Buy now, pay later company Affirm (NASDAQ:AFRM) reported revenue ahead of Wall Streets expectations in Q3 CY2025, with sales up 33.6% year on year to $933.3 million. Its GAAP profit of $0.23 per share was significantly above analysts’ consensus estimates.
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Affirm (AFRM) Q3 CY2025 Highlights:
- Revenue: $933.3 million vs analyst estimates of $884.7 million (33.6% year-on-year growth, 5.5% beat)
- EPS (GAAP): $0.23 vs analyst estimates of $0.11 (significant beat)
- Adjusted EBITDA: $271.9 million vs analyst estimates of $221.8 million (29.1% margin, 22.6% beat)
- Operating Margin: 6.8%, up from -19% in the same quarter last year
- Market Capitalization: $21.77 billion
StockStory’s Take
Affirm’s third quarter delivered results that surpassed Wall Street’s expectations, with management attributing this to sustained growth in merchant partnerships, robust consumer demand for 0% APR products, and disciplined underwriting. CEO Max Levchin highlighted the company’s ability to “execute in the ABS market and in the capital markets more broadly,” referencing Affirm’s expanded relationships with blue-chip investors. The quarter was also marked by progress in direct point-of-sale merchant integrations and increased transaction frequency per customer, particularly within lower average order value categories such as apparel and beauty.
Looking ahead, management points to continued investment in product innovation, notably the Affirm Card and expansion of 0% APR promotional events, as key drivers of growth. Levchin emphasized the long-term potential of the recently extended Amazon partnership, stating, “We are going to be able to continue to work with them over the next 5 years.” The company expects the Affirm Card’s reach to broaden through improved underwriting and deliberate marketing, while ongoing enhancements to platform integrations and new verticals are anticipated to support scale. CFO Robert O’Hare cautioned that Affirm’s focus remains on maintaining take rates near 4%, balancing growth and profitability.
Key Insights from Management’s Remarks
Management attributed the quarter’s outperformance to a combination of expanded merchant relationships, increased consumer engagement with 0% APR offers, and disciplined execution in both underwriting and capital markets.
- Amazon partnership extended: Affirm secured a five-year extension with Amazon, which management views as a significant long-term commitment. This partnership is expected to provide ongoing access to a large customer base and enhance Affirm’s scale in U.S. e-commerce.
- 0% APR product growth: The company saw strong uptake in 0% APR loan products, driven by targeted promotional events such as the “0% Days.” Management noted these offers attracted higher credit quality users and deepened merchant relationships by enabling efficient, tailored promotions.
- Affirm Card adoption: The Affirm Card added 500,000 new members in the quarter. Levchin described improved underwriting—especially through cash flow analysis for younger and thinner-file consumers—as unlocking new growth, though marketing remains internally focused for now.
- Capital markets execution: Affirm successfully navigated a complex funding environment, expanding its asset-backed securities (ABS) program and deepening ties with institutional investors. Management emphasized that the asset’s performance and dedicated team are key differentiators in securing favorable terms.
- Payment service provider (PSP) expansion: New PSP integrations, such as with Worldpay for Platform, accelerated merchant onboarding. Management explained that these relationships improve the speed and breadth of integrations, supporting both domestic and international growth.
Drivers of Future Performance
Affirm expects growth in consumer-facing products and expanded merchant partnerships to drive results, while maintaining profitability discipline amid evolving credit and funding conditions.
- Broader Affirm Card rollout: Management believes the Affirm Card’s penetration can increase as underwriting models mature and product features are tailored to more consumer segments. Internal marketing and gradual expansion are expected to drive adoption, with the goal of making the card a primary payment method for existing users.
- Merchant-funded promotions: The company plans to continue and expand merchant-funded 0% APR events, leveraging its data to target offers and support merchant sales. Management expects these initiatives to drive loan volume growth and maintain high credit quality among borrowers.
- Balancing growth and take rates: CFO Robert O’Hare reiterated the company’s focus on keeping revenue less transaction cost (RLTC) take rates near 4%, aiming to optimize growth and profitability. He cautioned that product mix, funding strategies, and capital markets dynamics could create variability in margins and take rates over time.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will watch (1) the pace of Affirm Card adoption as underwriting models evolve, (2) incremental growth from expanded partnerships such as Amazon and new payment service providers, and (3) the effectiveness and frequency of merchant-funded 0% APR promotional events. Progress in international markets and new product verticals will also be important to track for sustained growth.
Affirm currently trades at $72.44, up from $65.99 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).
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