Affirm Holdings, Inc. (AFRM): Business Model Canvas [Dec-2025 Updated]

Affirm Holdings, Inc. isn't just a Buy Now, Pay Later (BNPL) company anymore; their pivot to a diversified payment network is defintely working, evidenced by their 2025 Total Revenue hitting $3.22 billion and Gross Merchandise Volume (GMV) reaching $36.7 billion. You need to understand how they are funding this massive growth-with a total funding capacity of $26.1 billion-while attracting over 24.1 million active users who value their transparent, no-late-fee model. This shift from a pure merchant tool to a consumer-driven financial platform fundamentally changes their risk profile and long-term opportunity, so let's break down the full Business Model Canvas to see exactly where the money is coming from and what their next big move will be.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Key Partnerships

The core of Affirm Holdings, Inc.'s business model relies heavily on its Key Partnerships, which provide the necessary funding, merchant distribution, and technological integration to scale its buy now, pay later (BNPL) platform. You can't run a lending business without capital and distribution, so these partners are defintely mission-critical.

Expanded Funding with New York Life for up to $750 million in Loan Purchases

Affirm significantly strengthened its capital markets engine in late 2025 by expanding its long-term partnership with New York Life Insurance Company. This isn't just a simple loan; it's a forward-flow arrangement where New York Life agrees to purchase a stream of Affirm's installment loans.

The expanded deal commits New York Life to purchasing up to $750 million of Affirm's installment loans through December 2026. This off-balance-sheet funding is a big deal because it's expected to support approximately $1.75 billion in annual consumer loan volume, providing a reliable, institutional source of liquidity for Affirm's growth. To be fair, this builds on a relationship that already saw New York Life invest nearly $2 billion in Affirm collateral prior to this expansion.

Exclusive Pay-Over-Time Provider for Shopify, Extended Beyond the U.S.

The partnership with Shopify is a massive distribution channel, and its expansion in early 2025 was a clear signal of Affirm's global ambitions. Affirm remains the exclusive provider for Shop Pay Installments in the U.S., but the key action here is the international rollout.

The exclusivity has now been extended to Canada, and the companies plan to broaden availability to other key international markets. This is how Affirm gets its BNPL product in front of millions of new consumers without having to sign up every single small-to-medium business directly.

Near-term expansion targets include:

• Canada (exclusive provider)
• U.K. (planned expansion)
• Australia (planned expansion)
• Western Europe, starting with France, Germany, and the Netherlands (planned expansion)

Major Retail Integration with Large Enterprise Merchants like Costco for Online Purchases

Securing large, enterprise-level merchants is crucial for driving high Gross Merchandise Volume (GMV). The multi-year partnership with Costco, announced in May 2025, is a prime example. Affirm is the exclusive pay-over-time provider for Costco.com in the United States.

This integration targets high-ticket items, allowing Costco members to use Affirm for online purchases ranging from $500 to $17,500. For the fiscal year ended June 30, 2025, Affirm processed $36.7 billion in total GMV, so adding a retailer of Costco's scale is a clear move to push that number higher, especially in the big-purchase categories like appliances and furniture.

Originating Bank Partners for Loan Issuance and Capital Market Partners for Loan Sales

Affirm operates as a financial technology company, not a bank, so it relies on regulated bank partners to originate (issue) the loans to consumers. This is a non-negotiable part of their model, plus it helps manage regulatory risk.

The company actively manages its origination relationships to diversify risk. For instance, in early 2025, Affirm began shifting its loan originations to rely less on Cross River Bank, with the majority of loans then being handled by Celtic Bank. They also partner with Lead Bank for originations. Furthermore, Stride Bank was added in April 2025 as a card issuing partner for the Affirm Card, diversifying the Banking-as-a-Service (BaaS) providers.

Here's the quick math on scale: The total number of active merchants on the platform reached 419,000 as of September 2025, all of whom rely on these bank partners to fund the purchases.

Partner Type	Key Partner Examples	Primary Function
Originating Banks	Celtic Bank, Cross River Bank, Lead Bank	Legally issue and hold the consumer loans on their balance sheets.
Capital Markets	New York Life Insurance Company	Purchases installment loans (forward-flow) to provide off-balance-sheet funding.
Card Issuing Bank	Stride Bank, Evolve Bank & Trust	Issuers of the Affirm Card debit product.

Strategic Integration with Worldpay for Platforms for Embedded Payments

The expanded partnership with Worldpay for Platforms, announced in October 2025, is a major move to embed Affirm's product deeper into the digital infrastructure of other software companies (Software-as-a-Service or SaaS). This is about reaching merchants through a single, powerful integration point.

Worldpay for Platforms provides embedded payments for over 1,000 software companies, and in the last year alone, it processed more than $400 billion in payment volume. Integrating Affirm directly into this platform means that all those thousands of merchants can now easily offer Affirm at checkout, which is a huge, frictionless growth lever.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Key Activities

You're looking for the engine room of Affirm Holdings, Inc., the core actions that drive its value proposition-honest, transparent credit at the point of sale. The key activities are all about data, network scale, and capital efficiency. Honestly, in late 2025, Affirm's success hinges on two things: how smart their AI is and how cheaply they can fund the loans it approves. Everything else is a multiplier.

