Affirm GMV Jumps 43% in Fiscal Q4

Affirm (AFRM) reported robust Q4 fiscal 2025 results, achieving GAAP diluted EPS of $0.20, marking a return to profitability from a prior-year loss. Revenue surged 33% year-over-year to $876 million, and gross merchandise volume (GMV) jumped 43% to $10.4 billion, both surpassing company guidance. This strong performance was driven by a 24% increase in active consumers to 23.0 million, higher engagement, and significant growth in its Affirm Card segment, alongside operational efficiencies and AI-driven underwriting, though a continued shift towards 0% APR loans and the anticipated departure of a major merchant may influence future margin trends.

Analysis

Affirm (AFRM) delivered a strong Q4 fiscal 2025 performance, marked by a significant return to GAAP profitability with diluted EPS of $0.20, reversing a $0.14 loss from the prior-year period. Growth was robust across key metrics, with Gross Merchandise Volume (GMV) surging 43% year-over-year to $10.4 billion and revenue climbing 33% to $876 million, both surpassing company guidance and analyst estimates. This top-line momentum was fueled by accelerating customer adoption, evidenced by a 24% increase in active consumers to 23.0 million and a rise in transactions per active consumer to 5.8. Profitability also saw material improvement, with operating income turning to a $58 million gain from a $73 million loss, and the adjusted operating margin expanding 430 basis points to 27.0%. This was achieved through impressive operating leverage, as headcount remained flat over two years while GMV nearly doubled, a testament to the efficiency gains from AI in underwriting and product. While credit quality improved, with 30+ day delinquencies falling 18 basis points, two key headwinds warrant attention: a strategic shift toward lower-yield 0% APR loans, which now comprise 29% of GMV and pressure margins, and a significant merchant concentration risk, with the top five partners accounting for 46% of GMV and a confirmed departure of a major merchant slated for early fiscal 2026.

Key Decisions for Investors

• Investors should weigh the impressive top-line growth and return to profitability against the significant, disclosed risk of a major merchant departing by Q2 fiscal 2026, which could create a headwind for GMV and revenue.
• Monitor the strategic shift towards 0% APR loans; while this mix drives user acquisition and GMV, its continued pressure on revenue-per-transaction and margins, as noted in the FY26 outlook, is a critical factor for long-term profitability models.
• The strong performance of the Affirm Card, with GMV more than doubling, signals successful product expansion and diversification, presenting a key growth vector to watch for capturing a larger share of consumer spending.
• Given the company's demonstrated operating leverage through AI and a stable headcount, investors should evaluate whether a full-year adjusted operating margin guidance of above 26.1% is sustainable in the face of the identified merchant and margin pressures.