Executive Summary

Affirm delivered another upside quarter: GMV rose 35% to $10.1B, revenue rose 47% to $866M, RLTC rose 73% to $419M, and GAAP net income was $80M; operating margin was ~breakeven despite $101M of enterprise warrant/SBC expense, driving a 27.4% adjusted operating margin and a positive EPS of $0.23 diluted .
Mix and funding tailwinds: 0% APR GMV grew >70% YoY; average cost of funds fell ~~50 bps sequentially to 7.2%; RLTC margin was aided by better loan-sale/securitization execution (~~$60M benefit), putting RLTC at 4.1% of GMV .
Guidance strengthened: FY25 adjusted operating margin raised to 22.5–23.5% (from ≥20% prior); FY25 revenue guided to $3.13–$3.19B, RLTC to $1.42–$1.45B; GAAP operating income profitability reaffirmed for FQ4’25 .
Strategic catalysts: Affirm Card GMV doubled to $845M with ~1.7M active cardholders; funding capacity increased to $22.6B; Sixth Street partnership (up to $4B capacity) to ramp in FH2’25; UK launch on track, with Shopify integration testing expected soon .
Consensus estimates: S&P Global consensus data was unavailable at time of request due to provider rate limits, so vs-consensus comparisons are not shown; however, management stated it exceeded all metrics versus prior outlook .

What Went Well and What Went Wrong

What Went Well
- Broad-based growth and margin execution: GMV +35% to $10.1B; revenue +47% to $866M; RLTC +73% to $419M (4.1% of GMV), aided by improved loan sale pricing and a $736M ABS plus $500M loan sale (~$60M combined RLTC benefit) .
- Funding and unit economics: Average cost of funds declined ~50 bps YoY and sequentially to 7.2%; forward flow capacity expanded (e.g., Sixth Street up to $4B capacity), pushing funding capacity to $22.6B .
- D2C expansion and Card traction: D2C GMV +43% to $2.8B; Affirm Card GMV $845M (more than doubled), and active cardholders approached ~1.7M; app-driven 0% APR GMV grew 260% .
- Quote: “We exceeded the outlook established in our previous letter on all financial metrics in FQ2’25.” .
What Went Wrong
- RLTC above long‑term band from capital markets timing: RLTC % GMV slightly exceeded the 3–4% target due to outsized capital markets benefits; management intends to reinvest surplus RLTC (e.g., in 0% offers), which can be margin dilutive short term .
- Elevated warrant/SBC remains a GAAP headwind: ~$101M of enterprise warrant and share-based expense weighed on GAAP operating income, keeping operating margin ~breakeven despite strong AOI .
- Credit normalization: 30+ day delinquencies in monthly installment loans ticked up YoY (though down QoQ), consistent with expanded approvals and normal seasonality; card/category mix changes require ongoing monitoring .

Financial Results

Metric	Q4 FY2024	Q1 FY2025	Q2 FY2025
GMV ($B)	7.2	7.6	10.1
Total Revenue ($M)	659.2	698.5	866.4
Revenue as % GMV	9.1%	9.2%	8.5%
Transaction Costs (Non‑GAAP) ($M)	349.8	413.4	447.0
RLTC ($M)	309.4	285.1	419.4
RLTC as % GMV	4.3%	3.8%	4.1%
Operating Income (Loss) ($M)	(73.5)	(132.6)	(4.3)
Operating Margin	(11.1)%	(19.0)%	(0.5)%
Adjusted Operating Income ($M)	149.8	129.6	237.8
Adjusted Operating Margin	22.7%	18.6%	27.4%
Net Income (Loss) ($M)	(45.1)	(100.2)	80.4
Basic EPS ($)	(0.14)	(0.31)	0.25
Diluted EPS ($)	(0.14)	(0.31)	0.23
Total Transactions (count, M)	24.7	27.2	38.1

Revenue composition (GAAP)

Revenue Line ($000s)	Q4 FY2024	Q1 FY2025	Q2 FY2025
Merchant Network Revenue	181,008	184,339	244,895
Card Network Revenue	42,980	47,480	58,142
Total Network Revenue	223,988	231,819	303,037
Interest Income	337,618	377,064	409,367
Gain on Sales of Loans	69,983	63,613	125,287
Servicing Income	27,596	25,983	28,690
Total Revenue, net	659,185	698,479	866,381

