By Emily Dattilo

When Affirm releases its quarterly results after the market closes later today, investors will look for the 'buy now, pay later' to make further progress in becoming profitable.

For the second fiscal quarter, Wall Street has penciled in a loss of 16 cents per share and revenue of $807 million, according to FactSet. The company said it expects to become profitable under generally accepted accounting principles in the fourth quarter of fiscal 2025. In the quarter a year ago, Affirm reported a loss of 54 cents per share and revenue of $591 million.

Wall Street forecasts gross merchandise volume -- which measures transactions on Affirm's platform -- to be $9.64 billion in the quarter. A year ago, gross merchandise volume was $7.5 billion.

Shares of Affirm were trading around $63 on Thursday ahead of the results.

Last month, Susquehanna Financial Group said that though Affirm has a bright future, its quarterly report could prove disappointing. Analysts James Friedman and Madeleine Zhou downgraded shares of Affirm to Neutral from Positive and cut their forecasts for earnings and revenue.

There are two reasons to move to the sidelines, Friedman and Zhou wrote. First, shares have reached their $57 price target. Second, data on U.S. online spending during the holiday season indicates that the portion of purchases made via BNPL didn't increase much from a year ago. That is a hint that Affirm's gross merchandise value could be lower than Wall Street analysts expect.

J.P. Morgan analysts Reginald Smith and Charles Pearce, who rate Affirm at Overweight with a price target of $74, were a bit more optimistic. The stock has rallied 25% since Affirm reported first-quarter results in November, compared with a 1% gain from the S&P 500, they wrote.

"We highlighted AFRM as a core holding entering 2025, and we continue to like the company's growth and margin expansion opportunity, and think new product and partnership initiatives will drive strong stock sentiment," analysts said.

"We note fintech lenders including SoFi and LendingClub are getting more aggressive around marketing and investment in CY25, and we would not be surprised to see Affirm follow suit (in the form of better financing offers to win new accounts) as adj. operating profit margins have been running ahead of expectations the last few quarters," they added.

Write to Emily Dattilo at emily.dattilo@dowjones.com

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February 06, 2025 11:22 ET (16:22 GMT)

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