Affirm posts record profit as leadership shifts to future products
- Affirm makes money from merchant fees and consumer interest on installment loans.
- The company achieved its most profitable quarter ever in the fourth quarter of fiscal 2026.
- Interest-bearing loans made up 72 percent of fiscal 2025 GMV, making credit quality vital.
- Amazon extended its partnership through 2031, securing a major growth driver.
- New risks have emerged as some private credit funding partners face redemption pressures.
Profit proof and partner risk
Affirm is a high-growth buy now, pay later platform. The bull case is simple. More shoppers bring more merchants, and more merchants give shoppers more places to use Affirm. That network can become stronger as the Affirm Card turns one-time checkout use into more frequent everyday spending. The company also rolled out a program with Intuit to expand merchant reach.
The thesis improved after Affirm announced its most profitable quarter ever in the fourth quarter of fiscal 2026. CEO Max Levchin handed day-to-day execution to new President Michael Linford. This allows Levchin to focus on long-term product development for fiscal 2028 and beyond.
The bear case is still serious. Amazon represented 21 percent of total GMV in the first nine months of fiscal 2026. One partner has huge weight. While Affirm secured a five-year extension with Amazon through January 2031, partner churn is a real threat. One large merchant partner transitioned off the platform recently.
Funding is also showing cracks. Some private credit funds that buy loans from Affirm are facing redemption pressures. If these partners cannot buy as many loans, Affirm might have to keep more loans on its own balance sheet or slow down growth.
Fees, interest, and funding
Affirm gets paid in two main ways. Merchants pay a fee when Affirm helps complete a sale. Shoppers may also pay interest on fixed installment loans, depending on the product they choose.
The merchant fee is usually higher when the shopper gets a 0 percent APR offer, because the merchant is helping pay for that promotion. On interest-bearing loans, Affirm earns simple interest from the consumer. Simple interest means the borrower is not charged interest on top of unpaid interest.
Affirm does not fund every loan with cash sitting on its own balance sheet. It uses bank partners, warehouse credit lines, securitizations, and forward flow deals with private credit funds. In plain English, Affirm creates loans, then uses outside funding markets to help carry or sell those loans.
That makes the model scalable, but not risk free. If credit losses rise or funding partners face their own cash crunches, this capital-light setup can become a weak spot.
Ways shoppers split payments
Pay-in-X
This includes short payment plans, often with one to four 0 percent APR installments. It represented 14 percent of fiscal 2025 GMV.
0% APR monthly loans
These longer payment plans are interest free for the shopper. Merchants tend to subsidize them because they lift conversion and order size.
Interest-bearing monthly loans
These are fixed-rate installment loans where the consumer pays interest. They were 72 percent of fiscal 2025 GMV, making credit risk central to the story.
Affirm Card
This physical and virtual card lets users pay in full or apply for financing after a purchase. It moves Affirm into more frequent, lower-ticket spending.
AdaptAI
AdaptAI is the company's artificial intelligence promotion tool for merchants. The goal is to personalize offers and improve checkout conversion.
Savings account and marketplace
Affirm also offers a high-yield savings account and a marketplace for deals. These products can keep consumers inside the Affirm app more often.
GMV mix, not formal segments
Affirm does not report formal operating segments. The mix below uses fiscal 2025 GMV by loan product. Amazon remained a major concentration at 21 percent of total GMV for the first nine months of fiscal 2026.
What could break the thesis
Amazon concentration
High impact · Medium oddsAmazon represented 21 percent of total GMV for the first nine months of fiscal 2026. That is a powerful growth channel, but it gives Amazon bargaining power. While the contract runs through 2031, any change in Affirm visibility at checkout could hurt volume.
Credit losses in a downturn
High impact · Medium oddsAffirm underwrites each transaction with its own risk model. If unemployment rises or consumers fall behind, loan losses could rise fast. That would pressure earnings and could make funding partners more cautious.
Funding market squeeze
High impact · Medium oddsAffirm depends on warehouse credit lines, securitizations, and forward flow buyers. Recently, private credit funds buying Affirm loans have faced redemption pressures. If capital becomes scarce, growth could slow even if consumer demand stays strong.
Bank partner dependence
Medium impact · Medium oddsAffirm uses originating bank partners including Celtic Bank and Lead Bank. The Affirm Card depends on Evolve Bank and Trust as its issuing bank. If a partner changes terms, faces regulatory pressure, or ends a deal, Affirm may need to move volume elsewhere.
Competition and pricing pressure
Medium impact · High oddsAffirm competes with cards, mobile wallets, banks, and other buy now, pay later providers. Merchants can test several payment buttons at once. If rivals accept lower fees, Affirm may have to give up margin to keep volume.
In one breath
How does Affirm make money?
Affirm earns fees from merchants when it helps complete a sale. It also earns interest from consumers on interest-bearing installment loans.
Is Affirm profitable?
Yes. Affirm achieved its most profitable quarter ever in the fourth quarter of fiscal 2026, building on its initial GAAP operating income profitability from late fiscal 2025.
Why is Amazon important to Affirm?
Amazon represented 21 percent of total GMV in the first nine months of fiscal 2026. That helps growth, but it also creates risk if Amazon changes terms or sends less volume to Affirm.
What is the biggest risk for AFRM stock?
The biggest risks are credit losses, funding access, and partner concentration. Private credit funds that buy Affirm loans are currently facing redemption pressures, which could limit funding.
Sources and research notes
This page combines Finn's company research with public filings and other cited materials. The thesis is reviewed when material company information changes; Finn Scores use the latest available scoring data.
- Thesis reviewed
- August 30, 2026
- Score data
- September 6, 2026
- Reviewed by
- Shivam Bharuka
Comparable Software - Infrastructure companies
Companies near Affirm Holdings, Inc. in Finn's Software - Infrastructure industry ranking.