KPIs and credit

KPI	Q4 FY2024	Q1 FY2025	Q2 FY2025
Active Consumers (M)	18.7	19.5	21.0
Transactions per Active Consumer	4.9	5.1	5.3
Active Merchants (K)	303.0	323.0	337.2
Affirm Card GMV ($M)	507	607	845
Active Cardholders (M)	~1.2	>1.4	~1.7
Avg Cost of Funds	~7.7%	~7.7%	7.2%
30+ DQ% (Monthly Installment ex-Peloton)	2.4% (Jun)	2.8% (Sep)	2.5% (Dec)
Allowance for Credit Losses / HFI	5.5%	5.6%	5.4%
Total Platform Portfolio ($B)	11.0	11.8	14.0
Equity Capital Required ($M)	596.3	581.3	640.5
ECR as % of Total Platform Portfolio	5.4%	4.9%	4.6%

Notes: Q2 RLTC benefitted from the $736M 2024‑X2 ABS and a $500M loan sale (~$60M RLTC impact), while average funding costs fell to 7.2%; management acknowledged RLTC exceeded the 3–4% target due to these items and expects to reinvest surplus in 0% offers and growth .

Guidance Changes

Metric	Period	Previous Guidance (Q1 letter)	Current Guidance (Q2 letter)	Change
GMV	FY2025	“More than $34B”	$34.74–$35.34B	Raised (narrowed up)
Revenue	FY2025	“At least +20 bps vs FY24 as % GMV”	$3.13–$3.19B	New absolute range
Transaction Costs	FY2025	“Similar to FY24 as % GMV”	$1.71–$1.74B	New absolute range
RLTC	FY2025	“At least +20 bps vs FY24 as % GMV”	$1.42–$1.45B	New absolute range
Adjusted Operating Margin	FY2025	≥20%	22.5–23.5%	Raised
Wtd Avg Basic Shares	FY2025	322M	323M	Maintained (slight update)
Wtd Avg Diluted Shares	FY2025	N/A	342M	New disclosure
Operating Income (GAAP)	FY2025	GAAP OI profitable in FQ4’25	GAAP OI profitable in FQ4’25	Maintained
GMV	FQ3’25	N/A	$8.00–$8.30B	New
Revenue	FQ3’25	N/A	$755–$785M	New
RLTC	FQ3’25	N/A	$340–$355M	New
Adj Op Margin	FQ3’25	N/A	20–22%	New
GMV	FQ4’25	N/A	$9.00–$9.30B	New
Revenue	FQ4’25	N/A	$810–$840M	New
RLTC	FQ4’25	N/A	$375–$390M	New
Adj Op Margin	FQ4’25	N/A	23–25%	New

Assumptions noted: declining benchmark rates embedded (tailwind to RLTC); warrant amortization to $5M/quarter in FQ3–FQ4’25; UK/Wallet initiatives included but not material in FY25 .

Earnings Call Themes & Trends

Topic	Q4 FY2024 (Q−2)	Q1 FY2025 (Q−1)	Q2 FY2025 (Current)	Trend
0% APR and pricing reinvestment	0% programs as growth lever; RLTC at high end aided by securitization; intent to reinvest above 4%	Emphasized promotions harmonization across surfaces; plan to be aggressive given strong unit economics	0% APR GMV +70%; plan to reinvest surplus RLTC, careful credit cutoffs	Accelerating
Funding/capital markets	Strong ABS program; pricing/spreads improving; capacity +$1B QoQ	Dual-rating in ABS; forward flow upsizes; view rate cuts as gradual tailwind	Avg cost of funds 7.2%; funding capacity $22.6B; Sixth Street up to $4B	Improving
Affirm Card	Cohorts scaling; GMV $507M; in-store usage rising	Active cardholders >1.4M; harmonizing 0% across card/app; Visa Flexible Credential rollout	Card GMV $845M; ~1.7M cardholders; expanding use cases (GoodRx, groceries)	Accelerating
Wallet partnerships	Major wallet partnership “pre‑commercialization”	Apple Pay live (late Q1); harmonizing offers across wallets	Wallet integrations “meaningful”; accretive to repeats/credit	Improving
UK expansion	Planned UK launch before CY’24 end	Launched UK; targeting longer-term loans; enterprise integrations planned	Early metrics positive; Shopify testing soon	Building
Credit quality	Seasonal DQ increases expected; cohorts performing in-line	DQ up with expanded approvals; still targeted within RLTC 3–4%	DQ improved QoQ in Q2; slightly higher YoY; within expectations	Stable

