Affirm Holdings Inc Q1 2025 Earnings Call Transcript

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

Question: Andrew Bauch - Wells Fargo Securities, LLC - Analyst : Hey, guys. Nice set of results here, and thanks for the question. Just could you unpack the uplift to revenue as a percentage of GMV for the full year and then RLTC coming up nice from 10 basis points to 20 basis points and what are the drivers of that?

Question: Andrew Bauch - Wells Fargo Securities, LLC - Analyst : Yes, I understand. I thought I would assume that you guys were planning on reinvesting some of the excess RLTC back in for growth. So, maybe if you just kind of expand upon the thought there?

Question: Andrew Bauch - Wells Fargo Securities, LLC - Analyst : Great. Thank you, Michael. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00PM, AFRM.OQ - Q1 2025 Affirm Holdings Inc Earnings Call

Question: John Hecht - Jefferies - Analyst : Good afternoon, guys. Congratulations on another good quarter. I guess one of the trends we're seeing out there now is a pretty big pickup in secondary market activity. I think that's tied to kind of interest rate movements and credit trends and so forth. How does that impact your thinking about kind of what balance sheet management, retention versus sale and so forth, given those trends? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00PM, AFRM.OQ - Q1 2025 Affirm Holdings Inc Earnings Call

Question: John Hecht - Jefferies - Analyst : Perfect. Thanks.

Question: James Faucette - Morgan Stanley - Analyst : Great. Thank you very much. I wanted to just quickly touch base on kind of the outlook for 0% promotions as we go into the holiday season. Typically, this would be where we'd see some strength. And I'm wondering kind of tying that back to the RLTC commentary, a lot of times because of the MDR differences that can provide some RLTC benefit as well. So, just help us think through that potential as a driver and promotion for the holiday season? Thanks.

Question: James Faucette - Morgan Stanley - Analyst : Great. Thanks.

Question: Vincent Caintic - BTIG - Analyst : Hi. Good afternoon. Thanks for taking my question. Wanted to go back to the discussion about margins. So it was nice to see the guidance for the adjusted operating income margin now above 20% and then the guidance for the fiscal second quarter of the 21% to 23%. So I wonder if you could maybe discuss sort of what are you expecting in terms of longer-term operating income margins where you think you can operate? It seems like the 21% to 23% is sort of in that mid-to high 3% RLTC. Where do you think that can get and the run rate going forward? Thank you.

Question: Vincent Caintic - BTIG - Analyst : Okay. Great, very helpful. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00PM, AFRM.OQ - Q1 2025 Affirm Holdings Inc Earnings Call

Question: Dan Dolev - Mizuho Securities USA - Analyst : Hey, guys. Thanks for taking my question. Great results as always. Max, we noticed that active consumer growth accelerated again. Can you maybe touch a little bit on the factors behind the acceleration? Thank you.

Question: Dan Dolev - Mizuho Securities USA - Analyst : Amazing. Thanks, Max.

Question: Robert Wildhack - Autonomous Research LLP - Analyst : Hi, guys. Maybe just to start, I wanted to get your certainly early thoughts on the UK launch. I mean how have the conversations there gone with merchants? And I'm curious why you think or what you think is your right to win in that already pretty competitive market.

Question: Robert Wildhack - Autonomous Research LLP - Analyst : Yes. Can I go bigger picture, Max. And relatedly I wanted to ask about the competitive landscape more broadly. I appreciate your thoughts on the UK. At the same time you have players from overseas who are showing up on Apple Pay and maybe drifting into some longer duration products. I mean, it seems like the competitive boundaries of the last couple of years might be shrinking. Would you agree with that characterization? And then how would you think about sustaining growth and expansion without igniting some kind of competitive race to the bottom?

Question: Reggie Smith - JPMorgan - Analyst : Hey, guys. Congrats on the quarter. I had two questions. One is super quick. I wanted to make sure, I guess, you issue a process that talked about increased scrutiny on sponsored banks. I wanted to make sure that that would not impact the growth of the Affirm card? That should be a quick answer. But then, I think bigger picture, I'm curious if there are any like nuances in terms of underwriting consumers in the UK versus the US and how you guys go about kind of building out your underwriting knowledge there as you kind of enter that new market?

Question: Reggie Smith - JPMorgan - Analyst : Thank you. Is there anything you can talk about in terms of the nuance in that market that anecdotally like consumers are different from American consumers in any way payback spending anything you can share?

Question: Reggie Smith - JPMorgan - Analyst : Of course you will. Perfect. Thank you.

Question: Jill Shea - UBS - Analyst : Thanks for taking the question. You've noted in the shareholder letter that as it relates to funding that declining benchmark rates will be a tailwind to RLTC. Can you just touch on your view on the path of funding costs in light of the current interest rate outlook? And maybe help us think about the magnitude and pacing of the benefit as we move through the year?

Question: Jill Shea - UBS - Analyst : Very helpful. Thank you.