ZACKSยท2025-07-22 15:26Core Insights - Visa Inc. and Affirm Holdings are positioned at the forefront of the payments landscape, with Visa as a long-established card network and Affirm as a rapidly growing fintech innovator in the buy now, pay later (BNPL) space [1][2] Group 1: Visa's Position - Visa reported Q2 fiscal 2025 net revenue of $9.6 billion, a 9.3% year-over-year increase, driven by an 8% gain in payments volume and strong cross-border growth [3] - Visa's extensive global network captures over half of the purchase volume in the U.S. and billions of digital transactions, providing a durable competitive advantage [3][4] - The company returned $5.6 billion to shareholders through buybacks in the last quarter and has a new $30 billion repurchase authorization, indicating strong cash flow [4] - Visa is expanding into digital payments through Visa Direct and investing in real-time payments infrastructure to adapt to a digitizing financial landscape [5] - Visa's business model is primarily fee-based and dependent on banks and merchants, which may be less appealing to tech-savvy consumers seeking speed and flexibility [6] Group 2: Affirm's Growth - Affirm's revenues increased by 36% year-over-year to $783.1 million in Q3 FY25, supported by higher gross merchandise volume and expanded merchant relationships [7] - The active consumer count for Affirm rose to 21.9 million, with transactions per active user growing by 21.7%, indicating rising engagement [7] - Affirm operates outside traditional credit-card networks, partnering with major retailers like Shopify and Amazon, allowing it to directly tap into consumer spending [8] - The company has diversified its funding model with 24 securitizations totaling $12.25 billion and over 150 capital partners, showcasing operational maturity [10] - Affirm is expanding internationally through partnerships and is investing in new offerings like debit cards and B2B tools to diversify its business [11] Group 3: Financial Comparisons - The Zacks Consensus Estimate for Affirm's fiscal 2025 EPS indicates a 101.8% year-over-year improvement, while Visa's is projected at 13.1% [13] - On a price-to-sales basis, Visa trades at 15.04X forward revenues, significantly above the industry average of 6.30X, while Affirm's price-to-sales multiple is at 5.41X, indicating potential for growth [14] - In the past year, Visa has returned 32.5%, while Affirm has delivered a remarkable 127.5% return, reflecting their respective revenue growth and market performance [16] Group 4: Conclusion - Visa continues to dominate global payments with scale and profitability, but its growth is tied to economic activity [19] - Affirm is benefiting from structural tailwinds and a flexible payment model, positioning it for future growth [20] - Despite higher leverage, Affirm's valuation reflects its growth potential, making it a compelling investment opportunity for those seeking exposure to the evolving fintech landscape [21]