In its fiscal third quarter, Affirm’s gross merchandise value jumped double digits, all but one spending category showed gains, underscoring the appeal of paying over time, and 1.8 million new consumers transacted within the platform’s growing ecosystem.
But guidance that implies at least some deceleration from lofty transaction growth — particularly in March and April ahead of tariffs — helped send the shares 8% lower when the buy now, pay later (BNPL) giant reported earnings Thursday (May 8).
By the numbers detailed in the quarterly shareholder letter, the growth is being borne aloft by 0% APR monthly installments, which CEO Max Levchin said in the company’s quarterly shareholder letter grew by 44%, tied to 13% of the company’s $8.6 billion in GMV, which was up 36% year over year.
Revenues were up a commensurate 36% to $783 million. Levchin noted in the letter that 80% of monthly 0% volume in Q3 2025 came from prime and super-prime borrowers “compared to roughly 50% we typically see in interest-bearing products,” he wrote.
As for the Affirm Card, the $807 million in GMV was up 115% year over year, with 2 million active cardholders. All told, the company counts 21.9 million active consumers, up 23% from a year ago. Merchant tallies gathered 20% to 358,000. Charge-offs are trending toward 3.5%, which tracks to expectations, and loss rates of Pay in 4 loans are below 1%.
During the conference call with analysts, CFO Rob O’Hare said, “We are seeing really healthy repayment rates come through. We do about a $100 million of GMV a day, and so we get a pretty fulsome dataset every day as those cohorts are coming in for repayment 30 days later. We’re not seeing any signs of stress with the consumer in the repayment rates. … We actually saw a slight uptick in prepayments. And so we take that as a pretty positive credit signal.”
On that same call, Levchin said that 0% offers have a positive ripple effect, saying, “When a merchant shows up and says, ‘Hey, I’m thinking of doing a giant 0% promo this quarter,’ our answer is always going to be, ‘Absolutely, let’s do this.’ It makes a little bit less money, but the brand halo that drives it for us, the conversion that the merchant sees and therefore attaches themselves to Affirm that much more — and the incremental volume to them … it’s all goodness up and down.”
There’s potential for cross-selling, as “the totality of Affirm card holders comes from the existing Affirm base. Every time we sign someone new through a 0% promo, some number of months or quarters from now, that is a prime candidate for [Affirm] Card and that’s a lifetime value booster.”
Guidance for the current quarter looks for $815 million to $845 million in top line, which implies $830 million at the midpoint, and which missed the Street’s consensus at about $840 million (revenue growth year over year as measured in the fiscal fourth quarter last year was 48%).
Additional earnings materials indicated that general merchandise GMV grew by 38% year over year, travel volumes surged 26%, electronics by 34%. The only category to show a decline was sporting goods and outdoors-related volumes, which slipped 14%.
Levchin added during the call that with guidance, “We’re calling for 34% year on year growth, and that’s down ever so slightly from the 36% growth that we saw this quarter. … We did see elevated growth rates in April. Those [rates] were roughly in line with what we saw in March, which we had called out as 40% year on year growth in the month. We are expecting that growth will moderate from the levels that we’ve seen quarter to date.”
Levchin’s shareholder letter also offered up the observations, “Strategically, we believe we have all the tools necessary to manage our business effectively in any macroeconomic environment. In a mild stress scenario [relatively few jobs lost], we would expect to see a gradual uptick in delinquencies; in a more severe one, perhaps a more rapid increase.”
But in any event, he contended, there would be an increase in demand for Affirm as “shoppers seek the optionality of more time to pay for their purchases, and merchants look for ways to make price increases more palatable to buyers.”
The company’s models estimate that in a “recession scenario of a ~50% increase in credit stress, a reduction in approvals required to maintain our target credit results would ‘cost’ us about 10 percentage points of GMV growth.”
The firm would be able to moderate those impacts, Levchin said in the latter, by reducing exposure limits and increase its use of cash flow underwriting. Past experience, particularly through the macro volatility seen during the pandemic, Levchin said during the call, have helped inform the ways in which the company can react to external factors.
Asked on the call about credit reporting and recent announcements that loans will be reported to the credit bureaus, Levchin noted, “The vast majority of the world says, ‘Hey, if I’m borrowing money and I’m paying it back on time, I want that reflected on my permanent record. When I go to borrow money for a car or even get my credit check for an apartment rental, I want to know that if I borrowed from you, you helped me build my credit history and ultimately helped my credit score.’”
