Affirm Holdings posted a surprise profit in its third fiscal quarter, signaling a notable turnaround for the buy-now-pay-later (BNPL) pioneer.
But despite stronger-than-expected earnings, investors sent the stock lower in post-earnings trading — a move that underscores the market’s growing demand for sustainable, long-term strategy in the fintech sector.
The San Francisco-based company reported net income of $137 million, reversing a $205 million loss in the same period last year.
Revenue jumped 36 percent to $783 million, driven by strong performance in its interest-free installment loan offerings. The company also reported a 36 percent increase in gross merchandise volume, totaling $8.6 billion for the quarter.
Affirm’s leadership emphasized a shift toward lower-risk products, with CEO Max Levchin noting that 0 percent APR loans grew 44 percent year-over-year.
These loans, typically financed in partnership with large retailers, have become a cornerstone of Affirm’s effort to appeal to more creditworthy consumers and reduce default risk.
“Our 0% product continues to draw higher-credit-quality borrowers and boost merchant conversion,” Levchin said on a call with investors. “This is a win for customers, for merchants, and for Affirm’s bottom line.”
Yet Wall Street remained cautious. Shares of Affirm fell more than 6 percent after the company offered guidance suggesting a slower growth trajectory in the upcoming quarter.
The company expects GMV to decline sequentially and flagged moderating growth rates as a reflection of seasonality and tightening consumer credit conditions.
For investors, the results posed a paradox: a company delivering on profitability, yet issuing guidance that tempers expectations.
“There’s a recalibration happening here,” said Rohan Malhotra, a fintech analyst at Beacon Ridge Partners. “Affirm is maturing as a business, but the market is still pricing it like a high-growth tech stock. That’s causing some friction.”
Affirm has also signaled plans to invest in artificial intelligence to automate credit decisioning and customer engagement.
While details remain sparse, Levchin has hinted that generative AI could become a critical component of Affirm’s next growth phase — enhancing efficiency while maintaining regulatory compliance in a sector under increasing scrutiny.
Still, the company faces headwinds. BNPL remains a controversial segment of consumer finance, with regulatory agencies in the U.S. and abroad considering tighter controls amid concerns about consumer debt.
Rising interest rates and slower e-commerce growth have also complicated the outlook for Affirm and its competitors.
Even so, some analysts view Affirm’s conservative guidance and strategic pivot as signs of prudent management, rather than weakness.
“Affirm is adapting to a more disciplined fintech environment,” said Nadia Evans, head of research at FinLens Global. “The profitability this quarter is real. The shift to zero-interest products is strategic. They’re setting up for long-term relevance.”
Affirm’s stock has declined 12.8 percent so far this year, though it remains up substantially from its lows in 2023.
Analysts have issued 12-month price targets ranging from $45 to $85, with an average near $67 — suggesting potential upside if the company can deliver consistent performance and navigate shifting regulatory tides.
As the fintech landscape consolidates and investors look beyond flashy growth metrics, Affirm’s measured approach may prove to be the foundation for something rarer in Silicon Valley: staying power.
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