Proprietary AI-powered credit underwriting and risk management (AdaptAI)

The single most critical activity is the continuous refinement of their proprietary AI-powered credit underwriting. This system, which underwrites every single transaction individually, is what allows Affirm to offer point-of-sale financing without charging late or hidden fees. It's a core competitive advantage: better underwriting means lower loss rates, which means they can afford to be more consumer-friendly than rivals who rely on late fees for revenue.

Their newest iteration, AdaptAI, is a platform that uses real-time AI to deliver personalized financial benefits-like a 0% APR offer or an extended term-at the checkout. This isn't just about risk; it's about conversion. Affirm has leveraged AdaptAI internally to drive nearly a 10% incremental improvement in conversion rates within the Affirm App and Affirm Card ecosystem. That's a huge lift for merchants, and it's why they pay a merchant discount rate.

Here's the quick math on their credit performance in FY2025:

• Average FICO Score (FY2025 Consumer Base): 649
• Average Household Income (FY2205 Consumer Base): $73,000
• Pay in 4 Loss Rate: Tracking to less than 1% of Gross Merchandise Volume (GMV)
• 30-Day Delinquency Rate (FQ2 2025): 2.5%

Continuous development of the Affirm Card and direct-to-consumer (DTC) app platform

Moving beyond the merchant checkout page is a major activity, and the Affirm Card and DTC app are the tools for that. This shift is about owning the customer relationship, not just the transaction. The DTC channel is growing fast, with 24% of transactions now taking place directly through Affirm channels, up from prior periods. This is a defintely a strategic move to expand the total addressable market beyond e-commerce.

The Affirm Card is the main driver of this growth. Its performance in the fiscal fourth quarter of 2025 (FQ4 2025) shows how quickly this activity is scaling:

Metric	FQ4 2025 Value	Year-over-Year Growth
Active Consumers (Total)	23 million	24%
Active Card Consumers	2.3 million	97%
Affirm Card GMV	$1.176 billion	132%

The card's GMV of over $1.1 billion in a single quarter proves the DTC platform is now a substantial business line, not just an experiment.

Maintaining and expanding the merchant network of over 377,000 businesses

While the DTC channel is growing, the core business remains the merchant network. Maintaining the technology integrations and expanding the partner base is a constant, high-touch sales and engineering activity. As of the end of fiscal year 2025 (June 30, 2025), the active merchant count grew 24% year-over-year to 377 thousand. This is the true scale of the network, which is lower than the 419,000 figure often cited, but still represents massive reach.

This network activity generated a Gross Merchandise Volume (GMV) of $10.4 billion in FQ4 2025 alone, a 43% year-over-year increase. For the full fiscal year 2025, Affirm's GMV is expected to be within the range of $35.7 billion to $36 billion, showcasing the sheer volume of transactions this network facilitates. One key action here is diversification: they are actively reducing concentration risk after losing a major partner, Walmart, which shifted an estimated $1.5 billion in GMV away from the platform in 2025.

Loan origination, servicing, and management of the funding program capacity

The financial plumbing is a key activity. Affirm must constantly secure capital to fund the loans they originate, which is done through a mix of on-balance sheet loans and off-balance sheet arrangements with third-party investors. This is where the financial analyst hat comes on: managing funding capacity is paramount to scaling without hitting a capital wall.

As of FQ4 2025, Affirm's total funding capacity reached up to $26.1 billion, a significant increase from $23.3 billion in the prior quarter. This capacity is projected to support more than $60 billion in annual GMV. In late 2025, they expanded their long-term capital partnership with New York Life, which will support an additional annual consumer loan volume of approximately $1.75 billion. This activity ensures liquidity and allows them to continue originating loans at scale.

Compliance and regulatory adherence in the evolving financial technology (fintech) space

The regulatory environment for Buy Now, Pay Later (BNPL) is still a fluid situation, so compliance is a high-priority activity. Affirm actively engages with regulators and policymakers, positioning itself as a transparent, consumer-friendly leader. They work closely with their bank partners, like Cross River Bank, whose lending practices are examined by the FDIC.

Their core strategy here is to lead by example: since they do not charge late fees, they argue that their model is inherently safer for consumers and forces them to have superior underwriting. CEO Max Levchin has publicly called for regulators to cap late fees across the BNPL industry, stating this would motivate all players to focus on better underwriting, which is a clear action to shape the competitive landscape in their favor.

Next Step: Finance: Model the impact of the new New York Life funding on the cost of funds by Friday.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Key Resources

The core of Affirm Holdings, Inc.'s (AFRM) business model rests on a foundation of intellectual property, a massive financial network, and a distinct brand promise. These Key Resources-the assets essential to create and deliver value-are what allow the company to underwrite credit instantly and at scale while maintaining its consumer-friendly, no-late-fee model.

