Keep an eye on Affirm Holdings (NASDAQ: AFRM). With earnings out on Thursday after the market closes, earnings and guidance could help send the stock even higher in the near term.
Fueling momentum, buy now, pay later (BNPL) stocks are still growing fast. In fact, the market has grown rapidly, with some estimates noting that the global market could grow from about $156.6 billion in 2023 to more than $1 trillion by 2028.
We also have to consider that Americans are carrying more debt. U.S. household debt reached about $18.8 trillion in the second quarter of 2026, according to the Federal Reserve Bank of New York. At the same time, more consumers are turning to BNPL loans to pay for everyday purchases.
According to LendingTree, 29% of BNPL users have used these loans to buy groceries. That is up from 25% a year earlier and just 14% two years ago. Consumers are also using BNPL to pay for clothing, electronics and household items.
That is good news for BNPL companies such as Affirm.
Affirm Earnings Are Coming
AFRM is scheduled to report its fiscal fourth-quarter results on August 27 after the market closes. Wall Street expects AFRM to report earnings of about $0.33 per share. That would be a significant improvement from the same period last year.
But EPS may not be the most important number investors watch. AFRM’s growth in gross merchandise volume, or GMV, will likely get plenty of attention. GMV measures the total value of transactions made through the company’s platform. In the third quarter, Affirm’s GMV jumped 35% year over year to $11.6 billion.
The company also added more customers and merchants. Active consumers increased 22% to 26.8 million, while active merchants jumped 44% to 515,000. Affirm’s card business is growing even faster. Affirm Card GMV increased 146% to $2.1 billion, while active cardholders more than doubled to 4.4 million.
Profitability Is Improving
AFRM is also showing that it can grow while becoming more profitable.
Third-quarter revenue increased 33% to $1.04 billion. Revenue less transaction costs, an important measure of the company’s underlying economics, increased 41% to $498 million.
Adjusted operating income jumped 62% to $281 million.
For the upcoming quarter, Affirm Holdings expects GMV between $13.15 billion and $13.45 billion. The company expects revenue between $1.08 billion and $1.11 billion. AFRM also expects an adjusted operating margin of 27.5% to 29.5%. If the company beats those expectations, investors could have another reason to push the stock higher.
What Investors Really Want
A strong earnings-per-share number would certainly help. But investors will probably pay even more attention to GMV, profitability and management’s outlook for the next fiscal year.
Investors will also be watching the outlook closely. Klarna (NYSE: KLAR), another major BNPL company, recently reported better-than-expected results but lowered its full-year outlook. Its shares fell sharply after the announcement. That puts even more focus on what AFRM says about consumer spending and credit quality.
The Bottom Line
The BNPL industry still has a substantial growth opportunity.
More consumers are using installment payments, and the overall market could reach more than $1 trillion within the next few years. Affirm is currently one of the strongest companies in the space. Its GMV is growing quickly, its merchant network is expanding, its card business is taking off and its profitability is improving. Now investors want to know if that growth can continue.
If Affirm beats expectations on Thursday and gives investors a strong outlook for fiscal 2027, the earnings report could strengthen the bullish case for AFRM.
