01—Abstract
Summary
Summary of the 8-K filed August 28, 2025. Cited figures are marked; the original filing is the authoritative source.
Affirm's fiscal Q4 2025 shareholder letter, furnished under Item 2.02 on August 28, 2025, shows a company crossing into GAAP operating profitability.
Total revenue rose 33% year over year to $876 milliona, GMV grew 43% to $10.4 billion, and GAAP operating income swung to $58 million (a 7% margin) from a $73 million loss a year earlier. Net income was $69 million. For the full fiscal year 2025, Affirm reported revenue of $3.22 billion, GMV of $36.7 billion, and an operating loss of $87 million, which improved sharply from the prior year.
Management said it had delivered on a profitability timetable it set a year earlier and intends to keep producing positive operating income while still growing quickly. Unit economics improved on funding costs and credit. Revenue less transaction costs (RLTC) rose 37% to $425 millionb, and RLTC as a percent of GMV was 4.1%, above the company's 3-4% long-term target.
Average cost of funds fell about 90 basis points year over year to 6.8%, and 30+ day delinquencies on monthly installment loans (ex-Peloton) declined. Revenue as a percent of GMV fell 64 basis points to 8.5%, mainly because the mix shifted toward 0% APR products, which carry lower yields and shorter terms. Growth was concentrated in Affirm Card, with Card GMV up 132% to $1.2 billionc and active cardholders up 97% to 2.3 million.
For fiscal 2026, guidance calls for GMV of more than $46 billiond, revenue of about 8.4% of GMV, GAAP operating margin of more than 6.0%, and adjusted operating margin above 26.1%. Liquidity was about $2.2 billion, net cash was $1.1 billion, and the company had funding capacity of $26.1 billion.
Investors should note that GAAP results depend heavily on enterprise warrant and share-based expense, which was $49 million in the quarter, and that management expects that expense to fall at least 30% in FY26. The letter also flags concentration risk: the top five merchants and platform partners account for roughly 46% of GMV.
02—Key points
Key Highlights
- GAAP operating income of $58.1M in FQ4'25 (7% margin), versus a $73.5M loss a year earlier; net income of $69.2M
- Revenue grew 33% to $876.4M and GMV grew 43% to $10.4B, with Card GMV up 132% and D2C GMV up 61%
- RLTC rose 37% to $425M, or 4.1% of GMV, above the 3-4% long-term target; cost of funds fell ~90 bps to 6.8%
- Adjusted operating income was $237M (27% margin), up from $150M; the GAAP-to-adjusted gap is driven largely by $49M in enterprise warrant and share-based expense
- FY26 guidance: GMV above $46B, GAAP operating margin above 6.0%, and enterprise warrant expense expected to fall at least 30%
- Net cash position of $1.1B after repaying convertible debt; $200M 2026 convertible note buyback authorized, with $174M remaining as of August 27
- Funding capacity rose to $26.1B, the tenth straight quarterly increase, supporting an implied capacity of more than $60B in annual GMV
03—Questions
Frequently Asked Questions
Did Affirm achieve GAAP profitability in the quarter?
Yes, on an operating basis. Operating income was $58.1M (7% margin) in FQ4'25, compared with a $73.5M loss in FQ4'24, and net income was $69.2M. Full-year FY25 was still an operating loss of $87.3M, so the quarter marks the first period of operating profit, not a full-year result.
Why did revenue as a percent of GMV decline?
Revenue as a percent of GMV fell 64 bps to 8.5%. Growth in 0% APR products, which have lower interest yields and shorter loan terms, drove most of the decline. Interest income fell 62 bps as a share of GMV, and network revenue fell 13 bps on shorter 0% APR durations. Management says this mix shift is expected to continue, since the 0% APR share of GMV is projected to rise in FY26.
What is driving the gap between GAAP and adjusted operating results?
The main item is enterprise warrant and share-based expense, which was $49M in the quarter and $319M for FY25. Stock-based compensation ($65M in the quarter) and depreciation and amortization ($64M) also account for the difference. Management expects enterprise warrant expense to fall at least 30% in FY26, which should narrow the gap.
How concentrated is Affirm's business with major merchants?
Concentration remains significant. The top five merchants and platform partners generated about 46% of GMV, which was stable year over year, and their GMV grew 41%. The letter also notes that one enterprise merchant plans to move its Pay Later volume to its own wallet, with the transition expected to be substantially complete by FQ2'26.
What does the FY26 outlook imply for profitability?
Guidance calls for GMV of $46B or more, revenue of about 8.4% of GMV, RLTC of about 4% of GMV, GAAP operating margin of more than 6.0%, and adjusted operating margin above 26.1%. For FQ1'26, the company expects GMV of $10.1-10.4B and a GAAP operating margin of 1-3%.
04—Continue