Core Insights - The performance of two fintech companies, Affirm and Block, diverged significantly, with Affirm showing strong growth while Block faced ongoing challenges [2][5]. Affirm - Affirm reported a remarkable quarter with a 42% surge in transaction volume and earnings per share (EPS) more than doubling street estimates, despite losing the Walmart deal [2]. - The Affirm card, aimed at capturing point-of-sale payments, saw its volume more than double year-over-year, indicating strong consumer adoption [3]. Block - Block, led by Jack Dorsey, experienced its fourth consecutive double miss on both revenue and earnings, marking a troubling trend with six straight revenue misses [3][4]. - Although payment volume increased, profits did not keep pace, leading to concerns about persistent margin issues, attributed to elevated processing costs [4]. - Cash App showed strong performance with a 134% increase in borrowing, but this was already anticipated by the market, putting pressure on Block to provide positive guidance at the upcoming investor day [5]. Market Reaction - Block's stock has declined nearly 27% this year, reflecting investor concerns and the need for clearer positive signals from the company [6].

Financial Data and Key Metrics Changes - The company reported a strong quarter with significant growth, maintaining a revenue-less transaction cost (RLTC) of 4.2% [22][105] - The updated fiscal year 2026 outlook indicates an increase in operating margins to more than 7.5%, up from the previous guidance of over 6% [73][74] Business Line Data and Key Metrics Changes - The company highlighted that approximately half of the GMV growth came from direct point-of-sale merchant integrations, while one-third came from direct-to-consumer channels [52] - The 0% APR loans are identified as the fastest-growing loan product, with expectations for continued growth in this area [78] Market Data and Key Metrics Changes - The company noted a healthy spending environment for consumers, particularly in sectors like sporting goods and outdoor products [27] - Delinquency trends remain low, indicating strong consumer repayment behavior [29] Company Strategy and Development Direction - The company extended its agreement with Amazon for an additional five years, indicating a commitment to long-term partnerships [4][47] - The strategy includes expanding relationships with payment service providers (PSPs) to enhance integration speed and market reach [15][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to execute in the ABS market despite broader market challenges, attributing success to strong asset performance and investor relationships [10][112] - The company is focused on maintaining a long-term perspective, with a target RLTC range of 3% to 4% for sustainable growth [23][107] Other Important Information - The company is actively exploring new verticals, including services and automotive repair, with a robust process for adapting underwriting models [96][97] - The recent promotional event, referred to as "Zero Days," was successful in driving consumer engagement and merchant awareness [61][104] Q&A Session Summary Question: Thoughts on funding market execution amidst challenges - Management highlighted their strong execution in the ABS market and the unique value of their products, which are well-received by investors [10] Question: Insights on PSP relationships and strategy - Management emphasized the importance of PSPs for integration speed and expanding market access, noting ongoing efforts to enhance these relationships [15][34] Question: Trends in consumer spending and delinquency rates - Management confirmed that consumer spending remains healthy, with low delinquency rates indicating effective underwriting practices [27][29] Question: Update on operating margins and expense expectations - Management attributed the increase in operating margins to growth rather than cost-cutting, with a focus on revenue growth driving operating leverage [74] Question: Competitive environment and capital market conditions - Management noted a constructive capital market environment for their assets, with a focus on maintaining strong relationships with investors [112]

Core Viewpoint - Affirm Holdings Inc. has reported strong financial results, with earnings and revenue exceeding market expectations, indicating a potential shift in the fintech industry's trajectory [1][2]. Financial Performance - Affirm reported fourth-quarter earnings of $0.20 per share, doubling the Street estimate of $0.10, and quarterly revenue reached $876.41 million, surpassing expectations of $837.02 million [3]. - For the first quarter, Affirm projects revenue between $855 million and $885 million, slightly above the estimate of $860.55 million, and forecasts fiscal 2026 revenue at $3.86 billion, significantly higher than the consensus of $3.18 billion [4]. Growth Metrics - The company achieved record GMV growth, with a year-over-year increase of over 40% for the first time since the pandemic, and total notional volume reached its highest level on record [5]. - Affirm expanded its merchant network to 377,000 partners, a 24% increase year-over-year, and boosted transaction frequency by 20% [3]. Guidance and Projections - For fiscal 2026, Affirm guided GMV above $46 billion, slightly ahead of the Street's estimate of $45.8 billion, with a take rate of approximately 8.4% [6]. - Management expects a Revenue Less Transaction Costs (RLTC) margin of 4.0%, an adjusted operating margin above 26.1%, and a GAAP operating margin above 6.0% for fiscal 2026 [7]. Customer Acquisition and Credit Trends - There was a 66% year-over-year increase in 0% APR loans to $3 billion, which are crucial for acquiring new customers, as half of first-time users start with a 0% product [8]. - Credit trends remain solid, with 30+ day delinquencies down 18 basis points year-over-year, indicating a favorable shift towards low-risk, interest-free products [8]. Stock Performance - Affirm Holdings shares rose by 11.41% to $89.12, nearing a new 52-week high [11].

Financial Data and Key Metrics Changes - The company is pleased to improve its outlook for the current quarter and the fiscal year, indicating a positive trend in financial performance [6] - The company is on a journey towards becoming GAAP profitable, balancing growth and profitability [6] Business Line Data and Key Metrics Changes - The strength in GMV (Gross Merchandise Volume) was broad-based, with strong growth across various categories, particularly in direct-to-consumer services, which grew faster than the overall business [18][19] - March was highlighted as the strongest month of growth, achieving a 40% year-on-year GMV growth [19] Market Data and Key Metrics Changes - The company noted that the 0% APR product is gaining excellent traction, with a focus on maintaining high credit quality [10][12] - The company is actively responding to merchant requests for promotional financing, which is seen as a growth opportunity [10][12] Company Strategy and Development Direction - The company aims to balance growth opportunities with excellent credit quality while being judicious in spending [6] - The management emphasized the importance of the 0% APR product as a tool for market share growth and customer acquisition, viewing it as a long-term value booster [12][28] Management Comments on Operating Environment and Future Outlook - Management is mindful of the potential implications of student loan enforcement and has factored this into their underwriting processes [59] - The company is continuously monitoring credit trends and is prepared to adjust its strategies based on market conditions [110][115] Other Important Information - The company is focused on enhancing its app to improve user engagement and repayment rates, with ongoing updates and improvements [61][64] - The partnership with Costco is seen as a significant opportunity, although specific timelines for impact were not disclosed [70][71] Q&A Session Summary Question: Can you discuss the balance between zero APR loans and interest-bearing loans? - Management indicated that while zero APR loans generate slightly lower revenue, they significantly improve credit quality and customer acquisition, leading to long-term benefits [10][12] Question: What are the pockets of strength in GMV? - The company reported strong growth across various categories, with direct-to-consumer services leading the charge [18][19] Question: How does the company view the competitive landscape? - Management acknowledged the competitive environment but emphasized their focus on conversion and impact rather than pricing [126][129] Question: What are the implications of student loan enforcement? - The company is monitoring the situation closely and has already incorporated student loan data into their underwriting processes [59] Question: Can you provide an update on international expansion? - The partnership with Adyen is expected to speed up integration in the UK, with ongoing efforts to educate the market about the company's offerings [91][92] Question: How is AI being utilized within the company? - The company is leveraging machine learning for credit scoring and operational efficiency, while also exploring generative AI for customer interactions [96][100]