Sign in
AH

Affirm Holdings, Inc. (AFRM)·Q1 2026 Earnings Summary

Executive Summary

  • Revenue and profitability outperformed: Revenue rose 34% YoY to $933.3M, operating margin reached 6.8% (vs. -19.0% LY), and adjusted operating margin expanded to 28.3%; GMV grew 42% to $10.8B and RLTC hit 4.2% of GMV .
  • Versus Wall Street consensus, Affirm delivered a revenue beat and mixed EPS/EBITDA: Revenue $933.3M vs. $880.6M consensus; Primary EPS 0.608 actual vs. 0.616 consensus; EBITDA $137.0M actual vs. $221.8M consensus (S&P Global) (*Values retrieved from S&P Global).
  • Notable strategic catalysts: extended U.S. Amazon agreement through January 2031 and amended warrant terms; executed largest ABS deal ($1.1B) at the lowest WA yield since FY’22; expanded capital partnerships (New York Life) and PSP distribution (Worldpay for Platforms) .
  • Guidance raised: FY26 GMV raised to >$47.5B (from >$46B) and FY26 operating margin to >7.5% (from >6%); Q2 FY26 guide implies continued strength with revenue $1.03–$1.06B and adjusted OM 28–30% .
  • Execution drivers: strong 0% APR product momentum (monthly 0% GMV +74% YoY), Affirm Card acceleration (Card GMV +135% YoY; active cardholders +500k QoQ to 2.8M), and funding costs tailwind (avg funding cost 6.7%) .

What Went Well and What Went Wrong

What Went Well

  • Record GMV and accelerating profitability: GMV $10.8B (+42% YoY), operating income $63.7M vs. $(132.6)M LY; adjusted operating income $263.9M (28.3% margin) .
  • Strategic wins and distribution expansion: extended Amazon through January 2031; expanded PSP reach via Worldpay for Platforms to >1,000 SaaS platforms; added $500M forward-flow capacity and upsized warehouses .
  • Card and 0% APR momentum: Card GMV $1.4B (+135% YoY); active cardholders reached 2.8M; 0% APR monthly GMV +74% YoY; “0% Days” promo to drive merchant-funded offers .
    • Quote: “Earlier this week, we extended our U.S. agreement with Amazon for an additional five years through January 2031.” — Max Levchin .

What Went Wrong

  • Revenue yield pressure: Revenue as % of GMV fell 52 bps YoY to 8.7% due to shorter-duration 0% monthly loans and mix shift to D2C/Card; interest income as % of GMV declined 74 bps with more loan sales and higher 0% mix .
  • Seasonal uptick in delinquency QoQ: 30+ day delinquencies (ex-Peloton & Pay in X) rose 45 bps QoQ (still -4 bps YoY), reflecting seasonality; allowance for credit losses increased to 5.9% of LHI vs. 5.6% QoQ .
  • Enterprise partner headwind: one large merchant substantially completed shifting Pay Later volumes to its own wallet in FQ1’26, tempering future concentration benefits .

Financial Results

Core P&L and Unit Economics (Oldest → Newest)

MetricQ1 2025Q4 2025Q1 2026
Revenue ($USD Millions)$698.5 $876.4 $933.3
GAAP Diluted EPS ($)$(0.31) $0.20 $0.23
Operating Margin (%)(19.0)% 6.6% 6.8%
Adjusted Operating Margin (%)18.6% 27.0% 28.3%
GMV ($USD Billions)$7.6 $10.4 $10.8
Revenue as % of GMV (%)9.2% 8.5% 8.7%
RLTC as % of GMV (%)3.8% 4.1% 4.2%

Q1 2026 vs. Wall Street Consensus (S&P Global)

MetricConsensusActual
Revenue ($USD Millions)880.6*933.3
Primary EPS ($)0.616*0.608*
EBITDA ($USD Millions)221.8*137.0*

Values retrieved from S&P Global.

Revenue Composition (Oldest → Newest)

Component ($USD Millions)Q1 2025Q4 2025Q1 2026
Merchant Network Revenue$184.3 $239.5 $251.1
Card Network Revenue$47.5 $67.1 $69.3
Interest Income$377.1 $419.1 $454.1
Gain on Sales of Loans$63.6 $116.9 $119.0
Servicing Income$26.0 $33.9 $39.7
Total Revenue, net$698.5 $876.4 $933.3

KPIs and Platform Metrics (Oldest → Newest)

