PENG

Affirm Holdings, Inc. Q4 Fiscal 2025 Earnings Report

• Earnings Performance: Affirm reported an earnings per share (EPS) of 20 cents for Q4 fiscal 2025, exceeding the Zacks Consensus Estimate of 11 cents and improving from a loss of 14 cents per share in the same quarter last year.

• Revenue Growth: Total revenues reached $876.4 million, marking a 33% year-over-year increase and surpassing management's expectations of $815-$845 million, as well as the consensus estimate by 4.4%.

Key Financial Metrics

• Gross Merchandise Value (GMV): GMV for the quarter was $10.4 billion, up 43% year-over-year, exceeding both management's expectations of $9.4-$9.7 billion and the Zacks Consensus Estimate of $9.5 billion. This growth was driven by strong performance from major merchant partners and attractive financing options.

• Transaction Volume: Total transactions surged by 51.8% year-over-year to 37.5 million, significantly surpassing the consensus mark of 30.3 million, largely due to increased repeat customer transactions.

• Income Sources: Servicing income rose 23% year-over-year to $33.9 million, while interest income increased by 24% to $419.1 million, both exceeding consensus estimates.

Expense and Profitability Analysis

• Operating Expenses: Total operating expenses increased by 11.7% year-over-year to $818.4 million, driven by higher costs related to loan commitments, funding, and technology. The provision for credit losses also rose by 33.2% to $156.6 million.

• Adjusted Operating Income: Affirm reported an adjusted operating income of $237 million, a 58.2% increase year-over-year, with an adjusted operating margin of 27%, surpassing the expected range of 23-25%.

• Net Income: The company achieved a net income of $69.2 million, a significant turnaround from a net loss of $45.1 million in the prior-year quarter.

Balance Sheet and Future Outlook

• Cash and Assets: As of June 30, 2025, Affirm had cash and cash equivalents of $1.4 billion, a 33.7% increase from the previous fiscal year-end, with total assets rising to $11.2 billion, up 17.2%.

• Debt and Equity: Funding debt decreased by 11.7% to $1.6 billion, while total stockholders’ equity rose by 12.3% to $3.1 billion.

• Future Projections: For Q1 fiscal 2026, Affirm anticipates GMV between $10.1-$10.4 billion and revenues in the range of $855-$885 million, with an expected adjusted operating margin of 23-25%. Long-term projections estimate GMV to exceed $46 billion, with revenues expected to be 8.4% of GMV.

Market Position and Comparisons

• Zacks Rank: Affirm currently holds a Zacks Rank #3 (Hold).

• Competitor Performance: Other companies in the technology sector, such as Astera Labs, Reddit, and Penguin Solutions, have shown strong earnings growth and upward revisions in earnings estimates, indicating a competitive landscape.

• Market Trends: The semiconductor market is projected to grow significantly, from $452 billion in 2021 to $971 billion by 2028, highlighting potential opportunities for companies like Affirm that are positioned to benefit from technological advancements.

• U.S. Stock Market Update: U.S. stock futures rose this morning, with the Dow gaining over 100 points, while several companies, including CoreWeave Inc and Profrac Holding Corp, saw significant declines in pre-market trading due to disappointing financial results or stock offerings.

• Notable Stock Movements: CoreWeave's shares fell 8.8% after reporting mixed quarterly results, while other companies like CAVA Group and Journey Medical Corp experienced drops of 24% and 20.5%, respectively, following worse-than-expected sales and earnings reports.

• Nvidia vs AMD Performance: Nvidia is recognized as a leading chip stock in the AI sector, but Advanced Micro Devices (AMD) has outperformed it recently.

• Future Outlook: Charts indicate that AMD's strong performance may continue as it approaches its earnings report scheduled for Tuesday afternoon.