Affirm Active Consumers Leap 23% as BNPL’s Momentum Continues

A strong holiday shopping season, coupled with the continued momentum of buy now, pay later (BNPL) options and zero interest rates, helped push Affirm Holding’s gross merchandise volumes higher.

And as a result — particularly as consumers opted to pay for discretionary items, such as electronics, over time — the company saw double-digit growth in its active consumer base.

By the numbers, Affirm’s second quarter detailed that gross merchandise volume (GMV) grew 35% to $10.1 billion, which accelerated from the first quarter; the company said it had made “gains in merchant share of cart” and 0% APR monthly installment GMV grew by 70%.  Active consumers were 23% higher to 21 million.  Transactions per active consumer also were on the rise, up 22% year over year to 5.3.

Looking Toward Positive Operating Income

Revenues were up 47% to $866 million.

And, as CEO Max Levchin penned in the company’s investor letter, “We are five months away from our chosen target date to turn Affirm operating income positive, but it should be apparent to a casual observer that we are nearly there today — mark it zero.”

Investors sent the shares sharply higher in after-hours trading on Thursday (Feb. 6), as the stock was 12.8% higher.

By product category, GMV was up 40% in general merchandise, and 36% in electronics. Levchin noted in the written materials, “Newer merchant categories such as professional and legal services, which we generally serve via partner platforms, grew over 60% and contributed to the strong performance in the ‘Other’ category,” which in turn was up 57%.

During the conference call with analysts, Levchin said that the growth in the 0% APR offerings came as the company’s merchants, looking for growth during the important holiday shopping (fourth calendar) quarter, “They look for ways to do promotions. There are a handful of well understood ways of doing it. One such way is discounts …  your typical 20% off, compromise pricing integrity and teaches consumers to wait for the next 10% sale. Channeling the same promotional dollars into reduced APRs or 0 APRs is very powerful,” he told analysts.

And, he added, “We have a very sizable audience that is direct-to-consumer in our app and with our card. And for a long time, these promotions were largely available on our merchants point of sale online. We have now offered them an opportunity to bring these promotions — to essentially syndicate them across the entirety of Affirm ‘surfaces,’ which is to say they’re available in our app on our card and across many of the wallets where we’re integrated.”

Growth Via Affirm Card

With a nod to the Affirm Card, company materials stated that $845 million in Affirm Card GMV was up 113% year over year; the card’s active consumers were up 136% during the same period, to 1.7 million cardholders.

“App-started 0% APR GMV,” the shareholder letter said, grew 260%, “highlighting just how early we still are in the card journey.”

On the call Thursday, Levchin said the card has been instrumental in driving active consumers, telling analysts that “The card obviously is a great product to increase engagement. … It’s awakened, if you will, dormant consumers that have transacted with us sometime in the past, but haven’t used us in a while.”

As for credit metrics, the earnings materials show that 30-plus-day delinquencies into December 2024 were 2.5%, the same rate that had been seen before the pandemic, at the end of 2019. The latest figure also marked an improvement from the 2.8% seen in the fiscal first quarter.

Wallet integrations are also proceeding apace, and Levchin said, “They’re shaping up to be a really meaningful part of the business across the board, and the metrics on these integrated wallets are really strong. … They add to the transaction per user averages, they add to conversion metrics that we track internally, and they are accretive on the credit quality side of the equation.”