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Affirm Stock Soars 15% as Strong Earnings and Revenue Signal Profit Turnaround

Prime Highlights:

  • Affirm’s stock jumped 15% in after-hours trading after reporting strong quarterly results.
  • The company delivered better-than-expected earnings and revenue, showing a clear turnaround from last year’s losses.

Key Facts:

  • Earnings per share: 20 cents vs. 11 cents estimated; Revenue: $876 million vs. $837 million expected.
  • Gross merchandise volume: Rose 43% year-over-year to $10.4 billion, with net income of $69.2 million compared to a $45.1 million loss last year.

Key Background:

Affirm’s stock surged in after-hours trading on Thursday after the buy now, pay later (BNPL) company posted stronger-than-expected results for its fiscal fourth quarter. The company’s earnings and revenue not only beat Wall Street forecasts but also highlighted a significant turnaround from losses in the same period last year.

The San Francisco-based fintech reported earnings per share of 20 cents, almost double the analysts’ consensus estimate of 11 cents, according to LSEG. Quarterly revenue came in at $876 million, comfortably ahead of the expected $837 million. That figure marked a 33% jump from $659 million a year ago.

Gross merchandise volume, a key measure of transaction activity, rose 43% year-over-year to $10.4 billion. Affirm reported a profit of $69.2 million, or 20 cents per share, reversing last year’s loss of $45.1 million, or 14 cents per share, in the same quarter. Management credited disciplined execution for helping the company reach operating income profitability right on the schedule it had committed to.

For the upcoming quarter, Affirm expects its revenue to fall between $855 million and $885 million, with total transaction volume projected at $10.1 billion to $10.4 billion.

Before Thursday’s earnings announcement, Affirm’s shares had already climbed 31% this year, outpacing the Nasdaq’s 12% gain. The latest results provided further momentum, sending the stock up 15% in extended trading.

Affirm, which went public in 2021, has built major partnerships with Amazon and Shopify to strengthen its position in the competitive BNPL space. However, competition is intensifying as retailers evaluate alternative providers. Recently, Walmart switched its BNPL collaboration to Klarna, which is also on the brink of a public offering. Affirm found its way further into the market last year with an Apple deal.

Investors are celebrating the high financial results and the obvious road to profitability of Affirm, despite the competitive headwinds, which indicates the increasing confidence in the company’s strategy.