Financial and Capital Capacity

Affirm's ability to lend is directly tied to its financial resources and its capital-light funding strategy. Crucially, the company's total funding capacity soared to $26.1 billion as of the end of fiscal year 2025 (June 30, 2025). This represents a massive 55% increase year-over-year, which is a defintely strong signal of capital market confidence in their loan quality and underwriting models. This capacity is the lifeblood for originating new loans and supporting its Gross Merchandise Volume (GMV) growth, which is projected to be between $35.7 billion and $36 billion for FY2025.

The balance sheet also reflects a solid base. Total assets stood at $11.15 billion at the close of fiscal year 2025. This includes a significant portion of loans held for investment, which grew by 24% to $7.03 billion, showing both the scale of their lending and the successful execution of their funding strategy.

Financial Resource Metric	Value (Fiscal Year 2025 End)	Significance
Total Funding Capacity	$26.1 billion	Represents a 55% YoY increase, fueling loan origination growth.
Total Assets	$11.15 billion	Balance sheet strength supporting platform expansion.
Loans Held for Investment	$7.03 billion	A 24% YoY increase, showing successful capital deployment.
Asset-Backed Securitizations (Total Issued)	~$12.25 billion	Off-balance sheet funding, reducing direct credit exposure.

Proprietary Machine Learning Models

The most critical intellectual resource is Affirm's proprietary machine learning (ML) models. These models don't just rely on traditional FICO scores; they assess risk in real-time, transaction-by-transaction, using hundreds of data points, including the merchant profile and the consumer's repayment history on the platform.

Here's the quick math: with over 13 years of underwriting experience across more than 50 million individuals and managing over $100 billion in loans, the models are constantly learning. This granular, dynamic approach is what allows Affirm to approve credit instantly while keeping defaults low, which is a major competitive moat in the Buy Now, Pay Later (BNPL) space.

Technology Platform and Intellectual Property

Beyond the core underwriting engine, the technology platform itself is a key asset. The intellectual property centers on products like Adaptive Checkout. This technology dynamically provides optimized biweekly and monthly payment options side-by-side in a single integrated checkout solution, personalizing the offer to the consumer and the purchase.

The newer AdaptAI platform, launched in April 2025, builds on this by offering an AI-powered promotions platform to merchants. This has already driven nearly 10% incremental improvements in conversion rates within Affirm's own app and card products.

• Adaptive Checkout: Dynamically optimizes payment plans.
• AdaptAI: AI-powered promotions for merchants.
• Real-time underwriting: Instant credit decisions at point-of-sale.
• Affirm Card: Extends BNPL to physical and online purchases.

A Strong Brand Built on Transparency

The brand is a significant intangible asset. Affirm has built a strong brand based on transparent, no-late-fees financing, which stands in stark contrast to traditional credit cards and some competitors. This policy is a core part of their mission to deliver honest financial products.

This brand trust translates directly into business value. It helps drive repeat transaction rates, which were reported at a high 96% in the first quarter of fiscal 2026 (ended September 30, 2025), showing strong customer loyalty and lower customer acquisition costs over time.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Value Propositions

The core value proposition of Affirm Holdings, Inc. is a two-sided network effect: it offers financial transparency and flexibility to consumers while simultaneously acting as a growth engine for merchants. This dual focus has driven the company's Gross Merchandise Volume (GMV) to $36.7 billion for the fiscal year ended June 30, 2025, a clear signal that the market is embracing this model.

For Consumers: Honest financing with no late or hidden fees, showing total cost upfront.

Affirm's primary value to you as a consumer is radical transparency, which is a direct counter to the complexity and hidden costs of traditional credit. When you check out, you see the total cost of your loan in simple dollars and cents, including all interest, before you commit. This is a crucial difference from deferred interest programs or revolving credit lines.

The company simply does not charge late fees, ever. This isn't a marketing gimmick; it's a foundational business decision, and it means Affirm doesn't profit from your mistakes. Since its founding through June 2025, Affirm estimates it has helped consumers avoid approximately $23 million in late fees alone.

For Consumers: Flexible payment options including 0% APR and Split Pay for smaller purchases.

Flexibility is key, and Affirm's Adaptive Checkout technology tailors the payment plan to the purchase and the consumer. You get a range of personalized options, from short-term, interest-free payments (often called Split Pay or Pay in 4) to longer installments stretching up to 60 months for larger items.

The availability of 0% Annual Percentage Rate (APR) financing, especially on the Affirm Card and through key merchant partnerships, is a major draw. For example, a $1,200 purchase over 12 months at 0% APR means you pay back exactly $1,200-no interest, no fees. The rate you are offered will range from 0% to 36% APR based on your credit profile, but the total cost is always fixed and known upfront.

For Merchants: Increased Gross Merchandise Volume (GMV) of $36.7 billion in FY2025.

