Affirm’s third quarter delivered results that surpassed Wall Street’s expectations, with management attributing this to sustained growth in merchant partnerships, robust consumer demand for 0% APR products, and disciplined underwriting. CEO Max Levchin highlighted the company’s ability to “execute in the ABS market and in the capital markets more broadly,” referencing Affirm’s expanded relationships with blue-chip investors. The quarter was also marked by progress in direct point-of-sale merchant integrations and increased transaction frequency per customer, particularly within lower average order value categories such as apparel and beauty.
Is now the time to buy AFRM? Find out in our full research report (it’s free for active Edge members).
Affirm (AFRM) Q3 CY2025 Highlights:
- Revenue: $933.3 million vs analyst estimates of $884.7 million (33.6% year-on-year growth, 5.5% beat)
- Adjusted EPS: $0.61 vs analyst estimates of $0.62 (in line)
- Adjusted EBITDA: $271.9 million vs analyst estimates of $221.8 million (29.1% margin, 22.6% beat)
- Operating Margin: 6.8%, up from -19% in the same quarter last year
- Market Capitalization: $26.06 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Affirm’s Q3 Earnings Call
- Dan Dolev (Mizuho): Asked how Affirm maintained strong capital market execution despite industry challenges; COO Michael Linford credited asset performance and a strong internal team for continued ABS program success.
- Kathy Chen (Wells Fargo): Inquired about RLTC trends and the decision to maintain guidance; CFO Robert O’Hare explained the 4% upper bound reflects a long-term target balancing growth with profitability, with quarterly fluctuations expected.
- Moshe Orenbuch (TD Cowen): Sought clarity on Affirm Card growth drivers and cash flow underwriting; CEO Max Levchin noted that improved underwriting, especially for younger users, expands approval rates and supports careful rollout.
- Reginald Smith (JPMorgan): Asked about underwriting changes in new verticals like automotive repair; Levchin emphasized Affirm’s ability to rapidly adjust underwriting models to new data as a core competitive strength.
- James Faucette (Morgan Stanley): Queried strategy behind 0% APR loan expansion and merchant-funded promotions; Levchin highlighted targeted offers to higher credit quality users and plans to run similar campaigns in the future.
Catalysts in Upcoming Quarters
Going forward, the StockStory team will watch (1) the pace of Affirm Card adoption as underwriting models evolve, (2) incremental growth from expanded partnerships such as Amazon and new payment service providers, and (3) the effectiveness and frequency of merchant-funded 0% APR promotional events. Progress in international markets and new product verticals will also be important to track for sustained growth.
Affirm currently trades at $78.63, up from $65.99 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).
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