Affirm’s Revenue Forecast Falls Short, Stock Drops 10%

TORONTO, Canada — Affirm Holdings Inc., a prominent player in the buy now, pay later sector, announced a revenue forecast for the current quarter that missed analysts’ expectations, causing its stock to plummet 10% during extended trading on Thursday.

The company reported a gross merchandise volume (GMV) of $8.6 billion, exceeding the average estimate of $8.2 billion, as per data from StreetAccount. This figure represents a substantial 36% growth from the same period last year.

In its previous quarter, Affirm’s revenue rose by 36%, and its key margin metric, revenue less transaction costs (RLTC), reached 4.1%, slightly above its long-term target range of 3% to 4%. Meanwhile, the adjusted operating margin was reported at 22%, better than the 21.6% prediction by analysts.

Affirm recorded a net income of $2.8 million, or a penny per share, a significant turnaround from a loss of $133.9 million, or 43 cents per share, during the same quarter last year. However, for the upcoming quarter, Affirm estimates revenue will be between $815 million and $845 million, with a midpoint of $830 million, falling short of the expected $841 million.

The company’s business heavily relies on consumer spending, especially in sectors like electronics, apparel, and travel. Recent data from CNBC highlighted that while lower-income consumers are curtailing spending to essentials, wealthier individuals are still indulging in luxury purchases.

Looking ahead, Affirm forecasts fourth-quarter GMV between $9.4 billion and $9.7 billion, averaging $9.55 billion, which is above the StreetAccount estimate of $9.2 billion. The adjusted operating margin is anticipated to fall between 23% and 25%, compared to the estimated 23.8%.

Affirm aims to achieve profitability on a GAAP basis by the conclusion of its fiscal fourth quarter in 2025. Meanwhile, the company reported an increase in its active consumer base to 22 million, with 2 million new users onboarded.

The Affirm Card, which is central to the company’s growth strategy, saw a remarkable 115% rise in GMV compared to last year, and the number of active cardholders more than doubled.

Affirm’s collaboration with major companies continues to bolster its position. Recently, a partnership with Apple was finalized, allowing U.S. Apple Pay users to apply for loans directly through Affirm. Additionally, the Consumer Financial Protection Bureau announced halting enforcement of a regulation that posed challenges for BNPL companies, seen as a positive development for Affirm.

During the quarter, the rise of 0% interest loans, subsidized by merchants, surged by 44% year-over-year. Credit quality remained stable, with losses below 1% in Affirm’s core loan offering that permits users to repay in four installments.

Despite Thursday’s after-hours decline, Affirm shares have decreased by 11% this year overall, while the Nasdaq has slipped about 7%.