Affirm Holdings Inc at Wolfe Research FinTech Forum Transcript

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

Question: Darrin Peller - Wolfe Research LLC - Analyst : Nice. I mean putting aside financial targets for a moment, just thinking about the actual like innovation and launches, help us just -- explain to us again what you're most excited about for the rest of this fiscal year. You touched on a little bit of it, I think, just a moment ago, but even into next fiscal year, '26 as well.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. So now going back to financial targets again. Look, I mean, focusing on the remainder of the year, you obviously at earnings in February, just raised your outlook really across the board, expectations for GMV, revenue and operating income all coming in higher than you previously expected. Maybe just remind us what trends you were seeing that gave you the conviction to increase that outlook compared to your initial expectation first, and we'll go from there.

Question: Darrin Peller - Wolfe Research LLC - Analyst : So it was pretty broad-based. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum

Question: Darrin Peller - Wolfe Research LLC - Analyst : And just remind us the targets again for anyone in the room that may not be as familiar, some of the key targets for the year.

Question: Darrin Peller - Wolfe Research LLC - Analyst : The growth rates-wise.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Right. Yes. It seems like you're moving a little faster on that than I think a lot of us thought, right?

Question: Darrin Peller - Wolfe Research LLC - Analyst : I think if we just take a step back, I mean, you're talking about really good growth rates in the backdrop of what everyone sees as some scary headlines and tariffs and questions on policy and necessarily see it -- I mean, if you listen to the other fireside chats today, it doesn't sound like anyone is really seeing too much change in the consumer yet. But I don't know if you can give a quick comment on anything you're seeing out there in terms of the state of the consumer and the health in your business. And then more importantly, I mean, just inflation questions come up all the time. Rate volatility comes up. If you could just remind us how you incorporate macro assumptions in your guidance and then potential implications of whether it's higher inflation or anything else. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum

Question: Darrin Peller - Wolfe Research LLC - Analyst : So far, behavior seems consistent.

Question: Darrin Peller - Wolfe Research LLC - Analyst : By the way, for what it's worth, like Visa or Mastercard actually just said cross-border for them. Travel and growth seems like it's been stable into February and into March.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. All right. So far, so good, the consumer for now at least.

Question: Darrin Peller - Wolfe Research LLC - Analyst : I mean I don't know, tariffs is obviously going to have this question of whether or not it's inflationary. And your thoughts on the potential impact to your business, if you could walk through any either first, I don't know, or second order effects in your mind. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. That's helpful. That makes sense. Let's talk about international. I mean, again, you brought it up before. It's something you're excited about, the UK an area you've been focused on. And so just give us a quick update on how that's been going first.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. And then moving beyond UK, just thought process around other international markets, whether it's developed or even emerging markets.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Is that a buy or a build approach?

Question: Darrin Peller - Wolfe Research LLC - Analyst : I want to shift to the merchant side more broadly now, and we're going to go back to the financial questions on profitability and whatnot. But first, just on the overall side of growth, you've added -- I mean, I think it was 21% overall active merchant growth and 25% growth in merchants above, I think, a pretty good size annual GMV. And so for those less just familiar with the story, if you could summarize your value prop and how are you winning that kind of a merchant base to grow that fast off of what's already a pretty decent-sized base now.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. I mean so from your perspective, the ability to add at these rates seems sustainable to you, at least for the time being?

Question: Darrin Peller - Wolfe Research LLC - Analyst : So active customers might be even -- probably an even better metric to keep an eye on, right? And that also was growing 23% last quarter. So just touch a little more on the strategy there. Obviously, there's a little bit of a flywheel, right, with more merchants, more consumers. But help us

Question: Darrin Peller - Wolfe Research LLC - Analyst :

Question: Darrin Peller - Wolfe Research LLC - Analyst : And engagement levels. I mean that's another metric that I think you've seen growing. I mean certainly not 20%, but it's up a few percent year over year also, right?

Question: Darrin Peller - Wolfe Research LLC - Analyst : You're right, doubled over the past few years.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. If we keep going down the sort of the offering levels, I mean, obviously, the result is strong, active customers and merchants, but the Affirm app also. I know it's one of the things that Max talked about in your recent shareholder letter, was just revamping the Affirm app. So what improvements and changes have been made in the user interface and just the offering in general? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum

Question: Darrin Peller - Wolfe Research LLC - Analyst : Maybe we could shift and keep going down the path of offering in products and talk about the card now, which has been really successful. I don't know, when was it exactly really initiated and launched? It was about 1.5 years ago was it?

