Affirm Reports 'Strong' Quarter, Exceeds FY26 GMV Guidance Expectations

Affirm Holdings reported a strong quarter, exceeding FY26 GMV guidance expectations, according to RBC. The company operates a payment network that offers consumers and merchants a flexible alternative to traditional payment options. Its platform comprises point-of-sale payment solutions, merchant commerce solutions, and a consumer-focused app. The Affirm App and Website provide tailored offers from merchants based on consumers' preferences.

Affirm Holdings, Inc. (AFRM), a leading payment network operator, reported a strong fourth quarter (Q4) performance, with gross merchandise volume (GMV) exceeding expectations for the fiscal year 2026 (FY26). The company's results underscore its ability to scale profitably in the competitive buy now, pay later (BNPL) sector.

Affirm reported a net income of $69.24 million for Q4 2025, a significant improvement from a loss of $45.14 million in the same period last year. On a per-share basis, earnings improved to $0.20 from a loss of $0.14 per share. Total revenue increased to $876.42 million, up 33% year-over-year (YoY) [1].

Key highlights include a 43% increase in GMV to $10.4 billion and a 24% increase in active customers to 23 million. The company also expects revenue in the range of $855 million to $885 million for the first quarter of 2026, below the average analyst forecast of $1.05 billion [1].

Affirm's success is driven by strategic AI tools like Adapt AI, which boosted GMV for merchants by 5% through dynamic pricing and personalized payment plans. The company's credit discipline and product diversification, including the Affirm Card, have also contributed to its resilience. The Affirm Card generated $1.2 billion in volume, with average spending per cardholder reaching $4,700 annually [2].

Market share gains and competitive dynamics also played a role in Affirm's performance. The company's U.S. BNPL market share grew from 9% in 2022 to 13% by year-end 2024, driven by strategic partnerships and a focus on user experience [2]. However, the competitive landscape is heating up, with traditional financial institutions and big tech firms entering the space.

The BNPL sector is poised for sustained growth, with the U.S. market projected to expand at an 8.5% compound annual growth rate (CAGR) through 2030, reaching $184.05 billion in value. Globally, the market is expected to surpass $911.8 billion by 2030, driven by adoption in emerging economies [3].

Regulatory shifts are also creating a more sustainable environment for BNPL providers. The U.S. Consumer Financial Protection Bureau (CFPB) has deprioritized enforcement of its 2024 BNPL interpretive rule, signaling a shift toward broader consumer protection goals [4].

Affirm's Q4 results and strategic initiatives demonstrate its capacity to outperform in a maturing BNPL sector. With a robust balance sheet, a growing market share, and a product portfolio that aligns with consumer and merchant needs, the company is well-positioned to capitalize on the sector's long-term growth.

References:
[1] https://www.nasdaq.com/articles/affirm-holdings-swings-profit-q4-expects-q1-revenue-below-view-stock
[2] https://www.ainvest.com/news/affirm-strong-earnings-signal-buying-opportunity-evolving-bnpl-sector-2508/
[3] https://www.businesswire.com/news/home/20250217649569/en/United-States-Buy-Now-Pay-Later-Market-Report-2025-Affirm-Afterpay-and-Klarna-Continue-to-Scale-their-Services-as-New-Entrants-and-Traditional-Financial-Institutions-Compete-for-Market-Share---ResearchAndMarkets.com
[4] https://www.hklaw.com/en/insights/publications/2025/05/cfpb-provides-status-update-regarding-buy-now-pay-later