Affirm Holdings (AFRM) recently reported its fiscal Q1 2026 results, and the market reacted positively. Shares jumped 10% in after-hours trading, buoyed by an upward revision of FY2026 gross merchandise volume (GMV) guidance and a double-beat on earnings and revenue. The company reported earnings of 23 cents per share, exceeding the consensus estimate of 11 cents, and revenue reached $933.33 million, surpassing the Street's estimate of $883.14 million. But does this "beat the band" narrative, as CEO Max Levchin put it, hold up under closer scrutiny? Affirm stock gains on GMV guidance lift, Q1 earnings, revenue beats (AFRM:NASDAQ)
Digging into the Numbers
Levchin's enthusiasm is understandable. Setting a "highest-ever GMV record in a quarter with relatively few shopping holidays" sounds impressive. However, context is crucial. While the $933.33 million revenue figure represents a significant increase from the $698.47 million reported in the same period last year, the growth rate itself warrants deeper inspection. A quick calculation reveals year-over-year revenue growth of approximately 33.6% (specifically, (933.33-698.47)/698.47). Is that "beating the band," or just keeping pace in a high-inflation environment where nominal dollar figures are naturally inflated?
Here's where I start to raise an eyebrow. Affirm is projecting second-quarter revenue in the range of $1.03 billion to $1.06 billion, compared to the $1.05 billion analyst estimate. That’s… basically in line. It's not a miss, but it's hardly a blowout that justifies the celebratory language. And this is the part of the report that I find genuinely puzzling – the disconnect between the exuberant rhetoric and the fairly pedestrian forward guidance.
The Cookie Crumble: A Word on Data Collection
It's also worth briefly touching on how these numbers are tracked. Many online services, including those likely used by Affirm's customers, rely on cookies and similar tracking technologies. NBCUniversal's cookie notice (included in one of the reports, oddly enough) details the various types of cookies used, from strictly necessary ones to those used for advertising and analytics. The accuracy of GMV figures, and the projections derived from them, depends heavily on the reliability and comprehensiveness of this data collection. If a significant portion of users are blocking cookies or opting out of tracking (which is an increasing trend), the data could be skewed. This isn't to say that Affirm's numbers are wrong, but it introduces a layer of uncertainty that's often glossed over in these earnings reports. How many users are actively blocking tracking, and what impact does that have on the overall GMV calculation?
Furthermore, the reliance on third-party cookies for advertising and personalization raises questions about the long-term sustainability of Affirm's growth strategy. As privacy regulations tighten and browser vendors crack down on tracking, the effectiveness of targeted advertising may diminish, potentially impacting Affirm's ability to acquire new customers and drive GMV growth. We should ask: What contingency plans does Affirm have in place to mitigate the impact of these changes?
The BNPL Landscape: A Maturing Market
The "buy now, pay later" (BNPL) market is no longer the Wild West it once was. Competition is intensifying, and regulatory scrutiny is increasing. Affirm isn't just competing with other dedicated BNPL providers; it's also facing pressure from traditional credit card companies and banks that are rolling out their own installment payment options. This increased competition could put pressure on Affirm's margins and limit its ability to maintain its current growth rate. The question then becomes: How is Affirm differentiating itself from the growing pack of BNPL providers, and what is its strategy for maintaining a competitive edge in an increasingly crowded market?
I've looked at hundreds of these filings, and the lack of discussion about the competitive landscape, beyond the generic "we're innovating" statements, is concerning. It suggests either a lack of awareness or a deliberate attempt to downplay the challenges ahead.
So, What's the Real Story?
Ultimately, Affirm's Q1 2026 results are a mixed bag. The company beat expectations, but the forward guidance is lukewarm, and the celebratory rhetoric feels overblown. The reliance on potentially unreliable cookie data and the intensifying competition in the BNPL market add further layers of complexity. It's not a disaster, but it's far from a clear-cut "beat the band" performance. The market's initial enthusiasm might be premature.
