(Reuters) -Affirm shares jumped 22.8% on Friday, as a strong holiday shopping season helped the buy now, pay later lender post a surprise quarterly profit and forecast upbeat annual revenue.
More consumers used its BNPL services to take advantage of heavy discounts by retailers on everything from apparel to electronics to lure budget-conscious shoppers during the holiday season.
Gross merchandise volume (GMV) – the total dollar amount of all transactions on the Affirm platform – jumped 35% to $10.1 billion in the second quarter ended Dec. 31, exceeding analysts’ estimates of $9.57 billion, according to LSEG.
San Francisco, California-based Affirm was on track to add more than $4 billion to its market capitalization if the gains hold.
In a letter to shareholders late on Thursday, Affirm said the merchandise and consumer electronics categories contributed significantly to growth.
GMV growth from Affirm’s top five merchants and platform partners collectively jumped 40%, partly due to increasing demand from consumers for zero-percent financing.
“Affirm is on our short list of transformative fintechs that can become big companies over time,” William Blair analyst Andrew Jeffrey said.
Affirm reported net income of $80.4 million, or 23 cents per share, compared with analysts’ expectations of a loss of 15 cents per share.
The company reported profit on a reported basis for the first time as a public company.
“Affirm is firing on all cylinders, delivering premium growth, improving profitability and consistent credit performance,” J.P. Morgan analyst Reginald Smith said.
The company’s total revenue soared 47% to $866 million, beating estimates of $807.2 million.
It also forecast fiscal 2025 revenue between $3.13 billion and $3.19 billion, compared with Street expectations of $3.09 billion.
“Affirm continues to distinguish itself as the clear market leader in BNPL, and as new growth opportunities emerge, an increasingly diversified and profitable fintech,” Wells Fargo analysts said.
(Reporting by Arasu Kannagi Basil in Bengaluru; Editing by Shailesh Kuber and Anil D’Silva)
