8-K: Affirm Posts Strong Q1 2026 Results, Extends Amazon Deal

Affirm Holdings, Inc. reported stellar first fiscal quarter 2026 results with significant growth across key metrics and announced a five-year extension of its strategic agreement with Amazon.

Summary

• FQ1 2026 Gross Merchandise Volume (GMV) grew 42% year-over-year to $10.8 billion.
• Total Revenue increased 34% year-over-year to $933 million.
• Revenue Less Transaction Costs (RLTC) surged 60% year-over-year to $455 million.
• Achieved Net Income of $80.7 million, a significant improvement from a $100.2 million loss in FQ1 2025.
• Operating Income reached $63.7 million, compared to a $132.6 million loss in the prior year.
• Adjusted Operating Income more than doubled, increasing 104% year-over-year to $263.9 million.
• Extended the US agreement with Amazon for an additional five years, through January 2031, effective February 1, 2026.
• Active consumers grew 24% year-over-year to 24.1 million, and active merchants increased 30% year-over-year to 419 thousand.
• Affirm Card GMV was up 135% year-over-year, with active cardholders reaching 2.8 million.
• Funding capacity increased to $26.6 billion, capable of supporting over $60 billion in annual GMV.

Sentiment

Score: 9

Explanation: The filing reports exceptionally strong financial results, including a significant return to profitability and robust growth across key metrics like GMV and active users. The extension of the critical Amazon partnership for five years is a major strategic win, providing long-term stability and growth potential. The positive outlook for future quarters further reinforces a highly favorable sentiment.

Positives

• Strong GMV growth of 42% to $10.8 billion.
• Total Revenue increased 34% to $933 million.
• Revenue Less Transaction Costs (RLTC) grew 60% to $455 million, exceeding the long-term target range at 4.2% of GMV.
• Return to profitability with Net Income of $80.7 million, a $180.9 million improvement year-over-year.
• Operating Income of $63.7 million, a $196.3 million improvement year-over-year.
• Adjusted Operating Income increased 104% to $263.9 million, with Adjusted Operating Margin at 28.3% (+10 pp year-over-year).
• Five-year extension of the strategic US agreement with Amazon through January 2031, effective February 1, 2026.
• Affirm Card GMV surged 135% year-over-year, and active cardholders more than doubled to 2.8 million.
• Active consumers grew 24% to 24.1 million, marking the seventh consecutive quarter of accelerating year-over-year growth.
• Active merchant count increased 30% to 419 thousand.
• Growth in 0% APR products, with GMV up 64% (74% for monthly installments, 55% for Pay-in-X).
• Funding capacity increased to $26.6 billion, supporting over $60 billion in annual GMV.
• Net cash position increased by $196 million year-over-year to $1.1 billion.
• Credit outcomes remained steady and within targets, with recent monthly installment loan cohorts tracking to approximately 3.5% ultimate net charge-offs and Pay in 4 loans tracking to less than 1% of GMV.
• Successful ABS issuance (AFFRM 2025-3) of $1.1 billion with the lowest weighted-average yield since FY22 and a three-year revolving period.
• Expanded forward flow partnerships by approximately $500 million and upsized warehouse agreements by $300 million.

Negatives

• Revenue as a percentage of GMV decreased by 52 basis points to 8.7% year-over-year, partly due to a mix shift towards direct-to-consumer (D2C) GMV and shorter average term length of 0% APR loans.
• Interest income as a percent of GMV declined 74 basis points due to selling more loans and an increased mix of 0% APR loans.
• An enterprise merchant that previously intended to switch Pay Later volumes to its own wallet solution substantially completed this transition during FQ126, potentially impacting future GMV from that partner.
• 30+ day delinquencies (excluding Peloton and Pay in X loans) increased 45 basis points quarter-over-quarter, attributed to seasonality.

Risks

• Ability to attract and retain additional merchant partners, commerce platforms, and consumers, and grow existing relationships.
• Highly competitive and evolving nature of the industry.
• Need to maintain a consistently high level of consumer satisfaction and trust in the brand.
• Concentration of a large percentage of revenue and GMV with a small number of merchant partners and commerce platforms.
• Ability to sustain revenue growth rate or the growth rate of related key operating metrics.
• Ability to successfully maintain relationships with existing originating bank partners and card issuing bank partners and engage additional partners.
• Ability to maintain, renew, or replace existing funding arrangements and build new funding relationships.
• Impact of any existing funding sources becoming unwilling or unable to provide funding on acceptable terms.
• Ability to effectively underwrite loans facilitated through the platform and accurately price credit risk.
• Performance of loans facilitated through the platform.
• Ability to effectively use and provide AI-powered solutions.
• Impact of elevated market interest rates and corresponding higher negotiated interest rate spreads on the business.
• Terms of securitizations, warehouse credit facilities, and forward flow agreements.
• Impact of general economic conditions, including inflation, recessionary concerns, uncertainty relating to tariffs on global trade, potential financial institution instability, and fluctuations in the U.S. consumer credit market.
• Ability to achieve sustained profitability in the future.
• Ability to grow effectively through acquisitions or other strategic investments or alliances.
• Ability to successfully expand into new international geographies.
• Seasonal or other fluctuations in revenue and GMV due to consumer spending patterns.
• Pending and future litigation, regulatory actions, and/or compliance issues.
• Developments in the regulatory environment.
• Ability to continue to attract and retain highly skilled employees.

