Affirm Holdings, Inc. (AFRM) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary suggests a positive outlook with strong performance in key areas like international expansion, Affirm Card growth, and strategic partnerships. The Q&A section revealed no significant negative trends, and management's responses were generally well-received, despite some lack of clarity on GMV deceleration. Overall, the company's growth and strategic initiatives indicate a positive sentiment, likely to result in a stock price increase of 2% to 8%.
Key Financial Performance
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Operating Highlights
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Risk or Challenges
Risks from Forward-Looking Statements: The company acknowledges that forward-looking statements are subject to numerous risks and uncertainties, which could lead to material differences in actual results. This highlights potential challenges in achieving projected outcomes.
Regulatory Risks: The company mentions that risks and uncertainties are detailed in their SEC filings, implying potential regulatory hurdles that could impact operations or financial performance.
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Guidance & Outlook
Investor Forum Announcement: Max Levchin announced that the next investor forum will be held on May 12, where the management team will discuss commercial and product initiatives and update the medium-term financial framework.
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Shareholder Return Plan
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Key Q&A
Q:Can you talk about the dynamics of your growth, particularly the top 5 merchants growing 23% and blending down as a concentration?
A:Max Levchin deferred to Rob O'Hare, who explained that the top 5 merchants disclosed for Q2 FY '26 are a different subset compared to fiscal '25. A large merchant partner transitioning off Affirm integration impacted the metric. The business is growing well with diversification in GMV.
Q:What are you seeing in terms of consumer trends, credit trends, and overall economic health?
A:Max Levchin stated that the consumer remains healthy, willing to borrow and repay. There is no significant deviation in trends quarter-to-date, and the company feels good about demand and repayment ability.
Q:Can you unpack the puts and takes in the RLTC margin and its trajectory?
A:Robert O'Hare mentioned RLTC take rates are expected to be slightly above 4% in Q3 and Q4. Benefits on transaction costs, particularly funding costs, are expected to continue. Revenue take rates softened year-over-year due to a higher 0% mix, which is beneficial for the network.
Q:What impact are competitors' aggressive strategies having on Affirm's merchant pricing and go-to-market strategy?
A:Max Levchin stated that competitors' promotional strategies have not impacted Affirm. Affirm's simple and transparent 0% interest offers resonate with consumers, and the company has not seen any effect from competitors' aggressive offers.
Q:Can you unpack the 'other' GMV category, which is now 15% of total and growing triple digits?
A:Max Levchin explained that the 'other' category includes a diverse range of small merchants and novelty items. It represents the long tail of merchants realizing the benefits of offering Affirm. As categories within 'other' reach critical mass, they may be broken out separately.
Q:Can you provide more details on the decision to pursue a bank charter and its potential benefits?
A:Max Levchin stated the primary motivation is regulatory certainty. The timeline for approval is years, and the focus is on long-term regulatory stability. Potential new products enabled by a bank charter are far in the future.
Q:Can you comment on the strong execution in ABS deals and the AI Boost product?
A:Robert O'Hare highlighted strong ABS deal execution with spreads under 100 basis points and weighted-average yields below 4.6%. Max Levchin noted that Boost AI is in early stages, allowing merchants to optimize promotions through automated A/B testing.
Q:Can you provide updates on the Affirm Card and international expansion?
A:Max Levchin reported Affirm Card GMV grew nearly 160% year-over-year, with active cardholders up 121%. International expansion is progressing, with new partnerships in the UK and scaling of existing ones like Shopify and Wayfair.
Q:What is driving the slowdown in GMV growth to 30% in Q3 and 25% in Q4?
A:Robert O'Hare mentioned no specific drivers for the deceleration, but noted the impact of comping the transition with a large retail partner.
Q:What is the current state of the forward flow and loan buyer channel?
A:Max Levchin stated the channel remains extremely constructive, with strong demand from partners for loan allocations.
Q:What are you seeing in the regulatory environment, particularly regarding potential caps on BNPL rates?
A:Max Levchin mentioned no specific discussions on BNPL rate caps. The company maintains positive relationships with regulators and focuses on being a good actor in the industry.
Q:How are customers using the Affirm Card, and has your thinking on it evolved?
A:Max Levchin noted that the card is used differently by various customer segments. Some use it as a top-of-wallet card, while others use it for considered purchases. The company is focusing on tailoring products to different customer needs.
Q:What is the rationale for expanding into new verticals like home improvement and medical?
A:Max Levchin explained that new verticals are chosen based on consumer demand. The goal is to make Affirm universally accepted across all categories, building a network similar to major credit card companies.
Q:Can you provide details on the partnership with Fiserv and its potential impact?
A:Max Levchin stated the partnership aims to offer BNPL capabilities to regional banks and financial institutions. It is too early to discuss unit economics, but the goal is to integrate Affirm into core banking software providers.
Q:What are your thoughts on agentic commerce and Affirm's role in it?
A:Max Levchin expressed optimism about agentic commerce, emphasizing Affirm's transparency and suitability for automated decision-making. The company is actively engaging with the industry to ensure inclusion in agentic commerce platforms.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the slowdown in GMV growth, providing no specific drivers for the deceleration. Additionally, they did not disclose the mix between short-term and long-term 0% loans or provide detailed unit economics for the Fiserv partnership.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
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Frequently Asked Questions
Where does this earnings call transcript come from?
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They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
