Affirm Highlights Steady Demand, Strong Funding Markets and Rapid Affirm Card Growth in Q&A Call

Key Points

• Steady consumer demand and active underwriting: Management said demand was consistent through the quarter, underwrites every transaction to stay nimble, and can tighten risk (down payments, shorter terms, higher score cutoffs) to limit credit stress with only "pretty minimal" profitability headwinds at the low end of the credit spectrum.
• Strong funding markets and capital flexibility: A recent ABS was upsized from $500M to $750M and ~2.5x oversubscribed with tighter spreads versus late 2025, and Affirm cites roughly $4B of untapped warehouse capacity alongside committed forward flow relationships to fund through cycles.
• Rapid Affirm Card growth and economics: The card reached ~16% of GMV and grew ~150% YoY after counting permanent PAN transactions, is high-margin with healthy interchange, and management targets $7,500 of annual spend per cardholder over the long term.

Affirm NASDAQ: AFRM executives fielded questions from an analyst and retail investors in a recent discussion that touched on consumer demand trends, funding conditions, product mix, merchant tools, and the company’s approach to longer-term growth initiatives including international expansion and partnerships.

Consumer health and underwriting approach

Management said it is “too early” to see a discernible impact from elevated oil prices on consumer behavior. Demand was described as continuing at “steady growth rates” and consistent throughout the quarter, with no clear evidence that higher fuel costs are currently causing consumer stress. However, the company acknowledged that prolonged elevated prices could have an impact over time, and said uncertainty remains around how long the current environment may persist.

Affirm emphasized that it underwrites “every single transaction with every consumer every time,” which it said helps the company stay current and remain nimble if consumer conditions deteriorate. The company noted it originates about $150 million of loans per day on average and highlighted early repayment signals—particularly performance at the first repayment event, typically 30 days after origination—as a key leading indicator for underwriting posture and delinquency trends.

Managing credit stress: levers and expected impacts

In discussing how Affirm might respond to a more contractionary environment, management framed tightening as primarily removing loans that are “break even or better” at the low end of the credit spectrum within many large merchant programs. As a result, the company said it would expect a slowdown in GMV under higher stress assumptions, but “pretty minimal” profitability headwinds because most profitability comes from the middle to upper portions of its credit spectrum.

Management outlined multiple tools it can use to adjust risk:

• Requiring down payments at checkout to reduce risk and increase consumer “skin in the game.”
• Shortening term lengths to reduce exposure.
• Requesting more consumer information to better assess financial health and tailor terms.
• Adjusting minimum credit score thresholds within merchant programs.

Funding market conditions and capital structure flexibility

Affirm pointed to what it called a strong recent data point in its funding markets: a securitization it said closed “yesterday,” initially launched at $500 million and upsized to $750 million due to demand. Management said the transaction was about 2.5 times oversubscribed after the upsizing, was marketed over three days (versus a typical five-day period), and priced at an all-in spread of 116 basis points for a three-year offering. The company also said spreads tightened by 8 basis points compared with a similar three-year deal completed in late 2025.

Management described asset-backed securities (ABS) as one of several funding channels and said it has built a capital program designed to work through cycles. Beyond ABS, Affirm cited committed forward flow relationships—typically seeking at least two-year commitments—and warehouse facilities from large bank counterparties. It added that it tends to keep most unused capacity in warehouses, noting approximately $4 billion of untapped warehouse capacity disclosed in its 12/31 filing. If ABS markets were to experience dislocation, management said warehouses would likely absorb more volume.

On on- versus off-balance sheet strategy, management said it has not provided forward guidance, and that historically the business has been roughly 50/50. It characterized the recent ABS transaction as an on-balance-sheet funding vehicle with an advance rate approaching 96.5%, which it described as capital efficient and allowing it to retain more loan economics than an off-balance-sheet loan sale. The company said its priority is maintaining the ability to fund through any economic cycle.

Affirm Card growth, economics, and share-of-wallet ambitions

Management said Affirm Card reached about 16% of GMV and was growing 150% year-over-year. It attributed momentum to ease of use “anywhere that accepts Visa” and highlighted that the card is unlocking more in-store spend versus BNPL’s historically e-commerce-heavy mix. The company also disclosed a product reporting change starting October 1: transactions facilitated through a permanent PAN within one wallet partner are now counted as card transactions and card volume, reflecting a shift from one-time card numbers to a permanent PAN structure. Management said this contributed to a “bend upward” in growth in users and GMV.