For a merchant, Affirm is a sales tool, not just a payment method. The proof is in the scale: Affirm facilitated a total GMV of $36.7 billion in consumer purchases for the fiscal year ended June 30, 2025. Here's the quick math: by enabling consumers to pay over time, merchants capture sales that might otherwise be abandoned or delayed.

This massive volume is supported by a growing, engaged customer base, which reached 23 million active consumers in Q4 2025. That's a huge, high-intent audience you're tapping into. Plus, Affirm takes on 100% of the credit, fraud, and chargeback risk, so the merchant gets paid upfront (typically within 1-3 business days) and doesn't worry about the loan repayment.

For Merchants: Higher sales conversion rates and average order values via point-of-sale financing.

The most compelling value for merchants is the direct impact on their core sales metrics. Point-of-sale financing acts as a powerful lever to increase both the frequency and size of purchases.

Merchants using Affirm have reported a more than 70% lift in average cart sizes during fiscal year 2025. Some partners have seen sales conversions increase by up to 25%. This is why merchants are willing to pay a fee to Affirm-the increase in Average Order Value (AOV) and conversion rate more than covers the cost.

Here is a snapshot of the merchant-side value:

Metric	Value Proposition	FY2025 Data / Impact
Gross Merchandise Volume (GMV)	Facilitates large-scale consumer spending	$36.7 billion (FY2025 reported)
Average Order Value (AOV)	Encourages larger purchases	Reported lift of 60%+ to 70%+ for merchants
Sales Conversion Rate	Reduces cart abandonment	Increased by up to 25% for partners
Repeat Purchase Rate	Drives customer loyalty	Approximately 20% repeat purchase rate from high-LTV customers

For Both: Seamless, integrated payment network at checkout (online and in-store).

The final value proposition is the seamlessness of the payment network (a buy now, pay later or BNPL system). It works across channels, which is critical for an omnichannel retail strategy. Affirm is integrated with over 60% of e-commerce in the US, making it a ubiquitous online option.

In 2025, the in-store network expanded dramatically, moving beyond just a virtual card. This is defintely a game-changer for physical retail. Key developments include:

• Launch on Stripe Terminal in August 2025, enabling in-store BNPL for merchants using Stripe's hardware (over one million devices).
• Availability for in-store purchases via Apple Pay on iPhone as of September 2025, offering a quick, tap-and-pay installment option.

This integration means a consumer can use Affirm almost anywhere, online or in a physical store, using the same quick eligibility check and transparent terms. The entire experience is fast, which means less friction and higher conversion for the merchant.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Customer Relationships

Direct-to-Consumer (DTC) engagement via the Affirm mobile app and Affirm Card

Affirm's relationship with consumers is rapidly shifting from a purely point-of-sale (POS) service to a direct-to-consumer (DTC) ecosystem, primarily driven by the mobile app and the Affirm Card. This shift builds a direct, sticky relationship that bypasses the need for a merchant integration at the time of purchase. The DTC Gross Merchandise Volume (GMV) surged by 53% to reach $3.2 billion in the first fiscal quarter of 2026 (ending September 30, 2025), demonstrating the success of this strategy.

The Affirm Card acts as a key component of this DTC strategy, allowing users to apply Affirm's pay-over-time options anywhere Visa is accepted. The card's GMV is growing at an explosive rate, soaring 135% year-over-year to $1.4 billion in Q1 FY26. As of that quarter, the company had 2.8 million active cardholders, which is a strong indicator of consumer adoption for everyday discretionary spend.

• Active Consumers (Sep 2025): Over 24.1 million
• Active Cardholders (Sep 2025): 2.8 million
• Affirm Card GMV (Q1 FY26): $1.4 billion

Fully automated and digital-first service for instant credit decisions

The core of the consumer relationship is a fully automated, digital-first experience designed for speed and clarity. Affirm underwrites every individual transaction in real-time to provide an instant credit decision, a process that is far more transparent than traditional revolving credit. They are increasingly using cash-flow underwriting, which evaluates real-time spending and deposit patterns, to approve more users who might have thin credit files, like younger consumers.

This automated system allows for a high volume of transactions with minimal human intervention. To put the scale in perspective, the average number of transactions per active consumer increased to 5.8 as of June 30, 2025, up from 4.9 the previous year. That's a defintely solid increase in engagement.

High-touch, dedicated account management for large enterprise merchants

While the consumer-facing relationship is digital, the merchant relationship is highly tiered. For the largest enterprise partners-like Amazon and Apple-Affirm utilizes a high-touch, dedicated account management model. This ensures deep integration, strategic alignment, and co-marketing efforts that drive significant volume.

The success of these managed relationships is clear in the numbers. Affirm's overall active merchant count grew to 419,000 as of September 2025, but the top-tier partners continue to be massive growth engines, with GMV from the top five merchants growing by 41% in Q4 FY25.

Customer Relationship Metric	Fiscal Year 2025 / Q1 2026 Value	Significance
Active Consumers (Sep 2025)	Over 24.1 million	Scale of the direct user base.
Repeat Transaction Rate (Q4 FY25)	95%	High customer loyalty and retention.
Transactions per Active Consumer (FY25)	5.8	Frequency of engagement and stickiness.
Active Merchants (Sep 2025)	419,000	Breadth of the merchant network.
Affirm Card GMV Growth (Q1 FY26 YoY)	135%	Success of the DTC product expansion.

