Affirm Crushes Earnings Expectations, Turns Bears into Believers

Core Insights - Affirm's fiscal Q4 2025 earnings report showed significant performance, with shares rising nearly 11% following the announcement [1] - The company reported revenue exceeding $876 million, reflecting a growth rate of just under 33%, surpassing consensus estimates of less than 27% [1] - Affirm achieved a non-adjusted earnings per share (EPS) of 20 cents, nearly double the analyst consensus forecast of 11 cents, marking the third consecutive quarter of positive non-adjusted EPS [2] Financial Performance - Affirm posted its first quarter of positive non-adjusted operating income at $58 million, indicating a shift towards profitability alongside its high growth [3] - The fiscal Q1 revenue guidance suggests a deceleration in growth, with a midpoint revenue estimate of $870 million, indicating a growth rate of 24.5% [4] - Gross merchandise volume (GMV) grew by nearly 44%, the highest rate in at least six quarters, with projections for at least 25% GMV growth in fiscal 2026 [5] Analyst Sentiment - Analysts have raised their price targets for Affirm by 40% or more following the earnings report, with an average revised target nearing $97, indicating over 13% upside from the current trading price [8] - The updated targets suggest a shift in analyst sentiment from caution to optimism regarding Affirm's future performance [8] - Affirm's forward enterprise value to sales (EV/S) ratio stands at 8.6x, significantly higher than its average of around 5.8x over the past three years, necessitating continued profitable growth to justify this valuation [11]