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    AFRM
    Earnings call· Sep 2025(Q1 FY26)

    Affirm Holdings, Inc. AFRM

    Nov 6, 2025 Source

    Executive summary

    Affirm Holdings Q1 FY26 — Amazon Extension and Strong Execution Drive Profitability

    Affirm delivered a strong quarter, highlighted by the 5-year extension of its Amazon partnership and robust execution in capital markets. The company's strategic focus on 0% APR offers and the Affirm Card continues to drive significant GMV growth and consumer engagement, while maintaining strong profitability. Management remains committed to expanding its network and product offerings, leveraging its advanced underwriting capabilities to enter new verticals.

    Highlights

    5

    • Extended U.S. agreement with Amazon for an additional 5 years through January 2031.

    • Achieved Q1 FY26 RLTC of 4.2%, up 48 basis points QoQ, exceeding the 4% full-year target.

    • Added 0.5 million Affirm card members in the quarter, demonstrating strong consumer adoption.

    • GMV grew 40% year-over-year, driven by direct point-of-sale merchant integrations and direct-to-consumer channels.

    • Successfully executed an ABS deal and expanded capital markets relationships, reflecting strong asset performance.

    Concerns

    2

    • Observed a few basis points of demand slowdown from government employees, though delinquencies remained stable.

    • Merchant fee rates for core 0% longer-term loans trended slightly lower due to an adjustment with a significant merchant.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full-year FY26 Operating Margin
    more than 7.5%
    high materiality
    High
    Full-year FY26 Revenue Less Transaction Cost (RLTC) Take Rate
    4%
    medium materiality
    High
    Q2 FY26 Gross Merchandise Volume (GMV)
    $13 billion to $13.3 billion
    high materiality
    High

    Operational metrics

    11
    Gross Merchandise Volume growth
    40%YoY
    Q1 FY26

    Mentioned in the context of overall company growth and consumer demand.

    Revenue Less Transaction Cost (RLTC) Take Rate
    4.2%up 48 bps QoQ
    Q1 FY26

    Exceeded the full-year target of 4%.

    Affirm Card New Members
    0.5 million
    Q1 FY26

    Reflects strong adoption of the Affirm Card.

    Affirm Card Active Members Goal
    10 million
    Long-term

    Management's long-term goal for the Affirm Card, currently just under 1/3 of the way there.

    Affirm Card Discretionary Spend Goal
    $7,500
    per year

    Management's long-term goal for annual discretionary spend per Affirm Card user, currently 1/3 to 1/2 of the way there.

    0% Offers Merchant Funding
    aspire for 100%
    Ongoing

    A significant percentage of 0% offers are already merchant-funded, with an aspiration for all of them to be.

    Apparel and Beauty GMV growth
    30%YoY
    Q1 FY26

    This category experienced strong growth in the quarter, contributing to overall GMV.

    Average Order Value
    $260-$270down slightly QoQ, up slightly prior quarter
    Q1 FY26

    Hovering in this range, trending down slightly over the last 2-3 fiscal years due to expansion into lower AOV areas.

    Government Employee Demand Slowdown
    few basis points
    Q1 FY26

    Detected a slight slowdown in demand from government employees, but no loss of repayment.

    Earned Wage Access Average Loan Duration
    8 days
    Typical

    Mentioned as a characteristic of EWA products, distinguishing them from Affirm's longer-term lending.

    0% Monthly Installment Loans Growth
    fastest-growing
    Q1 FY26

    Expected to continue as the fastest-growing loan product, a trend observed for several quarters.

    Industry KPIs

    2
    MetricValueDetails
    Funding cost—
    Active consumers0.5 millionmembers

    Product announcements

    2
    ProductTypeDetails
    Boost.aiupdate
    Cash Flow Underwritingupdate

    Deals & partnerships

    3
    AmazonExtension of U.S. agreement for Buy Now, Pay Later services.5 years

    Extended through January 2031, representing a long-term commitment and continued service to customers.

    WorldpayPayment Service Provider (PSP) relationship to accelerate merchant integrations.

    One of the recent PSP signings aimed at expanding Affirm's reach to more merchants and platforms.