Transparency and trust built on a policy of never charging late fees

Affirm's foundational promise is transparency, which is a key differentiator in building consumer trust. Unlike most credit card and traditional pay-over-time options, Affirm has a strict policy of never charging late fees, hidden fees, or compounding interest.

This commitment to a fair and transparent approach is a powerful retention tool. It means the cost of a loan is known upfront, which resonates strongly with consumers, especially younger ones who are wary of revolving credit card debt. This transparency directly supports the high repeat usage, which is arguably the most critical metric for the business.

Focus on repeat customers, driving transaction volume growth

The primary focus of the customer relationship strategy is to convert first-time users into high-frequency, repeat customers. This is the engine of their transaction volume growth. In the fourth fiscal quarter of 2025, an astonishing 95% of transactions came from repeat borrowers, which is a clear sign that the consumer is highly engaged and loyal to the platform.

This repeat business model creates a powerful network effect: more active consumers lead to higher transaction volume, which in turn makes the platform more valuable to merchants. The high repeat rate, coupled with the increase in transactions per user, is what allows Affirm to drive its Gross Merchandise Volume (GMV), which hit $36.7 billion for the full fiscal year 2025.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Channels

You need to see the channels not just as distribution points, but as high-velocity funnels that drive your core Gross Merchandise Volume (GMV). For Affirm Holdings, Inc., the channel strategy in late 2025 is a dual-pronged attack: deep integration at the merchant's point-of-sale (POS) and explosive growth in the direct-to-consumer (DTC) Affirm Card.

The merchant network reached approximately 419,000 active merchants as of September 2025, a massive increase that fuels the primary channel. Overall, the company facilitated consumer purchases totaling $36.7 billion in GMV for the fiscal year ended June 30, 2025. That's the scale we are analyzing.

E-commerce and online checkout integration with partners like Shopify and Costco

The core of Affirm's channel strength remains the seamless integration into major e-commerce platforms and large-scale merchant checkouts. This is the classic buy now, pay later (BNPL) channel, where the financing option appears directly in the payment flow. The goal is to maximize conversion by making the loan option a non-event at checkout.

A key strategic channel is the partnership with Shopify, which expanded its Shop Pay Installments internationally in April 2025, starting with Canada and targeting the UK, Australia, and key European markets next. This move is defintely critical for international GMV growth. While the company lost the Walmart partnership in 2025, which shifted about $1.5 billion in GMV away, the overall merchant network growth to over 400,000 partners shows strong diversification and resilience.

Here's the quick math on the overall platform reach as of late 2025:

Metric	Value (As of Late 2025)	Context
Active Merchants	419,000	As of September 2025, demonstrating merchant network expansion.
Active Consumers	24.1 million	As of September 2025, showing the size of the addressable consumer base.
FY 2025 Gross Merchandise Volume (GMV)	$36.7 billion	Total consumer purchases facilitated for the fiscal year ended June 30, 2025.

Direct-to-Consumer (DTC) channel via the Affirm Card and mobile application

The Direct-to-Consumer channel, primarily driven by the mobile application and the Affirm Card, is the fastest-growing part of the business. It bypasses the need for a direct merchant integration, allowing consumers to use Affirm almost anywhere. Direct-to-Consumer GMV grew 53% year-over-year to $3.2 billion in the first fiscal quarter of 2026 (ended September 30, 2025). This channel increases transaction frequency, which climbed to an average of 5.8 transactions per active consumer in FY 2025.

The Affirm Card is a game-changer because it turns all merchants into Affirm merchants, even non-integrated ones. The card's GMV surged by an impressive 135% year-over-year to reach $1.4 billion in the first fiscal quarter of 2026. This explosive growth shows the power of owning the customer relationship.

• Active Cardholders: 2.8 million as of September 2025, a key growth driver.
• Card GMV Growth: 135% year-over-year in Q1 FY2026.
• DTC GMV (Q1 FY2026): $3.2 billion, a 53% year-over-year increase.

Virtual and physical Affirm Card for use everywhere Visa is accepted

The Affirm Card functions as a hybrid debit-financing product, available in both virtual and physical formats, leveraging the Visa network for near-universal acceptance. This is a crucial channel for driving discretionary spend outside the integrated merchant network. The card's architecture allows users to pay in full or apply to pay over time directly through the Affirm mobile application, even at vendors who do not explicitly offer BNPL.

The card's success is not just in online spend; it is also a powerful in-store channel, with GMV derived from in-store usage of the card growing by a staggering 187% in the fourth fiscal quarter of 2025. This clearly indicates the card is successfully bridging the online-to-offline gap for the company.

