BNPL lender Affirm leans into 0% loans, card program | PaymentsSource

Buy now/pay later lender Affirm is leaning into 0% promotional financing offers and its debit card program to drive growth as the company marches toward its year-end profitability target. 

Affirm beat Wall Street’s estimates on nearly every metric for its fiscal second quarter 2025 ended Dec. 31, according to S&P Global CapitalIQ. Revenue tallied $866 million, an increase of 47% year over year and ahead of analysts’ estimates of $807.6 million. GAAP net income landed at $80.4 million, or 23 cents per share, eclipsing analysts estimates of a $52.7 million loss, or a 17 cent loss per share. 

Adjusted earnings per share also landed at 23 cents per share. Analysts expected Affirm to post a 23-cent loss per share. 

Shares of Affirm surged as much as 15% in after hours trading on Thursday evening following the earnings report. Those gains extended 22.5% to $75.78 as of 10:30 a.m. in New York Friday morning.  

Analysts cheered the results. 

“Affirm is firing on all cylinders, delivering premium growth, improving profitability and consistent credit performance,” Reginald Smith, executive director of equity research at JPMorgan, said in a research note. 

Andrew Jeffrey, research analyst at William Blair, said that Affirm was “on our short list of transformative fintechs that can become big companies over time.” 

David Scharf, an analyst at Citizens JMP, said the company “is a long-term secular winner at the expense primarily of the credit card industry. The company is well-positioned to capitalize on the continued adoption of BNPL solutions for everyday purchases and benefits from a more robust loan platform relative to competitors.” 

Gross merchandising volume (GMV) increased 35% to $10.1 billion, according to Affirm’s letter to shareholders. Active customers grew 23% to 21 million consumers, marking the fourth consecutive quarter of year-over-year growth. Transactions per active customers increased  to 5.3, compared with 4.4 in the same reporting period a year ago. Active merchants jumped 21% to 337,000.

“We think Affirm’s five largest merchants powered upside with 40% expansion,” Jeffrey said. “It is our view that Affirm enjoys relatively low penetration with these large merchants and has ample share headroom.” Affirms counts Apple, Amazon, Shopify, Walmart and Expedia as its largest merchants. 

Increased consumer uptake on 0% financing offers were a key driver to the positive results during the quarter, Affirm CEO Max Levchin said on the company’s earnings call with analysts Thursday night. Merchants, manufacturers or both frequently buy down rates to help increase purchase conversions, a practice that is commonly seen in the automotive industry. 

“Not paying interest at all, obviously, is a compelling reason for someone to pull the trigger on buying,” Levchin said. 

Zero-percent APR GMV grew 70% when compared with the same reporting period last year. Much of that growth was fueled by Affirm’s app: in-app 0% APR originations increased 260%, according to Affirm. 

“We’re leaning in more and more into this notion that the Affirm network is this really rich collection of merchants that at any given time are offering these staggering 0% deals,” Levchin said. 

The shift to 0% offers reflects Affirm’s value proposition, William Blair’s Jeffrey said. “Merchants willingly bear a larger cost of BNPL owing to superior conversion, customer loyalty, and average ticket.” 

Active consumers on the Affirm Card surged 136% year over year to 1.7 million customers, increasing direct-to-consumer GMV by 113% to $845 million. 

“The card, obviously, is a great product to increase engagement [of] dormant consumers that have transacted with us sometime in the past,” Levchin said, but noted there was still work to be done to upgrade the user interface and increase engagement numbers. 

“It’s entirely about just making the card a more convenient thing,” he said. 

The Affirm Card will be key to the lender’s ability to increase its total addressable market, according to Jeffrey. 

“We are bullish on Affirm’s debit card because it can significantly expand the TAM to card present retail, which is roughly seven times ecommerce,” he said. “Our view is that Affirm Card will move toward the top of consumers’ wallets as the company improves functionality and drives monetization.” 

Full-year fiscal 2025 guidance remained relatively unchanged from last quarter; management assumes GMV of $34.74 to $35.34 billion and revenue coming in at $3.13 to $3.19 billion. 

Credit quality, meanwhile, posted a slight year-over-year decline but remained within analysts expectations: 30-day delinquencies were up to 2.5%, compared with 2.4% in its fiscal Q2 2024; 60-day delinquencies rose to 1.5% compared with 1.4% in the same reporting period last year, and 90-day delinquencies were flat at 07%. 

Funding capacity increased to up to $22.6 billion at the end of the quarter, up from $16.8 billion in fiscal Q1 2025 ended Sept. 30, largely due to its $4 billion forward flow deal signed with State Street.