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Affirm Q1 Earnings Beat on Rising Active Merchants, Stock Up 15%
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Key Takeaways
Affirm posted Q1 EPS of $0.23, beating estimates and reversing a prior-year loss.
GMV rose 42% to $10.8B, lifted by merchant integrations, wallets, and direct offerings.
Active merchants climbed 30% to 419,000, while transactions soared 52% on repeat users.
Shares of Affirm Holdings, Inc. (AFRM - Free Report) have risen 15.4% since it reported first-quarter fiscal 2026 results on Nov. 6. The strong quarterly results benefited from solid growth in Gross Merchandise Value (GMV), rising transaction volumes fueled by repeat customers, increasing active merchants and surging card network revenues. However, the upside was partly offset by an elevated expense level and rising provision for credit losses.
Affirm reported first-quarter fiscal 2026 earnings per share (EPS) of 23 cents, which beat the Zacks Consensus Estimate of 11 cents. The bottom line improved from the prior-year quarter’s loss of 31 cents per share.
Total revenues improved 33.6% year over year to $933.3 million and surpassed management’s expectation of $855-$885 million. The top line beat the consensus mark by 5.5%.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
As of Sept. 30, 2025, AFRM’s active merchants were 419,000, up 30% year over year. GMV of $10.8 billion climbed 42% year over year in the quarter under review, which exceeded management’s expected range of $10.1-$10.4 billion but missed the Zacks Consensus Estimate of $13.1 billion. The metric was aided by strong contributions from direct merchant point-of-sale integrations, wallet partnerships and direct-to-consumer offerings.
Total transactions rallied 52.2% year over year to 41.4 million on the back of a significant surge in repeat customer transactions. The metric missed the consensus mark of 44.2 million.
Servicing income of $39.7 million advanced 53% year over year but missed the consensus mark of $40.3 million. Interest income rose 20% year over year to $454.1 million but missed the Zacks Consensus Estimate of $481.7 million.
Merchant network revenues improved 36.2% year over year to $251.1 million in the fiscal first quarter, missing the consensus mark of $304.8 million. The metric gained from a growing GMV. Card network revenues were $69.3 million, which increased 46% year over year, attributable to the higher usage of Affirm Card and Affirm virtual cards. The metric missed the consensus mark of $81 million.
Total operating expenses increased 4.6% year over year to $869.7 million due to higher loss on loan purchase commitment, funding costs, processing and servicing, and technology and data analytics expenses. Provision for credit losses escalated 1.8% year over year to $162.8 million. Nevertheless, sales and marketing expenses dropped 46% year over year.
Adjusted operating income totaled $264 million, which surged 103.6% year over year. Adjusted operating margin improved 970 basis points year over year to 28.3%, which surpassed management’s estimated 23-25% range.
Affirm's net income was $80.7 million against a net loss of $100.2 million in the prior-year quarter.
Financial Position of Affirm (As of Sept. 30, 2025)
Affirm exited the fiscal first quarter with cash and cash equivalents of $1.4 billion, which climbed 5.5% from the fiscal 2025-end figure. Total assets of $11.5 billion increased from the fiscal 2025-end figure of $11.2 billion.
Funding debt amounted to $1.8 billion, up 9.6% from the figure as of June 30, 2025.
Total stockholders’ equity of $3.3 billion rose from the fiscal 2025-end figure of $3.1 billion.
AFRM generated $374.6 million of net cash from operations during the September quarter, which increased from the year-ago figure of $196.9 million.
AFRM’s Q2 Guidance
Affirm forecasts second-quarter fiscal 2026 GMV to be in the range of $13-$13.3 billion. Revenues are anticipated to be within the range of $1.03-$1.06 billion. The weighted average shares outstanding are expected to be 354 million. It projects the adjusted operating margin to be within 28-30%.
AFRM’s FY26 View
Management now anticipates GMV to be more than $47.5 billion, up from the prior projection of more than $46 billion. Revenues are still anticipated to be 8.4% of GMV. Adjusted operating margin is now estimated to be more than 27.1%. Weighted average shares outstanding are estimated to be 353 million.
The Zacks Consensus Estimate for BILL Holdings’ current-year earnings of $2.14 per share has witnessed one upward revision in the past 30 days against none in the opposite direction. BILL Holdings beat earnings estimates in each of the trailing four quarters, with the average surprise being 25.8%. The consensus estimate for current-year revenues is pegged at $1.6 billion, implying 9% year-over-year growth.
The Zacks Consensus Estimate for Reddit’s current-year earnings of $2.35 per share has witnessed 11 upward revisions in the past 30 days against no movement in the opposite direction. Reddit beat earnings estimates in each of the trailing four quarters, with the average surprise being 192.5%. The consensus estimate for current-year revenues is pegged at $2.1 billion, calling for 63% year-over-year growth.
The Zacks Consensus Estimate for Freshworks’ current-year earnings is pegged at 59 cents per share, implying 37.2% year-over-year growth. In the past seven days, Freshworks has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for the current-year revenues is pegged at $834.6 billion, calling for 15.8% year-over-year growth.
