Affirm(US:AFRM)2025-05-08 22:02Financial 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][7] - The quarter showed strong growth in GMV (Gross Merchandise Volume), with March being the strongest month at 40% year-on-year growth [20] Business Line Data and Key Metrics Changes - Strong growth was observed across various business lines, particularly in direct-to-consumer services, which outpaced the overall business growth [19] - The zero APR product is gaining traction, although it has a lower revenue and return on loan compared to interest-bearing loans [10][12] Market Data and Key Metrics Changes - The company noted broad-based strength in GMV across its merchant base, with only one category experiencing a decline [19] - The company is actively engaging with merchants to promote zero APR offers, which are seen as beneficial for both parties [11][28] Company Strategy and Development Direction - The company aims to balance growth and profitability while continuing to take market share [7] - There is a focus on enhancing the Affirm app to improve user engagement and repayment rates, with ongoing updates and features being rolled out [61][63] Management's Comments on Operating Environment and Future Outlook - Management is mindful of potential economic challenges, including the impact of student loan enforcement and broader economic conditions [59] - The company is prepared for recession scenarios and has a proactive approach to adjusting credit quality and underwriting standards as needed [34][112] Other Important Information - The partnership with Costco is highlighted as a significant development, although specific timelines and metrics are not disclosed [70][71] - The company is committed to reporting loan data to credit bureaus, which is seen as beneficial for consumers and the company's brand [40][42] Q&A Session Summary Question: Can you discuss the balance of economics between zero APR and interest-bearing loans? - Management indicated that while zero APR loans generate less revenue, they enhance brand loyalty and customer acquisition, leading to better credit quality in the long term [10][12] Question: What are the pockets of strength in GMV? - The company reported strong growth across most categories, with direct-to-consumer services leading the charge [19][20] Question: How does the company view the impact of student loan enforcement? - Management is monitoring the situation closely and has already factored student loan delinquencies into their underwriting processes [59] Question: Can you elaborate on the competition and funding structure? - The competitive landscape remains intense, but the company focuses on conversion and impact rather than pricing to maintain its market position [122][123] - A bank charter is not seen as a solution for the current funding strategy, but the company remains open to pursuing one if necessary for product development [116][120]