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1. Company Snapshot

1.a. Company Description

Affirm Holdings, Inc.operates a platform for digital and mobile-first commerce in the United States and Canada.The company's platform includes point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app.


Its payments network and partnership with an originating bank, enables consumers to pay for a purchase over time with terms ranging from one to forty-eight months.As of June 30, 2021, the company had approximately 29,000 merchants integrated on its platform covering small businesses, large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies.Its merchants represent a range of industries, including sporting goods and outdoors, furniture and homewares, travel, apparel, accessories, consumer electronics, and jewelry.


The company was founded in 2012 and is headquartered in San Francisco, California.

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1.b. Last Insights on AFRM

Breaking News: Affirm Holdings Inc recently faced concerns about private-credit liquidity tied to LENDX, causing its stock to drop. Despite this, analysts report that funding demand and loan performance remain strong. The company has not released recent earnings data. Analysts from various firms have given Affirm a hold recommendation. The current situation with private-credit liquidity has raised some concerns but it is too early to panic. Funding and loan performance are still robust. Some analysts are advising investors to hold their positions.

1.c. Company Highlights

2. Affirm Holdings' Q2 FY2026 Earnings: A Strong Performance

Affirm Holdings reported a robust financial performance in Q2 FY2026, with revenues growing significantly. The company's EPS came in at $0.37, beating estimates of $0.28. The strong EPS performance was driven by the company's continued growth in active merchants, which rose 42% year-over-year, and its ability to maintain a healthy net interest margin. Revenue growth is expected to continue, with analysts estimating a 24.8% increase in revenues for the next year.

Publication Date: Feb -15

📋 Highlights
  • Merchant Diversification: Top five merchants changed in 2026, with the "other" category growing triple digits, indicating strong diversification beyond core merchants.
  • Consumer Credit Health: Consumers remain healthy and capable of repaying loans, with US and UK markets showing sustained growth in transaction activity.
  • ROTC Margin Progress: ROTC margin nears long-term target, with LTC take rates projected at >4% in Q3/Q4, and transaction cost benefits improving margins.
  • Growth Deceleration: GMV growth expected to slow to 30% in Q3 and 25% in Q4, reflecting market saturation and strategic shifts to higher-quality growth.
  • Strategic Partnerships: Affirm expands with Fiserv for debit cards and tests new verticals (e.g., rent payments), aiming for universal acceptance like Visa/Amex.

Merchant Growth and Diversification

The company's growth is driven by its expanding merchant base, with active merchants increasing by 42% year-over-year. Max Levchin, the CEO, mentioned that the top five merchants are different from the previous year, indicating a diversification in the company's revenue streams. The "other" category, which represents a long tail of smaller merchants, is growing triple-digits and is now the second-largest vertical after the top five merchants.

Credit Performance and Risk Management

Affirm's credit performance remains strong, with the company maintaining a tight control over its credit risk. The ROTC number is close to the upper side of the long-term goal, indicating good credit management. Max Levchin emphasized that the company's NACO curves are tightly run lines, demonstrating excellent credit performance.

Valuation and Growth Expectations

Using the current valuation metrics, we can assess what's priced in for Affirm Holdings. The company's P/S Ratio is 4.58, and the EV/EBITDA ratio is 16.57. These metrics indicate that the market is pricing in a certain level of growth for the company. With analysts estimating a 24.8% increase in revenues for the next year, it remains to be seen whether the company can meet these expectations.

Strategic Initiatives and Future Growth

Affirm is continuing to expand its product offerings and explore new categories, such as home improvement, medical, and auto repair. The company is also working on integrating with merchants who sell parts and adjacent products. Additionally, Affirm is excited about its partnership with Fiserv to offer debit cards with "now, pay later" capacity, leveraging its platform and software engineering team.

3. NewsRoom

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Affirm, Fintech Stocks Hit by Private-Credit Jitters. Why You Shouldn't Panic Just Yet.

Mar -20

Source: barrons.com

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Why Is Affirm Stock Crashing, and is it a Buying Opportunity?

