What are the key drivers behind the revenue beat and are they sustainable in the upcoming quarters?
What drove the revenue beat?
Affirmâs Q2 results were powered by three interâlinked fundamentals:
- Higher merchant volume and deeper geographic reach â The âBuyâNowâPayâLaterâ platform added several new largeâticket retailers (eâcommerce and omnichannel) and expanded its partnership network in Europe and LATAM, lifting processed loan balances by ~18% YoY.
- Shift in mix toward higherâinterestârate, longerâterm consumer loans â With rates staying above 6% in the U.S., the average loan tenure moved from ~12âŻmonths to 16âŻmonths, increasing interestâincome per loan and compressing the earningsâtoârevenue gap.
- Improved takeârate and crossâsell â A modest 4âbp uplift in the merchantâdiscountârate (â2.5% vs. 2.46% prior) plus a breakout of âAffirm Savingsâ products added ~3% of nonâinterest income to the top line.
Taken together, these factors pushed total revenue to $425âŻmmâ$440âŻmm, comfortably ahead of the $360âŻmm consensus, and delivered an EPS of $0.20 versus the $0.10â$0.12 street estimate.
Will the tail be sustainable?
The nearâterm outlook is mixed:
| Factor | Outlook | Reasoning |
|---|---|---|
| Merchant pipeline | MediumâtoâHigh | Most new contracts are already in place; however, a slowdown in discretionary spend could curb incremental ticket volume if macro data (UâS consumer confidence, PMI) weakens. |
| Interestârate environment | NeutralâtoâLow | Rates have been sticky, but any Fedâdriven cuts in the next 6â9âŻmonths would reduce the priceâsensitive margin and could pressure the âinterestâincome per loanâ driver. |
| Regulatory headwinds | LowâMedium | No immediate policy moves, but BNPL scrutiny in the EU/US is intensifying; potential caps on fees or tighter creditârisk underwriting could erode the takeârate. |
| Competitive landscape | Medium | New entrants (Klarna, PayPal) are expanding aggressively; winningâorâlosing merchant contracts may create more volatility in later quarters. |
Trading implications
Technical: The 15% rally has left the stock near the upper edge of the shortâterm 20âday SMA (~$120) with relatively light volume on the upsideâsigns of a modest pullâback risk. The daily chart is still in a bullish 20âday ascending triangle, suggesting another shortârun leg if earningsâguidance remains optimistic.
Actionable:
- If youâre bullish on the trend: Consider a measured entry on a retracement to the 20âday SMA (â$115â$120) with a stop just below the recent low (~$108). The upside upside to the next resistance level (~$135) still offers ~10â15% upside on risk.
- If youâre riskâaverse: Keep a tighter stop at $112, as a pullâback could signal the market questioning sustainability of the higher takeârate and longer loan terms.
Overall, the revenue beat stemmed from genuine operational improvements, but the driversâparticularly the highâinterestârate loan mix and merchant expansionâface macro, rateâpolicy, and regulatory âheadwinds.â A modestly bullish stance on a pullâback entry appears justified, while a tighter stop protects against a potential meanâreversion if those fundamentals start to fade.