Future Outlook

Affirm expects continued strong performance for FQ2 2026 and Fiscal Year 2026. For FQ2 2026, GMV is projected to be between $13.00 billion and $13.30 billion, with Revenue between $1,030 million and $1,060 million, and Adjusted Operating Margin between 28% and 30%. For the full Fiscal Year 2026, GMV is expected to exceed $47.5 billion, and Adjusted Operating Margin is anticipated to be more than 27.1%. The outlook assumes a modest decline in short-term benchmark interest rates and that international expansion will not be a material growth contributor in FY26. Enterprise warrant expense is expected to decrease approximately 25% in FQ226 compared to FQ225, and at least 30% for FY26 from FY25.

Management Comments

• We delivered another set of stellar results to get fiscal 2026 started, in both growth and profitability rubrics.
• Earlier this week, we extended our US agreement with Amazon for an additional five years through January 2031, and we look forward to continuing to serve these customers going forward.
• Credit outcomes remained steady and well within our targets, but does not change the fact that credit is always job #1 at Affirm.
• The growth of the data asset we're able to put to work is accelerating.
• Our most important asset is trust. We don't take that lightly. We keep earning it by doing the fundamentally honest thing by all our partners, customers, consumers, and indeed, shareholders, with integrity and transparency.

Industry Context

Affirm's strong performance, particularly in GMV and profitability, indicates its growing strength in the competitive Buy Now, Pay Later (BNPL) and digital payments sector. The extension of the Amazon partnership solidifies its position with a major e-commerce player, a critical differentiator in a market seeing increased competition from traditional lenders and other fintechs. The emphasis on data-driven models (AdaptAI, BoostAI) and network effects suggests a strategic focus on technological advantage and efficiency, aligning with broader fintech trends towards AI and personalized financial services. The growth in 0% APR products and the Affirm Card also reflects a response to consumer demand for flexible, transparent payment options and diversified product offerings beyond traditional point-of-sale financing. The expansion into ISV and wallet partnerships demonstrates a strategy to reach long-tail merchants and integrate more deeply into the broader payment ecosystem, a common trend for payment providers seeking scale.

Comparison to Industry Standards

• Affirm's 42% year-over-year GMV growth to $10.8 billion significantly outpaces many traditional payment processors and even some BNPL competitors, demonstrating strong market penetration and consumer adoption.
• The return to net profitability ($80.7 million) and substantial increase in Adjusted Operating Income (104% year-over-year) positions Affirm favorably against some BNPL peers who are still struggling with profitability despite growth.
• The five-year extension of the Amazon partnership is a major competitive win, securing a key distribution channel that many competitors would covet, such as PayPal's Pay in 4 or Apple Pay Later.
• The growth of Affirm Card GMV by 135% year-over-year and active cardholders to 2.8 million indicates successful diversification beyond pure online point-of-sale, competing more directly with traditional credit cards and other flexible payment solutions.
• Maintaining credit outcomes within targets, with monthly installment loan charge-offs at approximately 3.5% and Pay in 4 at less than 1% of GMV, suggests effective risk management, which is crucial in the BNPL sector, especially compared to some competitors who have faced higher delinquency rates.

Related Party Transactions

• The Second Amended and Restated Installment Financing Services Agreement was entered into with Amazon.com Services LLC and Amazon Payments, Inc.
• A second amendment to the amended and restated warrant was entered into with Amazon Services, maintaining an exercise price of $100.00 per share for Warrant Shares vesting before February 1, 2026, and setting an exercise price of $63.06 per share for Warrant Shares vesting on or after February 1, 2026.

Stakeholder Impact

• Shareholders: Highly positive due to strong financial performance, return to profitability, significant growth in key metrics, and the extension of a crucial partnership with Amazon, which is expected to drive long-term value.
• Consumers: Positive impact through continued access to Affirm's closed-end installment loan products on Amazon.com and via Amazon Pay, as well as the continued growth and experimental cash flow underwriting for the Affirm Card.
• Merchants: Positive impact from increased GMV, higher conversion rates, and an improved buyer experience offered by Affirm, along with expanded partnerships (Shopify UK, ServiceTitan, Vagaro, Ace Hardware, Worldpay for Platforms) providing access to more merchants.
• Capital Partners: Positive due to consistent credit outcomes, increased funding capacity to $26.6 billion, and successful ABS issuance with favorable terms, reinforcing trust and stability in Affirm's loan portfolio.
• Employees: Positive sentiment from strong company performance and growth, potentially leading to increased opportunities and stability.

Next Steps

• Affirm will host a conference call and webcast to discuss first fiscal quarter 2026 financial results on November 6, 2025, at 2:00 pm PT.
• Affirm will be attending the UBS Global Technology and AI Conference on December 2, 2025, in Scottsdale, AZ.
• The full text of the Restated Agreement and Second Amendment will be filed as an exhibit to the Company's Quarterly Report on Form 10-Q for the fiscal quarter ending December 31, 2025.

Key Dates

Recommendation

The filing demonstrates exceptional financial performance, marked by a significant return to net profitability and robust growth in Gross Merchandise Volume (GMV), revenue, and adjusted operating income. The five-year extension of the strategic partnership with Amazon is a critical long-term positive, securing a major distribution channel and validating Affirm's value proposition. Furthermore, the company's strong credit quality, increasing funding capacity, and positive future outlook, coupled with the successful expansion of its product offerings like the Affirm Card, indicate a strong competitive position and significant upside potential. These factors collectively suggest a highly attractive investment opportunity.

Keywords

Affirm, AFRM, Buy Now Pay Later, BNPL, Fintech, Payments, Installment Loans, Amazon Partnership, Financial Results, Q1 2026, Earnings, Gross Merchandise Volume, Revenue, Profitability, Credit Quality, Affirm Card, Shareholder Letter, SEC Filing