a trend that could impact all players, including Affirm. Yet, by focusing on high-value transactions, Affirm appears to create a protective cushion against these market fluctuations.
Moreover, the competitive landscape is rapidly evolving, with major players like Square’s parent company, Block, acquiring substantial BNPL firms like Afterpay. As the market grows, maintaining a competitive edge will be vital. Affirm’s unique positioning will play a pivotal role in its ability to attract and retain customers, especially amid increasing competition in the BNPL segment.
As of Thursday’s market close, Affirm shares had remained relatively flat throughout the year; however, they have surged over 70% since the end of August. This sharp increase illustrates a growing investor confidence in Affirm’s strategic direction and future profitability. The anticipated quarterly earnings call promises to shed more light on the company’s plans as it continues to navigate the complex BNPL market.
Affirm’s robust fiscal first-quarter performance signals a promising future for the company as it rises to the forefront of the BNPL sector. With strategic partnerships and a focus on quality, Affirm is well-positioned to maintain its competitive edge and achieve its profitability goals in the coming years.