In-store presence via point-of-sale (POS) systems and self-checkout kiosks

While the Affirm Card is the primary driver of in-store growth, the company maintains a dedicated channel for integrated physical retail. This channel involves direct integration into a retailer's point-of-sale (POS) system or self-checkout kiosks. This allows for the traditional BNPL experience at a physical register, which is essential for big-ticket items in sectors like home goods or electronics.

The strategy is to expand offline retail capabilities and enhance point-of-sale integrations. The 187% GMV growth from in-store Card usage in Q4 FY2025 is the clearest signal of the overall success in capturing physical retail spend, even as the company continues to work on its direct POS integrations.

Developer APIs for seamless merchant integration

The Developer API (Application Programming Interface) is the technical backbone that powers the merchant-integrated channels. It is the channel that allows a merchant to embed Affirm's Adaptive Checkout technology-which offers various payment options like Pay-in-X (short-term, 0% APR installment loans) and longer-term interest-bearing loans-directly into their website or app.

The availability of these APIs is what scaled the active merchant count to 419,000. The API channel is also what facilitates payment links at online checkout and integration into third-party digital wallets, ensuring the payment option is available regardless of the merchant's e-commerce setup. This technical channel is responsible for the majority of the $36.7 billion in annual GMV.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Customer Segments

You can't build a massive payment network by focusing on just one customer. Affirm Holdings, Inc. has a dual-sided market, meaning they serve both the consumer who is buying and the merchant who is selling, plus the financial institutions that ultimately fund the loans. This structure is defintely the key to their scale and resilience.

For the fiscal year 2025, the customer base shows strong growth and diversification, which is exactly what you want to see in a high-growth fintech. The core segments are clear: the end-user consumer, the retail partner, and the capital market investors.

Consumers: Over 24.1 million active users who seek transparent, flexible credit.

This is the lifeblood of the business. As of September 2025, Affirm served over 24.1 million active consumers, a number that reflects the accelerating adoption of Buy Now, Pay Later (BNPL) services. These aren't just one-time users; the high repeat transaction rate shows they are integrating Affirm into their regular spending habits. The core value proposition here is simple: transparency. No late fees, no compounding interest, just a clear payment schedule upfront.

Here's a quick snapshot of the active consumer profile in FY 2025:

• Average Household Income: Approximately $73,000.
• Average FICO Score: Approximately 649, indicating a broad reach across the credit spectrum.
• Financial Goal: Primarily focused on cash flow management and budgeting, with approximately 63% of BNPL users citing this as a key reason for use.

Merchants: Over 419,000 businesses, ranging from small to large enterprise.

The merchant base is just as crucial, providing the point-of-sale integration that drives Gross Merchandise Volume (GMV). As of September 2025, Affirm partnered with over 419,000 active merchants. This massive network expansion is what allows the consumer to use the service for a wide range of purchases, from everyday goods to high-value items like travel and medical procedures.

Merchants use Affirm to boost their own sales metrics. For example, merchants using Affirm reported a lift of more than 70% in average cart sizes during fiscal years 2025 and 2024. This is a compelling pitch, and it explains why Affirm continues to secure major partnerships with household names like Amazon, Shopify, and Apple.

Younger demographics (Millennials/Gen Z) who prefer installment payments over revolving debt.

The strategic focus on Millennials and Gen Z is a long-term play against traditional credit cards. These younger demographics are a primary target because they are increasingly adopting BNPL services, seeing them as a more flexible and less opaque alternative to revolving credit. They value the binary precision of an installment loan over the complexity of compounding interest and hidden fees.

The growth in the Direct-to-Consumer (D2C) channel, especially the Affirm Card, is a direct result of targeting this group. D2C GMV grew an incredible 61% in Q4 FY2025, with the Affirm Card's GMV skyrocketing by 132% to $1.2 billion, showing the success of moving beyond the traditional merchant checkout. This segment is the future growth engine. The Affirm Card is a game-changer for customer engagement.

Institutional investors and banks (e.g., New York Life) that purchase loans.

This is the segment that provides the essential funding capacity, allowing Affirm to offload risk and recycle capital for new loans. These are sophisticated financial players who buy the loans originated by Affirm through asset-backed securitizations (ABS) and forward flow agreements. As of March 31, 2025, Affirm's total funding capacity grew to $23.3 billion.

The diversity of these partners is a huge strength, providing a durable funding model. The company has issued 24 ABS transactions totaling $12.25 billion, involving over 150 unique capital partners. Key institutional relationships include:

• New York Life: Expanded a long-term capital partnership in October 2025.
• PGIM Fixed Income: Secured a $3 billion revolving pass-through facility in June 2025, following a private purchase of $500 million in loans in late 2024.
• Sixth Street Partners: Engaged in a loan sale partnership, ramping up forward flow capacity.
• Moore Capital Management: Extended their long-term capital partnership through May 2027.

This capital market segment is what validates Affirm's underwriting model to the broader financial world. Here's the quick math: the total funding capacity is positioned to support over $60 billion in annual GMV, which gives them a massive runway.

