Affirm Q1 2026 Earnings Call - Buy Now, Sell Later?

Affirm (AFRM) reported robust fiscal Q1 2026 results, with revenue up 34% to $933 million, EPS of $0.24 significantly exceeding expectations, and GMV growing 42% to $10.8 billion, while Affirm Card active users more than doubled and its Amazon partnership was renewed. This strong performance, alongside easing regulatory pressures and lower borrowing costs from recent Fed rate cuts, positions the Buy Now, Pay Later sector in a more favorable operating environment, building on Affirm's achievement of its first full-year GAAP net income in FY2025 and signaling a broader industry shift towards financial service diversification.

Analysis

Affirm (AFRM) reported exceptionally strong fiscal Q1 2026 results, significantly exceeding analyst expectations. Revenue surged 34% year-over-year to $933 million, while Gross Merchandise Volume (GMV) grew 42% to $10.8 billion. Earnings Per Share (EPS) of $0.24 dramatically surpassed the $0.11 forecast, indicating robust operational efficiency and profitability.

Operational metrics further underscore this strength, with Affirm Card active users more than doubling, up 101% year-over-year to 2.8 million, and credit quality remaining stable at 2.8% 30+ days past due. The renewed partnership with Amazon highlights continued strategic growth, building on the company's first full-year GAAP net income of $52.19 million in FY 2025.

The broader operating environment for the Buy Now, Pay Later (BNPL) sector has become significantly more favorable. Recent Federal Reserve rate cuts are reducing the cost of capital, directly benefiting Affirm's margins and funding flexibility. Concurrently, regulatory risk has eased following the CFPB's reversal on classifying BNPL lenders as credit card providers.

Despite a 67.1% year-to-date gain in 2025, AFRM shares saw a decline on the day of the earnings release, opening at $71.14 and falling to $66.24. This short-term volatility contrasts with the long-term positive shift in its financial narrative and the industry's strategic pivot towards diversification into broader financial services.

Key Decisions for Investors

• Investors should evaluate Affirm's strong fundamental performance and improving macro/regulatory backdrop against its recent stock price volatility to determine entry or exit points.
• Monitor Affirm's progress in diversifying into broader financial services, as this strategy is key to long-term growth and market positioning within the evolving fintech landscape.
• Maintain vigilance on credit quality metrics and the competitive landscape, especially given the mixed performance of peers like Klarna, to assess sustained profitability and market share.