What happened

Shares of Affirm (NASDAQ:AFRM) tanked as much as 18% on Tuesday morning after the company reported fiscal third-quarter earnings. The results were mixed compared to Wall Street's expectations, as Affirm recognized significant stock-based compensation expenses in connection with its IPO earlier this year. As of 12:10 p.m. EDT, shares had somewhat recovered and were down 7%.

So what

Revenue in the fiscal third quarter was $230.7 million, easily topping the $198.2 million in sales that analysts were looking for. That resulted in a net loss per share of $1.06, which was worse than the $0.31 per share in red ink that Wall Street was modeling for. The buy-now-pay-later (BNPL) specialist reported gross merchandise volume (GMV) of $2.3 billion. Active merchants more than doubled to 12,000, and active consumers jumped 60% to 5.4 million.

A laptop displaying a merchant website that integrates Affirm next to a pair of glasses and a vase holding flowers

Image source: Affirm.

"Affirm's strong third quarter results reflect continued progress toward building the most valuable and transparent financial network for consumers and merchants," CEO Max Levchin said in a statement. "During the period, we more than doubled the number of merchants on our platform, accelerated GMV growth to 83%, and increased active consumers by 60% year-over-year."

Now what

Affirm said that it is seeing GMV growth accelerate in certain key categories, such as travel and ticketing, due to pent-up demand. The company is also expanding its partnership with Shopify and recently closed its acquisition of Returnly.

Guidance for the fiscal fourth quarter calls for GMV of $2.2 billion to $2.25 billion, with revenue forecast in the range of $215 million to $225 million. That outlook includes expected impacts from Peloton's voluntary recall of its Tread and Tread+ (Peloton is one of Affirm's prominent partners).

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