Affirm (NASDAQ:AFRM) executives fielded questions on growth drivers, funding conditions, product initiatives, and regulation during the company’s fiscal 2026 second-quarter earnings call, with management repeatedly characterizing results as strong and consumer credit performance as stable.
Management highlights investor forum and business diversification
Founder and CEO Max Levchin offered brief prepared remarks, calling the quarter’s results “excellent” and announcing the company plans to hold its next investor forum on May 12. Levchin said the event will include a broader set of executives discussing commercial and product initiatives and an updated medium-term financial framework.
Consumer health and credit trends described as steady
Asked about consumer and credit conditions, Levchin said the consumers Affirm is seeing are “quite healthy,” adding they are “able and willing to pay us back.” He emphasized Affirm is selective because it does not approve every loan, but said the company feels good about both demand and repayment behavior. Levchin added he did not see any notable change in trends early in the current quarter.
Later in the call, Levchin reiterated that the company was not seeing “disturbances in the forest” on credit. He said Affirm manages credit to a NICO metric and described the NICO curves as tightly controlled, which he cited as his “North Star” for monitoring credit outcomes.
RLTC margin outlook, 0% mix, and competitive positioning
O’Hare discussed revenue less transaction costs (RLTC) take rate expectations, saying the company’s guidance implies RLTC take rates “slightly above 4” in both fiscal Q3 and Q4. He described the puts and takes as similar to what the company saw in Q2: some year-over-year softening in revenue take rates, alongside benefits on transaction costs—particularly funding costs—driven by improvements in the asset-backed securities (ABS) market.
O’Hare also pointed to the company’s increased mix of 0% offerings as a factor in revenue take-rate dynamics, calling it “really good for the network.” Levchin later argued that Affirm’s “brain dead simple” and transparent 0% messaging remains a differentiator, saying the company has not seen an impact from competitors offering aggressive promotions such as cash back incentives. He said Affirm’s “no interest” claim has become a durable calling card because there is “no asterisk” and the company does not charge late fees.
On merchant pricing, management said the opportunity to capture value varies by merchant size. The company described traction with go-to-market packages for smaller merchants that can move them from a base package to a higher-converting program with more 0% offerings. For larger merchants, management framed pricing discussions as dependent on proving conversion benefits and ensuring compensation aligns with the value delivered. O’Hare added that “flat pricing in a declining rate environment is actually the same thing as taking price.”
Funding markets, ABS execution, and loan buyer demand
Management described capital markets conditions as favorable. Discussing a recent ABS transaction, O’Hare said the market remains “very constructive” and noted the last deal was priced with a spread of under 100 basis points, which he said the company had not seen since 2021. He added the weighted average yield in the deal was below 4.6%, and characterized current execution as the best the company has seen since the rate environment shifted. O’Hare attributed the execution to investor confidence in Affirm’s ability to manage credit outcomes and deliver returns.
On forward flow and private credit demand, management said the environment remains “extremely constructive,” with conversations often centered on how much allocation the company can provide to partners. O’Hare said Affirm has been selective in choosing partners, which he said supports a durable funding ecosystem.
Asked whether private credit buyer preferences change what Affirm holds on balance sheet, management said no, explaining the company allocates loans to partners on a “vertical slice” basis rather than selecting specific assets. The company noted exceptions may include concentration limits or test products that are not included in normal funding flows.
Product initiatives: Affirm Card, AI tools, international expansion, and new vertical tests
Levchin and the team emphasized multiple growth levers, particularly the Affirm Card. Levchin said card GMV was up “just under 160%” year-over-year, active cardholders rose 121%, and 0% deals on the card increased 190%. He described the card as a “big growth engine” that is now “material” to the overall business, rather than a novelty for diehard users.
Levchin also said card usage varies meaningfully by consumer segment. He described a group of users treating the card as top-of-wallet for everyday spending, but said it remains a minority; a majority use the card for more “considered purchase” moments. He added Affirm expects to talk more over time about internal consumer segmentation as usage patterns “bifurcate” into distinct groups.
On AI, Levchin differentiated between Adapt AI, which he said has been part of the product for a couple of years, and Boost AI, which he described as newer. He said Boost AI enables automated A/B testing and allows merchants to allocate incremental budget to Affirm-specific promotions such as 0% or reduced APR offers, with Affirm optimizing deployment to maximize conversion. Levchin characterized this as moving toward an “advertising model versus a cost of acceptance model,” while noting Boost AI remains in “early days” and is not broken out in reported numbers or guidance.
Internationally, Levchin said the company is seeing momentum in the U.K., including U.S. brands enabling Affirm in the market and scaling Shopify-related activity that is “still not at sort of peak run rate.” He also referenced Wayfair going live in the U.K. in what he described as an early beta-like stage, and mentioned a partnership with a large U.K. device seller. Levchin said international is smaller than the card business but is growing at a pace that “excites” the company, adding that more countries are expected over time.
Management also discussed category expansion and tests:
- “Other” GMV category: Levchin described “other” as primarily the long tail of many smaller merchants that are difficult to classify, and said the company has broken out categories once they reach critical mass, citing “services” as a recent example. Management also said wallet partnerships are included in “other,” and that these wallet relationships are contributing to higher merchant growth.
- Rent test: Levchin said the rent initiative is a “very, very small test” focused on short-term timing shifts (for example, aligning rent due dates with pay cycles) rather than turning rent into a longer subscription-like installment plan. He stressed investors should “put nothing in your model for now.”
- Intuit/QuickBooks payments partnership: Levchin said the initiative is not B2B lending, but rather a way to offer consumers installment payments for services invoiced through QuickBooks—describing it as “B2B2C.” He said Affirm expects to be included as a payment option in invoices from service providers using QuickBooks, expanding BNPL into service transactions that previously relied on cards.
- Fiserv partnership: Levchin said it is too early to discuss unit economics but framed the strategy as enabling banks and financial institutions—many of which lack underwriting and capital markets capabilities—to offer BNPL features through their existing debit card relationships, leveraging integrations via core banking software providers.
On the bank charter application, Levchin said the primary motivation is “regulatory certainty,” describing it as a long-term investment with a timeline measured in years. He cautioned that approval is uncertain and said any potential product expansion enabled by a charter is “so far away” that it is not worth discussing now.
Levchin also addressed regulation more broadly, saying the company was not hearing about specific caps on BNPL rates. He described a “dynamic” regulatory environment at both federal and state levels and said Affirm maintains active conversations with regulators, adding that the company’s practices—such as not charging late fees—support constructive relationships.
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.
