Affirm's GMV Poised for Growth on an Expanding Merchant Base

Affirm Holdings, Inc. AFRM operates a vast and diverse merchant network that is central to its mission of reinventing payments. As of March 31, 2025, Affirm had approximately 358,000 active merchants, ranging from small businesses to large enterprises and omnichannel retailers. The figure represents a year-over-year increase from around 292,000 active merchants. 

These partners span various industries, including fashion, electronics, travel, home and lifestyle, leveraging Affirm's flexible buy now, pay later (BNPL) solutions to drive higher average order values and customer conversion rates. AFRM also targets international growth through its expanding merchant network. This April, AFRM and Shopify announced the expansion of Shop Pay Installments internationally, starting with Canada and eyeing future growth in the UK, Australia and key European markets. 

Some of the recent tie-up examples include those with Shopmonkey and Xsolla, as a result of which AFRM’s flexible payment solutions will be extended for auto repairs and game developers. Partnerships with Williams-Sonoma and KAYAK enabled the company to step into the Canadian market. 

However, Affirm’s longstanding partnership with Walmart suffered a setback this year as Klarna replaced AFRM to become the exclusive provider of BNPL loans for the retailer. Nevertheless, the setback can be offset by the company’s continuous pursuit of collaborations. This amplifies the reach of Affirm’s payment options to a broader consumer base, which in turn, drives more transactions and contributes to its gross merchandise volume (GMV) growth. 

In the first nine months of fiscal 2025, Affirm’s GMV was $26.3 billion, which climbed 36% year over year.  AFRM expects its fiscal 2025 GMV to be within $35.7-$36 billion, the mid-point of which implies a year-over-year rise of 34.8%. Notably, merchant network revenues improved 30% year over year in the first nine months of fiscal 2025.  

How are Competitors Faring?

Some of Affirm’s key competitors in the BNPL space include PayPal Holdings, Inc. PYPL and Sezzle Inc. SEZL, both of which can capitalize on an extensive merchant base. 

PayPal boasts a merchant base of more than 36 million across the globe, per reports. It reported 436 million active consumer and merchant accounts in the first quarter of 2025. PYPL’s net revenues rose 1% year over year to $7.8 billion, while total payment volume climbed 3% compared with the same period last year.

On the other hand, Sezzle’s merchant base comprises more than 40,000 businesses across the United States and Canada, per reports. SEZL’s total revenues more than doubled year over year to $104.9 million in the first quarter, supported by a 64.1% rise in GMV.

Affirm’s Price Performance, Valuation & Estimates

Shares of Affirm have surged 132.1% in the past year compared with the industry’s 41.2% growth. 

From a valuation standpoint, AFRM trades at a forward price-to-sales ratio of 5.61, below the industry average of 5.88.

The Zacks Consensus Estimate for Affirm’s fiscal 2025 earnings implies 101.8% improvement from the year-ago period. The consensus mark for revenues indicates 37% year-over-year growth.

AFRM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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