AFRM — Affirm Holdings, Inc.

Affirm Holdings, Inc. Q3 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• Revenue Growth: Affirm reported strong revenue growth, continuing a record streak, with a notable increase in GMV (Gross Merchandise Volume).
• Delinquency Rates: Delinquencies remained stable, indicating solid credit performance among the consumer base.
• Funding Costs: Funding costs decreased by approximately 125 basis points year-on-year, attributed to favorable market conditions and successful execution in ABS (Asset-Backed Securities) deals.
• Active Merchants: The active merchant count increased by 44%, reflecting strong growth in partnerships, particularly with major platforms like Shopify.
• Affirm Card Users: The number of Affirm Card users reached approximately 4.4 million, with a focus on increasing adoption and engagement.

2. Strategic Updates and Business Highlights

• Product Development: Affirm is leveraging AI to enhance software development efficiency, which is expected to positively impact the bottom line. The use of AI tools is seen as a way to increase productivity without reducing headcount.
• Big Nothing Event: The upcoming Big Nothing event is anticipated to drive cardholder sign-ups and improve targeting strategies based on data from previous events.
• Pay in X Growth: The Pay in X segment is now the fastest-growing area, driven by partnerships and a shift to more favorable financing options for consumers.
• Adaptive Checkout: Affirm is integrating its Adaptive Checkout and Boost offerings to enhance merchant and consumer experiences, with plans for further developments.

3. Forward Guidance and Outlook

• Q4 Expectations: Affirm is optimistic about sustaining growth into Q4, despite facing tougher year-over-year comparisons due to the sunset of a top merchant. The company anticipates easier comps in fiscal 2027.
• International Expansion: While international expansion is underway, it is not expected to materially impact results in fiscal 2026. Investments are being made in preparation for future market entries.

4. Bad News, Challenges, or Points of Concern

• Competitive Landscape: The BNPL (Buy Now, Pay Later) market remains competitive, with ongoing pressure from other players. However, Affirm believes its established brand and underwriting capabilities provide a competitive edge.
• Allowance for Loan Losses: The allowance for loan losses increased quarter-over-quarter, attributed to seasonal factors and elevated prepayments, which could indicate a shift in credit quality.
• Market Volatility: Although the funding environment is currently favorable, there are concerns about potential volatility in capital markets that could affect future funding strategies.

5. Notable Q&A Insights

• Credit Quality: Max Levchin emphasized that Affirm is not seeing deterioration in credit quality among its consumer base, which is a positive indicator for future performance.
• AI and Workforce: Levchin clarified that Affirm does not plan to implement layoffs due to AI advancements, focusing instead on enhancing productivity and efficiency.
• Cardholder Engagement: The company is actively working to improve the user experience and engagement with the Affirm Card, leveraging data to optimize the onboarding process and reduce friction.
• Market Positioning: Affirm's long-term strategy focuses on maintaining its identity and trust with consumers, which is seen as a key driver of its competitive advantage.

Overall, Affirm's Q3 2026 results reflect strong growth and stability, with a positive outlook for continued expansion and innovation, despite challenges in a competitive landscape.