Affirm Expands Merchant Network: But Is Revenue Growth Keeping Up?

Affirm Holdings, Inc. AFRM is rapidly expanding its network of merchants, solidifying its position in the buy now, pay later (BNPL) landscape. From travel to electronics, clothing to home goods and fashion, the company continues to form partnerships that enhance its reach and offer consumers greater flexibility at checkout. Its active merchant network improved 30% year over year to 419,000 in the first quarter of fiscal 2026.

This expanding ecosystem is helping AFRM establish a stronger foothold in both small-ticket and big-ticket purchases. As the company increases its presence among merchants, it creates more opportunities to boost transaction volumes and keep users engaged on its platform. For merchants, AFRM’s flexible payment technology and ability to serve a wide range of price points make checkout smoother and help boost conversions.

Also, revenue growth is steadily keeping pace with this expansion. Even smaller purchases and interest-free plans play a role in boosting engagement, which helps establish long-term usage habits. Over time, as repeat customers and larger transactions become more frequent, revenues are expected to strengthen along with the expanding merchant network. In the fiscal first quarter, its total revenues grew 34% year over year. Initiatives like the Affirm Card are also supporting deeper adoption and more frequent usage.

By extending its merchant network and emphasizing user engagement, Affirm is building a strong foundation for the future. It is well-positioned to convert its scale into predictable, sustainable revenues over time.

How Are Competitors Faring?

Some of AFRM’s competitors in the BNPL space are Klarna Group plc KLAR and PayPal Holdings, Inc. PYPL.

Klarna’s broader ecosystem also continues gaining momentum, supported by a merchant network of 850,000 and 3.4 million daily transactions. KLAR’s total revenues rose 28% year over year in the third quarter of 2025.

PayPal reported 438 million active accounts in the third quarter of 2025, which rose 1% year over year. Its net revenues increased 7% year over year to $8.4 billion in the same quarter. Additionally, PayPal’s total payment volume increased 8% year over year in the third quarter of 2025.

Affirm’s Price Performance, Valuation & Estimates

In the year-to-date period, AFRM’s shares gained 13.3% compared with the industry’s rise of 9.5%.

From a valuation standpoint, AFRM trades at a forward price-to-sales ratio of 5.09, above the industry average of 4.92. AFRM carries a Value Score of D.

The Zacks Consensus Estimate for Affirm’s fiscal 2026 earnings implies 566.7% growth from the year-ago period. The consensus mark for fiscal 2026 revenues indicates 26% year-over-year growth.

Affirm currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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