Affirm said the card remains primarily a “second-use product” for existing users rather than the primary distribution channel, and it did not estimate ultimate penetration. It reiterated a long-term target of $7,500 of annual Affirm spend per cardholder, which it said is based on industry and survey data regarding discretionary spend for its core user profile. To bridge toward that level, management emphasized presenting the “right offers,” citing flexibility across term lengths (from 30 days out to 36 months and in some cases 48 months) and APRs (0% up to 36%).

On economics, Affirm said product mix is the biggest driver of profitability and that the card historically has a higher interest-bearing mix than the company overall, which remained true in the December quarter. It also pointed to healthy interchange and said card is “arguably” its most profitable product depending on how products are defined. Management added that because card is largely repeat use, it benefits from “positively selected” borrowers, which it said reduces credit losses relative to first-time transactions.

0% APR mix, merchant tools, partnerships, and longer-term initiatives

Management said it continues to push to expand 0% APR offerings but noted there are still large merchants not utilizing 0%, indicating “more room to go.” It framed 0% as a complement to interest-bearing products rather than a pivot away, and said consumers who start with 0% loans still show a high propensity to use interest-bearing loans over their lifecycle. It also highlighted the company’s long-term target for Revenue Less Transaction Cost (RLTC) as a percentage of GMV in a 3% to 4% range, and said recent quarters have been operating at or above the high end of that range.

In competition-related discussion, management argued Affirm’s breadth of loan products differentiates it from competitors concentrated in Pay-in-4, which it said often relies on higher merchant discount rates and may face challenges with large retailers focused on cost of acceptance. Affirm said its ability to structure programs—mixing 0% for conversion and interest-bearing to monetize on the consumer side—helps it balance merchant cost, conversion, and its own profitability.

On merchant optimization tools, Affirm said AdaptAI is live on its direct-to-consumer surfaces to optimize offer sets and increase take-up. For BoostAI, management said it is early but aimed at dynamically optimizing merchant offer menus beyond static term sets; it said early data shows GMV lift for merchants, higher consumer take-up, and improved unit economics for Affirm, though rollout requires contract amendments and merchant trust.

Looking ahead, management said it expects to participate “anywhere that consumers are shopping,” including potential future agentic commerce protocols, and referenced prior work across direct merchant partnerships, platforms like Shopify, and wallet integrations. Internationally, it said it is working toward an “auto-on” release for Shop Pay Installments in the U.K. and is in an optimization phase similar to the U.S. rollout prior to broader scaling. It said additional markets beyond the U.S., Canada, and U.K. would require new licenses, and the company will discuss new markets when closer to launch.

Affirm also discussed a new partnership with QuickBooks, with an initial focus on enabling consumers to finance business-to-consumer invoice payments through the platform. Management said it is live with an increasing number of merchants and expects to scale over the month, but noted it will not be material this year. It characterized the move as an expansion into the services vertical, an area it said BNPL has historically under-penetrated.

On a potential bank license, management said it is excited about participating in more of the value chain—such as loan origination and potentially card issuing—while not expecting to turn off existing bank partners. It said scaling would play out over “a handful of years” if a license is granted and deferred additional discussion to an investor forum in May. In response to a retail question, management said autos and homes are “a no today,” citing a “bright line” around secured lending and not wanting to repossess goods.

Finally, on capital allocation, management highlighted an existing buyback program for convertible bonds and said it expects to keep leaning into the 2026 convertible maturity as a primary focus. It added that broader capital allocation decisions may come later as the business matures, and said it remains active in evaluating M&A opportunities as a complement to internal product and engineering capabilities.

About Affirm NASDAQ: AFRM

Affirm Holdings, Inc is a financial technology company that provides point-of-sale consumer lending and payments solutions for online and in-store purchases. Its core product is a buy-now-pay-later (BNPL) platform that enables consumers to split purchases into fixed, transparent installment loans with no hidden fees. Affirm offers a range of financing options through merchant integrations, a consumer-facing mobile app and virtual card capabilities, and tools for merchants to offer alternative payment methods at checkout.

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