Affirm Q1 2027 Revenue Rises 35% as Operating Margin Expands

Affirm (AFRM) reported strong growth and wider operating margins for its fiscal first quarter ended September 30, 2026, as gross merchandise volume rose 34% year over year and revenue increased 35%. The payments company also forecast more than $65.25 billion in GMV for fiscal 2027, while expecting both GAAP and adjusted operating margins to remain positive for the full year.

Fiscal first-quarter GMV reached $14.37 billion, up from $10.76 billion a year earlier. Revenue rose to $1.26 billion from $933.3 million and represented 8.8% of GMV, compared with 8.7% in the prior-year quarter.

Revenue less transaction costs, a non-GAAP measure, increased 36% to $617.1 million and edged up to 4.3% of GMV from 4.2%. Excluding the provision for credit losses, the measure rose 42% to $876.5 million, or 6.1% of GMV, from $618 million, or 5.7%.

GAAP operating income nearly tripled to $187.1 million from $63.7 million, lifting the operating margin to 15% from 7%. Adjusted operating income increased to $379.7 million from $263.9 million, while the adjusted operating margin expanded to 30% from 28%. Adjusted results exclude depreciation and amortization, stock-based compensation, enterprise warrant and share-based expenses, and certain other items.

Consumer and Card Activity Drive Volume

Affirm ended the quarter with 28.7 million active consumers, up 19% year over year. Transactions per active consumer also increased 19% to 7.3, while total quarterly transactions grew 34% to 55.6 million. Repeat customers accounted for 96% of transactions.

The direct-to-consumer business was led by Affirm Card, which generated $3.34 billion of GMV, an increase of 117%. Affirm Card active consumers more than doubled to 6 million, representing a 21% attach rate relative to total active consumers.

Point-of-sale channels accounted for 75% of fiscal first-quarter GMV, with Affirm’s direct channels contributing the remaining 25%. Interest-bearing products represented 72% of GMV, while short-term, zero-interest Pay in X products made up 15% and zero-interest monthly installment products accounted for 13%.

Growth was spread across merchant categories. General merchandise remained the largest category at 30% of industry GMV, followed by travel and ticketing at 14% and fashion and beauty at 13%. The presentation showed year-over-year category volume growth ranging from 14% in equipment and auto to 65% in the “other” category.

Affirm’s active merchant count rose 48% to 621,000. Merchants generating more than $1,000 in trailing-12-month GMV increased 60% to 268,000.

Interest Income Rises as Credit Costs Increase

Interest income climbed to $658.1 million from $454.1 million a year earlier. Average loans held for investment rose to $9.84 billion from $7.13 billion. Interest-bearing loans represented 74% of the average balance, with zero-interest loans accounting for 26%.

Total transaction costs increased to $645.1 million from $478.1 million and represented 4.5% of GMV, compared with 4.4% a year earlier. The provision for credit losses rose to $259.4 million from $162.8 million, while funding costs increased to $134.4 million from $110 million.

The allowance for credit losses reached $636 million, equal to 6.3% of loans held for investment, compared with $426 million and 5.9% a year earlier. For U.S. monthly installment loans excluding short-term Pay in X products, the 30-day-or-more delinquency rate was 2.9% at September 30, up from 2.8% a year earlier. The 60-day and 90-day delinquency rates were 1.7% and 0.8%, respectively, each 0.1 percentage point higher year over year.

Affirm reported $31.7 billion of funding capacity at quarter-end, compared with a total platform portfolio of $21.6 billion. The portfolio represented 68% of available funding capacity, and required equity capital was 5% of the portfolio.

Fiscal 2027 Outlook

For the fiscal second quarter, Affirm expects GMV of $17.9 billion to $18.2 billion and revenue of $1.44 billion to $1.47 billion. Transaction costs are projected at $730 million to $745 million, producing revenue less transaction costs of $705 million to $720 million.

The company forecasts a second-quarter GAAP operating margin of 11.5% to 13.5% and an adjusted operating margin of 29.5% to 31.5%.

For fiscal 2027, Affirm expects GMV above $65.25 billion. Revenue is projected to remain near fiscal 2026’s level of about 8.49% of GMV, while revenue less transaction costs is expected to be similar to the prior year’s 4.16%. The company expects an adjusted operating margin above 30.75% and a GAAP operating margin above 14.75%.

The outlook assumes short-term benchmark interest rates will increase during fiscal 2027 compared with fiscal 2026. Affirm also expects required equity capital to remain at or below 5% of its total platform portfolio. Enterprise warrant expense is expected to be seasonally higher in the second quarter, partly reflecting the late-first-quarter launch with a large enterprise partner in the UK. Expansion outside North America is included in the forecast but is not expected to make a material contribution to fiscal 2027 growth.

Affirm identified funding availability, credit performance, elevated interest rates, merchant and platform concentration, competition, regulation and broader economic conditions as key uncertainties. The company also noted that its performance depends on retaining consumers and merchant partners, maintaining originating-bank and card-issuing relationships, and accurately underwriting and pricing credit risk.