Shares of Affirm Holdings popped in after-hours trading Thursday after the fintech posted fiscal fourth-quarter results.
Revenue rose 33% to $876 million in the quarter, handily topping the $837 million analysts had anticipated, according to FactSet. The company posted a profit of 20 cents, marking a turnaround from the loss of 14 cents in the same period last year.
Gross merchandise volume, a key metric representing the total dollar amount of all transactions on the platform, net of refunds, was up 43% at $10.4 billion. The figure was also up sequentially; Affirm reported $8.6 billion in GMV in the previous quarter.
"It's actually our largest GMV quarter ever, which is unusual for our fourth quarter," Chief Operating Officer Michael Linford said in an interview with Barron's. "We've also achieved our first quarter of operating income profitability as a public company, which is a really big deal for us."
The company expects gross merchandise volume of at least $46 billion in fiscal 2026, and revenue in the range of $855 million to $885 million in the current fiscal quarter.
Linford explained that the company sets a "floor," or a bottom line, and expects to perform better from there. "We're very intentional with the numbers we put out there -- we will do better than that number," the COO said when asked if the estimate was conservative. "And yet we take our guidance very seriously."
Shares of the buy-now, pay-later provider have rallied 31% this year, spurred on by a series of upgrades and positive analyst commentary on the stock. Wall Street has also seen solid earnings from peers Block and PayPal Holdings, though shares fell in both cases as generally strong results failed to wow investors.
The market didn't have the same reaction to Affirm's earnings. Shares rallied by double digits after the report, climbing over 16% to $93.33.
Affirm's public breakup with Walmart in March was expected to have a negligible impact on GMV in the most recent quarter. Affirm noted in a March filing with the U.S. Securities and Exchange Commission that purchases made through its integrated program with Walmart made up just 5% of GMV and 2% of adjusted operating income.
Linford said Thursday that the company expects to be rolled off and replaced by buy-now, pay-later peer Klarna in the second quarter. But that doesn't mean it's the end of Affirm's relationship with Walmart.
"We have a business serving consumers directly, and that can go to merchants weren't no longer directly integrated with," Linford said. "We anticipate being able to offset a substantial portion of the headwind associated, with the loss of that direct integration with our direct-to-consumer business."
Shares tumbled in May after Affirm's fiscal fourth-quarter guidance missed expectations and analysts questioned just how much macroeconomic uncertainty, and a resulting slowdown in consumer spending, would hurt quarterly results. Management asserted at the time that tariffs were nothing to sweat over.
When asked about trends in consumer spending, Linford asserted that, despite ongoing volatility, Affirm was in a good place. "The bottom line is, the impact is going to be on the merchants, and we help merchants sell inventory," the COO said. "It's an incredibly valuable tool when they're staring down big changes to their business."
Jefferies analysts maintained a Buy rating and $95 price target on Affirm stock following the report, asserting that it was another strong quarter with guidance that "likely satisfies the bulls."
The firm noted that credit and margins "were stable, if not positive." Strong credit performance was driven by an increase in 0% APR products, which carry higher FICO scores, "and also due to stable overall credit characteristics." Active users and active merchants accelerated during the quarter.
Meanwhile, "guidance is a good starting point as AFRM errs on the side of conservationism, and points to upside relative to expectations on most KPIs (key performance indicators)," analysts wrote.
Of 27 analysts polled by FactSet, 17 rate Affirm at Buy or the equivalent. Ten rate it at hold, and none at Sell.
