Affirm BNPL Volumes Jump 36% as 0% Loans Drive Broader Use

Core Insights - Affirm's fiscal second quarter demonstrates the integration of buy now, pay later (BNPL) into everyday commerce, moving beyond occasional large purchases [1] Financial Performance - Gross merchandise volume (GMV) increased by 36% year over year to $13.8 billion, while revenue rose by 30% to $1.1 billion [3] - Active consumers grew by 23% to 25.8 million, with transactions per active consumer increasing by 20% to 6.4, and active merchants expanding by 42% to approximately 478,000 [3] Business Growth Drivers - Growth was fueled by point-of-sale integrations, wallet partnerships, and the direct-to-consumer business, particularly the Affirm Card, which saw direct-to-consumer GMV rise by 52% to $4.3 billion [4] - The Affirm Card's volume surged by 159% to $2.2 billion, with active cardholders more than doubling to 3.7 million, leading to card attach rates of about 14% [4] Zero-Interest Financing - GMV associated with 0% APR products grew by 60%, with over 60% of new customers opting for a 0% option for their first transaction [5] - Nearly 39% of all purchases during the quarter were interest-free, with around 60,000 merchants offering 0% APR deals, nearly quadrupling from the previous year [5] Consumer Credit Health - Thirty-plus-day delinquencies on monthly installment loans were at 2.7%, showing a year-over-year increase but a sequential decrease, while recent cohorts tracked toward approximately 3.5% net charge-offs [9] - Pay-in-4 losses remained below 1% of GMV, and the allowance for credit losses was consistent at 5.4% of loans held for investment [9] Technological Advancements - Affirm's AdaptAI and BoostAI systems are increasingly shaping financing offers and merchant performance, with BoostAI now operational across numerous enterprise merchants and small businesses [11] - BoostAI allows merchants to allocate additional funds for Affirm-specific promotions, optimizing conversion rates through automated A/B testing [12] Strategic Initiatives - Affirm expanded partnerships with major retailers and embedded pay-over-time options into QuickBooks Payments, while also testing rent-related use cases [12] - The company applied for an industrial bank charter to gain regulatory clarity, which is viewed as a long-term investment rather than an immediate growth driver [13] Future Projections - Affirm projected GMV for the current fiscal year to be between $48.3 billion and $48.85 billion, with revenue expected between $4.09 billion and $4.15 billion, indicating a deceleration from recent growth rates [14] - Operating margins are anticipated to improve in the second half of the year, despite a 6% drop in shares during after-hours trading [14] Overall Strategy - The quarter reflects Affirm's deeper penetration into everyday commerce, expanding distribution through the Affirm Card and partnerships, while enhancing automated decision-making processes [15]