Affirm RLTC Growth Accelerates to 41% Year Over Year
Revenue less transaction costs reached $498 million in the third fiscal quarter as GMV growth cooled to 35%.
Affirm Holdings (AFRM), the buy-now-pay-later payments company, accelerated growth in revenue less transaction costs to 41% year over year in the third fiscal quarter, a faster pace than the 29% year-over-year increase recorded in the second fiscal quarter.
Gross merchandise volume rose 35% from a year earlier, slowing from 36% growth in the prior quarter and marking a 10th consecutive period of more than 30% year-over-year GMV expansion. Revenue increased 33% year over year, a quicker clip than the 30% year-over-year rise in the second fiscal quarter.
The company delivered 35% GMV growth without compromising unit economic discipline. RLTC as a percent of GMV was over 4.3%. More than 70% of RLTC dollar growth flowed to adjusted operating income.
Sequential dollar levels fell from the second fiscal quarter, a seasonal pattern in the company’s calendar. GMV declined to $11.6 billion from $13.8 billion. Revenue declined to $1,039 million from $1,123 million, and RLTC declined to $498 million from $543 million. Net income was $103 million, down from $130 million in the prior quarter.
Operating income as a percent of revenue was 9%, up 10 percentage points year over year. In the second fiscal quarter, that ratio was 10.5%, up 11 percentage points year over year. Adjusted operating income as a percent of revenue was 27%, up 5 percentage points year over year, compared with 30% in the second fiscal quarter, when the year-over-year expansion was 3 percentage points.
The Affirm consumer remained financially healthy, with no change in demand or in consumers’ ability to repay. Delinquencies were up in line with expectations, with roughly half of the increase coming from a reduced denominator primarily due to stronger tax refund seasonality.
Zesty capital-markets demand was a resounding vote of confidence in the company’s approach to credit. Affirm grew capacity despite the lower seasonal volume of the third fiscal quarter. It priced its third consecutive revolving ABS transaction under a 5% blended yield in March, and its average annualized cost of funds reached the lowest level in three and a half years.
In the second fiscal quarter, the company highlighted AdaptAI and BoostAI, internally developed yield-optimization technologies. AdaptAI was deployed on nearly all Affirm surfaces, including digital wallets, and contributed to an approximately 10% year-over-year improvement in end-to-end checkout conversion. BoostAI, which optimizes financing offers through automatic A/B-test programs at participating merchants, had been deployed at 47 enterprise merchants and hundreds of small and mid-sized businesses since its launch a few months earlier. Merchants using BoostAI saw an average 5–15% increase in GMV, driven by higher conversion and consumer take-up.
A 0% APR event called the Big Nothing accounted for approximately 15% of all GMV in October in the second fiscal quarter, with daily Affirm cardholder signups increasing 21% during the event. The company was already planning the next Big Nothings.
Earlier in the third fiscal quarter, the company took a full week as a development team to retool Affirm software engineering to be truly AI-first. Agentically written code dominated non-agentic code after that effort, and an order-of-magnitude gain in software development productivity was entirely plausible, while the company expected to modestly grow its development team.