Affirm’s $1.9 Billion Profit Has a $1.5 Billion Asterisk

Key Takeaways

• Affirm reported fiscal 2026 revenue of $4.26 billion, up 32%, on $50.2 billion of gross merchandise volume.
• Net income came in at $1.93 billion, which looks like a breakout year and will be the number most readers remember.
• About $1.5 billion of it is a non-cash tax benefit, and operating income was closer to $417 million.
• Guidance for the September quarter calls for revenue of $1.19 billion to $1.22 billion.

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Growth Is Still Running Above 30%

Affirm (AFRM) closed fiscal 2026 with revenue of $4.26 billion, up 32% from the prior year, on $50.2 billion of gross merchandise volume, the total value of purchases made through its platform.

Profitability improved alongside that growth, with operating income of about $417 million, a margin near 10%.

The chart below tracks Affirm’s revenue history and what analysts expect through fiscal 2031.

Analysts expect revenue of around $5.5 billion in fiscal 2027, roughly 29% growth, and around $11.7 billion by fiscal 2031, which works out to an annual pace of around 27% over the next two years.

Management’s outlook points in the same direction, with fiscal 2027 volume guided above $64 billion.

Klarna, Affirm’s closest listed rival, gives a useful yardstick. In its June quarter, the Swedish company grew revenue 27% to $1.04 billion and volume 18%, while Affirm’s volume rose 36% over the same period, and Klarna’s net income was $9 million.

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What Sits Inside the $1.9 Billion

Reported net income for the year was $1.93 billion, up from $52 million in fiscal 2025, but most of the jump did not come from operations. Pre-tax income was $493 million, and the difference came from a non-cash tax benefit of about $1.5 billion.

A valuation allowance is a reserve a company sets against future tax savings it is not yet sure it can use. Once profits are consistent enough, the reserve can be released and booked as a gain.

The accounting is legitimate, but it is not cash earned during the year, and it will not repeat. The chart below shows how sharply the bottom line turned.

Read the last bar with the asterisk in mind. A cleaner gauge of progress is the move from a net loss of $518 million in fiscal 2024 to pre-tax profit of $493 million in fiscal 2026.

Forward earnings growth figures will look odd for the same reason, because next year’s comparison starts from an inflated base.

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Should You Buy Affirm Stock?

The bull case is fairly plain: growth above 30%, a real operating profit and a large funding base. Wall Street largely agrees, with 27 of 34 analyst ratings at Buy or Outperform, seven at Hold, and none negative.

The mean price target sits around $99, more than 40% above the recent close of around $69.

The bear case starts with what Affirm is: a lender. Funding costs and credit losses both take a share of every dollar of revenue, and the shares have swung hard, with a beta above 3.

Consumers who fall behind on repayments would show up quickly in the numbers.

Affirm also depends on lenders and investors continuing to buy its loans at attractive rates, and both the funding market and the borrower can change when the economy softens.

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So what is Affirm stock actually worth?

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!