Affirm Holdings Reports Strong Fourth Quarter Results, Achieves GAAP Operating Profitability

Affirm Holdings Inc. (AFRM) announced robust fourth-quarter fiscal 2025 results, achieving GAAP operating profitability for the first time. The buy now, pay later (BNPL) provider saw significant growth in gross merchandise volume and customer engagement, leading to a substantial increase in its stock price and a positive outlook for fiscal year 2026.

Market Performance Overview

Affirm Holdings Inc. (NASDAQ: AFRM) shares advanced significantly following the announcement of its exceptional fourth-quarter fiscal 2025 results. The buy now, pay later (BNPL) provider's stock closed over 11% higher at $89.35 on August 29, 2025, as investors responded positively to the company's achievement of GAAP operating profitability and strong growth metrics.

Fourth Quarter Fiscal 2025 Highlights

Affirm reported a landmark quarter, demonstrating a significant turnaround in its financial performance. The company achieved a GAAP operating income of $58 million, a notable improvement from the $73.5 million operating loss recorded in the same period last year. This marks the first time Affirm has reached profitability on a GAAP operating income basis.

Key financial and operational metrics for the quarter included:

Gross Merchandise Volume (GMV): Surged 43% year-over-year to $10.4 billion, exceeding Street estimates.
Revenue: Climbed 33% year-over-year to $876 million, significantly surpassing analyst expectations of $837.4 million.
Normalized Earnings Per Share (EPS): Reached $0.53, outperforming Wall Street estimates by $0.10 per share.
Adjusted Operating Income Margin: Increased by 4 percentage points year-over-year to 27%.

This robust growth was propelled by rising customer adoption and increased transaction frequency. Active consumers expanded by 24% to 23 million, while transactions per active consumer rose by 19% to 5.8. Notably, repeat borrowers accounted for 95% of transactions, indicating a strong and loyal customer base.

Growth Catalysts and Strategic Diversification

A significant driver of Affirm's performance was the accelerated growth of its direct-to-consumer Affirm Card business. Card GMV experienced an impressive 132% surge to $1.2 billion in Q4 2025, with active cardholders growing 97% to 2.3 million users. The Affirm Card has achieved a 10% attach rate among Affirm's customer base, enhancing direct consumer relationships and reducing dependence on traditional merchant partnerships.

Strategically, Affirm has diversified its operations across nine major industry categories, with general merchandise contributing 36% of GMV. All categories demonstrated strong year-over-year growth, alongside an increase to 155 merchants generating over $1,000 in trailing twelve-month GMV, providing multiple avenues for continued expansion.

Market Reaction and Broader Implications

The market's positive reaction underscores a crucial inflection point for Affirm. The achievement of GAAP profitability, coupled with sustained GMV and revenue growth, signals the company's ability to scale profitably and effectively monetize its expanding user base. This performance suggests a maturing BNPL sector where scale can translate into sustainable financial results, potentially impacting investor sentiment across the broader Fintech ecosystem.

Affirm's current valuation stands at a Price-to-Earnings (P/E) ratio of 25.9X. While this compares to peers like Upstart (UPST) at 26.9X P/E and SoFi Technologies (SOFI) at 49.1X P/E, and the broader Fintech industry group average P/E ratio of 34.0X, analysts suggest there is room for a higher valuation multiplier given Affirm's strong execution and improving profitability. The positive results and outlook may lead to a re-evaluation of its shares by the market.

Analyst Perspectives and Outlook

Following the strong results, analysts have maintained or upgraded their ratings for Affirm. The consensus rating is generally a "Moderate Buy," with some analysts moving to a "Strong Buy." This reflects confidence in the company's growth trajectory, valuation potential, and the tailwinds from the expanding BNPL market.

"Affirm's FY 2026 guidance implies 20% top-line growth and positive operating margins, supporting further upside potential at a 25.9X P/E valuation."

Looking ahead, Affirm's fiscal year 2026 guidance projects at least 25.5% GMV growth and continued GAAP profitability, with an adjusted operating margin forecast to exceed 26.1% and a GAAP operating margin above 6.0%. The company expects to generate $3.86 billion in revenue for FY 2026, implying 20% growth. These projections indicate a resilient business model and continued demand for BNPL services amid consumer spending patterns.

