Affirm Achieves Profitability as BNPL Industry Moves Toward Sustainable Growth

August 29, 2025

Affirm Soars After Reporting First Profitable quarter, Shares Jump 11%

San Francisco, CA – August 29, 2025 – Shares of Affirm Holdings Inc. surged more than 11% today, closing at $89.35, following the release of exceptional fourth-quarter fiscal 2025 results. The company, a leading provider in the “buy now, pay later” (BNPL) sector, has achieved a landmark milestone: its first-ever quarter of profitability under Generally Accepted Accounting Principles (GAAP). This positive shift comes as Affirm successfully leverages robust growth across all major performance indicators.

Record Financial Gains Fuel Investor Confidence

Affirm’s recent quarterly performance demonstrates a clear ability to achieve profitability at scale. Gross merchandise volume (GMV) reached $10.4 billion, a significant 43% increase compared to the same period last year. Revenue followed suit, climbing 33% to $876 million, surpassing analyst predictions of $837.4 million. Notably, the company announced a GAAP operating income of $58 million, a remarkable reversal from the $73.5 million operating loss reported in the fourth quarter of the previous fiscal year.

This financial success mirrors strong consumer appetite for flexible payment options across various retail sectors. Affirm’s active consumer base expanded by 24% to 23 million, with each active consumer completing an average of 5.8 transactions-a 19% increase. An remarkable 95% of all transactions are conducted by returning customers,revealing a strong level of customer loyalty and sustained growth.

Key Drivers behind Affirm’s Momentum

Several factors are contributing to Affirm’s impressive rally. First, the rapid expansion of the Affirm Card, designed for direct-to-consumer purchases, is a major catalyst. Second, Affirm is strategically diversifying its retail partnerships.Lastly, the attainment of lasting profitability represents a pivotal moment for the company.

Affirm Card growth Takes Center Stage

The Affirm Card is experiencing explosive growth, with GMV jumping 132% to $1.2 billion in the fourth quarter of 2025. The number of active cardholders increased by 97% to 2.3 million. The card has achieved a 10% adoption rate among Affirm’s existing customers,reducing reliance on external merchant partnerships and driving higher-margin revenue.

Diversification Reduces Risk, Expands Market

Affirm has successfully broadened its reach across nine major retail categories, including general merchandise, which currently accounts for 36% of GMV.This diversification strategy, along with partnerships with 155 merchants each generating over $1,000 in trailing twelve-month GMV, opens up multiple avenues for continued expansion.

Metric	Q4 2025	Year-Over-Year Change
Gross Merchandise Volume	$10.4 Billion	+43%
Revenue	$876 Million	+33%
GAAP operating Income	$58 Million	From -$73.5 Million Loss
Active Consumers	23 Million	+24%

Profitability Signals a Turning Point

Affirm projects an adjusted operating margin exceeding 26.1% for fiscal 2026 and a GAAP operating margin exceeding 6.0%. The company boasts a robust funding capacity of $26.1 billion, with 58% currently deployed, providing ample resources for future growth while maintaining solid credit performance.

Did You Know? The BNPL market is projected to reach $335 billion by 2028, according to a recent report by Statista.

Pro Tip: When considering BNPL options, always review the terms and conditions carefully, including any applicable fees and interest rates.

The Evolution of Buy Now, Pay Later

The “buy now, pay later” model has rapidly gained popularity, particularly among younger consumers. What began as a niche offering has evolved into a mainstream payment option, driven by the demand for increased financial flexibility. Industry reports indicate a important increase in BNPL usage in the last few years,with projections for continued growth as consumers seek alternatives to traditional credit options. However, it’s important to navigate these options responsibly, understanding the potential for overspending and the impact on credit scores.

Frequently Asked questions About Affirm

• What is Affirm? Affirm is a financial technology company that offers buy now, pay later services, allowing consumers to split purchases into monthly installments.
• How does affirm make money? Affirm generates revenue through merchant fees, interest on loans, and interchange fees from its Affirm Card.
• What credit score is needed to qualify for Affirm? Credit score requirements vary depending on the purchase amount and individual credit profile.
• Is Affirm a good choice to credit cards? affirm can be a useful alternative for those who prefer predictable payment schedules, but it’s important to compare interest rates and fees.
• What happens if I miss an Affirm payment? missing a payment may result in late fees and possibly impact your credit score.
• How does the Affirm Card work? The Affirm card is a debit card that allows users to pay for purchases in installments directly at checkout, without requiring merchant partnerships.
• What is Affirm’s outlook for the future? Affirm anticipates continued growth driven by its expanding partnerships, diversification, and the increasing demand for flexible payment solutions.

