Affirm's Q3 Earnings Beat Estimates on Solid GMV Growth

Affirm Holdings, Inc. AFRM reported fiscal third-quarter 2025 earnings of a penny against the Zacks Consensus Estimate of a loss of nine cents per share and the prior-year quarter’s loss of 43 cents per share. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Total revenues improved 36% year over year to $783.1 million and remained within management’s expectation of $755-$785 million. The top line missed the consensus mark by 0.1%.

The quarterly results were aided by robust growth in Gross Merchandise Value (GMV), rising transaction volumes fueled by repeat customers, and surging card network revenues. However, the upside was partly offset by an elevated expense level and rising provision for credit losses.

Affirm Holdings, Inc. Price, Consensus and EPS Surprise

Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote

Q3 Performance of Affirm

As of March 31, 2025, AFRM’s active merchants were 358,000, up 23% year over year. GMV of $8.6 billion climbed 36% year over year in the quarter under review, which exceeded management’s expected range of $8-$8.3 billion and the Zacks Consensus Estimate of $8.1 billion. The metric was aided by strong contributions from Affirm's largest merchant partner, wallet partners and direct-to-consumer offerings. 

Total transactions surged 45.6% year over year to 31.3 million on the back of a significant surge in repeat customer transactions.

Servicing income of $32.1 million advanced 27% year over year and beat the consensus mark of $31.3 million. Interest income rose 28% year over year to $402.7 million but lagged the Zacks Consensus Estimate of $414.4 million.

Merchant network revenues improved 34.3% year over year to $214 million in the fiscal third quarter, higher than the consensus mark of $199.5 million. The metric gained from a growing GMV. Card network revenues were $58.6 million, which surged 64.2% year over year, attributable to the higher usage of Affirm Card and Affirm virtual cards. The metric surpassed the consensus mark of $46.4 million.

Total operating expenses increased 7.4% year over year to $791.5 million due to higher loss on loan purchase commitment, funding costs, processing and servicing, and technology and data analytics expenses. Provision for credit losses escalated 20.3% year over year to $147.3 million. Nevertheless, sales and marketing expenses dropped 44.3% year over year.  

Adjusted operating income totaled $173.7 million, which more than doubled year over year.  Adjusted operating margin improved 860 basis points year over year to 22.2%, which surpassed management’s estimated 20-22% range. 

Affirm's net income was $2.8 million against a net loss of $133.9 million in the prior-year quarter.

Financial Position of Affirm (as of March 31, 2025)

Affirm exited the fiscal third quarter with cash and cash equivalents of $1.4 billion, which climbed 33.4% from the fiscal 2024-end figure. Total assets of $10.4 billion increased 9.6% from the fiscal 2024-end.

Funding debt amounted to $1.9 billion, up 3.9% from the figure as of June 30, 2024. 

Total stockholders’ equity of $2.9 billion rose 5.2% from the fiscal 2024-end figure.

AFRM generated $210.4 million of net cash from operations during the March quarter, which inched up 1.1% year over year.

4Q25 Guidance

Affirm forecasts fourth-quarter fiscal 2025 GMV to be in the range of $9.4-$9.7 billion, up from the earlier view of $9-$9.3 billion. Revenues are anticipated to be in the range of $815-$845 million, higher than the earlier guidance of $810-$840 million. Transaction costs are estimated to be between $430 million and $445 million compared with the previous outlook of $435-$450 million. The weighted average shares outstanding are estimated to be 344 million. It continues to project the adjusted operating margin to be within 23-25%.

Fiscal 2025 View

Management anticipates GMV to be in the range of $35.7-$36 billion, higher than the earlier guidance of $34.74-$35.34 billion. The mid-point of the revised outlook indicates an improvement of 34.8% from the fiscal 2024 figure. 

Revenues are anticipated to be in the range of $3.163-$3.193 billion, higher than the prior outlook of $3.13-$3.19 billion. The mid-point of the updated view indicates 36.8% growth from the fiscal 2024 figure.

Transaction costs are projected within $1.721-$1.736 billion compared with the earlier guidance of $1.71-$1.74 billion.

Adjusted operating margin is now estimated to be within 23-23.6%, up from the earlier view of 22.5-23.5%. Weighted average shares outstanding are estimated to be 341 million.

Affirm's Zacks Rank

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

Other Computer and Technology Sector Releases

Of the other Computer and Technology sector industry players that have reported March-quarter results so far, the bottom-line results of Skyworks Solutions, Inc. SWKS, Fortinet, Inc. FTNT and MKS Instruments, Inc. MKSI beat the respective Zacks Consensus Estimate.

Skyworks Solutions reported second-quarter fiscal 2025 non-GAAP earnings of $1.24 per share, which beat the Zacks Consensus Estimate by 3.33% but declined 20% year over year. Revenues of $953.3 million dipped 8.9% on a year-over-year basis but surpassed the consensus mark by 0.20%. Mobile revenues contributed nearly 62% to total revenues and decreased 17% sequentially. 

Broad Markets saw growth of 3% year over year and 2% sequentially.  Non-GAAP gross margin expanded 160 basis points (bps) on a year-over-year basis to 46.7%. Non-GAAP operating margin contracted 340 bps on a year-over-year basis to 23.3% in the reported quarter.

Fortinet reported first-quarter 2025 non-GAAP earnings per share (EPS) of 58 cents, which beat the Zacks Consensus Estimate by 9.43%. The bottom line climbed 34.9% from the year-ago quarter’s earnings of 43 cents. Total revenues of $1.54 billion beat the consensus mark by 0.21% and improved 13.8% year over year. In the first quarter, Fortinet added more than 6,300 new logos, driven by continued worldwide investments in its channel partners.

RPO grew 12% to $6.5 billion and total billings rose 14% to $1.6 billion, driven by double-digit growth in AI-driven SecOps and Unified SASE. Segment-wise,  Product revenues increased 12.3% year over year to $459.1 million. Service revenues of $1.08 billion grew 14.4% year over year, accounting for 70% of total revenues. Security subscriptions revenues rose 16%, and support and related service revenues increased 12%.

MKS Instruments reported first-quarter 2025 adjusted EPS of $1.71, which beat the Zacks Consensus Estimate by 20.42% and jumped 45% year over year. Revenues of $936 million beat the consensus mark by 0.27% and increased 7.8% year over year. Products’ revenues (87.5% of total revenues) were $819 million, up 8.6% year over year. Services revenues (12.5% of total revenues) increased 2.6% year over year to $117 million.

Revenues from the Semiconductor market (44.1% of total revenues) increased 17.7% year over year to $413 million. Electronics & Packaging revenues (27% of total revenues) were $253 million, higher than the $208 million reported in the year-ago quarter. In the first quarter of 2025, the adjusted gross margin contracted 40 basis points (bps) on a year-over-year basis to 47.4%. Adjusted EBITDA was up 8.8% year over year to $236 million. Adjusted EBITDA margin expanded 20 bps year over year to 25.2%.

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