Affirm Q1 FY2027: GMV up 34% to $14.4B, while credit-loss provisions rose 59%

Affirm lends to shoppers at checkout and through its own app and card: monthly installment loans, many of them interest-bearing, and short “Pay in 4” plans. It earns fees from merchants and the card network, interest on the loans it keeps, and gains when it sells loans to investors. Because it funds loans with warehouse lines, securitizations and forward-flow sales, its profit depends as much on credit losses and funding costs as on volume.

The fiscal first quarter, July to September 2026, is the first test of the outlook Affirm gave in August, and the first in which its new revenue mix, more interest income and less merchant fee, shows up clearly. The sections below compare the quarter with that outlook, then look at what drove revenue, how much of the growth went to credit costs, and what the new targets imply.

Affirm Q1 FY2027 results at a glance

$ millions, except GMV and %	Q1 FY2027	Guided (Aug. 27)	Q1 FY2026
GMV ($ billions)	14.4	13.7–14.0	10.8
Total revenue	1,262	1,190–1,220	933
Revenue less transaction costs	617	575–590	455
Operating income	187	—	64
Operating margin	14.8%	11.5–13.5%	6.8%
Adjusted operating margin	30.1%	28.0–30.0%	28.3%
Net income	164	—	81

Revenue less transaction costs (RLTC) is Affirm’s non-GAAP measure of what is left after loan purchase losses, credit-loss provisions, funding costs and processing. Adjusted operating margin excludes stock-based compensation, enterprise warrant expense, depreciation and other items.

Every guided line landed above the August outlook

GMV of $14.4 billion (as rounded in the letter) was about $0.4 billion above the top of the $13.7–14.0 billion range, revenue about $42 million above $1,220 million, and RLTC about $27 million above $590 million (our arithmetic). The GAAP operating margin of 14.8% cleared the 11.5–13.5% range and the adjusted margin of 30.1% the 28.0–30.0% range. Net income more than doubled, from $80.7 million to $164.2 million.

Growth came from both sides of the network. Active consumers reached 28.7 million, up from 24.1 million a year earlier, transactions per active consumer rose to 7.3 from 6.1, and active merchants to 620.8 thousand. Total transactions grew 34% while average order value slipped 1% to $258. Affirm Card was the fastest-growing piece: active cardholders up 112% to 6 million and Card GMV up 117%.

Revenue mix: interest income led

Total revenue grew 35%, slightly faster than GMV, and revenue as a share of GMV rose 11 basis points to 8.79%. The letter breaks that down:

Revenue line, $ millions	Q1 FY2027	Q1 FY2026	Change
Interest income	658.1	454.1	+45%
Total network revenue	393.4	320.5	+23%
Gain on sales of loans	162.2	119.0	+36%
Servicing income	48.5	39.7	+22%

Interest income grew fastest, ahead of a 38% rise in average net loans held for investment, as the average APR rose about 40 basis points with more direct-to-consumer lending. Network revenue, mostly the fees merchants pay, grew only 23%, which the letter attributes partly to a mix shift toward direct-to-consumer volume that earns lower network revenue per dollar than integrated point-of-sale volume. So revenue is shifting from merchant fees toward interest, which ties more of it to credit.

Credit costs grew faster than volume

Transaction costs, $ millions	Q1 FY2027	Q1 FY2026	Change (≈)
Provision for credit losses	259.4	162.8	+59%
Processing and servicing	168.8	133.8	+26%
Funding costs	134.4	110.0	+22%
Loss on loan purchase commitment	82.6	71.6	+15%
Total transaction costs	645.1	478.1	+35%

≈ marks our arithmetic.

Funding was the help: average funding costs fell about 69 basis points from a year earlier to 6.0%, though they rose 27 basis points from the prior quarter as benchmark rates climbed, and more than 70% of on-balance-sheet funding is fixed-cost. The provision for credit losses was the drag, up about 59% against 34% GMV growth (our arithmetic). The allowance for credit losses rose to 6.3% of loans held for investment from 5.9% at both June 30 and a year earlier. Thirty-plus-day delinquencies on monthly installment loans, excluding Peloton and Pay in X, were 2.9%, up 9 basis points from a year earlier and 35 from the prior quarter. The letter says recent monthly installment cohorts are tracking toward about 3.5% ultimate net charge-offs, in line with expectations, and Pay in 4 loss rates tracking below 1% of GMV.

Below RLTC, operating expenses other than transaction costs rose about 10% to $430 million (our arithmetic: technology and data analytics $202.7 million, sales and marketing $86.8 million, general and administrative $140.6 million). That operating leverage, not lower credit costs, is what lifted the margin: transaction costs were about 51% of revenue in both years (our arithmetic). Income tax rose to $40.9 million from $2.3 million, which is why net income grew less than operating income.