Potential tailwinds for Affirm include a possible lowering of federal funds rates by the Federal Reserve in the second half of the year. Reduced financing costs could lead to increased demand and stronger BNPL loan originations. However, intensifying competition within the BNPL space remains a factor to monitor. The strong funding capacity of $26.1 billion, with only 58% currently utilized, positions Affirm for continued expansion while maintaining healthy credit performance metrics.

source:

[1] Affirm: Valuation Potential Not Yet Realized (NASDAQ:AFRM) | Seeking Alpha[2] Affirm Reaches Profitability as BNPL Scale Turns Into Sustainable Growth[3] Block: Improving Margin Trend (NYSE:SQ) | Seeking Alpha

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The Event in Detail The market's momentum is largely concentrated in chipmakers and companies providing AI infrastructure. Nvidia Corp. (NVDA) has seen its stock climb over 13% this year, pushing its market capitalization close to $4 trillion, surpassing the gross domestic product of some nations. Other significant advancers include Palantir Technologies Inc. (PLTR), up over 83%, alongside strong performances from Broadcom Inc. (AVGO), Super Micro Computer Inc. (SMCI), and Arm Holdings Plc (ARM). Nvidia's first-quarter earnings report highlighted a 73% year-over-year increase in data center revenue, underscoring the robust demand driving this sector. Oracle Corp. (ORCL) shares experienced notable volatility, slipping 6.2% after a prior 36% surge. This initial surge, which marked Oracle's best trading day since 1992, followed a "blowout earnings report" propelled by multibillion-dollar orders for its cloud services. The company's backlog reportedly ballooned, with analysts from Deutsche Bank commending the "truly awesome results" and affirming Oracle's position as a "leader in AI infrastructure." Despite the recent dip, ORCL remains up approximately 90% since the start of the year. The extraordinary performance of Oracle shares briefly propelled co-founder Larry Ellison past Elon Musk as the world's richest person, with Bloomberg estimating his net worth at $393 billion. This shift underscores the immense wealth generation occurring within the AI-driven technology landscape. Simultaneously, the global Initial Public Offering (IPO) market is undergoing a significant resurgence in 2024 and the first half of 2025. IPO proceeds increased by 17% compared to the previous year, reaching $61.4 billion from 539 deals. The U.S. market alone witnessed 165 IPOs, a 76% increase. This renewed activity is attributed to stabilizing inflation, plateauing interest rates, and strong stock valuations, with Technology, Media, and Telecommunications (TMT) companies, especially those focused on AI, leading the charge. Analysis of Market Reaction The current market rally is not merely speculative but is underpinned by "hard data, strong earnings" and a laser focus on AI infrastructure. This analytical rigor differentiates the present environment from the dot-com bubble of the late 1990s. Economists and strategists note that today's technology giants exhibit significantly higher earnings growth and lower valuation multiples compared to their predecessors during the dot-com era. The Magnificent Seven — Alphabet (GOOG), Amazon (AMZN), Apple (AAPL), Meta Platforms (META), Microsoft (MSFT), Nvidia (NVDA), and Tesla (TSLA) — currently trade at an average price-to-earnings (P/E) ratio of 28x over the past 12 months. 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For instance, Target Corp. (TGT) stock is down almost 30%, with Dollar General Corp. (DG), The Home Depot Inc. (HD), and United Parcel Service Inc. (UPS) showing minimal to negative returns. This narrow market participation raises questions about overall market health. The Magnificent Seven now account for nearly half of the S&P 500's total market capitalization gains this year. This concentration suggests that, without these seven dominant technology companies, the broader index would show considerably less movement. This dependency on a select group of companies, while not necessarily indicative of a bubble, highlights the fragility of such a narrow rally. The resurgence of IPO activity, while signaling renewed investor confidence, also reignites discussions about potential "frothiness" in the market. While the current IPO landscape benefits from greater private equity involvement and a focus on more mature companies prior to public listing compared to the dot-com era, the rapid growth of AI and heightened investor interest could still lead to instances of overvaluation. Expert Commentary Analysts at Loop Capital have set an ambitious price target for Nvidia stock, projecting a path to $6 trillion by 2027, assuming continued momentum in AI infrastructure spending. Avery Marquez, Director of Investment Strategies at Renaissance Capital, observed the renewed vigor in the IPO market: > "The IPO market is in a good position at the moment, and it looks like the long-awaited pickup is finally going to materialize." UBS Global strategists, in evaluating the current market, have expressed caution but see fundamental differences from past bubbles: > "There is little evidence of a market bubble at present, and we would look to benefit from AI-driven momentum in the stock market with a broadly diversified portfolio." Looking Ahead The sustainability of the current AI-driven rally remains a key focus for investors. Potential risks include a slowdown in AI capital expenditures, the re-emergence of political instability, or the possibility that current expectations for AI may be running ahead of reality. While the long-term transformative potential of AI is widely acknowledged, there is a short-term risk of over-investment and misallocation within the sector. The IPO market is expected to see a steady flow of new issuances, but it remains susceptible to broader market stability and investor confidence, particularly given ongoing uncertainties around trade tariffs and inflation. The anticipated Federal Reserve interest rate cuts in the coming months will be closely watched, as they could provide continued support for equity markets, though the impact of such policy on an already narrow rally remains to be fully seen. Investors are advised to maintain diversified portfolios amidst these evolving market dynamics.

