Where Can You Use Affirm? Merchant Network Expands 30% as Payment Volumes Soar in Q1 FY26

Affirm Holdings, Inc. (AFRM) has witnessed a notable 15.4% stock surge following its fiscal 2026 first-quarter earnings announcement on November 6, driven by substantial operational momentum and expanding merchant presence. The fintech payment platform’s growth narrative centers on merchants increasingly adopting Affirm across diverse retail channels, answering consumer questions about where to use Affirm for flexible payment options.

Operational Momentum Accelerates Across Core Metrics

The quarter showcased impressive execution across Affirm’s business pillars. Active merchant count reached 419,000 as of September 30, 2025, representing robust 30% year-over-year expansion. This growing merchant base directly addresses consumer needs—determining what stores accept Affirm has become easier as retail partnerships proliferate.

Gross Merchandise Value climbed to $10.8 billion, up 42% year-over-year and surpassing management guidance of $10.1-$10.4 billion. Transaction volumes advanced 52.2% year-over-year to 41.4 million, reflecting accelerating repeat customer utilization. The dual expansion of merchant networks and transaction frequency demonstrates how widely Affirm now functions as a purchasing option across consumer touchpoints.

Financial Metrics Deliver Outsized Profitability

Earnings per share reached 23 cents, meaningfully exceeding the consensus estimate of 11 cents and reversing the prior-year quarter’s 31-cent loss. Total revenues climbed 33.6% year-over-year to $933.3 million, surpassing guidance midpoint of $870 million and beating consensus by 5.5%.

The company’s profitability expansion extended beyond top-line growth. Adjusted operating income surged 103.6% year-over-year to $264 million, while adjusted operating margin expanded 970 basis points to 28.3%—outpacing management’s 23-25% expectation. This margin leverage reflects operating discipline despite higher credit provision and funding costs.

Revenue Composition Reflects Business Diversification

Card network revenues accelerated 46% year-over-year to $69.3 million, driven by elevated Affirm Card and virtual card adoption—a key indicator of how consumers increasingly choose Affirm across different retail environments and online platforms. Merchant network revenues advanced 36.2% year-over-year to $251.1 million, supported by expanding merchant participation and growing transaction values.

Interest income rose 20% year-over-year to $454.1 million, while servicing income increased 53% year-over-year to $39.7 million. This revenue diversification across interest, servicing, and network fees strengthens the business model’s resilience.

Cost Management Drives Margin Expansion

Operating expenses increased just 4.6% year-over-year to $869.7 million despite significant business expansion, demonstrating operational leverage. Notably, sales and marketing expenses declined 46% year-over-year, indicating improved unit economics and organic merchant acquisition momentum.

Provision for credit losses rose modestly 1.8% year-over-year to $162.8 million. While credit normalization continues, the company’s pricing discipline has maintained profitability expansion even as credit costs remain elevated.

Balance Sheet Strengthens Amid Growth

Cash and cash equivalents reached $1.4 billion as of quarter-end, up 5.5% from fiscal 2025 close. Operating cash flow surged to $374.6 million during the September quarter, nearly doubling the prior-year figure of $196.9 million. Total stockholders’ equity expanded to $3.3 billion from $3.1 billion, reflecting retained earnings growth and operational cash generation.

Management Raises Full-Year Outlook

For fiscal 2026, management elevated GMV guidance to exceed $47.5 billion from the prior $46 billion threshold. Full-year revenues are still anticipated at 8.4% of GMV. The company now projects adjusted operating margin exceeding 27.1%, with weighted average shares outstanding estimated at 353 million.

Second-quarter guidance points toward continued momentum, with forecasted GMV between $13.0-$13.3 billion and revenues anticipated at $1.03-$1.06 billion. Management projects Q2 adjusted operating margin within 28-30%, suggesting sustained operational leverage.

Investment Perspective and Competitive Positioning

Affirm maintains a Zacks Rank #3 (Hold) designation. Within the broader fintech and software ecosystem, the company’s 30% merchant growth and 42% GMV expansion underscore deepening retail penetration—making Affirm an increasingly standard payment option for consumers asking what stores accept Affirm. The expanded merchant footprint supports the long-term thesis of payment flexibility becoming table-stakes in consumer commerce.

The combination of merchant expansion, transaction acceleration, improving unit economics, and balance sheet strengthening positions Affirm within a compelling growth narrative as digital payments continue reshaping retail commerce.