Affirm's Active Merchants Rise: A Strategic Advantage in BNPL Space?

Affirm Holdings, Inc. AFRM is primarily focusing on growth and merchant expansion. It is strengthening its position in the competitive market of Buy Now Pay Later (BNPL) through merchant adoptions on its platform. The company has extended its footprint into the U.K. market, indicating its major expansion outside North America.

AFRM has reported more than 254,000 active merchants in fiscal 2023, which increased about 19.3% year over year in fiscal 2024, followed by 23% year-over-year growth in third-quarter fiscal 2025. At the end of the third quarter of fiscal 2025, it reached around 358,000 active merchants.

With the increasing participation of merchants, customers are provided with more checkout opportunities, which significantly boosts the gross merchandise volume (GMV). In the fiscal third quarter of 2025, Affirm’s GMV jumped 36% year over year, reaching $8.6 billion. The company projects GMV to be in the range of $35.7-$36 billion in fiscal 2025.

Affirm is focusing on providing transparent and reliable checkouts without any hidden charges. In the fiscal third quarter of 2025, its merchant network revenues rose 34.3% year over year. The company's strategic partnerships with major players are helping in driving growth. Affirm aims to boost its product lineup by introducing more flexible payment options, enhancing point-of-sale integrations and expanding its offline retail capabilities. It also focuses on innovative credit modeling that supports sustainable and long-term growth.

How Are Competitors Faring?

Some of AFRM’s competitors in the payment solutions space are PayPal Holdings, Inc. PYPL and Sezzle Inc. SEZL.

PayPal reported 436 million active accounts in the first quarter of 2025, which rose 2% year over year. Its net revenues increased 1% year over year to $7.8 billion in first-quarter 2025. PayPal’s total payment volume increased 3% year over year in the first quarter of 2025.

Sezzle reported 2.7 million active consumers in the first quarter of 2025, which grew 5.4% year over year. Sezzle’s total revenues grew 123.3% year over year to $104.9 million in the same quarter. Its gross merchandise volume increased 64.1% year over year.

Affirm’s Price Performance, Valuation & Estimates

Over the past year, AFRM’s shares have surged 90% compared with the industry’s growth of 37.4%.

From a valuation standpoint, AFRM trades at a forward price-to-sales ratio of 5.25, below the industry average of 5.68. The company carries a Value Score of F.

The Zacks Consensus Estimate for Affirm’s 2025 earnings implies 100.6% growth from the year-ago period. It witnessed five upward estimate revisions in the past 30 days against one movement in the opposite direction.

Affirm 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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