Will AFRM's Active Consumer Base Growth Translate Into a Strong FY26?

Core Insights - Affirm Holdings, Inc. (AFRM) is experiencing a significant increase in active consumers, with a 24% year-over-year growth in the first quarter of fiscal 2026, driven by higher retention rates and new consumer acquisitions through partnerships [1][8] - The company's transparent, interest-free payment options are particularly appealing to younger shoppers, contributing to a broader shift towards pay-over-time models in digital commerce [2] - Total transactions increased by 52.2% year-over-year in the first quarter, leading to a 33.6% growth in total revenues, largely due to repeat customer transactions [3][8] Business Environment - Despite positive growth indicators, the company faces challenges such as higher funding costs, evolving buy now, pay later (BNPL) regulations, and changes in consumer borrowing behavior [4] - Competitors like Klarna Group plc and PayPal Holdings, Inc. are also performing well, with Klarna reporting a 32% year-over-year increase in active users and PayPal showing a 7% increase in net revenues [5][6] Financial Performance - Affirm's shares have gained 11.8% year-to-date, outperforming the industry average of 10.2% [7] - The forward price-to-sales ratio for AFRM is 5.03, above the industry average of 4.98, indicating a higher valuation compared to peers [10] - The Zacks Consensus Estimate for Affirm's fiscal 2026 earnings suggests a remarkable 566.7% growth from the previous year, with a revenue growth estimate of 26% year-over-year [12]