AI Superpowers and a Funding Tailwind: Affirm's Record Q3
Healthy consumer, deep capital markets, and an agentic coding push power another beat
AFRM · Earnings Call · 2026-05-07
A Record Quarter, but the Story Is the Toolkit
Affirm is on a run. The Investor Forum next week is a part of the story—they keep teasing more, but the numbers speak already. The company reported another record quarter, with Effective Revenue up 32% y/y to $532M, and operating margin at 20.2%, up 22pp y/y. The stock, after a long drawdown, has rebounded 58% in the last 90 days.
But the real change on this call was the discussion of AI. Max Levchin, not one for hyperbole, went deep into how the company is using agentic coding internally. He described a hackathon where the product team "literally delivered dozens of shippable features" in 48 hours. He said they are "mass deploying it internally" and that it's "unequivocally accretive to the bottom line."
“... the reason we have this sort of uncork it moment early in the year is because we felt that we were ready to mass deploy it internally and have, so far, been very pleased with what's transpired.” — Max Levchin, CEO · 2026-05-07
This is a company-unique take at a time when many fintechs are announcing AI-driven layoffs. Max is explicit:
We are not planning AI-related layoffs, full stop.
Instead, AI tools are giving their engineers "superpowers." Rob O'Hare added that AI spend is only "very low single-digit millions per quarter," but the efficiency gains are real. This is a subtle but important shift: Affirm is treating AI as an accelerant to its already efficiency-obsessed culture, not as a cost-cutter for headcount.
Credit and Funding: The Affirm Consumer Is Healthy
The Affirm consumer remains a fortress. Management repeated that they are not seeing deterioration or "disturbances in the course." Credit quality is stable, and the slight increase in allowance rate is due to seasonality and, surprisingly, prepayments from tax season—a positive signal. Rob O'Hare explained:
“Another driver, which I think Max called out in his portion of the letter was just that we did see elevated prepayments on the platform. It's a little bit of a counterintuitive point, but that's a really positive credit signal, and it has the effect of reducing the overall loan balance, which obviously, the good loans are being paid off early.” — Robert O'Hare, CFO · 2026-05-07
The funding market is even more favorable. Michael Linford said they are "kind of out of adjectives to describe just how great the execution has been." ABS deals are oversubscribed, spreads are tightening, and they've executed 3 deals this year with funding costs down 125bps y/y. This is a theme that has been building for quarters, but the confidence is now palpable. In prior calls, they already flagged the constructive market:
“I think it's still extremely constructive. Yeah. I think the conversations we're having with our our partners is usually around having to disappoint them on how much allocation we can give them right now.” — Rob O'Hare, Chief Financial Officer · 2026-02-05
That was from February. Now they are saying the depth is even greater. This is a key pillar of the growth story. In November, Michael had already highlighted their execution:
“Yes. Thanks for the question. Yes, we're really proud of our ability to execute in the ABS market and in the capital markets more broadly.” — Michael Linford, CFO · 2025-11-06
The Card, 0% APR, and the Big Nothing
The Card customer continues to scale: 4.4M active cardholders, up from 3.5M last quarter. Max called it their "fastest growing and also our most profitable product." The growth is organic, not fueled by heavy marketing. The card is also a gateway to more frequent engagement and better data.
0% APR remains a powerful engine. Merchants are increasingly funding these offers, and the network effects are compounding. The "Big Nothing" event—a multi-day promotional push—is a teaching aid for merchants and consumers. Max revealed they are using data from the last event to improve targeting:
“So I think if you want to sort of look for bread crumbs, we got smarter about targeting, that's certainly ...” — Max Levchin, CEO · 2026-05-07
They are also driving app engagement and searches, which is a longer-term growth driver.
Looking Ahead
The company will host its Investor Forum next week, where they promise more details on AI, underwriting, and international expansion. With the stock rebounding and fundamentals strong, the near-term risk is more about macro than execution. But as Max said, "It doesn't get any easier, you just go faster."
The takeaway: Affirm is not just riding a wave; it is using AI to compound its underwriting and operations advantage, while the capital markets reward its discipline. The Effective Revenue trend—up 567% over six years—shows a company that has found a durable model. If Q3 is any guide, the next chapter will be about scale, not survival.