Affirm (AFRM) 2025 Conference Transcript

Affirm (AFRM) Conference Call Summary Company Overview - Affirm is a point of sale finance company specializing in buy now, pay later (BNPL) transactions and transaction processing, primarily in the U.S. market [4][5] - Key partners include Amazon and Shopify, with recent expansion into the U.K. market [5] - The company has demonstrated strong growth, with top-line growth in the mid-twenty percent range and customer growth exceeding 20% [5][6] Financial Performance - Affirm reported a strong third fiscal quarter, with active consumer base growth exceeding 20% and active merchants also growing by more than 20% [9][10] - Gross Merchandise Volume (GMV) grew by 36%, surpassing the previous year's performance [11] - Revenue growth aligned with GMV, with transaction profit growing over 50% and adjusted operating income margin at approximately 22%, reflecting a nine-point year-over-year margin expansion [12][13] - Affirm card, a direct-to-consumer offering, reached 1.9 million active cardholders, contributing to 9% of GMV with over 100% growth in the quarter [14][15] Market Dynamics - The BNPL category is growing at approximately 25%, with Affirm outpacing this growth [12] - Strong growth was observed across various categories, particularly in general merchandise and consumer electronics [16] - Monthly 0% installment loans saw a 44% growth, distinguishing Affirm's product offering from competitors [18][19] Customer Acquisition and Engagement - Most customer acquisition is driven by merchant partnerships, with a focus on e-commerce visibility [24] - New customer cohorts are transacting more frequently, with an average of over 5.5 transactions per user per year [26] - Affirm is gaining market share from credit cards, with a significant addressable market of $1.2 trillion in revolving credit card debt in the U.S. [29][30] Competitive Landscape - The market remains competitive, particularly in the pay-in-four product segment, where competitors dominate [33] - Affirm's adaptive checkout product allows for a mix of loan options tailored to merchant needs, enhancing competitiveness [34][35] - Klarna is noted as a key competitor, with Affirm actively engaging in the market despite their presence [36][37] Consumer Trends - Consumer spending has shown resilience, with GMV growth reaching 40% in March, attributed to effective product offerings [39][40] - Delinquencies remain in line with historical expectations, indicating strong credit performance despite increased demand [41][42] - Growth has been broad-based across categories, with the exception of sporting goods [43] Funding and Regulatory Environment - Affirm's average loan term is about 12 months, with a weighted average life of 5 months, making it less sensitive to interest rate changes [44][46] - The company has a robust funding capacity of $23 billion, with only 59% utilized, indicating strong growth potential [48][49] - Regulatory changes under the new U.S. administration are monitored, but Affirm's business model remains aligned with consumer-friendly practices [52][53] Future Growth Opportunities - Affirm is exploring in-store commerce opportunities through wallet partnerships and the Affirm card [66] - Expansion plans include entering the U.K. and other European markets, as well as Australia [68] Conclusion - Affirm continues to demonstrate strong growth and market leadership in the BNPL space, with a focus on consumer-friendly products and strategic partnerships. The company is well-positioned for future expansion and profitability.