Affirm Turns GAAP Profitable as Card GMV Surges 159%
Affirm posts first GAAP operating profit at $118M on 30% revenue growth, with its card business and merchant network driving the BNPL leader's breakout quarter.
Affirm just crossed the line that skeptics said it never would. The buy-now-pay-later company reported GAAP operating income of $118 million in its fiscal Q2, a 10% operating margin that marks the first time Affirm has run profitably under standard accounting rules. A year ago, the company posted a $4 million operating loss in the same quarter.
Revenue hit $1.12 billion, up 30% year-over-year and above the $1.06 billion Wall Street expected. Earnings per share came in at $0.37, comfortably beating the $0.27 consensus. This is the fifth consecutive quarter Affirm has topped earnings estimates.
The Card Is Working
The standout metric is the Affirm Card. Gross merchandise volume through the card product exploded 159% to $2.19 billion, with active card users growing 121% to 3.7 million. That's the kind of adoption curve that turns a niche product into a core business line.
CEO Max Levchin has positioned the card as Affirm's bridge from checkout-button financing to everyday spending. The numbers suggest it's working. The card gives consumers interest-free installment options at point of sale without the friction of applying for credit at each merchant — a hybrid between traditional credit cards and BNPL that's clearly resonating.
Merchant Flywheel Accelerates
Active merchants grew 42% to 478,000, driven partly by two strategic partnership wins. Affirm locked in exclusive BNPL deals with both Intuit and Expedia Group for the U.S. market, giving it embedded positioning in tax preparation and travel booking — two high-ticket categories where installment payments make obvious sense.
Adjusted operating income reached $337 million with a 30% margin, up from $238 million and 27% in the year-ago quarter. The operating leverage here is meaningful: revenue grew 30%, but adjusted operating income grew 42%.
Guidance Signals Confidence
Management guided Q3 GMV of $11.00–$11.25 billion and Q4 GMV of $12.75–$13.05 billion. Full-year revenue guidance of $4.09–$4.15 billion implies continued acceleration through the back half of fiscal 2026.
The trajectory matters because Affirm has been fighting a perception problem. BNPL companies were dismissed as pandemic-era fads that would struggle once rate hikes raised funding costs and consumer credit deteriorated. Affirm's response has been to grow through it while reaching profitability — a combination few competitors have managed.
Consumer credit quality remained stable, according to management, which is notable given broader concerns about weakening labor market data and the potential drag from tariff-driven price increases on consumer purchasing power.
Where It Fits
The BNPL market has consolidated rapidly. Klarna filed for its own IPO earlier this year, and Apple pulled back from its in-house installment product. Affirm's path to GAAP profitability while growing 30% gives it a credibility advantage in a category where most players are still burning cash.
Among recent earnings results, Affirm stands out for margin expansion. While companies like Roblox posted strong growth and Palantir delivered a blowout quarter, Affirm's story is specifically about proving the unit economics work at scale.
The stock has been volatile — down over 40% from its 52-week highs heading into the report. Whether this quarter resets the narrative depends on whether the market treats GAAP profitability as a one-quarter event or the beginning of a durable trend. The guidance suggests management believes it's the latter. Based on the card adoption numbers and merchant expansion, they have a credible case.