Q2 2025 Earnings Summary
- Affirm's active customers grew by 23% year-over-year, marking four consecutive quarters of accelerating growth. This growth is attributed to successful direct-to-consumer initiatives like the Affirm Card and expansion in e-commerce coverage, demonstrating sustainable and organic user base expansion.
- The Affirm Card is driving higher customer lifetime value, with cardholders being their best customers, exhibiting the highest margins, engagement, and transactions per year. The company is expanding card usage into new categories like groceries and medicine (e.g., partnership with GoodRx), which is expected to significantly increase spend per user.
- Affirm is enhancing its capital strength and scalability through strong partnerships and funding capabilities, notably the significant partnership with Sixth Street, described as an "incredible leap forward". The company believes it is taking market share, being the fastest-growing among large competitors, which positions it well for future growth.
- Affirm's recent funding cost improvements may not be sustainable, as they acknowledge benefiting from favorable market conditions that could reverse, potentially leading to higher funding costs and impacting margins.
- The company's focus on expanding 0% APR financing to drive growth could pressure RLTC margins, as offering these promotions may result in lower yields, especially if not sufficiently offset by lower credit losses.
- Increased sales and marketing expenses to support new program launches, despite historically low marketing spend, could lead to higher operating expenses without proportional revenue growth, potentially affecting profitability.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue (net) | +41% (from USD 496.55M in Q2 2024 to USD 698.48M in Q2 2025) | The increase is driven by higher GMV, enhanced interest income from larger loan volumes, and robust performance from the Affirm Card and merchant network channels—factors that were also key drivers in prior periods. |
Merchant Network Revenue | +30% (from USD 188.36M in Q2 2024 to USD 244.90M in Q2 2025) | Growth resulted from an expanded active merchant base and increased GMV—with more transactions per active consumer—mirroring trends from previous quarters, despite a lower average order value due to a shift in product mix. |
Card Network Revenue | +48% (from USD 39.27M in Q2 2024 to USD 58.14M in Q2 2025) | The surge reflects a significant increase in GMV processed by card-issuing partners and a broader merchant integration, similar to improvements seen in past periods driven by intensified card activity and better merchant mix. |
Interest Income | +42% (from USD 288.35M in Q2 2024 to USD 409.37M in Q2 2025) | A higher volume of loans held for investment and effective pricing initiatives—pushing more loan originations into higher APR ranges—have elevated interest income, in line with earlier period trends moving toward interest-bearing products. |
Gain on Sales of Loans | +137% (from USD 52.70M in Q2 2024 to USD 125.29M in Q2 2025) | The remarkable increase is due to a surge in loan sale volume (about a 30% rise), improved funding market conditions, and more favorable loan sale pricing, which builds on similar positive trends observed in prior periods. |
Provision for Credit Losses | +60% (from USD 99.70M in Q2 2024 to USD 159.82M in Q2 2025) | This rise is driven by a significantly larger loan portfolio (with loans held for investment increasing) and an elevated allowance rate (rising from 5.1% to 5.6%), reflecting heightened credit risk—a trend also noted in previous quarters. |
Operating Loss | Improved by USD 77M (from USD (209.45)M in Q2 2024 to USD (132.62)M in Q2 2025) | Better revenue less transaction costs (RLTC) performance coupled with relatively stable operating expenses (despite ongoing enterprise warrant and share-based costs) drove the marked reduction in operating loss, echoing efficiency improvements from earlier periods. |
Net Loss | Improved by approx 41% (from USD (171.78)M in Q2 2024 to USD (100.22)M in Q2 2025) | The narrowing net loss is principally due to lower operating losses, improved other income (with a less negative other income/expense impact), and stable tax expense, reflecting the company’s continued efforts on cost management and revenue enhancement as seen in prior quarters. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Non-GAAP Operating Expenses | Q3 2025 | no prior guidance | operating expenses to remain relatively flat in Q3 and Q4 compared to Q2 levels | no prior guidance |
