After reporting better-than-expected results and providing strong guidance, Affirm's stock price surged by 16%.

• Affirm's shares rose in after-hours trading on Wednesday after the company reported better-than-expected results on both its top and bottom lines.
• While analysts predicted a loss of 51 cents per share, the company reported a lower loss of 14 cents per share.
• Revenue of $659 million beat the $604 million average analyst estimate.

On Wednesday, after hours trading, shares experienced a 16% increase following the release of better-than-expected fiscal fourth-quarter results by the provider of buy now, pay later loans.

Analysts' consensus estimates from LSEG were exceeded by the company's performance.

• Loss per share: 14 cents adjusted vs. 51 cents expected
• Revenue: $659 million vs. $604 million expected

The reported GMV of $7.2 billion represents a 31% increase from the previous year, indicating the total value of transactions during the reporting period.

Affirm's revenue increased by 48% compared to the previous year, while its net loss decreased to $45.1 million from $206 million. The company's active merchant count surpassed 300,000, and the number of active consumers grew by 19% to 18.6 million.

Max Levchin, CEO, announced in a letter to shareholders that the company aims to achieve operating profitability on a GAAP basis by the end of the fiscal fourth quarter in 2025.

LSEG's polled analysts forecast revenue of $625 million for the current quarter, while Affirm expects revenue to fall between $640 million and $670 million.

Despite a 36% decline in Affirm shares for the year as of Wednesday's close, they have been moving upwards recently, with an 12% increase in August. Federal Reserve Chairman Jerome Powell indicated on Friday that lower interest rates could be implemented as early as September.

In a note last month, Bank of America analysts stated that rate cuts would positively impact Affirm's funding costs and increase profits on loan sales. The company recently raised its merchant interest rate cap from 30% to 36%, which analysts predict will continue to boost yields and drive growth in gross merchandise volume.

Affirm's new partnership with Apple and other collaborations are also contributing to its growth, as announced in June when Apple Pay users in the U.S. can apply for loans directly through Affirm on their iPhones and iPads.

By the end of this year, Affirm also intends to introduce its services in the UK.

Gina Sanchez, Lido Advisors' chief market strategist, stated on "The Exchange" on Wednesday that the consumer slowdown could hinder the company from achieving its profitability targets.

"Sanchez stated that this company operates on a buy now, pay later basis in an environment where consumption is declining. He advised being prepared for a slow period that may occur in the first half of 2025 until rate cuts have a significant impact, as this is the reality of being in a consumer play that relies on consumption volume."

WATCH: Affirm CEO on consumer behavior