Affirm Holdings Inc at UBS Global Technology and AI Conference Summary

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

Question: Jill Shea - UBS AG - Analyst : Thanks. So just maybe another follow-up on the card, clearly an important part of the story and it's contributed more to the growth at an early stage, earlier stage than we expected. And you saw users up 500,000 quarter over quarter, and you had a 12% attach rate in the quarter. I think that was, in terms of the growth rate, the highest growth quarter you've seen. Could you just touch a bit more on what's driving that acceleration in card adoption?

Question: Jill Shea - UBS AG - Analyst : Great. I'll turn it back to Tim on the 0%. Unidentified Participant Alright, 0% loan. So we generally think about this as a very TAM-expansive type of product for you. To set the stage though, the growth there was 74% year over year in the most recent quarter. The number of merchants funding these loans tripled to 40,000, again expanding the TAM, unlocking to some higher-income users. But maybe you could talk a little bit about the strategy here and when the enterprise salesperson from Affirm goes into the merchant and pitches the 0% loans, what does that conversation sound like?

Question: Jill Shea - UBS AG - Analyst : Great. So in terms of RLTC, you had another strong quarter at 4.2%, partially benefiting from lower funding costs and lower provisioning as the loan sales deferred flow partnerships began ramping up. Can we expect this level of loan sales to continue, and how should we think about the impact to RLTC going forward?

Question: Jill Shea - UBS AG - Analyst : Great. And maybe just turning back to the Affirm Card, just a quick question there. Affirm Card is about 13% of total GMV in the first quarter. Can you just talk about the RLTC margins and what it looks like there? I mean, clearly interest-bearing seems to be the vast majority of the GMV, so likely not diluted to margins, but maybe you can just walk through the dynamics there.

Question: Jill Shea - UBS AG - Analyst : Great. I'll turn it back to Tim on international. Unidentified Participant All right, great. On international, we know it's still pretty early, right? With Shopify in the UK, but let's just fast forward 3,4,5 years. If you had a model for the international business, which I'm sure you do, what would roughly be the RLTC margins of that business in the UK and what would the product mix be?

Question: Jill Shea - UBS AG - Analyst : Great. So maybe just going back to your investor forum in November 2023, you talked about two adjusted operating margin outlook scenarios which you've clearly exceeded even in the low revenue scenario. Could you just provide us an outlook in terms of where those margins can get to over the next several years?

Question: Jill Shea - UBS AG - Analyst : Great, that's very helpful. Maybe just turning to funding and capital partners, you had a really strong quarter in capital markets with your latest ABS deal of pricing at the lowest average yield since 2022, and you did note that you saw some flight to quality. Could you just give us an update on your funding partners? How are they positioned today? Is the demand for consumer credit still strong, and are you still seeing that flight to quality?

Question: Jill Shea - UBS AG - Analyst : And then maybe just drilling down on that a little bit, just given your success there, what's the pathway forward in terms of driving funding costs down? Can you continue to have runway there?

Question: Jill Shea - UBS AG - Analyst : And then maybe not to harp on funding, but maybe one quick question as well. I think you had given us that rule of thumb that a 100-basis-point decline in rate is about 40 basis points to funding. Could you just walk through the timing element of that? How much of it is truly variable? How much reprices on a lag? How do we see the funding costs kind of coming through the income statement over time?

Question: Jill Shea - UBS AG - Analyst : Great, I'll turn it back to Tim. Unidentified Participant All right. I think we can make this one a quick one and then maybe leave some time for Q&A, so I'll bring the microphone around in a sec. So, Michael, there was a comment in the fiscal Q3 2025 shareholder letter that really was well received by investors. I know you've talked about this a little bit since, but the comment was basically that, hey, in a recession where you see a 50% increase in credit stress, the impact to the business would be a 10% reduction in GMV, meaning the loss rates would kind of hang in there, of course, and you would just say no 10% more, and you'd see a little bit of a slowing in the GMV, and I think that comment was really helpful to the investment community because it allowed people to get more comfortable putting a multiple on Affirm. So maybe you could just talk a little bit about that number, what went into it. How do you define a 50% increase in credit stress?