Affirm Just Crushed Earnings—But Can It Outrun Klarna’s Scale?

Affirm posted a beat in its latest quarter with revenue of $993m (+34% vs. $882m consensus), adjusted EPS of $0.23 (vs. $0.11 expected), GMV of $10.8bn (+42%) and RLTC up 60%, lifting RLTC/GMV to 4.2% and driving a 28% adjusted operating margin; Affirm Card GMV jumped 135% and 30-day delinquencies remained stable at 2–3%, sending shares up ~11% on Nov. 7. By contrast Klarna’s GMV is much larger at $32.7bn (+25% or +23% LFL) but generated $903m of revenue and a -1.5% adjusted margin as it emphasizes 0% interest volume and ecosystem scale; Affirm’s renewed (non‑exclusive) Amazon partnership through Jan. 2031 secures volume but competition and macro-driven repayment risk remain. The result underscores a tradeoff between Affirm’s faster growth and superior current profitability versus Klarna’s scale expansion; Wall Street consensus targets imply meaningful upside for both (Affirm ≈$87–$89, ~32–36% upside; Klarna ≈$46–$49, ~45–54% upside).

Analysis

Affirm reported a decisive beat in its latest quarter with revenue of $993 million, up 34% versus expectations of $882 million (26% growth), and adjusted EPS of $0.23 versus $0.11 expected. Gross merchandise value (GMV) accelerated 42% to $10.8 billion while revenue less transaction costs (RLTC) rose 60%, lifting RLTC/GMV to 4.2%—above the company’s long-term 3%–4% target—and driving a reported adjusted operating margin of 28%; Affirm Card GMV grew 135% and 30‑day delinquencies held steady at 2%–3%, prompting an ~11% share rally on Nov. 7.

By contrast, Klarna’s GMV is roughly three times larger at $32.7 billion and grew 25% (23% like‑for‑like), but revenue was $903 million—$30 million below Affirm’s—reflecting Klarna’s predominance of 0% interest loans versus Affirm’s 72% interest‑bearing mix. That product mix explains the divergence in profitability (Klarna adjusted margin -1.5% vs Affirm +28%) and frames competing strategic paths: Klarna scaling ecosystem share while Affirm monetizes through interest and higher RLTC.

Key catalysts and risks are clear: Affirm’s renewed, non‑exclusive Amazon partnership through January 2031 secures volume but leaves potential dilution if Amazon adds rivals; macro-driven consumer repayment stress remains a principal downside. Wall Street consensus targets (~$87–$89 for AFRM implying ~32%–36% upside, ~$46–$49 for KLAR implying ~45%–54% upside) reflect bullish sentiment but differ on timing and margin conversion.

Key Decisions for Investors

• Consider increasing exposure to AFRM on the combination of revenue and EPS beats, 42% GMV growth, and a 4.2% RLTC/GMV that exceeds targets, while sizing positions to account for non‑exclusive Amazon exposure and macro risk
• Maintain selective or smaller exposure to KLAR for upside from scale given consensus targets, but await clearer margin improvement or signs that its ecosystem strategy is converting to profitability before allocating a full position
• Monitor 30‑day delinquency trends and RLTC/GMV closely as primary risk signals and consider hedging consumer credit exposure if delinquencies or macro indicators deteriorate
• Track analyst revisions and any changes to the Amazon partnership terms as near‑term catalysts that would warrant re‑rating position sizes