Affirm Q1 FY2027 Earnings: Net Income Doubles to $164M as Credit-Loss Provisions Rise 59%

Affirm doubled its net income in the first quarter of fiscal 2027, to $164 million, on revenue up 35% to $1.26 billion. The cost that grew fastest was credit: the provision for credit losses rose 59% to $259 million. That is not necessarily a sign of worse borrowers. Under US accounting a lender records the losses it expects on a loan when it makes the loan, so a company growing its loan book quickly books a lot of loss expense up front. The allowance Affirm holds against its loans rose to 6.3% of the book from 5.9% in June, and 30-day delinquencies ticked up to 2.9%. Those two numbers decide whether the profit holds.

Volume up 36%, profit doubled​

Gross merchandise volume, the value of purchases paid for with Affirm, rose 36% to $14.4 billion (shareholder letter). Revenue rose 35.2% to $1,262.2 million. Interest income on the loans Affirm keeps grew fastest, up 44.9% to $658.1 million; network revenue from merchants and cards rose 22.8% to $393.4 million. Affirm Card was the fastest-growing product: active cardholders more than doubled to 6 million and card GMV rose 117%.

Operating expenses grew more slowly than revenue overall, 23.6% to $1,075.2 million, so operating income rose to $187.1 million from $63.7 million and operating margin to 14.8% from 6.8%. Net income was $164.2 million against $80.7 million, or $0.47 per diluted share.

The treemap shows Affirm's cost structure: the provision for credit losses ($259.4 million) and technology and data analytics ($202.7 million) are the two largest items, then processing and servicing, funding costs and general and administrative expense. The ledger posts each of Affirm's operating captions as its own line, so the credit cost sits next to the others rather than inside a cost-of-revenue total, which Affirm does not report.

Why the provision grew faster than revenue​

Lenders reporting under current US GAAP use an expected-loss model, CECL: when a loan is made, the lender estimates how much of it will never be repaid over its life and records that estimate as an expense immediately, adding it to an allowance on the balance sheet. Actual write-offs later draw the allowance down. A lender that grows fast therefore pays for its losses before it earns the interest that covers them.

Affirm's 10-Q shows both pieces. Loans held for investment rose 5.8% in the quarter to $10,114.6 million, while the allowance for credit losses rose 12.9% to $636.1 million. So the allowance grew faster than the loans it covers: 6.29% of the book against 5.89% at the end of June, by our computation. The letter says recent monthly installment cohorts are tracking towards about 3.5% ultimate net charge-offs, "in-line with expectations." But delinquencies did move: loans 30 or more days past due rose to 2.9%, 9 basis points higher than a year earlier and 35 basis points higher than in June.

For a small business that sells on credit terms the same arithmetic applies on a smaller scale: an allowance for doubtful accounts recognised when the sale is made, not when the customer stops paying, is what keeps profit from looking best just before collections go wrong.

A loan book that has quadrupled​

Net loans held for investment were $2,348 million at the end of fiscal 2022, $6,629 million at the end of 2025, $8,997 million in June and $9,478.5 million on September 30. They are funded mostly by debt: notes issued by securitization trusts rose to $6,221.2 million from $5,331.2 million in the quarter, while other funding debt fell to $2,904.5 million, and with $1,130.6 million of convertible notes the total reached $10,256.3 million. The period file lists each funding line.

Each row is one reported period: revenue as a negative credit and Equity:Adjustments as net income. Affirm lost $707 million in fiscal 2022, $985 million in 2023 and $518 million in 2024, broke even with $52 million in 2025 and earned $1,930 million in 2026, a figure that includes a non-cash tax benefit of about $1.5 billion from releasing a valuation allowance, as our FY2026 analysis explained. This quarter's $164 million is earned with an ordinary tax charge of $40.9 million, which makes it the cleaner read of the business.

What to watch for the rest of fiscal 2027​

• The guide. For the December quarter Affirm expects GMV of $17.9 billion to $18.2 billion, revenue of $1,435 million to $1,465 million and an operating margin of 11.5% to 13.5%; for the year, GMV above $65.25 billion and an operating margin above 14.75%.
• Delinquencies after the holidays. The December quarter adds a seasonal surge of loans; the provision will rise with it, and the 30-day delinquency rate in early 2027 shows whether the 2.9% was seasonal.
• Funding mix. Securitization notes grew while other funding debt shrank. Funding costs rose 22%, slower than the loan book's income; a rise in rates or wider securitization spreads would narrow that gap.
• Interest income versus network revenue. Interest now provides more than half of revenue, which ties Affirm's results more closely to the credit cycle than to merchant fees.