Affirm Shares Surge

By Manya Saini

(Reuters) – Affirm shares rose 33% on Thursday after the buy-now-pay-later lender trounced estimates for quarterly results and announced plans to be profitable by the fourth quarter of next fiscal year, ahead of Wall Street’s predictions.

Cash burn has significantly affected the valuation of financial technology companies, particularly in the payments sector, which is sensitive to consumer spending and interest rate changes.

In a letter to shareholders late on Wednesday, Affirm discussed its ambitious profitability goal and commitment to maintaining it, following strong fourth-quarter results.

The company’s net revenue increased by 48% to $659.2 million for the three months ending June 30, surpassing LSEG estimates of $603.7 million. The net loss shrank to 14 cents per share, much less than the expected 48 cents.

Bank of America analysts noted that Affirm’s results indicated strong operational momentum, and the profitability forecast came much sooner than anticipated. The brokerage had initially projected profits in fiscal 2026.

BofA stated, “We view the lower interest rate environment, scale-driven profitability outlook, and Affirm’s unique growth prospects as attractive.”

Gross Merchandise Volume (GMV)—the total dollar amount of all transactions on the Affirm platform—rose by 31% to $7.2 billion this quarter.

“Affirm continues to fire on all cylinders, outgrowing e-commerce and payment peers,” J.P. Morgan analysts commented.

The strong GMV growth at Affirm contrasts with the broader payments sector, which faced challenges due to decreased consumer spending in the April-to-June quarter, especially among lower-income consumers.

Analyst Kevin Kennedy from Third Bridge suggested, “(We) don’t see growth as an issue for Affirm thanks to a combination of nascent BNPL adoption in the U.S. and landmark partner agreements, like the recent one with Apple (NASDAQ:AAPL).”