OpEx Envelope | Q3 2025 | no prior guidance | similar OpEx envelope for Q3 and Q4 as in Q2 | no prior guidance |
Non-GAAP Operating Expenses | Q4 2025 | no prior guidance | operating expenses to remain relatively flat in Q3 and Q4 compared to Q2 levels | no prior guidance |
OpEx Envelope | Q4 2025 | no prior guidance | similar OpEx envelope for Q3 and Q4 as in Q2 | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Consumer Growth and User Engagement | Q1 2025 emphasized improved transaction frequency and active user reinvestment ( ). Q4 2024 highlighted repeat users, enhanced segmentation, and Affirm Card usage ( ). Q3 2024 underlined new transactors and strengthened network effects ( ). | Q2 2025 reported a 23% YoY increase in active customers, strong wallet integrations, and a boost in engagement driven by higher use of the Affirm Card and 0% loans ( ). | Consistent and accelerating focus on consumer engagement, with clear improvements and expanding use cases. |
Affirm Card Performance | Q3 2024 noted improved card usability and repeat usage with expansion into everyday transactions ( ). Q4 2024 outlined targets such as a $7,500 spend per card while addressing diverse financial profiles ( ). Q1 2025 mentioned steady rollout progress without detailed metrics ( ). | Q2 2025 provided detailed metrics showing the card now accounts for over 8% of total GMV, with staggeringly strong economics and expansion into new spending categories like groceries and medicine; GoodRx partnership is a key highlight ( ). | Enhanced performance with new category expansion, reinforcing the card’s role as a strategic growth driver. |
Strategic Partnerships and Integrations | Q3 2024 offered little detail; Q4 2024 emphasized integration into Apple Pay and robust merchant partnerships ( ). Q1 2025 did not include commentary on these topics. | Q2 2025 features significant updates including the Sixth Street partnership, strong wallet integrations (including Apple Pay), the launch of the GoodRx partnership, and heightened focus on merchant promotions ( ). | Markedly increased emphasis with the introduction of major new deals and integrations that could amplify future growth. |
Funding Conditions and Capital Market Dynamics | Q3 2024 discussed localized funding and resilience to minor rate changes ( ). Q4 2024 highlighted non-consolidated securitization and the rate curve’s influence ( ). Q1 2025 detailed a 40 basis point impact per 100 bps change and showed strong secondary market activity ( ). | Q2 2025 emphasized durable improvements in funding costs, scaling of the capital program including forward flow and ABS channels, and highlighted the positive impact of the Sixth Street deal ( ). | Stable and reinforced positive funding conditions, with mentions of scaling capital programs and enduring market advantages. |
Unit Economics, Margin Expansion, and Promotional Reinvestment Risks | Q3 2024 and Q4 2024 stressed solid unit economics and operating leverage with measured risks attached to promotions ( ). Q1 2025 confirmed strong RLTC margins and cautious reinvestment in promotions ( ). | Q2 2025 reported RLTC margins above the 3%–4% target and disciplined margin expansion while strategically reinvesting excess margins into 0% APR loans, maintaining a strict control over credit quality ( ). | Continued robust performance with disciplined reinvestment strategies aimed at sustainable margin expansion. |
Credit Risk Management, Underwriting, and Delinquency Concerns | Q3 2024 focused on individual underwriting practices and seasonal delinquency management ( ). Q4 2024 reiterated strict transaction-level underwriting and precise delinquency targeting ( ). Q1 2025 noted unchanged but disciplined underwriting standards ensuring strong outcomes ( ). | Q2 2025 stressed a disciplined, collaborative approach to credit risk management, with real-time individual underwriting and careful adjustment for seasonality in delinquency rates ( ). | Consistently rigorous risk management remains a central priority, reinforcing credit quality and stability. |
International Expansion Challenges (UK Market Entry) | Q3 2024 described a cautious, phased entry in the U.K. with localized funding needs and an initial learning period ( ). Q1 2025 highlighted competitive market opportunities and the building of a local sales team to serve unmet longer-term loan demand ( ). Q4 2024 had no mentions. | Q2 2025 provided further detail on the testing phase in the U.K., noting strong merchant interest, early transaction volumes, and a focus on longer-term loans to fill a market gap ( ). | Steady optimism with increased granularity on market testing, indicating a maturing international strategy. |
