Affirm Holdings (AFRM) is having a good Friday. The buy-now-pay-later pioneer reported fiscal fourth-quarter results that beat expectations, and shares are up more than 7% in premarket trading.

The headline numbers were solid: adjusted earnings of 48 cents a share, well above the 34 cents analysts were looking for. Revenue came in at $1.165 billion, also ahead of the $1.106 billion consensus. But the real story is the growth engine underneath.

Eyes Merchant Expansion

Gross Merchandise Volume, or GMV, hit $14.1 billion in the quarter, up 36% year over year. Transactions grew even faster, jumping 41% to 53 million. That's a sign that Affirm's existing customers are using the service more often, not just that it's adding new users.

Transactions per active consumer keep climbing as Affirm expands its merchant base, adds consumer touchpoints, and pushes its Affirm Card. Automation is also making it faster and cheaper to onboard new merchants, which should help accelerate growth.

Here's the stat that should get investors excited: Affirm currently reaches only 80 of the top 250 e-commerce sites and about 10% of e-commerce merchants overall. Management described the opportunity as an "enormous amount of greenfield" for further expansion. In other words, there's a lot of room to run.

The company offers point-of-sale credit, the Affirm Card, Affirm Money accounts, and business-purchase solutions. It's also developing new products for fiscal 2029 and beyond. Services volume nearly doubled year over year, helped by two large platform wins, though adoption is still early and needs more customization.

No Hidden Fee Model

The Affirm Card is becoming a bigger part of the story. Its attach rate reached 19% of active users, and cardholders spend roughly twice as much as typical customers. Management says the card is highly profitable, and they plan to keep point-of-sale financing options while adding card-specific features.

Affirm is also improving the in-store experience and plans to launch new concepts offering greater financing value, including 0% interest and no fees. That might require a bit more effort than traditional cards, but the company says early results in the UK have been strong, with consumers and merchants responding well to the no-hidden-fee model.

Direct-to-consumer products now generate more than 80% of loans with interest, and Pay in X volume grew 41%. The company sees big potential in longer-duration 0% financing, though it requires highly precise underwriting. Management views that as a competitive advantage.

Outlook

Looking ahead, Affirm expects fiscal 2027 revenue of more than $5.44 billion, beating the $5.287 billion analyst estimate. GMV is expected to exceed $64 billion, with a revenue-to-GMV ratio of 8.5%. Revenue less transaction costs is projected at around 4.16% for the year, with funding costs and mix similar to fiscal 2026, including potential non-consolidated ABS deals that could boost quarterly gain-on-sale revenue.

For the first quarter, the company sees sales of $1.19 billion to $1.22 billion, compared with the $1.162 billion analyst estimate.

At the time of publication Friday, Affirm shares were up 7.38% at $83.21.

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