Affirm’s Q4 Earnings: A Pivotal Moment for BNPL’s Resilient Growth

Affirm’s Q4 2025 earnings report marks a transformative inflection point for the buy now, pay later (BNPL) sector, demonstrating how strategic innovation and market resilience can turn a once-struggling fintech into a compelling investment opportunity. The company’s gross merchandise volume (GMV) surged 43% year-over-year to $10.4 billion, driven by partnerships with major retailers, the expansion of 0% APR monthly installment loans, and the rapid adoption of the Affirm Card, which alone generated 132% GMV growth [1]. This performance translated into profitability: Affirm reported a GAAP operating income of $58 million, a stark contrast to the $73.5 million operating loss in Q4 2024 [2]. Revenue climbed 33% to $876.4 million, exceeding analyst expectations and signaling a durable shift in the company’s financial trajectory [3].

The broader BNPL market is equally poised for explosive growth. By 2033, the global BNPL market is projected to reach $80.15 billion, expanding at a 27% compound annual growth rate (CAGR) from 2025 to 2033 [4]. Affirm’s strategic partnerships with Stripe and Google Pay have amplified its accessibility, capturing a larger share of transactions in e-commerce and healthcare [5]. These collaborations align with the sector’s broader trend of diversification, as BNPL services increasingly cater to non-retail sectors like medical expenses, where flexible payment solutions are critical [6].

Affirm’s turnaround is not just a product of market tailwinds but a testament to its operational discipline. The company’s focus on credit-building tools—such as reporting BNPL payment data to credit bureaus—has expanded its appeal to younger, credit-challenged consumers while fostering long-term financial responsibility [7]. This approach contrasts with the sector’s earlier reputation for encouraging overspending, positioning Affirm as a responsible player in a space often scrutinized for consumer debt risks [8].

The resilience of the consumer finance sector further underpins Affirm’s growth potential. Despite weak consumer sentiment, card transaction data reveals robust spending, with JPMorgan reporting a 7% year-over-year increase in card spending and TransUnion noting a 4.5% rise in credit card originations [9]. Meanwhile, declining delinquency rates (2.17% in Q2 2025) suggest borrowers are managing debt responsibly [10]. These trends validate the BNPL model’s sustainability, as consumers increasingly prefer installment-based payments over traditional credit cards.

Critics may point to challenges such as the return of student loan payments and the UK’s growing preference for cash transactions [11]. However, Affirm’s diversified product suite—spanning retail, healthcare, and direct-to-consumer offerings—mitigates these risks. The company’s recent profitability and strong guidance for Q1 2026 (projected revenue of $920–$950 million) underscore its ability to navigate macroeconomic headwinds [12].

For investors, Affirm’s Q4 results represent more than a quarterly win—they signal a structural shift in the BNPL sector. With a resilient consumer base, a scalable business model, and a leadership team committed to innovation, Affirm is well-positioned to capitalize on the $80 billion BNPL market opportunity. As Deutsche Bank analysts recently noted, the company’s stock is undervalued relative to its growth prospects, making it a compelling long-term investment [13].

Source:
[1] Affirm Stock Soars as BNPL Firm's Fiscal Q4 Results Easily ..., [https://finance.yahoo.com/news/affirm-stock-soars-bnpl-firms-123133500.html]
[2] Affirm Reaches Profitability as BNPL Scale Turns Into ..., [https://www.investing.com/analysis/affirm-reaches-profitability-as-bnpl-scale-turns-into-sustainable-growth-200666159]
[3] Affirm's stock soars 15% on earnings, revenue beat, [https://www.cnbc.com/2025/08/29/affirm-afrm-q4-2025-earnings-report.html]
[4] Buy Now Pay Later Market Size | Industry Report, 2033, [https://www.grandviewresearch.com/industry-analysis/buy-now-pay-later-market-report]
[5] BNPL Fintech Affirm Reports Steady Financial Results, ..., [https://www.crowdfundinsider.com/2025/08/248722-bnpl-fintech-affirm-reports-steady-financial-results-stock-surges/]
[6] Buy Now Pay Later Market Size & Share Report, 2025-2032, [https://www.persistencemarketresearch.com/market-research/buy-now-pay-later-market.asp]
[7] A deeper look at buy now, pay later users, benefits and ..., [https://investors.affirm.com/news-releases/news-release-details/deeper-look-buy-now-pay-later-users-benefits-and-common]
[8] Buy now, pay later: a cross-country analysis, [https://www.bis.org/publ/qtrpdf/r_qt2312e.htm]
[9] The American consumer is proving to be resilient, at least according to their bankers, [https://finance.yahoo.com/news/the-american-consumer-is-proving-to-be-resilient-at-least-according-to-their-bankers-222724546.html]
[10] Q2 2025 TransUnion Credit Industry Insights Report, [https://newsroom.transunion.com/q2-2025-ciir/]
[11] Finance Monthly - June 2023, [https://www.finance-monthly.com/issues/2023/06/]
[12] Affirm Surpasses Expectations, Boosting BNPL Sector Health, [https://fintechreview.net/affirm-surpasses-expectations-boosting-bnpl-sector-health/]
[13] Affirm's Weak Guidance Hits the Stock. Why This Analyst ..., [https://www.barrons.com/articles/affirms-stock-earnings-guidance-d5a254a2]