Affirm Holdings Inc (AFRM) Q1 2026 Earnings Call Highlights: Strategic Partnerships and ...

This article first appeared on GuruFocus.

Release Date: November 06, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Affirm Holdings Inc (NASDAQ:AFRM) extended its agreement with Amazon for an additional five years, indicating strong partnership and future growth potential. The company successfully executed in the ABS market, expanding relationships with blue-chip buyers and scaling its ABS program. Affirm Holdings Inc (NASDAQ:AFRM) reported strong growth in 0% APR loans, which are increasingly popular among consumers and funded by merchants. The company is seeing increased transaction frequency per customer, indicating higher consumer engagement and loyalty. Affirm Holdings Inc (NASDAQ:AFRM) is experiencing significant growth in direct-to-consumer products, including the Affirm card, which is capturing more discretionary spend.

Negative Points

The company maintained a 4% target for revenue less transaction cost take rates, indicating potential pressure to balance growth and profitability. Affirm Holdings Inc (NASDAQ:AFRM) faces challenges in maintaining high merchant fee rates, particularly for 0% longer-term loans. The competitive environment remains intense, with new entrants in the BNPL space potentially impacting market share. Affirm Holdings Inc (NASDAQ:AFRM) is cautious about expanding into new verticals, requiring robust underwriting models and data integration. The company did not provide specific guidance on operating expenses, leaving uncertainty about future cost management strategies.

Q & A Highlights

Warning! GuruFocus has detected 6 Warning Signs with AFRM. Is AFRM fairly valued? Test your thesis with our free DCF calculator.

Q: Can you provide insights into Affirm's success in the funding market despite challenges faced by others? A: Michael Linford, Chief Operating Officer, highlighted Affirm's strong execution in the ABS market and capital markets. He attributed success to expanding relationships with blue-chip buyers and the unique value of Affirm's assets, supported by a highly skilled team that effectively communicates the product's advantages to investors.

Q: How is Affirm approaching its PSP strategy, and what can we expect in the future? A: Max Levchin, CEO, emphasized the importance of PSPs as a channel for Affirm, facilitating faster integration and expanding merchant reach. He noted that while PSPs help with integration speed, Affirm remains focused on maintaining high consumer conversion and credit performance.

Story Continues

Q: Why is the full-year '26 guide for RTC unchanged despite a strong quarter? A: Robert O'Hare, CFO, explained that Affirm aims to keep the revenue less transaction cost take rates around 4% as an upper bound. While they have been running slightly above 4%, the focus remains on maximizing growth and profitability, with 3% to 4% being the long-term target range.

Q: How does Affirm view the consumer spending environment and delinquency trends? A: Max Levchin, CEO, noted that Affirm's consumers are borrowing and repaying healthily, reflecting a strong spending environment. He mentioned that Affirm's underwriting is mathematically constructed, and while they monitor macro trends, current consumer behavior remains positive.

Q: Can you elaborate on the Amazon agreement extension and its significance? A: Michael Linford, COO, stated that the five-year extension with Amazon represents a long-term commitment from both companies. The focus is on continuing to provide value to consumers, with the renewal discussions having been ongoing for a significant period.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

View Comments