Question: Darrin Peller - Wolfe Research LLC - Analyst : I mean you have 1.7 million cardholders today, the average spending around $2,500 per cardholder. I know you have an ambition of having 20 million with $7,500 per average spend per year. So just help us understand the road map ahead of us on this front.

Question: Darrin Peller - Wolfe Research LLC - Analyst : That's pretty cool. But I mean, how do we go about converting more of the 21 million users from what? In other words, what's the actual tool? And what are you actually proactively doing to get 1.7 million much higher? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. Let's go back to the financial metrics again now because the underlying KPI seems strong. I guess profitability-wise, again, you talked about moving to profitability, I think, in terms of GAAP profitability, right? In Q2, we saw the company actually did deliver positive net income, GAAP net income for the first time in the company's history. So could you just remind us on the targets, again, the targets on timeline around GAAP profitability and the priority for the management team on this front?

Question: Darrin Peller - Wolfe Research LLC - Analyst : Yeah. So those were the benefit.

Question: Darrin Peller - Wolfe Research LLC - Analyst : And your ability to invest the way you need to invest and balance that feels right to you in terms of the time line?

Question: Darrin Peller - Wolfe Research LLC - Analyst : Okay. And then I guess if we go back up the income statement a little bit. I mean RLTC -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum

Question: Darrin Peller - Wolfe Research LLC - Analyst : Revenue less transaction costs. Just when we think about the actual margin you guys target, it's, what, 3% to 4% right? And you've already been kind of running at pretty close levels to that now, right? So just help us understand what the flexibility allows you to do from an investment standpoint. And how this is going to shape out and play out in your business, in your model, your financial?

Question: Darrin Peller - Wolfe Research LLC - Analyst : Can you just remind the audience and myself even of the magnitude of profitability of those types of products just based on -- I mean, a lot of it just explain the profitability profile of that versus your traditional interest-bearing loans.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Right. Maybe rate in a broad brush, right.

Question: Darrin Peller - Wolfe Research LLC - Analyst : I was just going to bring it to the credit spectrum question actually. I mean I guess all of that sounds great as long as credit quality is okay, right?

Question: Darrin Peller - Wolfe Research LLC - Analyst : So maybe go back to that. You mentioned a second ago, I think some of the data you're seeing in the ABS data has been good, right, from a delinquency standpoint. I think there was also a bit of an increase, maybe just based on I think it was last quarter, right, based on pricing initiatives, enabling extension just to more consumers. But where do you see credit now? Again, more broadly speaking, where are we in the cycle? What do you think you can manage in different types of environments?

Question: Darrin Peller - Wolfe Research LLC - Analyst : Yes. Yes, it's great.

Question: Darrin Peller - Wolfe Research LLC - Analyst : So I guess it would impact growth a bit, right?

Question: Darrin Peller - Wolfe Research LLC - Analyst : And from a funding standpoint, I mean, I know you guys had this large funding partnership with Sixth Street Partners. You indicated the partnership is going to take time to ramp. So maybe just if you could share some more details around that partnership, what the ramp might look like? And then maybe we'll get into just a bigger picture funding.

Question: Darrin Peller - Wolfe Research LLC - Analyst : Got it. Got it. Just before I turn to the audience, just two more for me. I mean, one is just competitively, are you seeing anything different from other, whether it's pay later companies or BNPL companies or even just companies that are in the wallet space? They're trying to say they can do more on the embedded finance front. So have you seen anything impacting you guys at all or just competitive dynamics that are different?

Question: Darrin Peller - Wolfe Research LLC - Analyst : Right. Guys, any questions you have in the audience? While we're waiting for the audience -- somewhere in the back. I have another one, but I'll let the audience kick in first. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 7:50PM, AFRM.OQ - Affirm Holdings Inc at Wolfe Research FinTech Forum Unidentified Participant Can you talk about the credit quality on the Affirm Card maybe relative to the customers who don't use it? And then just how that sort of informs maybe your underwriting decisions for expanding eligibility of the Affirm Card to other customers?

Question: Darrin Peller - Wolfe Research LLC - Analyst : Other questions? Unidentified Participant Could you just remind us of your views on sustaining your 3% to 4% RLTC margin target? Is this kind of just a function of diversifying and where you will continue to invest that excess margin?

Question: Darrin Peller - Wolfe Research LLC - Analyst : So I mean, just to wrap it up, the macro is the macro. But you guys have -- and what you have in your control, what do you want to see that you accomplished between now and the end of the year and, call it, 12 months from today that would make this a successful outcome?