Affirm Holdings, Inc. (NASDAQ: AFRM) announced steady third-quarter fiscal 2026 performance, underscoring its resilience in a volatile economic environment. For the period ended March 31, 2026, the company reported gross merchandise volume (GMV) of $11.6 billion, marking a 35% increase from the prior year. Total revenue reached $1.039 billion, up 33%, while revenue less transaction costs (RLTC) climbed 41% to $498 million, equating to 4.31% of GMV.
The fintech posted net income of $103 million, a sharp turnaround from the previous year’s results.
Operating income hit $88 million (8.5% of revenue), and adjusted operating income stood at $281 million (27% of revenue), reflecting significant margin expansion.
Active consumers grew 22% to 26.8 million, with transactions per active consumer rising 20% to 6.7.
Merchant partners expanded notably, and the Affirm Card drove direct-to-consumer GMV up 48% to $3.7 billion, with card-specific volume surging 146% and active cardholders reaching 4.4 million.
Founder and CEO Max Levchin highlighted the results as “outstanding,” noting the 10th straight quarter of over-30% GMV growth achieved without sacrificing credit discipline.
He emphasized improving unit economics and operational efficiency, stating that top-line momentum is now paired with stronger profitability further down the income statement.
Funding costs declined 126 basis points year-over-year to 5.8%, aided by successful asset-backed securities issuance and favorable repricing. Credit metrics remained solid, with delinquencies aligning with expectations.
Affirm provided optimistic guidance. For Q4, it expects GMV between $13.15 billion and $13.45 billion, revenue of $1.08 billion to $1.11 billion, and continued margin gains.
Full-year fiscal 2026 projections call for GMV of approximately $49.3 billion to $49.6 billion and revenue of $4.175 billion to $4.205 billion. Management anticipates stable product mix and interest rates while advancing international initiatives.
Analysts praise Affirm’s hybrid BNPL model, which combines transparent installment loans—some interest-bearing, others zero-APR—with merchant fees, interest income, and loan sales.
Unlike pure short-term “pay-in-four” offerings, Affirm reports to credit bureaus, helping users build credit histories while maintaining conservative underwriting.
This approach has enabled consistent access to capital markets, with $28.2 billion in funding capacity supporting over $65 billion in annual GMV potential.
The Affirm Card and in-store expansions further differentiate the platform by boosting repeat usage and higher average order values.
The future outlook appears bright. Wall Street views recent beats—EPS of $0.30 versus $0.17 expected, and revenue topping forecasts by over 4%—as evidence of sustainable scaling.
Projections suggest fiscal 2027 revenue could exceed $5 billion, driven by card growth, merchant partnerships, and incremental margin expansion above 70% on RLTC gains.
While macroeconomic headwinds persist, Affirm’s track record in securitizations has eased concerns over private credit funding strains.
The broader buy-now-pay-later market is projected to grow at a 20%+ compound annual rate through the early 2030s, fueled by e-commerce integration, point-of-sale adoption, and consumer demand for flexible payments.
However, growth is moderating from pandemic peaks as regulatory scrutiny intensifies and traditional banks roll out competing installment features.
Omnichannel strategies and AI-driven underwriting are becoming table stakes, with emphasis shifting toward responsible lending and lower default rates amid potential credit-cycle tests.
Key competitors include Klarna, which emphasizes lifestyle branding and its own card; Afterpay (Block), strong in retail and Cash App ecosystems; and PayPal’s integrated wallet solutions. Sezzle and Zip target niche segments with financial-education tools. Affirm aims to maintain an edge through scale, credit-reporting transparency, and diversified revenue streams, positioning it favorably as BNPL gradually evolves from somewhat of a niche fintech segment to mainstream consumer finance.