One-glance verdict
Within fair range
$34.77 our estimate vs market $71.52
Wall Street consensus: $99.09 (185.0% higher than our fair-value estimate)
106% above our estimate
Fundamentals snapshot
Affirm Holdings, Inc.
AFRM · NMS · Financial Services · Credit Services
Current price
$71.52
52-week range
$42.09 - $90.44
Market cap
$24.13B
Balance sheet
Stretched
1.92x Concerning
Net debt $8.32B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 32.2% last year.
- Reward Returns 45.1% on equity, ahead of 80% of its peers.
- Risk Forward P/E (14.8x) is higher than trailing (12.9x) - earnings are expected to drop.
- Risk Net debt grew 119.2% over 3 years.
What this company does
Affirm Holdings, Inc.
Affirm provides a "buy now, pay later" service, allowing people to purchase items from stores and pay for them over time in installments. The company makes money primarily by charging fees to the merchants who offer this payment option and from interest paid by shoppers on their payment plans. Affirm's success depends on growing its network of both stores and consumers who value this flexible way to pay.
How the company got here
Affirm was started in 2012 by Max Levchin, who also co-founded PayPal, to offer a more modern and transparent way to borrow money than traditional credit cards. The company grew by partnering with online stores, allowing shoppers to pay for purchases in fixed installments. A key moment was its initial public offering (IPO, when a private company first sells shares of stock to the public) in 2021, which gave it more capital (money for investment) to grow. Over time, Affirm has expanded from just a checkout option to a broader payment network, including a physical card and a consumer app.
What it actually does
Affirm offers a service known as "Buy Now, Pay Later" (BNPL), which lets you buy something immediately and pay for it over time in several set payments. When you're shopping online or in a store, you can choose Affirm at checkout to split the cost of your purchase into installments, for example, four payments every two weeks or monthly payments for larger items. Unlike a credit card where the interest can pile up, Affirm shows you the total cost upfront, including any interest, so you know exactly what you'll pay. The company makes an instant decision on whether to approve the loan based on the information you provide and a quick credit check that doesn't affect your credit score.
Merchant Fees
This is Affirm's main source of income, where it charges stores a fee for offering its payment plan to customers. Businesses are willing to pay this fee because offering installment plans can encourage shoppers to buy more and complete their purchases instead of abandoning their carts. Affirm pays the merchant (the store selling the goods) the full purchase amount right away, taking on the risk of the loan itself. These fees are a significant part of Affirm's overall revenue (the total money a company brings in from sales).
Interest Income
Affirm also makes money by charging interest on some of the loans it provides to consumers. While many smaller purchases can be paid off with zero interest, for larger items or longer repayment periods, Affirm will charge an interest rate, which is a percentage of the loan amount. This interest is clearly shown to the shopper as a fixed dollar amount before they agree to the loan, so there are no surprises. This is a major way Affirm earns money directly from the shoppers who use its service.
Interchange Fees
When a shopper uses the Affirm Card, which is a physical debit card, Affirm earns a small fee from the transaction. This fee, known as an interchange fee, is paid by the merchant's bank to the cardholder's bank for the convenience of accepting card payments. While this is a smaller piece of the business compared to merchant fees and interest income, it's a growing area as more people use the Affirm Card for everyday purchases.
Loan Sales and Servicing
Affirm doesn't hold onto every loan it originates (creates); it sells some of them to third-party investors and financial partners. When it sells a bundle of loans, it can earn an upfront gain on the sale. Often, even after selling the loan, Affirm will continue to manage the payments and customer service for that loan, earning a fee for this work, which is called loan servicing. This strategy allows Affirm to free up its own money to lend to more customers while still generating revenue.
What management is betting on now
Affirm is focused on becoming a go-to payment option for all types of shopping, not just at the online checkout. A major priority is expanding the use of its Affirm Card, which allows customers to use its pay-over-time feature anywhere debit cards are accepted. The company is also growing its network of merchant partners and expanding internationally into places like the U.K. and Australia. Management believes that by using its technology for smart underwriting (the process of deciding whether to give someone a loan), it can continue to grow profitably while offering a transparent alternative to traditional credit.
Price history
How the share price has moved
—
Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q1
$152.72M
FY2025 Q2
$268.11M
FY2025 Q3
$157.38M
FY2025 Q4
$23.52M
FY2026 Q1
$320.21M
FY2026 Q2
$118.03M
FY2026 Q3
$325.10M
FY2026 Q4
$229.29M
Revenue
$1.17B
Net income
$1.62B
Diluted EPS
4.63
Operating cash flow
$296.16M
Free cash flow
$229.29M
Fetching…
Sources
Revenue
$1.04B
Net income
$102.90M
Diluted EPS
0.30
Operating cash flow
$386.50M
Free cash flow
$325.10M
Fetching…
Sources
Revenue
$1.12B
Net income
$129.59M
Diluted EPS
0.37
Operating cash flow
$173.74M
Free cash flow
$118.03M
Fetching…
Sources
Revenue
$933.34M
Net income
$80.69M
Diluted EPS
0.23
Operating cash flow
$374.57M
Free cash flow
$320.21M
Fetching…
Sources
Revenue
$876.42M
Net income
$69.24M
Diluted EPS
0.22
Operating cash flow
$74.64M
Free cash flow
$23.52M
Fetching…
Sources
Revenue
$783.13M
Net income
$2.80M
Diluted EPS
0.01
Operating cash flow
$210.39M
Free cash flow
$157.38M
Fetching…
Sources
Revenue
$866.38M
Net income
$80.36M
Diluted EPS
0.23
Operating cash flow
$312.02M
Free cash flow
$268.11M
Fetching…
Sources
Revenue
$698.48M
Net income
$-100.22M
Diluted EPS
-0.31
Operating cash flow
$196.87M
Free cash flow
$152.72M
Fetching…
Sources
Is it cheap or expensive?
Fair value $34.77 vs current price $71.52
Wall Street consensus is the average analyst price target: $99.09 (185.0% higher than our fair-value estimate).
Our most-likely fair value is $34.77 a share — about 51.4% away from today's price of $71.52, so the stock currently looks fairly priced.
Is it drowning in debt?
Stretched
Net debt $8.3B. Interest coverage 1.9x.
Net debt
$8.32B
Interest coverage
1.92x
Affirm Holdings, Inc.'s profit covers its interest bill about 1.9 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
AFRM
BASELINE
Affirm Holdings, Inc.
Total debt $10.02B Interest coverage 1.92x This is the baseline the peer rows are being compared against.
Total debt $14.22B Interest coverage 14.50x +656% vs AFRM Carries about 7.6x more debt cushion than AFRM.
What you should know
The case for and against AFRM
3 Rewards
2 Risks
Rewards
-
Revenue grew 32.2% last year.
-
Returns 45.1% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Forward P/E (14.8x) is higher than trailing (12.9x) - earnings are expected to drop.
-
Net debt grew 119.2% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
12.93x
Forward P/E
14.81x
P/B
4.40x
P/S
5.66x
EV/EBITDA
43.90x
PEG ratio
8.68x
Profitability
How much profit each dollar creates
Gross margin
48.9%
Operating margin
12.6%
Net margin
45.3%
ROE
45.1%
ROA
1.9%
Health
Liquidity and balance-sheet strength
Debt / equity
1.83x
Current ratio
11.98x
Quick ratio
8.36x
Total debt
$10.02B
Total cash
$1.70B
Growth
How the business has been compounding
Revenue TTM
$4.26B
Revenue 5Y CAGR
33.3%
EPS TTM
5.53
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$1.23B
Free CF TTM
$992.63M
FCF margin
23.3%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
—