Affirm Q4 Earnings Call Highlights

Key Points

• Affirm reported its most profitable fiscal fourth quarter, excluding a tax valuation allowance, and plans to expand products, merchants and international operations. CEO Max Levchin will focus more on long-term product development, while Pat Suh and Michael Linford take on expanded leadership roles.
• The company sees significant growth potential in offline commerce and merchant expansion. Affirm is working to improve in-store approvals and payment reliability, while it remains available at only 80 of the top 250 e-commerce sites and about 10% of e-commerce merchants.
• Affirm highlighted rising adoption of Pay in 4, zero-interest financing and the Affirm Card, which has a 19% attach rate among active users and roughly twice the usage of a typical customer relationship. Management said it will prioritize transaction-level credit discipline and slow growth if needed to protect credit performance.

Affirm NASDAQ: AFRM said its fiscal fourth quarter was its most profitable ever, excluding the release of a tax valuation allowance, as the buy now, pay later company pointed to continued momentum in its core business and outlined product, merchant and international expansion priorities.

Founder and Chief Executive Officer Max Levchin also announced leadership changes intended to support execution and free more of his time for longer-term product development. Pat Suh was promoted to senior vice president and general manager of global markets, while Michael Linford was promoted to president. Levchin said he expects to focus more deeply on products and services that may not materially contribute until fiscal 2029 and beyond.

Product expansion and offline opportunity

Levchin said Affirm already offers consumers several products beyond its traditional point-of-sale installment loans, including the Affirm Card, an account product and financing for business purchases. While most of its offerings remain forms of credit, he said the company expects to keep expanding into additional products, verticals and use cases.

A major opportunity is in-store commerce, where Levchin said the company sees significant room for growth despite operational complexities that differ from online checkout. About 30% of Affirm Card transactions currently occur offline, according to an analyst question, though offline activity remains a small share of total gross merchandise volume.

Levchin said the company’s innovation team is working to improve in-store approvals and payment delivery, including addressing weak connectivity in large stores, point-of-sale systems that may not support QR codes, and issues such as transaction-size adjustments. He said Affirm intends to introduce “uniquely Affirm-specific” ideas in coming quarters, though he did not provide details.

“The bar for error is much lower” in stores than online, Levchin said, noting that consumers face greater inconvenience when a transaction fails at a physical checkout line.

Merchant expansion remains a long-term growth driver

Management said Affirm has substantial room to add merchants. Levchin noted that the company is available at 80 of the top 250 e-commerce sites and roughly 10% of e-commerce merchants overall. He described that opportunity as “enormous” greenfield rather than a sign of impediments to growth.

Large merchant sales cycles can take time because retailers often operate complex or outdated technology systems, he said. Still, Levchin said merchants increasingly understand the value of adding Affirm at checkout, and the company expects its sales organization to continue signing merchants individually and, in some cases, in groups.

Levchin also said the company is seeing faster movement from merchant launch to meaningful impact. He cited the recent launch of Crate & Barrel and said coordination around merchant onboarding, marketing and performance reporting has improved. Meanwhile, transactions per user per year have continued to rise, supported in part by expanding merchant availability and the Affirm Card.

Zero-interest financing, card adoption and product mix

Management highlighted continued growth in Pay in X offerings, including Pay in 4 and longer-term zero-interest financing programs funded by merchants and other partners. Levchin said zero-interest financing broadens the appeal of Affirm’s services to consumers across the credit spectrum, including customers who could otherwise pay with cash or a credit card.

Chief Financial Officer Rob O’Hare said Pay in 4 growth accelerated during the quarter after a large merchant with a relatively low average order value made the product an evergreen part of its financing program. He said Affirm tailors financing choices to a merchant’s products and basket sizes, and may offer different loan structures as transaction values increase.

O’Hare also said direct-to-consumer products carry a higher proportion of interest-bearing loans, with more than 80% of that product set interest-bearing. The continued scaling of products such as the Affirm Card has contributed to a modest shift toward interest-bearing loans, even as the company has increased zero-percent offers within point-of-sale integrations.

Levchin said the Affirm Card has a 19% attach rate relative to active users and generates roughly twice the usage of a typical customer relationship. The company expects both adoption and spending per cardholder to increase. He said Affirm plans to add card-specific features and benefits while maintaining the financing programs available through its standard point-of-sale experience.

Credit discipline and capital markets outlook

Levchin said Affirm does not view credit risk as a binary decision to broadly tighten or loosen lending. Instead, the company assesses transaction-level risk in real time and can adjust approvals across particular consumer groups, merchants or transaction categories. He said Affirm would slow growth before allowing a significant deterioration in credit outcomes.

“Credit target is the input, not the output of the business,” Levchin said, emphasizing the company’s responsibility to capital-markets partners that fund its lending activity.

O’Hare said the company’s outlook for revenue less transaction costs in fiscal 2027 reflects debt-capital-markets execution that has provided a funding-cost profile expected to continue through the year. He expects funding mix to remain broadly consistent with fiscal 2026 and said any shift toward interest-bearing products should be slight.

On profitability, O’Hare said management has provided guidance for GAAP operating income and share count, while cautioning that the effective GAAP tax rate could be volatile. He said the company expects a run-rate GAAP tax rate in the mid- to high-20% range, though stock-based compensation and other GAAP-versus-tax differences may cause fluctuations.

Affirm also expects gain-on-sale revenue to vary by quarter depending on non-consolidated asset-backed securitization activity. O’Hare said the company completed two such deals in fiscal 2026 and anticipates a broadly similar funding approach in fiscal 2027.

Internationally, Levchin said the company is encouraged by its early progress in the United Kingdom. He said consumer and merchant feedback has been strong, citing the company’s fee-free approach, and said management has not seen a meaningful competitive response so far.

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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