Why Affirm Holdings Stock Blasted Nearly 11% Higher on Friday

Key Points

• The buy now, pay later specialist put quite the cap on its fiscal 2025.

• Its fourth-quarter results featured a flip well into the black on the bottom line, among other positive developments.

• 10 stocks we like better than Affirm ›

Affirm Holdings (NASDAQ: AFRM), a prominent stock in the buy now, pay later niche of the finance industry, delivered its latest set of quarterly earnings after market close Thursday. The market reacted very positively to them the following day, rewarding the company with a rally that saw the stock rise by almost 11% in value.

That provided a night-and-day contrast to the uninspiring S&P 500 (SNPINDEX: ^GSPC), which slumped by 0.6% that trading session.

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Affirming the bulls

Affirm's fourth quarter of fiscal 2025 featured a revenue line of $876 million, which was a meaty 33% higher year over year. The company's overall gross merchandise volume (GMV) saw a steeper rise, climbing by 43% to $10.4 billion.

Image source: Getty Images.

Enhancing those significant improvements, on the bottom line the company flipped to a generally accepted accounting principles (GAAP) net income of almost $99 million ($0.20 per share) from the year-ago loss of over $49 million.

Both headline numbers trounced the average analyst estimates. The prognosticator consensus for revenue was slightly over $834 million, while that for per-share net income was $0.12.

Faced with rising prices and the ever-present threat of tariffs driving costs higher, many American consumers are going the "buy now, pay later" route. Affirm said in its earnings release that it effectively met its three main goals: building a quality merchant network, increasing transaction frequency, and "prioritizing excellent credit performance."

A likely top-line beat for the new fiscal year too

Affirm proffered guidance for both the inaugural quarter of its fiscal 2026 and the entirety of that year. For the latter period, it's expecting to book revenue of $855 million to $885 million, on GMV ranging from $10.1 billion to $10.4 billion; the average analyst estimate for the former is a bit more than $858 million.

The company's non-GAAP (adjusted) operating margin is anticipated to come in at 23% to 25%. It did not provide any guidance for the bottom line.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.