Affirm’s net income jumps to $164.2 million in fiscal first quarter
Key Facts
Affirm reported results on November 5 for the first quarter of fiscal 2027, ended September 30, 2026, posting net income of $164.2 million, compared with $80.7 million a year earlier. Diluted earnings per share under generally accepted accounting principles (GAAP) were $0.47, versus $0.23 in the year-earlier period. The company said in its shareholder letter that the results marked eight consecutive quarters of GAAP profitability. On an adjusted, non-GAAP basis, operating income rose to $379.7 million from $263.9 million. Adjusted operating margin increased to 30.1%, from 28.3% a year earlier.
The company’s growth was supported by an expansion in direct-to-consumer sales, with gross merchandise volume in that business rising 55% to $5.1 billion. Affirm attributed much of the growth to the Affirm Card, whose transaction volume increased 117% to $3.3 billion. Total transactions for the quarter reached 56 million, up 34% from the year-earlier period. By contrast, average order value fell 1% to $258. The company said lowering the minimum basket size contributed to the broader range of transactions.
The expansion coincided with improved diversification across the company’s partners: the share of gross merchandise volume from its five largest partners fell to 40%, compared with 44% in the same period a year earlier. Affirm linked the decline to diversification across merchants and platforms and growth in direct-to-consumer products. On credit quality, loans more than 30 days past due stood at 2.9%, excluding Peloton and Pay in X loans. The rate was 9 basis points higher year over year and 35 basis points higher than in the previous quarter. The company said average funding costs declined by about 69 basis points year over year to 6.0%, but rose 27 basis points quarter over quarter as benchmark interest rates increased.
After the announcement, AFRM shares closed at $69.66 on November 5, compared with the previous session’s close of $75.59. The company’s guidance for the second fiscal quarter puts gross merchandise volume at between $17.9 billion and $18.2 billion and revenue at between $1.435 billion and $1.465 billion. It also expects an operating margin of between 11.50% and 13.50% for the quarter. For fiscal 2027, Affirm expects gross merchandise volume to exceed $65.25 billion and operating margin to exceed 14.75%. Its guidance assumptions are based on higher short-term benchmark interest rates during fiscal 2027 than in fiscal 2026.
Affirm expects the launch of its product with a large institutional partner in the UK, which took place late in the first quarter, to accelerate the vesting of institutional warrants in the second quarter and beyond. The UK expansion places one of the company’s upcoming growth avenues within its guidance for the next period. The company said a replay would be available. Its announced guidance covers both the second fiscal quarter and fiscal 2027.