Macroeconomic Risks and Interest Rate Impacts | Q3 2024 underscored resilience to small interest rate changes ( ). Q4 2024 discussed potential upside from lower rates while considering labor market pressures ( ). Q1 2025 quantified the impact as about 40bps per 100bps shift and planned reinvestments, with modest benefits expected ( ). | Q2 2025 reaffirmed the company’s ability to operate in varied rate environments, emphasizing that affirm’s core model remains robust despite macro uncertainties, tariffs, and inflationary pressures ( ). | Consistent resilience with reaffirmed positive outlook, underscoring the company’s capacity to thrive irrespective of macroeconomic fluctuations. |
Leadership Transition and Operational Risks | Q4 2024 detailed a leadership transition with Michael Linford’s expanded role and noted potential CFO changes, along with forward-looking operational risk disclosures ( ). Q1 2025 and Q3 2024 did not mention these topics. | Not mentioned in Q2 2025. | The topic has receded in recent commentary, suggesting stabilization in leadership and a reduced focus on operational risks. |
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Funding Strategy and Sixth Street Partnership
Q: Will Affirm expand funding deals like the Sixth Street partnership?
A: Affirm is proud of its capital markets progress, including the significant partnership with Sixth Street. While not expecting similar large deals in the near term, they plan to leverage attractive financing opportunities in private credit and insurance markets. This approach supports scaling toward their goal of $50 billion in GMV, building a durable capital program that can withstand multiple economic conditions. -
Credit Performance and Delinquency Rates
Q: How does Affirm view delinquency rate targets and GMV growth?
A: Affirm sets delinquency targets in collaboration with capital partners, focusing on yield and safety. They maintain strong credit discipline, refusing to loosen standards for growth. Delinquencies fluctuate seasonally, but risk management is separate from growth initiatives, ensuring stability and trust with capital providers. -
Reinvestment of RLTC Margins into Growth
Q: How is Affirm reinvesting excess RLTC margins?
A: Exceeding their 3%-4% RLTC margin guide, Affirm is reinvesting the excess by leaning into 0% loans, sometimes subsidizing them. Although these loans have slightly lower margins, they believe it's beneficial for the network and helps reach a broader consumer base. -
Market Share Gains
Q: Is Affirm taking market share in the U.S.?
A: Affirm believes it is gaining market share, growing faster than competitors in North America. Strong partnerships, especially with major enterprises, contributed to a robust holiday period, enhancing their competitive position. -
U.K. Expansion and Competition
Q: How is Affirm's U.K. launch progressing against incumbents?
A: Affirm is pleased with the U.K. launch, offering diverse term loans, including 24- and 36-month loans that incumbents lack. Merchant interest is high, with impatience for Affirm's offerings. Initial results are positive, and they are integrating with Shopify to expand reach. -
Use of AI in Operations
Q: How is Affirm leveraging AI, and how does it impact headcount?
A: Affirm has used AI since inception for underwriting and fraud detection. Now, they are deploying AI tools for productivity across legal, compliance, accounting, and marketing, enhancing operating leverage without increasing headcount. This allows them to focus on hiring specialists and improving efficiency. -
Affirm Card Growth and Consumer Behavior
Q: What has Affirm learned about the Affirm Card and customer interaction?
A: The Affirm Card appeals to their best customers, increasing engagement and transactions per user. While not yet a primary banking relationship for most, there's room to add services. They aim to reach 20 million cardholders averaging $7,500 in yearly spend, expanding use cases and improving conversion. -
Management's Focus Areas
Q: What are management's current focus areas for improvement?
A: Management is prioritizing conversion and uptake, personalization, and enhancing the user experience of the Affirm app and card. Internationally, they focus on the U.K. expansion, and they continue to invest in new product categories and AI initiatives.