Affirm Raises Fiscal 2025 Guidance: A Signal for Sustainable Growth?

A leading player in the Buy Now Pay Later (BNPL) space, Affirm Holdings Inc. AFRM slightly raised its full-year guidance for fiscal 2025. After a robust result in the third quarter of fiscal 2025, AFRM also raised its fourth-quarter fiscal 2025 guidance. The quarter benefited from strong growth in Gross Merchandise Value (GMV), increased transaction volumes fueled by repeat customers and a surge in card network revenues.

For fiscal 2025, the company now forecasts revenues to be in the range of $3.163-$3.193 billion, higher than the earlier expected guidance range of $3.13-$3.19 billion. For the same period, AFRM raised its adjusted operating margin range to 23-23.6%, from the earlier range of 22.5-23.5%. The revenue guidance for the fourth quarter of fiscal 2025 has been raised, now to be between $815 million and $845 million.

In fiscal 2023, GMV was $20.2 billion, which grew around 32% year over year in fiscal 2024, followed by a 36% year-over-year increase in the first nine months of fiscal 2025. AFRM expects GMV to be in the range of $35.7-$36 billion in fiscal 2025, which is also up from the previous range of $34.74-$35.34 billion.

The growth in GMV was driven by several key areas, including Affirm’s largest merchant partner, wallet partners and direct-to-customer offerings. The company is actively collaborating with companies to expand its footprint. It also entered European markets. The hike in guidance reflects that AFRM is confident in its fundamentals and strategies to achieve sustainable growth.

How Are Competitors Faring?

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

PayPal’s net revenues increased 1% year over year to $7.8 billion in the first quarter of 2025. The company’s adjusted operating income grew 16% year over year in the same quarter to $1.6 billion. PayPal expects non-GAAP earnings to be in the range of $4.95-$5.10 per share in 2025.

Sezzle’s GMV rose 64.1% year over year in the first quarter of 2025 to $808.7 million. The company’s total revenues grew 123.3% year over year in the same quarter. Sezzle raised its 2025 total revenue growth guidance range to 60%-65%, from the earlier range of 25%-30%.

Affirm’s Price Performance, Valuation & Estimates

Over the past year, AFRM’s shares have surged 96.2% compared with the industry’s growth of 37.1%.

From a valuation standpoint, AFRM trades at a forward price-to-sales ratio of 4.94, below the industry average of 5.68.

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 60 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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