Affirm details new AI tool for merchants

• Key insights: Affirm is testing a new AI tool, called BoostAI, that allows merchants to perform advanced split testing of promotional financing offers, referred to in marketing as A/B testing. 
• What's at stake: The move comes as 0% financing offers continue to gain popularity, with volume buoyed by the company's three-day promotional sales even in October. 
• Forward look: The tool is being used by a small segment of Affirm's merchants, including 47 enterprise customers and hundreds of small to medium sized businesses. 

Affirm is working on an artificial intelligence tool for merchants that it hopes will drive more uptake on merchant-funded promotional financing rates. 

BoostAI is machine learning technology that allows merchants to A/B test promotional financing programs. The idea is to figure out which promotions lead to the highest sales conversions. A/B tests compare outcomes for two options, a method often used in the technology industry to measure user experience or affinity. 

And for Affirm, the technology is another pipeline to drive more merchant revenue. 

"It looks more and more like an advertising model versus a cost of acceptance model," Affirm CEO Max Levchin said on the company's quarterly earnings call on Thursday. 

BoostAI is designed to complement its AI-powered promotion platform AdaptAI. That tool allows retailers to offer rewards to customers, including exclusive APR rates, special repayment terms, or cash savings. 

The technology is being used by a small number of Affirm's merchants, including 47 enterprise customers and hundreds of small- and medium-sized businesses. Merchants using the technology have seen a 5% to 15% increase in gross merchandise volume, according to Affirm.

"It's definitely early days for BoostAI," Levchin said. 

Consumers like financing incentives

Consumers continue to be responsive to promotional financing offers, which have been a success story for the BNPL lender and helped it reach profitability targets ahead of schedule. Many of the promotional financing offers, including 0% offers, are funded by merchants. The offers have also served as a customer acquisition avenue. 

Gross merchandise volume growth from BNPL loans with 0% APR outpaced the lender's overall growth rate at 60%, with about 60,000 merchants funding them, nearly quadruple the number of merchants funding those rates in the same reporting period last year. Affirm had approximately 478,000 active merchants as of December 31, 2025, an increase of 42% year over year. 

More than 65% of loan applications were presented with a 0% APR offer, Affirm said, and 39% of all transactions during the quarter had a 0% APR.

A majority of Affirm's loans – 67% – are interest bearing. 

Affirm has leaned into 0% offers, and in October launched its own three-day sales event modeled after Amazon's Prime Days. "The Big Nothing" sales event accounted for 15% of GMV in October, Levchin said in his letter to shareholders. It also increased daily signups for the Affirm Card during the event. 

Affirm's earnings

Affirm posted "moderately positive" results for its second fiscal quarter ended December 31, according to TD Cowen analyst Moshe Orenbuch. 

"Revenue was well above our estimate and beat across most line items (merchant network revenue, interest income, gain on sale), due to stronger-than-expected growth in the Affirm platform," he said. 

Revenue came in at $1.12 billion, an increase of 30% year over year and ahead of analysts estimates of $1.06 billion, according to S&P Capital IQ. Net income hit $129.6 million, or 37 cents per diluted share, an increase of 61%. Analysts expected a net income of $92.7 million, or 27 cents a share. GMV increased 36% to $13.8 billion. 

Expenses increased 15% to $1 billion, mostly due to infrastructure expenses related to transaction growth.