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AFRM · Forward model · Merchant network revenue · Levchin case

What has to happen in Merchant network revenue

Model as of

This page changes Merchant network revenue inside the complete AFRM model. Every other vertical, corporate programme and valuation assumption stays in the selected portfolio case.

AFRM forward model
Horizon
Consolidated fair value $155.36 all other verticals held in this portfolio case
Final-quarter revenue $730M 21% of company revenue
Explicit segment contribution $3.63B EBITDA less segment capex, before corporate items

Affirm's own medium-term framework taken at face value: 25%+ GMV growth to $100B a year, revenue at 7.5-8.5% of it, RLTC at 3.75-4.0%, and a 30-35% adjusted operating margin. This case reaches the framework early rather than differently - $100B of annual GMV lands around 2029 instead of 2030, and margins settle at the top of the published band. What it does NOT reach is the version of the story where the Card and the adjacent verticals make Affirm something other than a lender: even here, interest income plus gain on sale is still more than half of terminal revenue, and the merchant fee rate still erodes. The framework is a bigger Affirm, not a different one - and that gap, not the growth rate, is what the multiple is arguing about. Which is why this case carries a 6x exit rather than the bull case's 6.5x: the company's own numbers, delivered in full, still describe a lender.

Merchant network revenue

Basis quarter$302M
Final quarter$730M
Implied CAGR+19%
Final revenue mix21%

The fee merchants pay Affirm for the sale, and the closest thing this company has to a pure take rate on volume. It is highest on 0% promotional and Pay-in-X plans, where the merchant is buying the conversion rather than the consumer buying the credit, so this line rises and falls with how much of the marketplace is merchant-funded rather than with GMV alone.

Last four quarters
2026 Q1 $251M Reported
2026 Q2 $328M Reported
2026 Q3 $268M Reported
2026 Q4 $302M Reported
Merchant fees on 0% APR monthly installmentsMerchant fees on Pay-in-XMerchant fees on interest-bearing installmentsPlatform and PSP integrations
Units 14057/qtr growing +6.5% per quarter $14,057M of GMV in FQ4'26, as reported ($14.1B in the headline). The unit is one million dollars of volume.
Price per unit $21510 drifting −0.8% per quarter $21,510 per $1M of GMV: a 2.151% merchant fee, the rate implied by $302.4M on $14,057M. Down from 2.310% in March and below the 2.30-2.49% band of the previous six quarters.
Merchant network revenue

Latest: $730M (2031Q4E)

Period Value
2025Q2 $245M
2025Q3 $214M
2025Q4 $239M
2026Q1 $251M
2026Q2 $328M
2026Q3 $268M
2026Q4 $302M
2027Q1E $323M
2027Q2E $345M
2027Q3E $369M
2027Q4E $394M
2028Q1E $422M
2028Q2E $452M
2028Q3E $484M
2028Q4E $518M
2029Q1E $556M
2029Q2E $596M
2029Q3E $639M
2029Q4E $685M
2030Q1E $692M
2030Q2E $697M
2030Q3E $702M
2030Q4E $707M
2031Q1E $713M
2031Q2E $718M
2031Q3E $724M
2031Q4E $730M

Assumptions & reasoning

  • The unit here is one million dollars of GMV, so this line is Affirm's volume multiplied by the merchant fee it earns per million. Both halves are disclosed: GMV every quarter in the headline - $14,057M in FQ4'26 - and the fee derived by division.
  • THE FEE RATE BROKE ITS BAND THIS QUARTER. It has run 2.30% to 2.49% across the six quarters to March; FQ4'26 came in at 2.151%, below the bottom of that range and 6.5% below the 2.30% of the June quarter a year ago. The model still drifts the rate down 0.75% a quarter, which is a 3.0% annual decline - about half the erosion the print just delivered. That assumption has been left alone deliberately: one quarter carrying a large enterprise promotional event is not a trend, and Affirm says that event does not repeat in FQ1'27. If the rate prints below 2.2% again in September, this drift is wrong and the merchant line has to be re-cut on a steeper one.
  • The company's own explanation is mix, and it is in the letter: network revenue grew 26% against 36% GMV growth, in part due to a mix shift towards direct-to-consumer GMV, which carries lower network revenue as a percentage of GMV. D2C GMV grew 49% to $4.7B and was driven entirely by the Affirm Card. That is the cannibalisation this line was always going to face, arriving on schedule.
  • GMV grows 6.5% a quarter here, unchanged. That is a 28.6% annual run rate against the more-than-$64B FY2027 guide, which is 27.5% growth on the $50.2B just delivered. It is deliberately above the guide and below the 36-37% Affirm actually delivered in FQ4'26 and in FY2026 as a whole.
  • The ceiling of $30B of GMV a quarter - $120B a year - is what stops a 6.5% compound running to infinity. Rolling the basis forward from $11.6B to $14.1B pulls that ceiling forward by roughly two quarters: it now binds inside the projected fourth year rather than at the end of it, which is a mechanical consequence of a bigger starting quarter and not a change of view. The ceiling was not moved to hide it. Affirm now reports $30.0B of committed funding capacity against a $20.2B platform portfolio, so a $120B annual ceiling still assumes that capacity roughly doubles again.
  • This is the same GMV that drives the gain-on-sale line, and the two carry it separately: moving volume here without moving it there breaks the arithmetic that ties both to one company.
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