Affirm's GMV Poised for Growth on an Expanding Merchant Base

Affirm Holdings (AFRM) is demonstrating robust growth, with its active merchant base expanding to 358,000 as of March 31, 2025, and merchant network revenues increasing 30% year-over-year in the first nine months of fiscal 2025. The company projects FY25 Gross Merchandise Volume (GMV) to reach $35.7-$36 billion, reflecting 34.8% growth at the midpoint, driven by international expansion initiatives and new partnerships despite losing its exclusive Walmart relationship to Klarna. Affirm's stock has surged 132.1% over the past year, and analysts anticipate significant earnings and revenue growth for FY25, indicating continued momentum in the BNPL sector.

Analysis

Affirm Holdings is demonstrating significant operational momentum, underscored by strong growth in its key performance indicators for fiscal 2025. The company expanded its active merchant base to 358,000, a notable increase from 292,000 in the prior year, which fueled a 30% year-over-year rise in merchant network revenues during the first nine months. This expansion is translating directly into volume, with Gross Merchandise Volume (GMV) climbing 36% to $26.3 billion over the same period. Management's guidance projects full-year FY25 GMV to reach $35.7-$36 billion, indicating sustained growth of approximately 34.8%. This outlook is supported by a strategic international expansion, highlighted by the extension of its Shopify partnership into Canada, and diversification into new verticals like auto repair and gaming. However, the company faces a significant headwind with the loss of its exclusive partnership with Walmart to competitor Klarna. While this is a material setback, the narrative suggests that Affirm's aggressive pursuit of new collaborations may mitigate the impact. Despite a 132.1% surge in its share price over the past year, the stock's forward price-to-sales ratio of 5.61 remains below the industry average of 5.88, while consensus estimates point to a 101.8% improvement in earnings and 37% revenue growth for fiscal 2025.

Key Decisions for Investors

• Given the strong GMV and revenue growth projections and a forward P/S valuation below the industry average, the fundamental picture appears to support the stock's recent performance.
• Investors should closely monitor the company's ability to offset the loss of the Walmart partnership through its new international and sector-specific collaborations, as continued high growth is contingent on this diversification.
• It is crucial to track the competitive landscape, particularly the growth rates of rivals like Sezzle, as market share dynamics in the BNPL space will be a key determinant of future profitability.