Affirm (AFRM) Financials

Affirm Holdings, Inc. (NASDAQ: AFRM) has shown notable financial trends over the past several years, with a focus on revenue growth, cash flow changes, and ongoing efforts to manage expenses and debt.

Positive Highlights:

• Operating revenue increased steadily from $361.6 million in Q1 2023 to $783.1 million in Q3 2025, reflecting strong top-line growth.
• Gross profit consistently equals operating revenue as cost of revenue is reported as zero across periods, indicating scaling high-margin business activities.
• Net cash from continuing operating activities improved from negative levels in 2022 to positive $210.4 million in Q3 2025, signaling better operating cash flow generation.
• Affirm maintained healthy total cash & equivalents of $1.35 billion as of Q3 2025, supported by substantial investments and managing debt issuance.
• Total assets grew from about $7 billion in early 2023 to $10.4 billion in Q3 2025, showing an expansion of the company's balance sheet and investment capacity.
• Reduction in total operating expenses in Q3 2025 compared to prior quarters reflects company efforts to control costs (Q3 2025 operating expenses $791.5 million vs. Q2 2025 $870.6 million).
• Net income turned positive in Q3 2025 with $2.8 million net income, a sharp improvement from losses exceeding $100 million in prior years.
• Other income net gains backed pre-tax income positively in recent quarters, including $13.7 million in Q3 2025, aiding profitability.
• Issuance and repayment of debt are actively managed; issuance in Q3 2025 was $7.13 billion against repayments of $7.30 billion, showing effective liability management.

Neutral Observations:

• Weighted average shares outstanding have increased moderately, with about 324 million basic shares in Q3 2025, which could slightly dilute per-share metrics.
• Accounts receivable and other current assets show some volatility, likely reflecting changes in business activities but are relatively stable.
• Cash interest paid remained high (~$101 million in Q3 2025), consistent with substantial debt on the balance sheet.
• Marketing expenses remain significant but have trended downward recently ($74 million in Q3 2025 vs. $136 million in Q2 2025).
• Restricted cash levels declined from $536 million in Q2 2025 to $385 million in Q3 2025, which could reflect changes in cash liquidity allocation.

Negative Considerations:

• Affirm experienced substantial net losses in earlier years and quarters, for example loss exceeding $200 million for multiple quarters in 2023 and 2024, highlighting historical profitability challenges.
• Other operating expenses remain very high, often exceeding $500 million, indicating high operating cost structure despite revenue growth.
• Total operating expenses often exceed total revenue in earlier quarters, resulting in operating losses, though this gap is narrowing recently.
• Retained earnings are negative and worsening, reflecting cumulative losses over history ($-3.13 billion in Q3 2025), a common sign of early-stage or growth-stage company losses.
• Long-term debt is sizeable, around $7.15 billion as of Q3 2025, and consistently increasing from $4-5 billion in early 2023, which could increase financial risk due to leverage and interest burden.
• Net change in cash & equivalents in Q3 2025 was slightly negative (-$1.2 million) despite positive operating cash flow, which could signal capital deployment or financing activity changes.
• Diluted earnings per share remain minimal ($0.01 in Q3 2025) despite improvement, indicating profitability per share is still very thin.

Summary: Affirm has demonstrated significant revenue growth and improved cash flow generation over recent quarters, transitioning to a net income positive position in Q3 2025. However, historical substantial losses and high operating expenses continue to weigh on financial stability, alongside a large and increasing debt load. Investors should closely monitor Affirm’s profitability trajectory and debt management as the company scales its business.