Affirm, one of the largest buy now, pay later (BNPL) lenders, delivered a quarterly report that beat expectations and offered a rosy outlook, signaling that consumers are still keen to split their purchases into installments even as borrowing costs remain elevated. The company's gross merchandise volume (GMV)—the total value of transactions processed on its platform—jumped 36% to $14.1 billion, while revenue climbed 33% to $1.17 billion, topping analysts' forecasts.
For the current quarter, Affirm expects revenue between $1.19 billion and $1.22 billion, comfortably above the $1.14 billion that Wall Street had penciled in, according to Reuters. That guidance suggests the company sees no letup in demand heading into the holiday shopping season, a critical period for BNPL providers.
Growth across the board
The numbers show broad-based momentum. Total transactions rose 41% to 53 million, and active consumers grew 21% to 27.8 million. That means more people are using Affirm more often, a sign that the service is becoming a habitual part of how some shoppers pay for everything from electronics to furniture.
Affirm also announced that Chief Operating Officer Michael Linford has been promoted to president, a move that signals continuity in its leadership team as the company scales up.
The BNPL industry has been under pressure to prove it can grow profitably without the tailwind of ultra-cheap funding. When interest rates were near zero, BNPL firms could borrow cheaply and lend to consumers at zero or low interest, making money on merchant fees. With rates higher, that model gets squeezed. Affirm's results suggest it is managing that transition well, with profitability improving even as it expands.
What this means for investors
For everyday investors, Affirm's report is a useful barometer for consumer health and the broader fintech sector. If shoppers are still willing to take on installment debt, it suggests confidence in their ability to pay later—a positive sign for discretionary spending. But it also raises questions about how much debt consumers are piling up, especially if the economy slows.
Affirm's upbeat forecast is reminiscent of other companies that have recently raised their outlooks. For instance, Ulta Beauty raised its sales forecast on strong makeup demand, and Dollar General and Dollar Tree raised forecasts after tariff refunds. These moves suggest that some corners of retail are still holding up, even as others, like Build-A-Bear, cut forecasts due to tariffs and lost Walmart business.
Investors will be watching whether Affirm can sustain this growth as the Federal Reserve's rate path remains uncertain. If rates stay higher for longer, BNPL firms may need to tighten lending standards, which could slow growth. Conversely, if the Fed starts cutting rates, Affirm could see its funding costs drop, boosting margins.
Another factor to watch is competition. Traditional banks and card networks are increasingly offering their own installment plans, and tech giants like Apple have entered the space. Affirm's ability to keep growing its user base and transaction volume suggests it is holding its own, but the competitive landscape remains intense.
For now, Affirm's results are a bright spot in the fintech sector, and the company's forecast points to a busy season for BNPL. As the holiday shopping period approaches, all eyes will be on whether consumer spending can keep pace with the optimism embedded in Affirm's guidance.