    ShopifyDistribution partner for accessing smaller merchants and international expansion.

    A key part of international expansion, helping access the long tail of smaller merchants efficiently. Live in the U.K. and scaling nicely.

    Risks & headwinds

    2
    Macroeconomic impact on consumer demandQ1 FY26

    few basis points of a demand slowdown

    Mitigation: Continuous monitoring of macro trends; no loss of repayment observed in this group.

    Pressure on merchant fee rates for 0% loanslast few quarters

    trending a little bit lower

    Mitigation: Adjustment made to a single merchant program with a high proportion of 0% and long-dated loans; considered a one-off adjustment.

    What to watch in Q2 FY26

    5

    Revenue Less Transaction Cost (RLTC) Take Rate Trajectory

    next quarter
    Current4.2%
    Targetcloser to 4%

    Why it matters

    Management targets 4% to balance growth and profitability; deviation could signal changes in product mix or capital markets.

    I think it's really a philosophical target that we have that we stay pretty close to 4% on the high end. ... But really, that goal is to make sure that we're maximizing growth and profitability. And so that's why 4%, we think, is the right target for this year.

    Q&A highlights

    6

    How is Affirm executing so well in funding markets despite broader volatility?

    Affirm is proud of its ABS execution, expanding relationships with forward flow buyers, and scaling its ABS program. The strong performance and unique nature of its assets, combined with an expert team, set it apart.

    “We are expanding relationships with blue-chip forward flow buyers, increasing their exposure to Affirm while continuing to scale our ABS program. I think, obviously, the performance of the asset is a major driver of the market's appetite for what we produce.”

    asked by Dan Dolev · answered by Michael Linford

    2 min read7 chapters

    Detailed Narrative

    01

    Amazon Partnership Extension

    Affirm announced a 5-year extension of its U.S. agreement with Amazon through January 2031, highlighting the long-term commitment and satisfaction with the service provided to consumers. This partnership is a significant driver of volume and consumer reach, with both companies focused on continued optimization and new product integration.

    02

    Strategic PSP Relationships

    The company emphasized the importance of Payment Service Provider (PSP) relationships, such as the recent Worldpay signing, for accelerating merchant integrations and expanding reach. While PSPs aid in integration speed, Affirm remains highly involved in sales and configuration, ensuring product breadth and high consumer conversion.

    03

    Robust Underwriting and Consumer Health

    Affirm's advanced, mathematically constructed underwriting practices enable it to serve a broad consumer base, including younger demographics often overlooked by traditional credit. Despite observing a slight demand slowdown from government employees, overall consumer repayment behavior and delinquency trends remain healthy, with the company continuously monitoring macro signals.

    04

    Affirm Card Growth and Strategy

    The Affirm Card continues to see strong adoption, adding 0.5 million members in the quarter. The company is deliberately expanding its reach, including testing cash flow underwriting to unlock growth among younger consumers and those with limited credit history. The long-term goal is to offer the card to every user, aiming for 10 million active cards and $7,500 in annual discretionary spend per user.

    05

    0% APR Offers and "0% Days" Promotion

    Affirm is aggressively leaning into 0% APR offers, which attract higher credit quality consumers and drive sales for merchants. The recent "0% Days" promotion, largely funded by merchants and marketed to existing users, demonstrated Affirm's ability to drive targeted, efficient promotions and move the needle for its merchant ecosystem.

    06

    Vertical Expansion and Underwriting Adaptability

    Affirm is confidently expanding into new verticals like automotive repair and other services, leveraging its robust process for building and modifying underwriting models. The ability to quickly incorporate new data and merchandise descriptors into its models allows the company to maintain strong returns and manage risk effectively across diverse product categories.

    07

    Capital Markets Execution

    Affirm continues to demonstrate strong execution in the ABS and broader capital markets, expanding relationships with blue-chip forward flow buyers. The performance of its unique asset class and the expertise of its capital markets team are key drivers of its ability to secure favorable funding, even amidst broader market volatility🌐.

    AI-generated summary of the company’s earnings call. Not investment advice.