Affirm Holdings Inc Earnings - Q3 2025 Analysis & Highlights
Affirm Holdings Inc (AFRM) Q1 2026 earnings call highlighted strong execution in the ABS market, an extension of the Amazon agreement, the importance of PSP relationships, and a focus on 0% APR loans. The company is focused on growth and profitability, with a target of approximately 4% for revenue less transaction cost take rates.
Key Financial Results:
Affirm is focused on 4% being an upper bound for revenue less transaction cost take rates.
Long term, Affirm thinks 3% to 4% is the right range.
Affirm has been fortunate to run slightly above 4%.
Business Segment Results:
Growth in fashion and beauty grew 30% in the quarter.
Approximately half of the GMV growth this quarter came from direct point of sale merchant integrations and one-third from direct to consumer.
Capital Allocation:
Expanding relationships with blue-chip buyers, increasing their exposure to Affirm while continuing to scale the ABS program.
Industry Trends and Dynamics:
The performance of the asset is a major driver of the market's appetite for what Affirm produces.
Affirm's product is very special and unique and it's highly valued in the debt capital markets.
PSP is a really important channel for Affirm.
PSP relationships help with the speed of integration.
The platforms for Affirm are the way they integrate more than they are the way they acquire.
The breadth of products requires and allows Affirm to make more connections than what they think other people can do in the industry.
Competitive Landscape:
Affirm has the best team in the world who does this every day and their ability to get in front of investors and make sure they understand what can be sometimes a complicated product and understand how it works and why their advantages are what they are, really does set them apart.
Affirm has a relatively durable moat in terms of both the data and the process of building lending products.
Affirm is safe from the cohort of competition because of their access to capital and balance sheet management.
Macroeconomic Environment:
The data seems to be suggesting, or at least Affirm's data, is that the spending environment for the consumer remains pretty damn healthy.
Government employees because of the shutdown to understand what it practically means for the ecosystem and Affirm in particular, and they do not see any loss of repayment.
The delinquencies and defaults in that group are just fine, like in line with the rest of general population, but they see a few basis points of a demand slowdown.
Growth Opportunities and Strategies:
Extended US agreement with Amazon for an additional five years through January 2031.
Affirm is a big fan of having lots of doors with Affirm logo on all of them so that both the merchant and the consumer have their choice as to who they partner with, who they walk through, and they will always be there to serve them.
Cash flow underwriting is really helpful for younger consumers and just folks who are kind of overlooked by the rest of the ecosystem.
Affirm wants the card to be the preferred way of interacting with their products.
Affirm is willing to enter these new businesses fairly quickly.
Affirm can do more than just fulfill the demand at the very bottom of the funnel.
Affirm can move the needle for the merchant ecosystem by deploying their essentially marketing dollars in the most targeted way possible.
Affirm is the only person who can stand up to an offer with the level of approvals that they do, an honest and true, transparent 0% offering.
Financial Guidance and Outlook:
Affirm is really focused on 4% being an upper bound for revenue less transaction cost take rates.
Affirm is maintaining their 4% target for fiscal 2026.
For FY 2026 outlook, Affirm is taking revenue less transaction costs dollars up.
