Is Affirm now profitable on a GAAP basis?

Barely. In FQ3'25 Affirm reported a GAAP net income of $2.8 million and a GAAP operating loss of $8.4 million (-1.1% margin). This is a large improvement from the prior-year quarter's $133.9 million net loss, but it was a small, near-breakeven result. Management's guidance for FQ4'25 implies an operating margin of 1% to 3%.

Why did RLTC grow faster than GMV, and is that sustainable?

RLTC grew 53% versus 36% GMV growth, and the RLTC rate rose 45 bps to 4.1%. Management attributed the entire increase to lower transaction costs, about half from lower provisions for loan losses and most of the rest from lower funding costs (average funding cost fell about 50 bps year over year to 7.1%). Sustainability depends on credit performance and funding markets, both of which can shift. Management also noted that growth in 0% APR products, which carry lower RLTC per dollar, could pressure the rate going forward.

How exposed is Affirm to an economic downturn?

Management modeled a recession scenario with about a 50% increase in credit stress. In that case, tightening approvals to protect credit results would cost roughly 10 percentage points of GMV growth, which management expects to partly offset with other credit levers. Management pointed to 2020 and 2022-2023 as precedents where it tightened credit standards and shortened loan terms. The letter itself does not provide a downside earnings forecast.

What do the credit trends look like?

Credit was stable. 30+ day delinquencies ex-Peloton and Pay-in-X loans fell 5 bps sequentially but rose 12 bps year over year, which management attributed to pricing initiatives that expanded credit access. Recent monthly installment cohorts are tracking toward about 3.5% ultimate net charge-offs as a percentage of GMV, in line with historical cohorts, and Pay-in-4 cohorts are tracking below 1% loss rates.

What is the outlook for the rest of fiscal 2025?

For FQ4'25, Affirm guided to GMV of $9.4 to $9.7 billion, revenue of $815 to $845 million, RLTC of $385 to $400 million, and an adjusted operating margin of 23% to 25%. For full-year FY2025, GMV is guided to $35.7 to $36.0 billion and revenue to $3,163 to $3,193 million. The outlook assumes GMV growth moderates from the pace seen in April.

AFRM 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed May 8, 2025. Cited figures are marked; the original filing is the authoritative source.

Affirm's fiscal third quarter 2025 (quarter ended March 31, 2025) showed strong top-line momentum and a sharp improvement in profitability.

GMV grew 36% to $8.6 billion^a, with growth accelerating through the quarter (March GMV up 40%). Total revenue rose 36% to $783 million, and Revenue Less Transaction Costs (RLTC, a non-GAAP measure) grew 53% to $353 million, with RLTC as a percentage of GMV improving 45 basis points to 4.1%. Operating loss narrowed to $8 million (about -1% margin) from a $161 million loss a year earlier, and net income swung to a $2.8 million profit from a $134 million loss.

Adjusted operating income rose to $174 million^b, a 22% adjusted margin versus 14% a year ago. Growth was driven heavily by 0% APR monthly installment products (up 44% and 13% of GMV) and the Affirm Card, whose GMV rose 115% to $807 million with roughly 1.9 to 2 million active cardholders. Management noted that 0% APR products carry modestly lower revenue and RLTC contribution per dollar, a trade-off it accepts for better credit quality and conversion.

Credit metrics were stable: 30+ day delinquencies ex-Peloton were up 12 basis points year over year but down 5 basis points sequentially, and recent monthly installment cohorts are tracking to about 3.5% ultimate net charge-offs. Management also laid out a recession sensitivity: a roughly 50% increase in credit stress could cost about 10 percentage points of GMV growth through tighter approvals. For the fourth quarter of fiscal 2025, Affirm guided to GMV of $9.4 to $9.7 billion^c, revenue of $815 to $845 million, and RLTC of $385 to $400 million, with an operating margin of 1% to 3% and an adjusted operating margin of 23% to 25%.

The outlook assumes GMV growth moderates from April's pace. Funding capacity rose to $23.3 billion^d and liquidity stood at about $2.1 billion.

02—Key points

Key Highlights

GMV grew 36% year over year to $8.6 billion, with March GMV up 40%, signaling acceleration into the end of the quarter.
Revenue rose 36% to $783 million, while revenue as a percentage of GMV held flat at 9.2%.
RLTC grew 53% to $353 million, and RLTC as a percentage of GMV rose 45 bps to 4.1%, above the 3% to 4% long-term target range; the gain came from lower transaction costs, mainly loan loss provisions and funding costs.
GAAP operating loss narrowed to $8 million from $161 million, and the company posted a small GAAP net income of $2.8 million versus a $134 million loss a year earlier.
Adjusted operating margin expanded to 22% from 14%, though $47 million of enterprise warrant and share-based expense still weighed on GAAP results.
Affirm Card GMV grew 115% to $807 million, and 0% APR monthly installment GMV grew 44%, representing 13% of total GMV.
Q4 FY2025 guidance calls for GMV of $9.4 to $9.7 billion and revenue of $815 to $845 million; full-year FY2025 GMV guidance is $35.7 to $36.0 billion.

03—Questions

Frequently Asked Questions

Is Affirm now profitable on a GAAP basis?
Barely. In FQ3'25 Affirm reported a GAAP net income of $2.8 million and a GAAP operating loss of $8.4 million (-1.1% margin). This is a large improvement from the prior-year quarter's $133.9 million net loss, but it was a small, near-breakeven result. Management's guidance for FQ4'25 implies an operating margin of 1% to 3%.
Why did RLTC grow faster than GMV, and is that sustainable?
RLTC grew 53% versus 36% GMV growth, and the RLTC rate rose 45 bps to 4.1%. Management attributed the entire increase to lower transaction costs, about half from lower provisions for loan losses and most of the rest from lower funding costs (average funding cost fell about 50 bps year over year to 7.1%). Sustainability depends on credit performance and funding markets, both of which can shift. Management also noted that growth in 0% APR products, which carry lower RLTC per dollar, could pressure the rate going forward.
How exposed is Affirm to an economic downturn?
Management modeled a recession scenario with about a 50% increase in credit stress. In that case, tightening approvals to protect credit results would cost roughly 10 percentage points of GMV growth, which management expects to partly offset with other credit levers. Management pointed to 2020 and 2022-2023 as precedents where it tightened credit standards and shortened loan terms. The letter itself does not provide a downside earnings forecast.
What do the credit trends look like?
Credit was stable. 30+ day delinquencies ex-Peloton and Pay-in-X loans fell 5 bps sequentially but rose 12 bps year over year, which management attributed to pricing initiatives that expanded credit access. Recent monthly installment cohorts are tracking toward about 3.5% ultimate net charge-offs as a percentage of GMV, in line with historical cohorts, and Pay-in-4 cohorts are tracking below 1% loss rates.
What is the outlook for the rest of fiscal 2025?
For FQ4'25, Affirm guided to GMV of $9.4 to $9.7 billion, revenue of $815 to $845 million, RLTC of $385 to $400 million, and an adjusted operating margin of 23% to 25%. For full-year FY2025, GMV is guided to $35.7 to $36.0 billion and revenue to $3,163 to $3,193 million. The outlook assumes GMV growth moderates from the pace seen in April.

04—Continue

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