Customer Segment	Key Metric (FY 2025/Q1 FY2026)	Primary Value Proposition
Consumers	Over 24.1 million active users (as of Sept 2025)	Transparent, flexible, no-fee installment payments.
Merchants	Over 419,000 active merchants (as of Sept 2025)	Increased conversion and average order value (70%+ lift in AOV).
Institutional Investors/Banks	Total funding capacity of $23.3 billion (as of Mar 2025)	Access to a diversified asset class (consumer loans) with attractive risk-adjusted returns.

Next Step: Finance should review the latest forward flow agreements with New York Life and PGIM to model the precise cost of funds for the next 12-month loan originations.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Cost Structure

You need a clear view of where every dollar goes, especially as Affirm Holdings shifts toward sustained profitability. The core of the company's cost structure is dominated by the expenses required to source, fund, and manage its loan portfolio, which totaled $3.312 billion for the fiscal year 2025. This is a capital-intensive model, so the cost of money and the cost of risk are the two biggest drivers you need to watch.

Here's the quick math: Transaction Costs-which include funding, processing, and credit losses-are the most volatile and significant part of the equation, reflecting the nature of a Buy Now, Pay Later (BNPL) lender.

Total Operating Expenses of $3.31 billion for fiscal year 2025.

Affirm Holdings reported total operating expenses of $3.312 billion for the fiscal year ending June 30, 2025. This figure represents a combination of the direct costs associated with loan origination (transaction costs) and the fixed and semi-variable costs necessary to run the technology platform and the business itself (Selling, General & Administrative, and Research & Development).

To be fair, this total is a significant increase from the prior year, but it reflects the massive growth in Gross Merchandise Volume (GMV) to over $36.7 billion in FY2025. The key is ensuring that revenue growth outpaces this expense growth, which is the defintely the challenge in a high-interest-rate environment.

Cost Component (FY2025)	Amount (Millions USD)	Primary Function
Provision for Credit Losses	$616.68	Cost of risk/Expected loan defaults
Funding Costs	$425.45	Cost to secure capital for loans
Processing and Servicing	$457.85	Managing loan portfolio, payments, & collections
Technology and Data Analytics	$589.72	Platform development, AI underwriting
General and Administrative	$545.05	Back office, legal, HR, corporate overhead
Sales and Marketing	$434.85	Merchant acquisition, consumer awareness
Loss on Loan Purchase Commitment	$242.26	Cost related to loan sale agreements

Significant funding costs related to securing capital for loan origination.

Funding costs are the interest and fees Affirm Holdings pays to banks, institutional investors, and capital partners to get the money it needs to originate loans. For fiscal year 2025, these costs hit $425.45 million. This is a critical expense, and its volatility is directly tied to the overall interest rate environment and the credit quality of the loans Affirm holds or sells.

The company mitigates some of this through its capital-light model-selling a portion of the loans to third parties via forward flow agreements and asset-backed securitizations (ABS). Still, the cost remains a major line item. The total funding capacity grew to $23.3 billion as of March 31, 2025, which is a good sign of investor confidence in their asset quality, but that capacity comes with a price tag.

Provision for credit losses, which escalated 60.3% in Q1 FY2025.

The Provision for Credit Losses is an accounting estimate for loans expected to go bad; it's the cost of risk. This is a non-cash expense that directly impacts profitability. In the first fiscal quarter of 2025 (Q1 FY2025), this provision escalated 60.3% year-over-year to $159.8 million.

For the full fiscal year 2025, the total provision was $616.68 million. This significant expense highlights the macroeconomic pressure on consumer credit quality and the inherent risk in the BNPL model, especially with higher-risk loans. Affirm's ability to manage this line item through better underwriting, powered by AI, is the single most important factor for future net income.

Technology and development costs for the core platform and AI underwriting.

The investment in technology is a fixed cost that drives long-term competitive advantage. Affirm Holdings spent $589.72 million on Technology and Data Analytics (Research & Development) in FY2025. This is where they build the moat.

• Fund AI-driven underwriting models to reduce credit losses.
• Develop new products like the Affirm Card and Adaptive Checkout.
• Maintain the core platform and merchant integrations.

This investment is crucial because their proprietary AI-driven underwriting is what allows them to offer a no-late-fee product while managing risk better than traditional lenders.

Processing and servicing expenses for managing the loan portfolio.

These are the operational costs of running the loan book, essentially the back-end plumbing. This includes expenses for payment processing, loan servicing, and collections activities. For fiscal year 2025, these costs amounted to $457.85 million.

As the Gross Merchandise Volume (GMV) grows-which was over $36.7 billion in FY2025-these expenses naturally rise. The key is that they must grow slower than GMV and revenue, indicating improved operational efficiency and scale. The goal is to automate as much of the loan lifecycle as possible, pushing this cost component down as a percentage of total revenue.

Next step: Finance needs to model the sensitivity of the $425.45 million in Funding Costs to a 50-basis-point change in the Fed Funds Rate by the end of the month.

