Affirm extends hot streak, challenging credit card industry

• Key insights: Affirm posted its most profitable quarter in its fourth fiscal quarter of 2026, and marked its 11th consecutive quarter of 30% or faster gross merchandise volume growth. 
• What's at stake: Affirm continues to see high consumer adoption rates while touching only a fraction of its total addressable market, which eventually will come at the expense of the credit card industry. 
• Forward look: Guidance for Affirm's fiscal 2027 came in above analysts expectations, with GMV hitting a floor of $64 billion and revenue less transaction cost margin — one of Affirm's KPIs — coming in above the medium-term guide at approximately 4.15%, both of which were in focus as potential negative signals to growth and credit quality, according to RBC analyst Daneil Perlin. 

Affirm continued to distinguish itself from its peers in its fourth fiscal quarter ended June 30 as more consumers turned to its point-of-sale and installment lending products, but the fintech still has plenty of room to grow as it touches only a fraction of its total addressable market. 

Challenging the credit card market is one of the "most immediate opportunities" for the firm, Affirm Chief Financial Officer Rob O'Hare told American Banker in an interview. 

"There's over a trillion dollars of revolving credit card balances outstanding in the U.S. The activity on credit cards is even larger than that," O'Hare said. "We think that the financial products that we've created really put the consumer in control, and are inherently better for consumers in terms of their transparency." 

Affirm's growth will likely come at the expense of the credit card industry, according to Citizens analyst David Scharf. 

"Affirm is a long-term secular winner at the expense primarily of the credit card industry," Scharf wrote in a research note. "The company is well-positioned to capitalize on the continued adoption of [buy now/pay later] solutions for everyday purchases and benefits from a more robust loan platform relative to competitors." 

Gross merchandise volume grew 36% year over year to $14.1 billion, marking the company's 11th consecutive quarter of 30% or faster GMV growth. Revenue increased 33% to $1.2 billion, and revenue less transaction costs — one of the lender's key performance indicators — increased 39% from the same reporting period last year to $589 million.

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The quarter also capped off Affirm's first consecutive 12-month period of profitability, CEO Max Levchin said on the company's earnings call with analysts. 

"With GMV crossing the $50 billion mark this fiscal year, Affirm's growth can no longer be explained away by the novelty of our product, and our steady credit outcomes demonstrate our commitment to responsible growth with robust unit economics," Levchin said in his letter to shareholders. 

There's still plenty of room for Affirm to grow, according to William Blair analyst Andrew Jeffrey. 

"While GMV continues to rapidly scale, we see plenty of share gain opportunities remaining as Affirm is available at 80 of the top 250 e-commerce sites and has just 10% penetration of U.S. e-commerce merchants," Jeffrey said, noting that figure represents less than 2% of carded spend. 

Active customers jumped 21% to 27.8 million, with transactions per active consumer also rising 20% to seven times per year. Active merchants also increased 51% to just over half a million at 571,000 merchants. 

Active cardholders of the Affirm Card —which has been one of the company's most promising products — more than doubled from the same period last year to 5.2 million users. Card GMV surged 124% to $2.8 billion, with cardholders generating almost two times more than the average Affirm customer at $4,000 per year. 

"Affirm Card is an important element of the company's ability to capture the roughly $9 trillion carded U.S. TAM, which is multiples the size of Affirm's core e-commerce market," William Blair's Jeffrey said. 

Shares of Affirm, which reported earnings Thursday night after market close, surged as much as 10% in early morning trading Friday to $85.77 before settling at $80.30 per share, a 3.9% increase from market open, as of 2 p.m. in New York following Federal Reserve Chairman Kevin Warsh's remarks in Jackson Hole, Wyoming. 

Affirm expects its momentum to extend into its next fiscal year, with GMV hitting a floor of $64 billion and revenue less transaction cost margin coming in above the medium term guide at approximately 4.15%, both of which were in focus as potential negative signals to growth and credit quality, according to RBC analyst Daniel Perlin.