Affirm Holdings Inc To Host CFO Fireside Chat Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Bryan Keane - Deutsche Bank - Analyst : <_ALACRA_META_ABSTRACT>Got it, got it, great. So I was hoping actually to kick it off with the news this morning that hit about the Sixth Street becoming part of the forward flow agreements, and deals for Affirm, I guess. How does this help accelerate growth in? And maybe what are the -- how does this work? And what are the implications for RLTC with Sixth Street now being in the mix?

Question: Bryan Keane - Deutsche Bank - Analyst : Yeah, because I was thinking about that, that this is kind of a private credit kind of investors, and usually they have higher -- they expect higher returns expectations versus other forward flow partners. So does it change any mix for RLTC, the revenue less transaction cost for you guys?

Question: Bryan Keane - Deutsche Bank - Analyst : Got it, got it. No, that's really helpful. So this is a retail forum, so I'm going to call out some retail questions and some of our questions with the institutional investor base combined. But let's start with the retail one and a popular one even on the institutional side from [Bobby B]. And he's asking if you could give us an update on trends you're seeing as we're now in the full swing of the holiday season with regards to BNPL demand, which is now about 8% of e-commerce volume. How does growth compare to last holiday season?

Question: Bryan Keane - Deutsche Bank - Analyst : You know, I know Adobe came out and talked about maybe 11% growth rate in some of the holiday sales. I know Afterpay had some comments, maybe they were up 10%. But you guys have traditionally always grown faster. And as you said that the guidance is for 29%. Is that mostly just share gains and just ramp up new clients that that gets you guys to grow in excess of even what the BNPL market might be growing at?

Question: Bryan Keane - Deutsche Bank - Analyst : Got it, got it. There's some seasonality in this December quarter. Can you just talk a little bit about the seasonality with interest bearing loans, maybe having a higher percentage than typical quarters for you guys?

Question: Bryan Keane - Deutsche Bank - Analyst : And does the rapid growth in Affirm Card, does that change the mix on that?

Question: Bryan Keane - Deutsche Bank - Analyst : Yeah. Got it, got it. And then just staying on Affirm Card, we've obviously been impressed by that rollout since the inception there. But going back a few quarters, I think you guys have previously mentioned some hurdles on the user interface and consumer education that had impacted early adoption. Can you provide maybe some color on what were some of those learnings that helped you guys maybe fix and pick up adoption on the card?

Question: Bryan Keane - Deutsche Bank - Analyst : Yeah, I think there's 1.4 million Affirm Card users last I looked, and I think you guys are now at 19.5 million active consumers on the platform. So I guess how do we think about penetrating that 19.5 million of will Affirm Card be able to go to that entire base? And how long will the ramp up take to get further penetration?

Question: Bryan Keane - Deutsche Bank - Analyst : Yeah. Just wanted to understand the economics of the Affirm Card. I know you guys have said it's kind of in the same 3% to 4% RLTC range. But just as we think about it for impacting the margins of the business, the dynamics between the in-person point of sale, debit transaction versus interest bearing, paying forward, how does that -- how do the economics maybe change, and how does it look compared to the core business?

Question: Bryan Keane - Deutsche Bank - Analyst : Got it. And then just to finish, [Daniel Via], retail investor, wanted to ask about with the Affirm Card, what call outs do you have on usage trends or new growth vectors that card can bring in? Would that include like a cashback or other incentive?

Question: Bryan Keane - Deutsche Bank - Analyst : Got it, got it. So I wanted to turn to some of the partnerships and merchant wins. [Sean T], a retail investor, wanted to ask about some of the ways Affirm plans to expand its distribution across different websites.

Question: Bryan Keane - Deutsche Bank - Analyst : Yeah. One of those partnerships obviously is a small company called Amazon, and they represent a large percentage of GMV over the last few quarters. I think it's something up to 23% of your GMV. You just provide color on that relationship, how it should trend going forward, especially with them, maybe adding a few other BNPL providers.

Question: Bryan Keane - Deutsche Bank - Analyst : And do you think that any of the new competition that Amazon might add or adding is going to change your guys' growth rates much or? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 13, 2024 / 4:00PM, AFRM.OQ - Affirm Holdings Inc To Host CFO Fireside Chat Call

Question: Bryan Keane - Deutsche Bank - Analyst : You've mentioned shop, and I think now they're $10 billion in cumulative volume. So could you maybe help us understand some of the add-ons to the program like Shop Pay commerce component, which is separate from Shop Pay and just what that might do to push forward the growth rate for the shop agreement.

Question: Bryan Keane - Deutsche Bank - Analyst : Can you talk a little bit about some of the non-traditional retail verticals of firms is available to consumer or that consumers might not be available? I think [Najar S], he's a retail investor. He's asking in particular about offering pay later for elective medical procedures and other expenses not covered by health insurance.

