Buy Now, Pay Later Leader Affirm Reports Stellar Q1 Results
Strong Growth in Gross Merchandise Volume and Revenue
Affirm, a leading provider of buy now, pay later loans, has reported impressive fiscal first-quarter results, exceeding analysts’ expectations. The company’s gross merchandise volume (GMV) reached $7.6 billion, surpassing the average estimate of $7.28 billion. This represents a significant 35% increase from the same period last year.
Revenue Soars 41%
Revenue for the quarter rose 41% to $496.5 million, driven by the growth in GMV. Revenue less transaction costs (RLTC) came in at $285 million, beating earlier guidance of $265 million to $280 million.
Path to Profitability
Affirm expects to achieve profitability on a GAAP basis in its fiscal fourth quarter of 2025, with CEO Max Levchin setting a goal of hitting operating profitability by the end of the fiscal year.
Guidance for Q2 and Beyond
The company forecasts second-quarter revenue of between $770 million and $810 million, with GMV expected to range from $9.35 billion to $9.75 billion. Analysts had predicted GMV of $9.48 billion.
Strategic Partnerships Drive Growth
Affirm’s partnerships with Apple, Shopify, and others have contributed significantly to its growth. The company’s new relationship with Apple, which allows U.S. Apple Pay users to apply for loans directly through Affirm, has been particularly instrumental in driving results.
Differentiation through Underwriting Quality
According to Kevin Kennedy, an analyst at Third Bridge, Affirm’s underwriting quality, particularly for higher-priced orders and interest-bearing BNPL purchases, sets it apart from competitors. This unique approach has helped the company maintain its edge in the rapidly growing buy now, pay later market.
Earnings Call and Industry Trends
Affirm’s quarterly earnings call is scheduled for 5:00 P.M. eastern. Meanwhile, the buy now, pay later space continues to evolve, with Square parent Block’s acquisition of Afterpay for $29 billion in 2021 highlighting the sector’s growth potential.
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