Affirm's Q4 Earnings and 2026 Guidance: Is the BNPL Leader Ready to Overcome Walmart Risks and Deliver Sustainable Growth?

Affirm Holdings (AFRM) has long been a bellwether for the buy-now-pay-later (BNPL) sector, and its Q4 2025 earnings and 2026 guidance underscore both its resilience and the challenges ahead. Despite the high-profile exit of Walmart from its BNPL partnership—a move that shifted $1.5 billion in GMV to Klarna—Affirm delivered a standout quarter, with 43% GMV growth to $10.4 billion and revenue rising 33% to $876 million [3]. These results, coupled with 2026 guidance projecting GMV above $46 billion and adjusted operating margins exceeding 26.1%, suggest a company poised to navigate headwinds through strategic innovation and margin discipline.

Strategic Resilience: Diversification and Product Innovation

Affirm’s response to Walmart’s departure has been twofold: accelerating merchant diversification and enhancing customer-centric offerings. The company now partners with 360,000 merchants, including new collaborations with New Look Vision Group in Canada and a major U.S. travel player [2]. These partnerships offset Walmart’s exit, with 155 merchants now generating over $1,000 in trailing twelve-month GMV—a 26% year-over-year increase [3].

Product innovation has also been pivotal. The Affirm Card, which grew GMV by 132% to $1.176 billion in Q4 2025, exemplifies this strategy [3]. By introducing flexible payment options like “Pay in 2” and “Pay in 30,” Affirm has captured customer loyalty, evidenced by a 94% repeat transaction rate in Q3 2025 [3]. Analysts argue these tools position Affirm to compete with Klarna and traditional banks, even as BNPL defaults rise [2].

Margin Dynamics: Profitability and Liquidity

Affirm’s margin performance remains a critical focus. While RLTC (revenue less third-party costs) margins are projected to stabilize at ~4% in 2026 [1], the company’s GAAP operating margin is expected to exceed 6.0%, reflecting cost discipline and scale [3]. A $4 billion loan purchase from Sixth Street further bolsters liquidity, enabling Affirm to deploy $20 billion in loans over three years [2]. This financial flexibility is crucial as the BNPL sector faces rising interest rates and regulatory scrutiny.

However, risks persist. Affirm’s debt-to-capital ratio of 72.8% [2] and exposure to high-risk consumer credit could pressure margins if defaults spike. RBC Capital projects GAAP profitability by 2026, but Needham analysts caution that Walmart’s shift could create revenue gaps [4].

The Path Forward: Balancing Growth and Prudence

Affirm’s 2026 guidance hinges on its ability to leverage partnerships with Amazon and Shopify, which could offset Walmart’s loss [5]. Yet, the BNPL landscape is intensifying, with Klarna’s Walmart deal and traditional banks leveraging their credit infrastructure. Affirm’s success will depend on maintaining its product edge while managing debt and credit risk.

For investors, the key question is whether Affirm’s strategic resilience—evidenced by its diversified merchant base, sticky customer offerings, and liquidity—can outpace sector-wide challenges. The answer may lie in its execution of 2026’s $46 billion GMV target and its ability to sustain margins above 26.1% [3].

Source:
[1] Affirm Earnings, 2026 Outlook Loom: Here's What Could Move Shares [https://www.investors.com/news/technology/affirm-stock-affirm-earnings-what-could-move-shares/]
[2] Affirm's Strategic Resilience: Turning Partnership Losses into Growth Opportunities in the BNPL Sector [https://www.ainvest.com/news/affirm-strategic-resilience-turning-partnership-losses-growth-opportunities-bnpl-sector-2508/]
[3] Affirm Q4 2025 slides: 43% GMV growth and operating profit milestone [https://www.investing.com/news/company-news/affirm-q4-2025-slides-43-gmv-growth-and-operating-profit-milestone-93CH-4215440]
[4] Affirm and Stripe bring BNPL option to in-store payments [https://www.investing.com/news/company-news/affirm-and-stripe-bring-bnpl-option-to-instore-payments-93CH-4188493]