KPIQ1 2025Q4 2025Q1 2026
Active Consumers (Millions)19.5 23.0 24.1
Transactions per Active Consumer5.1 5.8 6.1
Active Merchants (Thousands)323.0 376.8 418.9
Total Transactions (Count, Millions)27.2 37.5 41.4
Affirm Card GMV ($USD Billions)n/a$1.2 $1.4
Active Cardholders (Millions)n/a2.3 2.8
Card Attach Rate (%)n/a~10% ~12%
Avg Funding Cost (%)n/a6.8% 6.7%
ECR Ratio (%)4.9% 3.8% 3.9%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
GMV ($B)FY 2026>$46.0 >$47.5 Raised
Operating Margin (%)FY 2026>6.0 >7.5 Raised
Adjusted Operating Margin (%)FY 2026>26.1 >27.1 Raised
Revenue as % GMV (%)FY 2026~8.4 ~8.4 Maintained
RLTC as % GMV (%)FY 2026~4 ~4 Maintained
Wtd Avg Diluted Shares (M)FY 2026352 353 Slight increase
GMV ($B)Q2 2026n/a$13.0–13.3 New
Revenue ($M)Q2 2026n/a$1,030–1,060 New
RLTC ($M)Q2 2026n/a$510–525 New
Operating Margin (%)Q2 2026n/a6.5–8.5 New
Adjusted Operating Margin (%)Q2 2026n/a28–30 New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 & Q4 FY25)Current Period (Q1 FY26)Trend
Capital markets funding/ABSMultiple oversubscribed ABS; added warehouse & forward-flow capacity Priced $1.1B master trust ABS at lowest WA yield since FY’22; funding capacity up to $26.6B; avg funding cost 6.7% Improving execution, cost tailwind
PSP/wallet distributionJP Morgan Payments, Adyen, UATP travel network Expanded with Worldpay for Platforms, default option progress at top PSPs Broadening reach
0% APR strategy0% monthly GMV +44%; merchant-funded mix rising; shorter duration 0% monthly GMV +74%; Pay-in-X +55%; ran “0% Days” app/card promo Accelerating
Affirm CardActive cardholders ~1.9–2.3M; GMV $0.8–$1.2B; attach 10% Active cardholders 2.8M; GMV $1.4B; attach ~12%; testing cash-flow underwriting Scaling
Amazon agreementN/AExtended U.S. agreement to Jan 2031; warrant amendment set exercise price tiers Long-term anchor
Credit outcomesDelinquencies improved QoQ in Q4; vintage loss rates stable 30+ DPD up 45 bps QoQ (seasonality), -4 bps YoY; vintage NCOs stable (~3.5% monthly; <1% Pay-in-4) Seasonal normalization, stable cohorts

Management Commentary

  • “This one was really great… Earlier this week, we extended our U.S. agreement with Amazon for an additional five years through January 2031.” — Max Levchin .
  • “We are expanding relationships… increasing their exposure to Affirm while continuing to scale our ABS program… what we produce is… highly valued in the debt capital market.” — Management on ABS execution .
  • “We’re really focused on 4% being an upper bound for revenue-less transaction cost take rates… long-term, we think 3 to 4% is the right range.” — Management on RLTC philosophy .
  • “Card GMV was up 135% year over year, and active cardholders grew another 500 thousand from last quarter to reach 2.8 million.” — Shareholder letter .
  • “Funding costs… declining… to 6.7%.” — Shareholder letter .

Q&A Highlights

  • Funding execution/ABS markets: Affirm emphasized a “flight to quality” among investors and best-in-class asset performance enabling favorable ABS pricing .
  • PSP strategy: Platforms accelerate integrations and open “more doors,” with Affirm aiming to be a default payment option across top PSPs; Worldpay for Platforms integration expands reach materially .
  • RLTC target: Company reiterated 3–4% long-term RLTC range and aims to reinvest above-4% levels to expand the network; Q1’s 4.2% aided by lower provisions and funding costs .
  • Consumer health: Delinquency trends stable YoY; management monitoring macro signals, noting minimal impact from government shutdown cohort aside from minor demand slowdown .
  • Card adoption and underwriting: Cash-flow underwriting helps younger cohorts with thin files; management is deliberately scaling card marketing while enhancing underwriting confidence before broader rollout .

Estimates Context

  • Revenue beat: $933.3M actual vs. $880.6M consensus — strong top-line surprise driven by 0% APR adoption, loan sale gains, and servicing scale (S&P Global; actual from filings) .
  • EPS mixed: Primary EPS 0.608 actual vs. 0.616 consensus; note GAAP diluted EPS of $0.23 reflects different methodology/reporting basis (S&P Global; filings) .
  • EBITDA miss: $137.0M actual vs. $221.8M consensus — driven by lower revenue yield per GMV and elevated opex in tech/data and G&A despite leverage (S&P Global; filings) .
    Values retrieved from S&P Global.

Key Takeaways for Investors

  • Top-line momentum with disciplined unit economics: despite a 52 bps decline in revenue/GMV from mix effects, RLTC rose 48 bps and margins expanded — a sign of scalable profitability .
  • Strategic durability: Amazon renewal through 2031 de-risks a key enterprise relationship; warrant amendments realign incentives post-renewal .
  • Funding tailwind: largest-ever $1.1B ABS, lower yields, and added forward-flow/warehouse capacity support growth while lowering average funding costs .
  • Product flywheel: accelerated 0% APR adoption and Card growth (attach up to ~12%) deepen consumer engagement and merchant value while improving credit outcomes .
  • Guidance reset supports multi-quarter momentum: FY26 GMV and operating margin raised; Q2 guide implies sustained growth and high adjusted margins .
  • Watch mix and yield: continued mix shift toward shorter-duration 0% offers and D2C/Card can pressure revenue % of GMV, but is offset by funding/provision improvements and merchant-funded economics .
  • Monitor enterprise wallet transition and seasonality: one enterprise partner shifted Pay Later volumes; QoQ delinquency uplift is seasonal — cohorts remain stable (~3.5% monthly, <1% Pay-in-4) .