Could a fintech giant’s surprising strategy shift be the secret to doubling earnings and defying market expectations? Affirm Holdings Inc.’s (NASDAQ:AFRM) latest financial results reveal a narrative that could reshape how we view the industry’s trajectory.
Affirm (NASDAQ:AFRM) delivered strong fourth-quarter results with earnings doubling expectations and revenue topping forecasts, driving a 12% stock jump.
The fintech firm posted record GMV growth, strong margins, and upbeat fiscal 2026 guidance, signaling sustained momentum and profitability.
JPMorgan analyst Reginald L. Smith reiterated an Overweight on Affirm and increased the price forecast from $91 to $94.
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Affirm reported fourth-quarter earnings of $0.20 per share, doubling the Street estimate of $0.10. Quarterly revenue reached $876.41 million, topping expectations of $837.02 million.
Affirm said it expanded its merchant network to 377,000 partners (+24% Y/Y), boosted transaction frequency by 20%, and maintained strong credit performance with a 4.0% Revenue Less Transaction Costs (RLTC) margin for fiscal 2025.
For the first quarter, Affirm projects $855 million–$885 million in revenue (vs. $860.55 million estimate) and forecasts fiscal 2026 revenue at $3.86 billion, far above the consensus of $3.18 billion.
Smith cited record-breaking growth, stronger-than-expected guidance, and margin expansion. The analyst highlighted that Affirm's GMV growth surpassed 40% year-over-year for the first time since the pandemic. At the same time, total notional volume reached its highest level on record, capping a robust fiscal 2025.
For fiscal 2026, Affirm guided GMV above $46 billion, slightly ahead of the Street's $45.8 billion estimate. Although guidance for the take rate (~8.4%) and notional revenue (>$3.86 billion vs. $3.90 billion expected) was slightly below consensus, profitability targets came in comfortably ahead.
Management expects RLTC margin of 4.0%, flat year-over-year but at the high end of its range, an adjusted operating margin above 26.1% (+200bps Y/Y), and a GAAP operating margin above 6.0% (+800bps Y/Y). Smith emphasized Affirm's track record of exceeding guidance, noting that fiscal 2024 and fiscal 2025 GMV each finished 9–11% above initial forecasts.
Key call takeaways included a 66% Y/Y increase in 0% APR loans to $3 billion, underscoring their role in acquiring new customers, as half of first-time Affirm users start with a 0% product. Guidance assumes Walmart (NYSE:WMT) removes Affirm from its website by early fiscal 2026, but about one-third of Walmart's volume originates from the Affirm app, which could sustain sales. Credit trends remain solid, with 30+ day delinquencies down 18bps Y/Y, reflecting a favorable mix shift toward low-risk, interest-free products.
In third-quarter fiscal 2025, Affirm reported 43% Y/Y GMV growth, far above the Street's 32% forecast, while take rate slipped to 8.5% due to product mix. RLTC margin aligned with expectations at 4.1%, while adjusted operating margin surged to 26.9%, beating guidance (25%) and consensus (24.7%). The company also achieved its first GAAP operating profit, a key milestone.
Smith updated his model to reflect fiscal 2026 guidance, adjusting for the mix shift toward 0% APR loans, which is take-rate dilutive but positive for credit quality. He forecasts fiscal 2026 RLTC of $1.9 billion (up from $1.7 billion) and fiscal 2027 RLTC of $2.3 billion (up from $2.1 billion), with continued 25%+ GMV growth. Smith reiterated that Affirm's focus on disciplined growth, expanding profitability, and a strong consumer acquisition funnel sets it up for sustained upside.
AFRM Price Action: Affirm Holdings shares were up 11.41% at $89.12 at the time of publication on Friday. The stock is trading near a new 52-week high, according to Benzinga Pro data.
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