Management Commentary

“We exceeded the outlook established in our previous letter on all financial metrics in FQ2’25.”
On reinvesting margin: “Leaning into 0%… even… slightly lower margin… but… great thing for our network… reaching a broader cross-section of consumers.” – CFO .
On funding: “Partnership with Sixth Street is… an incredible leap forward… we’ll scale it carefully over the course of next year.” – COO .
On UK: “Market is hungry for… 24‑ and 36‑month loans… Shopify is our first major enterprise scale integration… relatively soon.” – CEO .
On AI: “Underwriting and fraud fighting… built on… AI… deploying AI tools for productivity… legal, compliance, accounting, marketing.” – CEO .
On Card strategy: “Card is our best economics… best engagement… we’re expanding use cases (e.g., medicine via GoodRx).” – CEO .

Q&A Highlights

RLTC strategy and 0% APR: Management plans to keep long‑term RLTC at 3–4%, reinvesting excess (e.g., subsidized 0% offers) while maintaining disciplined credit selection and iterating approval thresholds .
Capital/funding mix: Favorable market conditions plus strong credit execution lowered average funding costs; Sixth Street forward flow ramps through FH2’25; balance ABS and forward flow for durable scale .
Wallets distribution: Wallet integrations are accretive to repeats, conversion, and credit quality; offers being harmonized across surfaces to ensure consistent consumer experience .
UK update: Early traction with longer-term installment demand; enterprise distribution (Shopify) testing imminent; too early for share targets .
Card expansion: Focus on expanding use cases (e.g., healthcare/GoodRx, groceries), improving UX, and lifting per-user spend; cardholders represent the most engaged, best‑economics consumers .

Estimates Context

S&P Global Wall Street consensus estimates for revenue/EPS were unavailable at time of request due to provider rate‑limit errors. As a result, we cannot provide vs‑consensus comparisons for Q2 FY25 or forward periods at this time. Management indicated results exceeded its prior internal outlook on all metrics .

Key Takeaways for Investors

Affirm is balancing growth and profitability: strong QoQ and YoY acceleration in GMV/revenue with a 27%+ adjusted operating margin and positive GAAP EPS, aided by improved funding costs and loan monetization .
Mix and reinvestment choices are deliberate: 0% APR GMV surged (>70% YoY) as management redeploys surplus RLTC to expand reach and conversion while staying inside the 3–4% long‑term RLTC band .
Funding capacity and durability improved: capacity rose to $22.6B; forward flow and ABS channels deepen, with Sixth Street providing up to $4B capacity—supporting scalable growth and potential future cost‑of‑funds tailwinds .
D2C engine and Card are catalysts: Card GMV doubled to $845M, active cardholders ~1.7M; harmonized offers across app/card/wallets drive engagement and repeat usage .
International optionality: UK launch progressing with early merchant demand for longer‑term loans; Shopify integration expected to broaden reach in coming quarters .
FY25 outlook improved: AOI margin raised to 22.5–23.5%; GAAP OI profitability targeted in FQ4’25; new quarterly guidance provides better visibility into H2 seasonality and margin trajectory .
Watch list: trajectory of 0% mix vs margins, delinquency normalization vs approvals, pace of Sixth Street ramp, Apple/wallet commercialization, and UK scaling—each could drive estimate revisions and multiple expansion or compression .

Appendix: Additional Context from Press Releases (Q2 timeframe and shortly after)

Liberty Mutual Investments expanded forward flow partnership (potential up to $5B over time), adding a committed long-term capital partner to enable growth .
Post‑quarter, Affirm and J.P. Morgan Payments deepened partnership to bring Affirm to Commerce Platform merchants, expanding distribution; release reiterated 21M active consumers and >$10B quarterly GMV .
Affirm to expand credit reporting with Experian to include all pay‑over‑time products beginning April 1, 2025, enhancing transparency and potentially supporting consumers’ credit histories longer term .

All document metrics and quotes are sourced from Affirm’s Q2 FY25 8‑K/shareholder letter and earnings call, with additional context from Q1 FY25 and Q4 FY24 materials, and press releases as cited throughout.

Affirm Holdings, Inc. (AFRM)·Q2 2025 Earnings Summary