Affirm Holdings 2026 Q1 Earnings Strong Turnaround as Net Income Surges 180.5%

Affirm Holdings (AFRM) reported Q1 2026 earnings on Nov 6, 2025, with revenue rising 33.6% to $933.34 million and net income turning positive at $80.69 million, reversing a $100.22 million loss in 2025 Q1. The company maintained its 4% RLTC target and guidance for FY26 operating margins above 7.5%.

Revenue

Affirm’s total revenue surged 33.6% year-over-year to $933.34 million, driven by robust performance across its merchant and card networks. The merchant network contributed $251.15 million (+36.2% YoY), while the card network generated $69.33 million (+46% YoY). Interest income and servicing revenue also saw double-digit growth, with interest income at $454.12 million (+20.4%) and servicing income at $39.69 million (+52.8%). The company’s gross margin of 67.51% underscored strong profitability.

Earnings/Net Income

Affirm returned to profitability with EPS of $0.24, a dramatic 180.5% improvement from a $0.31 loss in 2025 Q1. The company’s net income of $80.69 million marked a record high for Q1 in seven years, reflecting operational leverage and cost management. The EPS turnaround from a loss to a profit underscores Affirm’s successful financial restructuring and operational efficiency.

Price Action

Despite the earnings beat, AFRM’s stock fell 7.28% in a single trading day, 4.27% in the week, and 13.95% month-to-date, indicating market skepticism amid broader economic concerns.

Post-Earnings Price Action Review

The strategy of buying AFRM shares on revenue raise announcements and holding for 30 days has historically yielded strong returns, leveraging positive momentum from consistent revenue growth and robust financial performance. AFRM’s gross margin of 67.51% and strategic partnerships, such as the Amazon agreement extension, have fueled investor optimism. Holding for 30 days post-announcement captures immediate price surges, while long-term prospects, including the Affirm Card’s expansion, support continued upward momentum. Market sentiment views AFRM’s $96.31 valuation as undervalued, aligning with its growth trajectory.

CEO Commentary

CEO Max Levchin highlighted the Amazon agreement extension through 2031 as a strategic win, emphasizing partnerships with PSPs to accelerate merchant integration. He noted strong consumer demand in categories like sporting goods and confidence in the Affirm Card’s role in capturing discretionary spend. Levchin balanced optimism with caution on risk management and expansion into new verticals.

Guidance

Affirm reaffirmed its 4% RLTC target for FY26, with Q2 GMV guidance of $13.0–$13.3 billion and operating margins above 7.5%. The company attributed improved margins to growth-driven leverage rather than cost-cutting, maintaining confidence in its long-term profitability and capital market execution.

Additional News

Affirm extended its Amazon partnership for five years, enhancing its market reach and long-term growth potential. The company also scaled its ABS program, securing blue-chip buyers and strengthening capital market execution. Growth in 0% APR loans, funded by merchants, and increased transaction frequency per customer highlighted rising consumer engagement. However, challenges persist in maintaining high merchant fee rates and managing competitive pressures in the BNPL sector.