Despite exceeding analyst expectations, Affirm (AFRM) shares experienced a downturn. The buy-now-pay-later provider reported an adjusted earnings per share of $0.37, surpassing the $0.27 estimate. Revenue also impressed, reaching $1.12 billion, a 30% year-over-year increase. However, the market reacted negatively due to rising credit losses.

Investors focused on the increase in credit loss provisions, which climbed to $214.2 million. The loss on loan purchase commitment also rose to $96.1 million. While GMV grew 36% to $13.8 billion, and operating income improved substantially, the widening credit concerns overshadowed these positive results. This reflects the current economic climate's impact on lending.

Affirm's CEO, Max Levchin, highlighted the company's performance and evolving consumer behavior. For the upcoming quarter, the company anticipates revenue between $970 million and $1 billion. For the full fiscal year 2026, they project revenue between $4.086 billion to $4.146 billion. The company has also announced new partnerships.

Buy-now-pay-later companies are facing increased scrutiny as interest rates rise and consumers struggle with debt. Increased delinquency rates are a key concern for investors. The market will be watching closely to see if Affirm can successfully navigate these challenges and maintain its growth trajectory while managing credit risk effectively.