Funding and the new targets

Funding capacity rose to $31.7 billion from $26.6 billion a year earlier and $30.0 billion at June 30; Affirm estimates it can support more than $70 billion of annual GMV. Total liquidity was about $3.0 billion against about $1.1 billion of convertible debt. Equity capital required was 4.6% of the $21.6 billion platform portfolio; the outlook assumes that ratio stays at or below 5%.

Outlook	August	November
Fiscal Q2 2027 GMV	—	$17.9–18.2 billion
Fiscal Q2 2027 revenue	—	$1,435–1,465 million
Fiscal Q2 2027 operating margin	—	11.50–13.50%
Fiscal 2027 GMV	more than $64.0 billion	more than $65.25 billion
Fiscal 2027 operating margin	more than 14.5%	more than 14.75%
Fiscal 2027 adjusted operating margin	more than 30.5%	more than 30.75%

The fiscal Q2 operating-margin range is lower than Q1’s actual margin. The letter notes that enterprise warrant expense is seasonally higher in fiscal Q2, and that a UK enterprise launch late in Q1 will speed up the rate at which those warrants are earned.

What to watch in fiscal Q2

• Delinquencies through the holidays. The 30+ day rate rose 35 basis points from the prior quarter. The letter separately expects recent monthly installment cohorts to reach about 3.5% ultimate net charge-offs; the two are different measures.
• Provision vs GMV. Provisions grew 59% against 34% volume growth; whether that gap narrows decides how much of the revenue growth reaches profit.
• Funding costs. They rose 27 basis points from the prior quarter; the letter’s outlook assumes higher short-term rates in fiscal 2027.
• Enterprise warrants. The lower fiscal Q2 margin range reflects warrant expense; the UK launch adds to it.
• Network revenue. Merchant fees grew more slowly than volume as direct-to-consumer and card volume grew.

Quick answers

What was Affirm’s GMV in Q1 FY2027?

$14.4 billion for the quarter ended September 30, 2026, up 34% from $10.8 billion a year earlier and above the $13.7–14.0 billion Affirm guided to in August. Total revenue was $1,262 million, up 35%.

Is Affirm profitable?

Yes. GAAP operating income was $187 million and net income $164 million in fiscal Q1 2027, against $64 million and $81 million a year earlier. The letter calls it the eighth consecutive quarter of GAAP profitability.

What is Affirm’s fiscal 2027 guidance?

GMV of more than $65.25 billion, up from more than $64.0 billion in August; revenue and RLTC similar to fiscal 2026 as a share of GMV; GAAP operating margin above 14.75% and adjusted operating margin above 30.75%. For fiscal Q2, GMV of $17.9–18.2 billion and revenue of $1,435–1,465 million.

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Sources and method. Every figure for the quarter — the income statement, key operating metrics, non-GAAP reconciliations, revenue drivers, credit metrics, the funding update and the fiscal Q2 and fiscal 2027 outlook — is Affirm’s own disclosure in its FQ1’27 Shareholder Letter, Exhibit 99.1 to the Form 8-K filed 2026-11-05 (accession 0001628280-26-071005), read directly from SEC EDGAR and linked above. The filing was accepted at 16:04 ET on 2026-11-05 (EDGAR filing index), after the US market closed. The August outlook comes from the “Financial Outlook” page of the FQ4’26 Shareholder Letter (Form 8-K filed 2026-08-27, accession 0001628280-26-059271), which is filed as images only and was read from that page image. Affirm’s fiscal year ends June 30, so fiscal Q1 2027 is the quarter ended September 30, 2026.

No consensus estimate is included, so this piece makes no claim that the quarter beat or missed expectations; the only comparisons are with Affirm’s own outlook and with prior periods. This piece makes no claim about the share-price reaction.

Our arithmetic, labelled as such: GMV about $0.4 billion, revenue about $42 million and RLTC about $27 million above the tops of the August ranges; net income growth of about 103%; the growth rates of each transaction-cost line (provision about 59%, processing and servicing about 26%, funding costs about 22%, loss on loan purchase commitment about 15%, total about 35%); transaction costs at about 51% of revenue in both years ($645.1 million of $1,262.2 million; $478.1 million of $933.3 million); and operating expenses other than transaction costs of about $430 million against about $392 million, up about 10%. These are approximations built on the disclosed figures, not reported numbers. The 34%, 35%, 36%, 45%, 23%, 22% and 38% growth rates, the margins and the basis-point changes are as printed in the letter. The interpretation — that revenue is shifting toward interest income and that credit-loss provisions are growing faster than volume — is our analysis, not a company statement, and is not a forecast.

Related: Sezzle Q2 2026, another pay-over-time lender.