Question: Bryan Keane - Deutsche Bank - Analyst : Great, great. I want to turn it to credit and profitability a common question we get and I'm sure retail investors have is just talking about Affirm's differentiated underwriting capabilities which has been really strong. DQ rates and credit losses have been managed really well even during this economic kind of slowdown here, and done a lot better than really the industry. So there's an actual investor question from [Marmy S] asking, could you walk us through the credit capabilities of Affirm? What makes it unique in this current environment with the macro rates or interest rates falling?

Question: Bryan Keane - Deutsche Bank - Analyst : I want to ask about falling interest rates in general. And obviously Affirm is a beneficiary of lower rates, but there's a lot of moving pieces there. So maybe you can walk us through interest rate impacts to the P&L and considerations, investors should keep in mind about the sensitivity and timing, and any other considerations when you're managing credit.

Question: Bryan Keane - Deutsche Bank - Analyst : Got it, got it. Wanted to get to the profitability side. Affirm obviously shown some great strides in improving -- rapidly improving profitability. [Junior V] who's a retail investor is asking in particular about the path to GAAP profitability by the end of fiscal year '25. What are some of the areas the firm is targeted to drive expense leverage? And where are some key focus of investment, whether that be marketing, product improvement, et cetera?

Question: Bryan Keane - Deutsche Bank - Analyst : Is there any targets for GAAP profitability, like a margin that you plan to get to?

Question: Bryan Keane - Deutsche Bank - Analyst : And can you remind us on the adjusted operating margin? What were those targets, because you guys are rapidly improving on that?

Question: Bryan Keane - Deutsche Bank - Analyst : Got it. Okay. Now I'm going to go to the grab bag of questions, retail investors that we -- I wanted to hit on here that were asked. [Jorge] and [Ashok T] are asking about if Affirm has any plans to expand its financial service offerings into auto loans, mortgages, or other financial wellness tools.

Question: Bryan Keane - Deutsche Bank - Analyst : Got it. [Brandy L] is asking why would a consumer choose Affirm over other buy now pay later providers? What's the firm's competitive advantage, and maybe I'll even extend that to not only the consumer, why consumers choose it, but why do merchants end up choosing Affirm?

Question: Bryan Keane - Deutsche Bank - Analyst : Because is take rate more just a function of what product set in and the credit risk or take on that because you guys have a little more flexibility maybe in touch rate than some of take rate than some of the other competitors.

Question: Bryan Keane - Deutsche Bank - Analyst : Retail investor, [Peter Z] wanted to ask about large banks that he's seeing like Chase are starting to offer pay overtime plans for their credit cards, allowing customers to break down purchases in 6, 12, 18 months with zero fees and no interest. Does that trend threaten maybe the future growth of Affirm? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 13, 2024 / 4:00PM, AFRM.OQ - Affirm Holdings Inc To Host CFO Fireside Chat Call

Question: Bryan Keane - Deutsche Bank - Analyst : Got it. I want to ask about the UK. I know you guys have started processing some merchants in that country. You talk about what makes your product or what's Affirm selling their product to differentiate itself from other competitor -- other BNPL competitors in the UK?

Question: Bryan Keane - Deutsche Bank - Analyst : [Adam W] and Marmy S are asking what's the next area of expansion outside the UK? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 13, 2024 / 4:00PM, AFRM.OQ - Affirm Holdings Inc To Host CFO Fireside Chat Call

Question: Bryan Keane - Deutsche Bank - Analyst : Got it. Questions on just the Affirm being offering up a B2B product. I know, I think you guys announced that last year. Any update on the progress and the opportunity there in B2B?

Question: Bryan Keane - Deutsche Bank - Analyst : Got it. I got a real time question coming in asking about how you guys think about the banking partners such as Evolve and Cross River, since they're under consent orders. Any issues with kind of the regulatory environment you're seeing with that?

Question: Bryan Keane - Deutsche Bank - Analyst : Question just asking about how much visibility does the CFO have in a given quarter, and then a given fiscal year?

Question: Bryan Keane - Deutsche Bank - Analyst : It's 100%.

Question: Bryan Keane - Deutsche Bank - Analyst : [Tamelia M] is asking that with the stock performance being phenomenal, especially over the last few months, how do you plan to -- how do you move the business forward for the continued success to match the stock outperformance?

Question: Bryan Keane - Deutsche Bank - Analyst : Last question for me, Rob, maybe just highlight some of the things you're most excited about that maybe investors are not seeing on a day to day or just things that could make a difference in the future that you think is worth pointing out. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 13, 2024 / 4:00PM, AFRM.OQ - Affirm Holdings Inc To Host CFO Fireside Chat Call

Question: Bryan Keane - Deutsche Bank - Analyst : Well, with that, Rob, we'll keep it there. Congrats on all the success, and congrats on the new role. And next time since we live probably 10 minutes away from each other, we should do this together.

Question: Bryan Keane - Deutsche Bank - Analyst : Yeah. All right, Rob. Thanks. Thank you.