Affirm — First Fiscal Quarter 2027 Earnings Summary

Financial Performance:

• Total revenue grew 35% year-over-year to $1,262 million.
• Revenue as a percentage of Gross Merchandise Volume (GMV) was 8.79%, an increase of 11 basis points year-over-year.
• Revenue Less Transaction Costs (RLTC) grew 36% to $617 million, representing 4.3% of GMV.
• Operating Income was $187 million, a 194% increase from $64 million in FQ1'26, with an operating margin of 14.8% (up from 6.8%).
• Adjusted Operating Income was $380 million, a 44% increase from $264 million in FQ1'26, with an adjusted operating margin of 30.1% (up from 28.3%).
• Net Income was $164 million, compared to $81 million in FQ1'26.
• Transaction costs increased 33% to $645 million; RLTC as a percentage of GMV increased 7 basis points to 4.30%.
• Funding costs averaged 6.0% annually, a decline of 69 basis points year-over-year, though they increased 27 basis points sequentially.
• Net cash position was $1.9 billion, increasing $761 million year-over-year.

Guidance and Future Outlook:

• Fiscal Q2 2027 GMV is projected between $17.9 billion and $18.2 billion.
• Fiscal Q2 2027 Revenue is projected between $1,435 million and $1,465 million.
• Fiscal Q2 2027 Operating Margin is projected between 11.50% and 13.50%.
• Fiscal Q2 2027 Adjusted Operating Margin is projected between 29.50% and 31.50%.
• Fiscal 2027 GMV is projected to exceed $65.25 billion.
• Fiscal 2027 Revenue is expected to be similar to Fiscal 2026 levels as a percentage of GMV (~8.49%).
• Fiscal 2027 RLTC is expected to be similar to Fiscal 2026 levels as a percentage of GMV (~4.16%).
• Fiscal 2027 Operating Margin is expected to exceed 14.75%.
• Fiscal 2027 Adjusted Operating Margin is expected to exceed 30.75%.
• Enterprise warrant expense is expected to be seasonally higher in FQ2 compared to other quarters.
• Short-term benchmark interest rates are expected to increase during Fiscal 2027 compared to Fiscal 2026.
• Equity Capital Required (ECR) as a percent of Total Platform Portfolio is expected to remain at or below 5%.
• International expansion is not expected to be a material growth contributor during Fiscal 2027.

Business Segments and Product Lines:

• Gross Merchandise Volume (GMV) grew 34% year-over-year to $14.4 billion, marking the 12th consecutive quarter of >30% growth.
• Direct-to-Consumer (D2C) GMV grew 55% to $5.1 billion, driven by Affirm Card GMV which grew 117% to $3.3 billion.
• Affirm Card active cardholders increased 112% to 6.0 million; card attach rate increased to approximately 21%.
• Card accounted for 23% of total GMV during the quarter.
• Total transactions increased 34% to 56 million; Average Order Value (AOV) declined 1% to $258.
• Active consumers increased 19% to 28.7 million; transactions per active consumer increased 19% to 7.3.
• Active merchant count increased 48% to 621,000.
• Network revenue grew 23%, while interest income grew 45% and gain on sales of loans grew 36%.
• New merchant partnerships include AliExpress, Antom, Farfetch, J. Crew (including J. Crew Factory and Madewell), Sam's Club, and Sur La Table.
• Partnerships renewed or expanded include Seatgeek (renewed) and a wallet partnership (scaling).
• Affirm Edge pilots are expected to go live in the first calendar half of 2027.
• A double-digit share of AI inference traffic now runs through an Affirm-developed gateway.
• New features include bank account down payments for borrowers and a Card-specific risk model iteration to increase purchasing power.

Market and Competitive Landscape:

• The mix of GMV from the top five partners declined to 40% from 44% year-over-year, indicating diversification.
• All categories grew, with notable strength in services, home/lifestyle, and "other" (long-tail merchants and wallet partners).
• International expansion into Canada and the UK accounted for approximately 20% of the quarter-over-quarter increase in active merchant count.
• The company notes a counterintuitive success model where checkout friction (applying for loans, reviewing terms) drives a 20% conversion lift.
• Approximately half of borrowers are prime or super-prime, and 85% have an open credit card line.

Risks and Challenges:

• 30+ day delinquencies (excluding Peloton and Pay in X loans) increased 9 basis points year-over-year and 35 basis points quarter-over-quarter to 2.9%.
• Recent cohorts of monthly installment loans are tracking toward approximately 3.5% ultimate net charge-offs.
• Pay in 4 loans continue to track to loss rates of less than 1% of GMV.
• Forward-looking statements involve risks including interest rate fluctuations, regulatory changes, competition, and the ability to maintain funding sources.
• Funding costs increased 27 basis points sequentially due to higher benchmark interest rates, though fixed-cost funding mitigated the impact.
• Provision for loan losses increased 29 basis points as a percentage of GMV, offsetting some tailwinds from funding costs and processing expenses.

Management Commentary and Tone:

• Management described the results as "stellar" and a "no-apologies quarter," emphasizing reliability and consistency.
• CEO Max Levchin highlighted the company's deliberate approach to risk management, noting the absence of late penalties and compounding interest.
• Management stated they are moving with "deliberate aggression" in a single-minded pursuit of their mission to scale the network to $100 billion and beyond.
• The company credited a new transformer-based AI model for an incremental 3.4% of end-to-end conversion via higher credit approvals while keeping losses flat.
• Management emphasized the symmetry between consumer intentionality and AI-driven underwriting improvements.
• The CEO noted a meaningful portion of his time is now spent working with the zt1 team.

Other Key Points:

• Funding capacity increased to $31.7 billion at the end of FQ1'27, up from $26.6 billion in FQ1'26.
• The company closed 2026-3, 2026-4, and 2026-5 ABS transactions, issuing approximately $1.7 billion in notes.
• The 2026-5 notes marked the inaugural issuance of five-year notes, attracting insurance investors.
• The company added a second major rating agency to its ABS program.
• On December 17, 2025, the board authorized the repurchase of up to $176 million of outstanding 2026 convertible notes; no repurchases occurred in FQ1'27.
• The company expects the first Affirm Edge pilots to go live in the first calendar half of 2027.
• A conference call and webcast were scheduled for November 5, 2026, at 2:00 pm PT.