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Affirm Q1 Earnings Beat on Rising Active Merchants, Stock Up 15%
Key Takeaways
Shares of Affirm Holdings, Inc. (AFRM - Free Report) have risen 15.4% since it reported first-quarter fiscal 2026 results on Nov. 6. The strong quarterly results benefited from solid growth in Gross Merchandise Value (GMV), rising transaction volumes fueled by repeat customers, increasing active merchants and surging card network revenues. However, the upside was partly offset by an elevated expense level and rising provision for credit losses.
Affirm reported first-quarter fiscal 2026 earnings per share (EPS) of 23 cents, which beat the Zacks Consensus Estimate of 11 cents. The bottom line improved from the prior-year quarter’s loss of 31 cents per share.
Total revenues improved 33.6% year over year to $933.3 million and surpassed management’s expectation of $855-$885 million. The top line beat the consensus mark by 5.5%.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
Q1 Performance of Affirm
As of Sept. 30, 2025, AFRM’s active merchants were 419,000, up 30% year over year. GMV of $10.8 billion climbed 42% year over year in the quarter under review, which exceeded management’s expected range of $10.1-$10.4 billion but missed the Zacks Consensus Estimate of $13.1 billion. The metric was aided by strong contributions from direct merchant point-of-sale integrations, wallet partnerships and direct-to-consumer offerings.
Total transactions rallied 52.2% year over year to 41.4 million on the back of a significant surge in repeat customer transactions. The metric missed the consensus mark of 44.2 million.
Servicing income of $39.7 million advanced 53% year over year but missed the consensus mark of $40.3 million. Interest income rose 20% year over year to $454.1 million but missed the Zacks Consensus Estimate of $481.7 million.
Merchant network revenues improved 36.2% year over year to $251.1 million in the fiscal first quarter, missing the consensus mark of $304.8 million. The metric gained from a growing GMV. Card network revenues were $69.3 million, which increased 46% year over year, attributable to the higher usage of Affirm Card and Affirm virtual cards. The metric missed the consensus mark of $81 million.
Total operating expenses increased 4.6% year over year to $869.7 million due to higher loss on loan purchase commitment, funding costs, processing and servicing, and technology and data analytics expenses. Provision for credit losses escalated 1.8% year over year to $162.8 million. Nevertheless, sales and marketing expenses dropped 46% year over year.
Adjusted operating income totaled $264 million, which surged 103.6% year over year. Adjusted operating margin improved 970 basis points year over year to 28.3%, which surpassed management’s estimated 23-25% range.
Affirm's net income was $80.7 million against a net loss of $100.2 million in the prior-year quarter.
Financial Position of Affirm (As of Sept. 30, 2025)
Affirm exited the fiscal first quarter with cash and cash equivalents of $1.4 billion, which climbed 5.5% from the fiscal 2025-end figure. Total assets of $11.5 billion increased from the fiscal 2025-end figure of $11.2 billion.
Funding debt amounted to $1.8 billion, up 9.6% from the figure as of June 30, 2025.
Total stockholders’ equity of $3.3 billion rose from the fiscal 2025-end figure of $3.1 billion.
AFRM generated $374.6 million of net cash from operations during the September quarter, which increased from the year-ago figure of $196.9 million.
AFRM’s Q2 Guidance
Affirm forecasts second-quarter fiscal 2026 GMV to be in the range of $13-$13.3 billion. Revenues are anticipated to be within the range of $1.03-$1.06 billion. The weighted average shares outstanding are expected to be 354 million. It projects the adjusted operating margin to be within 28-30%.
AFRM’s FY26 View
Management now anticipates GMV to be more than $47.5 billion, up from the prior projection of more than $46 billion. Revenues are still anticipated to be 8.4% of GMV. Adjusted operating margin is now estimated to be more than 27.1%. Weighted average shares outstanding are estimated to be 353 million.
AFRM’s Zacks Rank & Key Picks
AFRM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Computer and Technology space are BILL Holdings, Inc. (BILL - Free Report) , Reddit, Inc. (RDDT - Free Report) and Freshworks Inc. (FRSH - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BILL Holdings’ current-year earnings of $2.14 per share has witnessed one upward revision in the past 30 days against none in the opposite direction. BILL Holdings beat earnings estimates in each of the trailing four quarters, with the average surprise being 25.8%. The consensus estimate for current-year revenues is pegged at $1.6 billion, implying 9% year-over-year growth.
The Zacks Consensus Estimate for Reddit’s current-year earnings of $2.35 per share has witnessed 11 upward revisions in the past 30 days against no movement in the opposite direction. Reddit beat earnings estimates in each of the trailing four quarters, with the average surprise being 192.5%. The consensus estimate for current-year revenues is pegged at $2.1 billion, calling for 63% year-over-year growth.
The Zacks Consensus Estimate for Freshworks’ current-year earnings is pegged at 59 cents per share, implying 37.2% year-over-year growth. In the past seven days, Freshworks has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for the current-year revenues is pegged at $834.6 billion, calling for 15.8% year-over-year growth.