Can Affirm's Surging Consumer Base Drive FY26 Momentum?

Affirm Holdings, Inc. AFRM is at an inflection point heading into fiscal 2026, with its expanding active consumer base emerging as a critical performance barometer. The first quarter of the fiscal year demonstrated robust momentum—the company’s active consumer base expanded 24% year-over-year, bolstered by both improved retention metrics and aggressive new customer acquisition across an increasingly dense network of merchant partnerships. By prioritizing transparent pricing and flexible payment structures, AFRM has positioned itself to capture demand from digitally-native demographics seeking alternatives to traditional lending products.

Consumer Engagement Deepening Across AFRM’s Platform

The trajectory of AFRM’s active consumer base growth extends beyond raw user numbers. Repeat transaction activity surged 52.2% year-over-year in Q1, translating into total revenue growth of 33.6%—a figure that underscores deepening platform engagement. This isn’t simply more users signing up; it’s existing customers returning more frequently, embedding AFRM into their regular purchasing behavior across categories ranging from everyday items to significant expenditures.

Several factors reinforce this stickiness. The company’s refined risk assessment framework, combined with advanced fraud mitigation and seamless checkout experiences, has bolstered consumer confidence. As the active consumer base matures, spending patterns reflect broader adoption of buy-now-pay-later models in mainstream commerce, particularly among younger cohorts.

Competitive Landscape: How AFRM Stacks Up

Within the BNPL ecosystem, AFRM faces meaningful competition. Klarna Group plc KLAR reported 114 million active users globally in Q3 2025, representing 32% year-over-year expansion and generating 3.4 million daily transactions. KLAR’s revenues grew 26% YoY during the same period. Meanwhile, PayPal Holdings, Inc. PYPL maintains scale with 438 million active accounts (up 1% YoY in Q3 2025), though its growth trajectory appears more measured—net revenues increased 7% year-over-year to $8.4 billion, with total payment volume climbing 8% YoY.

AFRM’s 24% active consumer base growth compares favorably to PayPal’s more modest expansion, though Klarna’s 32% user growth suggests intensifying competition for market share in the flexible payments segment.

Valuation & Market Positioning

Year-to-date, AFRM shares have appreciated 11.8%, marginally outpacing the broader industry’s 10.2% gain. From a valuation lens, AFRM trades at a forward price-to-sales multiple of 5.03, slightly above the sector average of 4.98, reflecting market expectations embedded in the current price.

Wall Street’s consensus estimates project 566.7% earnings growth for fiscal 2026, anchored on anticipated 26% revenue expansion year-over-year. The stock currently carries a Zacks Rank of #3 (Hold), suggesting a balanced risk-reward profile at present valuations.

The Path Forward

AFRM’s continued ability to expand its active consumer base while maintaining profitability will be central to FY26 performance. Headwinds—including rising funding costs, regulatory scrutiny around BNPL products, and potential shifts in consumer borrowing appetite—pose near-term risks. However, if the company sustains momentum in user acquisition and monetization per customer, the active consumer base could continue powering stronger revenue visibility and a more resilient business model through fiscal 2026 and beyond.