Mar -19

Source: fool.com

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Better Fintech Stock: Upstart vs. Affirm

Mar -18

Source: fool.com

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Affirm Stock Falls Wednesday As Fed Signals Higher Inflation Outlook

Mar -18

Source: benzinga.com

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Private Credit's Investor Exodus Spreads to Consumer Loans

Mar -18

Source: wsj.com

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Stock Market Today (LIVE): Stock Futures Eye Today's Fed Rate News

Mar -18

Source: fool.com

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Affirm Holdings, Inc. (AFRM) Discusses Consumer Demand, Credit Trends and Macroeconomic Risks Transcript

Mar -17

Source: seekingalpha.com

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Affirm's Bottom Is Here - Robust Acquisition Trends At Higher Margins

Mar -17

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (19.50%)

6. Segments

Interest

Expected Growth: 19.3%

Affirm Holdings, Inc.'s 19.3% interest growth is driven by increasing adoption of buy-now-pay-later (BNPL) solutions, expansion into new merchant partnerships, and rising consumer demand for flexible payment options. Additionally, the company's focus on transparency, fairness, and consumer-friendly practices has contributed to its growing popularity, leading to increased interest income.

Merchant Network

Expected Growth: 21.67%

Affirm Holdings' Merchant Network growth of 21.67% is driven by increasing adoption of 'buy now, pay later' solutions, expansion into new merchant categories, and strategic partnerships. Additionally, the rise of e-commerce and growing consumer preference for flexible payment options contribute to the segment's growth.

Gain on Sales of Loans

Expected Growth: 22.95%

The 22.95% gain on sales of loans from Affirm Holdings, Inc. is driven by increasing adoption of buy-now-pay-later solutions, expansion into new merchant partnerships, and growth in point-of-sale payment volumes. Additionally, Affirm's focus on consumer-friendly financing options and its ability to provide transparent and flexible repayment terms have contributed to its rapid growth.

Card Network

Expected Growth: 10.88%

Affirm Holdings' Card Network growth of 10.88% is driven by increasing adoption of buy-now-pay-later (BNPL) solutions, expansion into new merchant partnerships, and rising consumer demand for flexible payment options. Additionally, the company's focus on transparency, consumer-friendly terms, and seamless user experience contribute to its growth momentum.

Servicing

Expected Growth: 12.8%

Affirm Holdings' 12.8% growth in servicing is driven by increasing adoption of 'buy now, pay later' solutions, expansion into new merchant partnerships, and rising consumer demand for flexible payment options. Additionally, Affirm's technology-driven platform and data-driven approach to underwriting have enabled the company to efficiently scale its servicing capabilities, further contributing to its growth.

7. Detailed Products

Point of Sale (POS) Financing

Affirm offers point-of-sale financing solutions that allow consumers to pay for purchases over time, providing a seamless and transparent financing experience.

Virtual Card

Affirm's Virtual Card is a digital payment method that allows consumers to pay for online purchases in installments, providing a convenient and flexible payment option.

Debit Card

Affirm's Debit Card is a debit card that allows consumers to earn rewards and cashback on their purchases, while also providing access to Affirm's financing options.

Savings Account

Affirm's Savings Account is a high-yield savings account that allows consumers to earn interest on their deposits, with no fees or minimums.

8. Affirm Holdings, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Affirm Holdings, Inc. is medium because while there are some alternative financing options available, Affirm's point-of-sale financing solutions are still relatively unique and convenient for consumers.

Bargaining Power Of Customers

The bargaining power of customers is low because individual consumers have limited negotiating power when it comes to financing options, and Affirm's partnerships with merchants give it an advantage in terms of pricing and terms.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low because Affirm is not heavily reliant on a single supplier, and its technology platform allows it to maintain control over its supply chain and operations.

Threat Of New Entrants

The threat of new entrants is high because the fintech industry is rapidly evolving, and new companies are emerging with innovative financing solutions that could potentially compete with Affirm's offerings.

Intensity Of Rivalry

The intensity of rivalry is medium because while there are some established players in the point-of-sale financing market, Affirm's strong partnerships and technology platform give it a competitive advantage, but it still faces competition from other fintech companies.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 69.11%
Debt Cost 3.95%
Equity Weight 30.89%
Equity Cost 21.78%
WACC 9.45%
Leverage 223.73%

11. Quality Control: Affirm Holdings, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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A-Score: 3.6/10

Value: 0.7

Growth: 9.1

Quality: 4.2

Yield: 0.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

46.16$

Current Price

46.16$

Potential

-0.00%

Expected Cash-Flows