Affirm (AFRM.US) turns a loss into a profit in Q3, Q4 revenue forecast falls short of expectations.

"Buy now, pay later" service provider Affirm (AFRM.US) disclosed in its latest financial report that despite exceeding market expectations in the previous quarter, its revenue forecast for the fourth quarter fell short of analysts' expectations, leading to a 10% drop in stock price in after-hours trading on Thursday. In the third quarter of the 2025 fiscal year, Affirm reported earnings per share of 1 cent, higher than the expected loss of 3 cents per share, with a net profit of $2.8 million, a significant improvement compared to the loss of $133.9 million in the same period last year; revenue was $783 million, in line with expectations. During the quarter, the company's Gross Merchandise Volume (GMV) reached $8.6 billion, exceeding market expectations of $8.2 billion, with a 36% year-on-year growth. The growth in GMV, a key indicator of transaction value, reflects consumers' continued demand for installment payment services. Revenue increased by 36% year-on-year, rising from $576 million in the same period last year to $783 million. The key profitability metric "Revenue less transaction costs" reached 4.1%, slightly higher than the company's long-term target range. Adjusted operating profit margin was 22%, slightly higher than the market's expected 21.6%. Despite a strong performance in Q3, Affirm's revenue forecast for the fourth quarter is $815 million to $845 million, with a median value of $830 million, lower than the estimated $841 million, disappointing investors. However, the company's GMV forecast for the fourth quarter is $9.4 billion to $9.7 billion, with a median value of $9.55 billion, higher than the market's expectation of $9.2 billion. The adjusted operating profit margin is expected to be between 23% and 25%, roughly in line with the market's estimated 23.8%. Affirm reiterated its goal of achieving GAAP net profit in the fourth quarter of the 2025 fiscal year. As of now, the total number of active users has increased to 22 million, with 2 million new users. The company's "Affirm Card" business GMV saw a staggering 115% year-on-year increase, with the number of active card users doubling. Collaborations with large platforms such as Apple Inc. (AAPL.US), Amazon.com, Inc. (AMZN.US), and Shopify (SHOP.US) continue to drive transaction volume growth. In June this year, Affirm announced with Apple that future iPhone and iPad users in the US can directly apply for Affirm loans through Apple Pay. Additionally, the Consumer Financial Protection Bureau (CFPB) announced this week that it will halt the enforcement of a regulatory provision implemented during the Biden administration that had previously increased compliance difficulty for BNPL service providers, which is widely seen as good news for companies in the industry like Affirm. The report shows a significant increase in 0% interest loans, up 44% year-on-year. These loans are typically subsidized by merchants or manufacturers to promote sales. Meanwhile, Affirm's core "4 installment pay" product maintains stable credit quality, with a default rate of less than 1%. Despite some improvements in fundamentals, Affirm's stock price has dropped 11% since the beginning of the year, while the Nasdaq index has fallen approximately 7% over the same period.