Affirm Holdings, Inc. (AFRM) - Canvas Business Model: Revenue Streams

You need to know exactly where the money comes from to assess Affirm Holdings's long-term viability, and the good news is their revenue model is highly diversified. The company generated a total revenue of approximately $3.22 billion for the fiscal year ended June 30, 2025, which represents a strong 39% increase year-over-year, showing a clear path to scale.

This isn't a single-stream business; it's a portfolio of income sources that de-risks their model, balancing merchant fees, consumer interest, and capital markets activity. The key takeaway is that they are successfully monetizing both the merchant side and the consumer side of their Buy Now, Pay Later (BNPL) platform. To be fair, the shift toward profitability in Q4 2025 was a pivotal moment, with net income hitting $69.2 million, a dramatic turnaround from the prior year's loss.

Total Revenue of $3.22 billion for fiscal year 2025

Affirm's total revenue for the fiscal year 2025 reached approximately $3.22 billion, a substantial increase that highlights the rapid adoption of their installment payment solutions across the US and Canadian markets. This top-line growth is a direct result of a record Gross Merchandise Volume (GMV) of $36.7 billion for the year, up 38% year-over-year, driven by their expansive merchant network and a growing base of 23 million active consumers.

Here's a quick math on the quarterly breakdown, which shows the complexity of their revenue structure. The fourth quarter of fiscal year 2025 alone saw total revenue of $876.42 million, demonstrating the power of their multi-faceted revenue streams.

Affirm Holdings, Inc. - Q4 FY2025 Revenue Breakdown (in millions)

Revenue Stream	Amount (Q4 FY2025)	YoY Growth (Q4 FY2025)	Description
Interest Income	$419.1 million	+24%	Interest charged to consumers on loans held on Affirm's balance sheet.
Merchant Network Revenue	$239.45 million	+56.2% (Network Revenue)	Fees paid by merchants for facilitating transactions and taking on credit risk.
Gain on Sales of Loans	$116.9 million	+67%	Profit realized from selling loans to third-party investors, like securitization trusts.
Card Network Revenue	$67.11 million	N/A (Included in Network Revenue)	Fees generated from the use of the Affirm Card.
Servicing Income	$33.9 million	+22.8%	Fees earned for managing and servicing off-balance sheet loan portfolios.
Total Revenue	$876.42 million	+33%

Merchant Network Revenue (fees paid by merchants)

Merchant Network Revenue is the core fee-based income, where Affirm charges merchants a fee for the service of offering installment payments to their customers. In Q4 FY2025, this revenue stream was a significant component, reaching $239.45 million. This revenue is crucial because it aligns Affirm's success directly with the growth of its merchant partners, which now number over 419,000.

This stream is often higher on 0% Annual Percentage Rate (APR) loans, as the merchant pays a larger fee to subsidize the consumer's interest. It's a strategic choice, so the company accepts a lower Revenue Less Transaction Costs (RLTC) percentage on these shorter-duration, 0% APR products to drive massive transaction volume and onboard new customers.

Interest Income on loans held on the balance sheet ($419.1 million in Q4 FY2025)

The traditional banking component of the business is Interest Income, which is the interest charged to consumers on loans that Affirm chooses to keep on its own balance sheet. This income stream grew by 24% year-over-year in Q4 FY2025 to $419.1 million, fueled by a 24% increase in the value of loans held for investment. This is a defintely important stream, but it comes with the risk of credit losses.

Affirm's underwriting model, which uses artificial intelligence (AI) to assess risk, allows them to manage this risk effectively. The strategic mix shift toward 0% APR products, which represented 29% of GMV in Q4 FY2025, actually helps here because the allowance rate for losses on those loans is roughly 60% lower than for interest-bearing loans.

Gain on Sales of Loans to third-party investors ($116.9 million in Q4 FY2025)

This revenue stream reflects Affirm's role as a loan originator and capital markets operator. It's the profit earned when they sell loans to third-party investors, such as through securitizations. This is a critical source of non-interest income that manages liquidity and reduces credit risk exposure on Affirm's balance sheet. The gain on sales of loans jumped a remarkable 67% in Q4 FY2025 to $116.9 million, indicating strong demand for Affirm's loan assets in the capital markets.

The strong increase here signals two things: improved loan sale volumes and better pricing for their loan portfolios. It's a sign of capital market confidence in their underwriting quality.

Servicing Income from managing off-balance sheet loan portfolios ($33.9 million in Q4 FY2025)

Servicing Income is the fee Affirm earns for managing the loans it has sold off its balance sheet to third-party investors. This includes collecting payments, handling customer service, and managing delinquencies. For Q4 FY2025, this income stream grew 23% to $33.9 million. This revenue is low-risk and highly valuable because it provides a steady, recurring fee based on the size of the off-balance sheet portfolio, which remained stable at approximately a 2% annualized yield.

• Merchant Network Revenue: Fees from retailers for the payment service.
• Interest Income: Interest paid by consumers on loans held by Affirm.
• Gain on Sales of Loans: Profit from selling consumer loans to investors.
• Servicing Income: Fees for managing loans held by third parties.