Affirm Q3 Earnings Call Highlights

Key Points

• Management reported stable credit performance among borrowers it underwrites and an “exceptionally constructive” funding market, with funding costs down roughly 125 basis points year‑over‑year and multiple ABS transactions oversubscribed by large investors.
• The Affirm Card is the fastest‑growing and most profitable product as app engagement shifts toward discovery and shopping, while Adaptive Checkout and bundled AI tools (AdaptAI/BoostAI) are being scaled to simplify merchant adoption.
• 0% APR and Pay‑in‑X offerings are expanding (including a large program and Shopify growth), modestly lightening RLTC but bringing lower credit costs, and management says AI developer tools are materially boosting development velocity with no planned AI‑related layoffs.

Affirm NASDAQ: AFRM executives told investors on the company’s fiscal third-quarter 2026 earnings call that they are seeing stable credit performance and an unusually supportive funding environment, while continuing to push product initiatives such as the Affirm Card, app-based shopping features, and AI-driven development tools.

The company kept formal prepared remarks brief, with founder and CEO Max Levchin calling fiscal Q3 “another one for the record books” and emphasizing that results are the product of execution rather than ease. Management repeatedly pointed analysts to additional detail expected at the company’s Investor Forum scheduled for May 12.

Credit trends and funding markets

On credit, Levchin said the company is not seeing deterioration among borrowers it chooses to underwrite. “We are not seeing deterioration,” he said, adding that Affirm’s view is specific to its own consumer base rather than the broader economy.

COO Michael Linford characterized the funding environment as “exceptionally constructive,” citing sustained demand from investors, “reducing spreads,” and “significant oversubscription” in transactions. Linford also said forward-flow partners continue to seek larger allocations of Affirm’s portfolio.

Asked about asset-backed securities (ABS) execution, Linford said Affirm has completed three deals so far in the year, including “2 revolving deals in the quarter,” and that it recently priced a static deal that had not yet closed. He described “incredible depth” and “continued and sustained tightening of spreads,” and said funding costs were down “on the order of 125 basis points year-on-year,” reflecting both lower benchmark rates and spread compression.

Management also addressed the composition of forward-flow funding. Without naming counterparties beyond one joint venture, the company said it is “heavily, heavily weighted away” from highly liquid vehicles that can be subject to volatility. Linford said the largest counterparties include a joint venture with Sixth Street, as well as “large pension funds and large insurance complexes.”

Product initiatives: “Big Nothing Days,” app engagement, and Adaptive Checkout

Levchin fielded questions about the company’s promotional event, “The Big Nothing,” and suggested next week’s iteration will incorporate improvements informed by data from the prior event. He said the company “got smarter about targeting,” using machine learning techniques to focus on “least costly, highest probability of conversion” opportunities by consumer, merchant, and SKU. He also said Affirm plans to promote the event more aggressively early, after “underplay[ing] the event itself in the early hours” previously.

On the consumer app, Levchin said usage is evolving in the direction analysts described—moving beyond simply making payments toward discovery and shopping. He said the app was designed to create engagement and highlight merchant promotions and noted that “Big Nothing Days are basically organized around the app.” Levchin said Affirm is seeing growth in searches within the app, while also reiterating that the company is aiming to pair the “app plus the card” as the best consumer experience.

Management also provided an update on “Adaptive Checkout,” following comments in the shareholder letter. Levchin said it is “doing really well,” and that the company is increasingly selling related tools together—“AdaptAI and BoostAI”—with an eye toward simplifying product packaging under a broader “Affirm Checkouts” concept. He described a longer-term goal of merchants turning it on and letting Affirm’s AI find optimal settings “in real time for every new incremental consumer,” but declined to provide metrics ahead of the Investor Forum.

Affirm Card growth and engagement flywheel

Executives said the Affirm Card continues to add users and remains central to the company’s engagement strategy. Levchin described the card as Affirm’s “fastest-growing and also our most profitable product,” while stressing that growth is not being driven by external advertising. “We’ve never tried to advertise it or promote it outside of existing Affirm user base,” he said.

Pressed on what is driving adoption, Levchin said Affirm relies on extensive experimentation on its own surfaces, describing “extremely high density multivariate testing” to reduce friction in the app and optimize approval, activation, and usage outcomes while managing credit risk.

On the profile of card users, Levchin said they skew “a little bit higher credit quality than the average Affirm consumer” because Affirm is “slightly more conservative” in card offers and approvals, though he said it is converging toward the broader base over time. He said card users transact more frequently and show broader category usage dispersion earlier, because the card reinforces that Affirm is a “general-purpose tool” that “works everywhere.”

Levchin also described engagement and transaction frequency as the result of a network effect between merchant distribution and repeat consumer usage. He noted that “90% plus” of transactions come from returning users, and said that expanding merchant acceptance, increasing consumer familiarity, and moving more users onto the card all reinforce higher transactions per active user.

0% APR, Pay-in-X growth, and RLTC considerations

In response to questions about Pay-in-X growth, CFO Rob O’Hare said Affirm expects the trend to continue into fiscal Q4. He attributed the quarter’s performance partly to “one very large program” moving to an “evergreen 0% and via Pay-in-4 offer,” as well as continued growth from the company’s Shopify program.

Management also discussed unit economics and “revenue less transaction costs” (RLTC). Levchin said 0% loans are “slightly lighter on the RLTC basis” but indicated the company is not concerned. Linford added that 0% loans also tend to have “less in terms of credit costs,” and said management likes the trade-off as a complement to the interest-bearing portfolio. Levchin argued that events like Big Nothing help demonstrate to merchants that funding 0% offers can drive incremental sales without simply pulling demand forward.

On loan loss related items, O’Hare said an increase in the allowance rate quarter-over-quarter was driven mainly by seasonality—typically elevated in fiscal Q3 following a post-holiday volume step-down from Q2—as well as “elevated prepayments” tied to tax season. He described prepayments as a “really positive credit signal,” but noted they can mechanically raise the allowance rate because early payoff reduces the loan balance and leaves delinquencies “off of a lower base.”

Separately, management attributed changes in “loan loss on purchase commitment” as a percentage of balances to 0% loan mix and term length, rather than changing economics with a specific vendor or originating partner.

AI tools, development velocity, and headcount stance

Levchin said the company’s increasing use of “agentic” AI-written code is “unequivocally accretive to the bottom line,” arguing it is boosting development velocity while maintaining rigorous quality controls required for underwriting and financial software. O’Hare said AI developer tools represent “very low single-digit millions per quarter” in spend and are not material to the overall P&L, while emphasizing a focus on overall efficiency from the tool portfolio.

Asked about competitors using AI to justify layoffs, Levchin was direct: “We are not planning AI-related layoffs, full stop.” He said Affirm already operates leanly with high revenue per employee and intends to use AI tools to “ship more,” not shrink teams.

Management also hinted at international expansion, but deferred most specifics to the Investor Forum. Linford said some investment work is already underway and that new markets could carry an initial learning and investment period that may create a small RLTC drag, though he said any headwinds should be minimal given the current size of the U.S. and Canadian businesses.

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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