Affirm Holdings, Inc.AFRM reported first-quarter fiscal 2027 earnings of 47 cents per share, beating the Zacks Consensus Estimate of 35 cents by 34.3%. The bottom line more than doubled from 23 cents per share a year ago.
Revenues of $1.3 billion increased 35.2% year over year and surpassed the consensus mark by 3.8%.
AFRM's strong quarterly results benefited from higher gross merchandise volume (GMV), growing Affirm Card adoption and increased interest income. However, rising operating expenses and elevated provisions for credit losses partly offset the gains.
Affirm Holdings, Inc. Price, Consensus and EPS Surprise
Affirm Holdings, Inc. price-consensus-eps-surprise-chart | Affirm Holdings, Inc. Quote
AFRM's Q1 Performance
As of Sept. 30, 2026, active merchants totaled 620,800, up 48% year over year. GMV increased 34% year over year to $14.4 billion. The figure also surpassed the Zacks Consensus Estimate of $14.1 billion. GMV growth was supported by direct-to-consumer offerings, merchant point-of-sale integrations and wallet partnerships.
Total transactions increased 34.3% year over year to 55.6 million, driven primarily by repeat customer activity. The metric beat the consensus mark of 52.1 million. Active cardholders increased 112% year over year to 6 million, lifting the card attach rate to about 21%.
Servicing income improved 22.2% year over year to $48.5 million, but missed the consensus mark of $55.1 million.
Interest income jumped 44.9% year over year to $658.1 million, benefiting from higher average loan balances and increased average annual percentage rates on interest-bearing loans. The metric beat the Zacks Consensus Estimate of $603.3 million.
Merchant network revenues increased 18.2% year over year to $296.9 million but missed the consensus mark of $318.3 million. The metric gained from growing GMV. Card network revenues amounted to $96.5 million, up 39.2% year over year, attributable to higher usage of Affirm Card and Affirm virtual cards. The metric beat the consensus mark of $87.6 million.
Affirm's Expenses and Profitability
Total operating expenses increased 23.6% year over year to $1.1 billion. Provision for credit losses surged 59.4% to $259.4 million, while technology and data analytics expenses rose 20.6% to $202.7 million. Higher software amortization and infrastructure spending contributed to technology costs.
Operating income improved to $187.1 million in the fiscal first quarter from $63.7 million a year earlier. Operating margin expanded to 14.8% from 6.8%. Adjusted operating income climbed 43.9% to $379.7 million, with adjusted operating margin improving to 30.1% from 28.3%.
Financial Position of Affirm (As of Sept. 30, 2026)
Affirm exited the fiscal first quarter with cash and cash equivalents of $2.1 billion, up from $1.6 billion as of June 30, 2026. Total assets increased to $16.5 billion from $15.8 billion.
Funding debt totaled $2.9 billion compared with $3.3 billion at the end of fiscal 2026. Total stockholders' equity was $5.75 billion, up from $5.48 billion at the end of fiscal 2026.
Net cash provided by operating activities declined to $207.1 million in the first quarter of fiscal 2027 from $374.6 million a year earlier.
AFRM's Q2 and FY27 Guidance
For the second quarter of fiscal 2027, AFRM expects GMV between $17.9 billion and $18.2 billion. Revenues are projected in the range of $1.435-$1.465 billion, while revenue less transaction costs is expected to be between $705 million and $720 million.
Management anticipates a GAAP operating margin of 11.5-13.5% and an adjusted operating margin of 29.5-31.5% for the fiscal second quarter.
For fiscal 2027, Affirm projects GMV exceeding $65.25 billion. Revenues are expected to remain near 8.49% of GMV, consistent with fiscal 2026. Management expects GAAP operating margin to exceed 14.75% and adjusted operating margin to surpass 30.75%.
Zacks Rank of Affirm
Affirm currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
How Did the Peers Perform?
Other payment space players like Mastercard IncorporatedMA, Visa Inc.V and American Express CompanyAXP have also reported their quarterly numbers. Here's how they have performed:
Mastercard reported third-quarter 2026 adjusted earnings of $5.31 per share, which topped the Zacks Consensus Estimate by 3.3%. The bottom line improved 21.2% year over year. Net revenues advanced 14% year over year to $9.8 billion. MA's quarterly results benefited from higher cross-border volumes, increased gross dollar volume and robust demand for value-added services, along with pricing initiatives. However, the upside was partly offset by higher payment network rebates and incentives, as well as increased operating expenses.
Visa reported fourth-quarter fiscal 2026 adjusted earnings of $3.48 per share, up 17% year over year and beating the Zacks Consensus Estimate by 1.5%. Net revenues came in at $12.1 billion, rising 13% year over year. V's quarterly results reflected higher payment volumes, robust cross-border activity and increased transaction processing. However, the upside was partly offset by increased operating expenses.
American Express reported third-quarter 2026 EPS of $4.68, which surpassed the Zacks Consensus Estimate by 4.7%. The bottom line advanced 13% year over year. Total revenues, net of interest expense, improved 9% year over year to $20.1 billion. AXP's quarterly results were driven by increased Card Member spending, higher net interest income and improved card fee growth. However, the upside was partly offset by elevated operating expenses.
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