What are your thoughts on Affirm’s profitability and its position in the evolving BNPL landscape? Do you believe this trend towards flexible payments will continue to grow in popularity?

How does Affirm’s focus on larger transactions contribute to its profitability compared to BNPL providers focusing on smaller purchases?

Affirm Achieves Profitability as BNPL Industry Moves Toward Lasting Growth

The Shift in BNPL: From Hyper-Growth to Profitability

For years, the “Buy Now, Pay Later” (BNPL) sector was defined by aggressive growth, fueled by low interest rates and a race to acquire users. Now, the landscape is changing. Affirm’s recent achievement of profitability – reporting its first full fiscal year of net income in 2024 – signals a pivotal moment. It’s not just about growth anymore; it’s about sustainable growth. This shift is impacting the entire BNPL industry, forcing companies to refine their business models and prioritize responsible lending.

Affirm’s Path to Profitability: Key Strategies

Affirm’s success isn’t accidental. Several key strategies contributed to reaching this milestone:

Focus on Larger Transactions: Unlike some competitors focusing on smaller, impulse purchases, Affirm has strategically targeted larger ticket items – furniture, appliances, and even travel. these transactions generate higher revenue per loan.

Merchant Partnerships: Strong relationships with major retailers (like Amazon, Walmart, and Target) provide a consistent stream of customers and reduce customer acquisition costs.

Transparent Pricing: Affirm distinguishes itself with a commitment to transparent pricing, avoiding hidden fees. This builds trust with consumers and reduces regulatory scrutiny.This is a key differentiator, as some BNPL providers have faced criticism for opaque fee structures.

Risk Management: Improved underwriting and risk assessment processes have minimized loan defaults, a critical factor in achieving profitability. This includes utilizing more complex credit scoring models.

Diversification of Revenue Streams: Beyond merchant fees, Affirm is exploring new revenue streams, including Affirm savings accounts and virtual cards.

The Broader BNPL Industry: A Correction and Consolidation

affirm’s profitability isn’t an isolated event.It reflects a broader correction happening within the BNPL industry. The era of easy money is over.

Increased Regulatory Scrutiny: Regulators globally are paying closer attention to BNPL, focusing on consumer protection and potential debt accumulation.the Consumer Financial Protection Bureau (CFPB) in the US has been particularly active.

Rising Interest Rates: Higher interest rates increase the cost of funding for BNPL providers, squeezing margins.

Credit Losses: As economic conditions become more uncertain, credit losses are rising, impacting profitability.

Consolidation: We’re seeing increased consolidation in the BNPL space, with larger players acquiring smaller ones. This is driven by the need for scale and efficiency. Klarna’s recent valuation cuts are a prime example of this market correction.

The Impact of Profitability on BNPL Business Models

The pressure to demonstrate profitability is forcing BNPL companies to rethink their core business models. Here’s how:

Shift from volume to Value: The focus is shifting from acquiring as many users as possible to acquiring high-quality users who are likely to repay their loans.

Emphasis on Unit Economics: BNPL providers are meticulously analyzing their unit economics – the revenue generated per loan versus the cost of funding and servicing that loan.

Refined Underwriting: More sophisticated underwriting models are being implemented to accurately assess credit risk. This includes leveraging option data sources.

Subscription Models: Some companies are experimenting with subscription models that offer benefits like increased spending limits and lower fees.

benefits of a Sustainable BNPL Ecosystem

A more sustainable BNPL ecosystem benefits everyone involved:

Consumers: Reduced risk of over-indebtedness, transparent pricing, and access to responsible credit.

Merchants: Increased sales, higher average order values, and access to a wider customer base.

BNPL Providers: Long-term profitability, reduced regulatory risk, and a stronger reputation.

* The Economy: A healthier credit market and reduced systemic risk.

Real-World Example: Affirm’s Partnership with amazon

Affirm’s integration with Amazon is a compelling case study. By offering Affirm as a payment option on Amazon.com, Affirm gains access to millions of potential customers. Amazon benefits from increased sales and customer loyalty. This partnership demonstrates the power of strategic alliances in the BNPL space. The success of this partnership is directly tied to Affirm’s ability to manage risk effectively and provide a seamless customer experience.

Future Trends in BNPL

Looking ahead, several key trends will shape the