Affirm Targets Merchant Expansion, Calls E-Commerce Opportunity "Enormous"

Affirm Holdings, Inc. shares moved higher in pre-market trading on Friday after the company reported strong fiscal fourth-quarter results.

Adjusted earnings per share came in at 48 cents, surpassing the analyst estimate of 34 cents. Sales reached $1.165 billion, above the market consensus of $1.106 billion.

Eyeing Merchant Expansion

Gross merchandise volume totaled $14.1 billion, up 36% year over year. Total transaction volume rose to 53 million transactions, up 41%, outpacing overall GMV growth.

As Affirm expands its merchant base, consumer touchpoints, and the Affirm Card, transactions per active consumer continue to rise, while automation is making merchant onboarding faster and more efficient.

The company currently covers only 80 of the top 250 e-commerce websites and roughly 10% of e-commerce merchants. On the conference call, management described the market as having "significant white space" for further merchant expansion.

Affirm offers point-of-sale credit, the Affirm Card, Affirm Money accounts, and enterprise procurement solutions, with additional products in development targeting fiscal 2029 and beyond.

Service volume nearly doubled year over year, driven by the rollout of two large platform partnerships, though adoption remains in early stages and requires further customization.

No Hidden Fees Model

The Affirm Card's attachment rate reached 19% of active users, with cardholders spending approximately 2x more than typical customers. Management stated the card remains highly profitable and plans to add card-exclusive features while retaining point-of-sale financing options.

The company is improving the in-store experience and plans to launch new concepts offering higher financing value, including 0% APR and zero fees, though requiring slightly more effort from users compared to traditional credit cards. Affirm noted early performance in the UK has been strong across both consumers and merchants, with positive reception to its no-hidden-fees model.

Affirm said its direct-to-consumer products now contribute over 80% of interest-bearing loans, while Pay in X transaction volume grew 41%. The company sees significant potential in longer-duration 0% financing, though it requires highly precise underwriting, which management views as a competitive advantage.

Guidance

For fiscal 2027, the company expects revenue above $5.44 billion, versus the market estimate of $5.287 billion, with GMV expected to exceed $64 billion and a revenue-to-GMV ratio of approximately 8.5%.

Revenue less transaction costs for the fiscal year is expected at approximately 4.16%, with funding costs and capital structure broadly similar to fiscal 2026, including potential non-consolidated asset-backed securities transactions, which could boost quarterly sales gains.

For the first quarter, Affirm expects sales of $1.19 billion to $1.22 billion, compared to the analyst estimate of $1.162 billion.

AFRM price action: As of Friday's writing, Affirm Holdings shares were up 7.38% at $83.21.