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US Administration Scrutiny on Chinese Pharma R&D Raises Market Concerns

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This initiative aims to curb China's growing biotech industry but has raised concerns about its potential negative impact on the US pharmaceutical supply chain and patient access to innovative treatments. The draft order includes provisions for stricter scrutiny on US pharmaceutical companies' deals to purchase drug rights from Chinese firms, mandating a "mandatory review" by a US national security committee. Furthermore, it proposes measures to discourage the use of clinical trial data generated from patients in China, calling for more rigorous reviews from the FDA and higher regulatory fees. This potential policy shift targets a substantial and rapidly expanding segment of the pharmaceutical market. In the first half of 2025 alone, roughly one-third of global pharmaceutical licensing spending, or $52 billion, involved Chinese drugs. This represents a significant increase from previous years, with China accounting for 21% of licensing spending in both 2023 and 2024, up from single digits prior. Major pharmaceutical companies, including AstraZeneca, Bristol Myers Squibb, Eli Lilly, and GSK, have collectively pledged approximately $150 billion to license novel treatments from China over the last five years. These deals often involve billions of dollars to secure exclusive development and sales rights for candidate drugs in overseas markets, illustrating the deep integration of Chinese innovation into global pharmaceutical pipelines. Analysis of Market Reaction The prospect of increased US scrutiny on Chinese pharmaceuticals immediately impacted market sentiment, leading to heightened volatility. Shares of Chinese biotech companies listed in the US, such as BeiGene, Zai Lab, and Legendary Biotech, experienced initial stock price declines. 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Sep 14 2025, 00:51

GE HealthCare Acquires Icometrix to Expand AI-Powered Alzheimer's Diagnostics

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A cornerstone of this platform is icobrain ARIA, the first FDA-cleared AI-powered software designed for the detection of amyloid-related imaging abnormalities (ARIA). ARIA are known side effects associated with recently launched amyloid-targeting Alzheimer's drugs, such as Leqembi and Kisunla. By integrating icobrain ARIA, GE HealthCare aims to bolster its capabilities in monitoring patient safety and treatment efficacy for individuals undergoing these novel Alzheimer's therapies. The acquisition will also see Icometrix's platform integrated with GE HealthCare's existing MRI systems, with plans to expand access to icobrain ARIA across all vendor MRI systems through commercial distribution and clinical integration. This strategic approach addresses interoperability challenges and seeks to accelerate the adoption of AI tools in neurological diagnostics. Icometrix's technology also includes icobrain ms, which has demonstrated an ability to reduce intra- and inter-rater variability in lesion counting, increasing sensitivity for detecting subclinical disease activity to 76% compared to standard radiological readings. Analysis of Market Reaction and Financial Position GE HealthCare, with a market capitalization of $35.94 billion, maintains a robust financial position. The company reported $19.97 billion in revenue over the last twelve months and a strong gross profit margin of 41.56%. Funding for the Icometrix acquisition will be derived from GE HealthCare's cash on hand, minimizing debt exposure. As of Q2 2025, the company held a cash balance of $3.8 billion and a current ratio of 1.16, indicative of strong liquidity. Despite an initial decline of 8.5% in its stock price following the acquisition announcement, likely reflecting investor concerns over Q2 2025's adjusted EBIT margin decline of 80 basis points due to tariff impacts and operational inefficiencies, GEHC stock has shown resilience, posting an 8.75% return over the past week. InvestingPro analysis suggests the stock is currently trading below its Fair Value, indicating potential upside opportunity. Broader Context and Implications This acquisition strategically positions GE HealthCare at the forefront of the burgeoning AI in medical imaging market, which is projected to expand from $4.46 billion in 2025 to $13.16 billion by 2029. The broader digital neurology market is also expected to demonstrate significant growth, from $48.78 billion in 2025 to $303.23 billion by 2034, at a compound annual growth rate (CAGR) of 22.51%. The rising prevalence of neurological disorders, particularly Alzheimer's disease—with patient numbers predicted to double by 2050 and an estimated economic burden of $360 billion in 2024—underscores the critical need for advanced diagnostic and monitoring solutions. By integrating Icometrix's AI tools, GE HealthCare aims to streamline workflows, enhance diagnostic precision, and provide crucial support for clinicians in managing these complex conditions. This move also grants GE HealthCare a first-mover advantage in scaling icobrain aria across various MRI systems, irrespective of the vendor. Such interoperability, combined with early investments in clinical validation, could translate into sustained market leadership in AI-driven neurological diagnostics. Expert Commentary Roland Rott, President and CEO of Imaging at GE HealthCare, emphasized the significance of this strategic venture, stating: > "This effort marks a pivotal step in our journey to advance precision care in neurology." Looking Ahead While the acquisition is subject to customary closing conditions, including regulatory approvals, its successful integration holds substantial implications for the future of neurological care. GE HealthCare will need to navigate challenges related to seamlessly integrating these AI tools into existing clinical workflows and contending with competition from both established tech giants and emerging startups in the AI diagnostics space. However, the rapidly expanding digital neurotherapeutics market, projected to reach $1.06 billion by 2030 with a CAGR of 19.5%, combined with GE HealthCare's commitment to innovation and precision medicine, positions the company for continued growth and impact in addressing critical unmet needs in neurological health.