Affirm shares fall 1.9% before Friday’s open despite revenue and net income growth
Key Facts
Affirm shares fell 1.9% to $68.32 in premarket trading on Friday, November 6, after the company reported results for its first fiscal quarter of 2027. Affirm published the results on November 5 for the quarter ended September 30, 2026, and its shares closed that day at $69.66, compared with $75.59 on November 4. Investing.com said the stock lost about 8% during the regular session on November 5, alongside a broad selloff in financial technology stocks. The report said investors focused on credit loss provisions and the outlook for gross merchandise volume in the current quarter. The decline came as results showed growth in revenue and net income, alongside increases in indicators related to credit losses and payment delinquencies.
Net revenue was $1,262.2 million in the quarter ended September 30, 2026, compared with $933.3 million in the same period a year earlier. Net income rose to $164.2 million from $80.7 million a year earlier. Revenue less transaction costs, a non-GAAP measure, was $617.1 million, or 4.3% of gross merchandise volume, compared with $455.2 million, or 4.2%, a year earlier. Adjusted operating margin was 30.1%, compared with 28.3% in the first fiscal quarter of 2026. The figures show expansion in revenue, earnings and adjusted operating metrics over the period, while higher credit costs stood out among quarterly expenses.
The provision for credit losses recorded in expenses rose to $259.357 million in the quarter, from $162.752 million in the same quarter a year earlier. The loss allowance reached 6.3% of loans held for investment on September 30, 2026, compared with 5.9% on June 30, 2026, and September 30, 2025. According to the shareholder letter, the rate of loans 30 or more days past due, excluding Peloton loans and X-type “buy now, pay later” loans, rose to 2.9%. The rate increased 9 basis points year over year and 35 basis points quarter over quarter. These indicators put credit costs and payment performance at the center of investors’ assessment of the results, with the market report identifying provisions as a focus of discussion after the announcement.
On the activity side, active consumers rose 19% to 28.7 million, while active merchants increased 48% to 621,000 as of September 30, 2026. Affirm Card gross merchandise volume grew 117% year over year, and the number of active cardholders rose 112% to 6 million. The company said gross merchandise volume among its five largest partners and merchants increased 22%, while their share of the total fell to 40% from 44% a year earlier. Amazon accounted for 20% of gross merchandise volume in the quarter, compared with 21% in the same period. The figures show growth in the user base, card and partners, alongside a decline in activity concentration among the five largest partners compared with the previous year.
Affirm set its gross merchandise volume outlook at $17.9 billion to $18.2 billion for the second fiscal quarter of 2027, and more than $65.25 billion for fiscal 2027. It also forecast second-quarter revenue of $1,435 million to $1,465 million, transaction costs of $730 million to $745 million, and revenue less transaction costs of $705 million to $720 million. The company said its outlook assumes higher short-term benchmark interest rates during fiscal 2027 than in fiscal 2026, and that expansion outside North America is not expected to contribute materially to growth in 2027. The available results materials do not establish that the outlook was raised from previous guidance. After the announcement, four brokerages cut their price targets: Barclays to $100 from $105, Goldman Sachs to $103 from $115, TD Cowen to $110 from $124, and Morgan Stanley to $79 from $82.
In a regulatory development, Affirm said in a filing submitted on November 5 that it had filed applications on January 23, 2026, with the Nevada Financial Institutions Division and the Federal Deposit Insurance Corporation to establish Affirm Bank, a proposed Nevada industrial bank. The application adds an institutional development to the backdrop of the earnings announcement, while the stock’s premarket move on Friday remained a 1.9% decline to $68.32. The company said it expects second-quarter gross merchandise volume of $17.9 billion to $18.2 billion, the measure that the market report linked to investors’ focus on the current-quarter outlook. Its fiscal 2027 outlook includes gross merchandise volume of more than $65.25 billion. The available data do not include the stock’s full-session move on Friday.