AFRM · Forward model · Interest income · Bear case
What has to happen in Interest income
Model as of
This page changes Interest income inside the complete AFRM model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.
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Interest income
Basis quarter$567M
Final quarter$1.10B
Implied CAGR+14%
Final revenue mix56%
The largest line in the company and the one that is genuinely supply-gated: Affirm can only earn interest on loans it funds and keeps. Loans held for investment were $8.57B at 31 March 2026 against $28.0B of committed funding capacity, so the constraint on this line is not demand for credit but how much of it Affirm chooses - and is able - to hold.
Last four quarters
2026 Q1
$454M
Reported
2026 Q2
$494M
Reported
2026 Q3
$532M
Reported
2026 Q4
$567M
Reported
Interest on monthly installment loans held for investmentAmortisation of discounts and fees on retained loans
Capacity energised
9561 $M of loans
at the basis quarter
$9,561M of loans held for investment at 30 June 2026, as filed on the balance sheet ($9,560,742K).
Capacity added
600 $M of loans/qtr
changing +3.0% per quarter
$600M added in the first projected quarter. Unchanged, and now below the pace: FY2026 added $2,535M, an average of $634M a quarter, and FQ4'26 alone added $988M.
Utilisation
84%
gliding toward 88%
84% of the book carries a rate. Assumed, not disclosed. Interest-bearing loans are 72% of GMV, up from about 71%.
Revenue per $M of loans
$70635/qtr
drifting −0.5% per quarter
$70,635 per $1M of interest-bearing balance per quarter: $567.3M over 84% of a $9,561M book, a 7.1% quarterly yield. Down from $73,940 in March, mostly because the closing balance grew 11.5% in the quarter.
Interest income
Latest: $1.10B (2031Q4E)
| Period | Value |
|---|---|
| 2025Q2 | $409M |
| 2025Q3 | $403M |
| 2025Q4 | $419M |
| 2026Q1 | $454M |
| 2026Q2 | $494M |
| 2026Q3 | $532M |
| 2026Q4 | $567M |
| 2027Q1E | $593M |
| 2027Q2E | $619M |
| 2027Q3E | $645M |
| 2027Q4E | $671M |
| 2028Q1E | $697M |
| 2028Q2E | $723M |
| 2028Q3E | $750M |
| 2028Q4E | $776M |
| 2029Q1E | $803M |
| 2029Q2E | $829M |
| 2029Q3E | $856M |
| 2029Q4E | $883M |
| 2030Q1E | $909M |
| 2030Q2E | $936M |
| 2030Q3E | $964M |
| 2030Q4E | $991M |
| 2031Q1E | $1.02B |
| 2031Q2E | $1.05B |
| 2031Q3E | $1.07B |
| 2031Q4E | $1.10B |
Assumptions & reasoning
- Capacity here is the loan book itself: $9,560,742K of loans held for investment at 30 June 2026, straight off the balance sheet, up from $8,573M in March and $7,026M a year ago. Utilisation is the share of that book that actually carries a rate, because the 0% promotional loans sitting in it earn a merchant fee instead.
- The $70,635 of quarterly revenue per $1M of interest-bearing balance is a 7.1% quarterly yield, near 28% annualised. That looks extreme until you remember these are five-month loans with APRs up to 36% and that interest income here includes the accretion of discounts on retained paper.
- THE IMPLIED YIELD FELL 4.5% SEQUENTIALLY AGAINST AN ASSUMED DRIFT OF -0.5%. Most of that is arithmetic rather than pricing: the balance is a period-end number and the flow is a quarter, so a book that grew 11.5% in three months depresses the yield measured against its closing balance. Some of it is real - average cost of funds fell 103 bp to 5.8% and Affirm competes cheaper funding into consumer APR. The -0.5% drift is left where it is rather than steepened to fit one quarter of a fast-growing book, and it is the third thing a future revision should settle.
- The book grows $600M in the first projected quarter and the addition itself grows 3% a quarter. That is now conservative: loans held for investment added $988M in FQ4'26 alone and averaged $634M a quarter across FY2026. The number was not raised - the model's whole stance on this line is that the constraint is how much paper Affirm chooses to hold, not how much it could - but a $600M quarterly add against a $634M realised average is a documented understatement, not an oversight.
- Utilisation stays at 84%. It is not disclosed and never has been; the product mix that stands behind it moved the right way, with interest-bearing loans now 72% of GMV against roughly 71%, and the CFO told the call the FY2027 mix should 'skew slightly higher to interest-bearing'. The 88% target is unchanged.
- This is the line that carries the credit cycle. The provision for credit losses ($223.2M in the quarter) and funding costs ($118.5M) are both charged here in full, which is why its margin sits near 42% rather than near the 90% a gross interest line would show, and why a bear case has to move this margin more than any other. Allowance to loans held for investment is 5.9% against 5.6% a year ago; 30+ delinquencies excluding Peloton and Pay-in-X are 2.5%, 19 bp worse year over year but 26 bp better sequentially.