Affirm (NasdaqGS:AFRM) FY Conference Transcript

Summary of Affirm's FY Conference Call - September 10, 2025 Company Overview - Company: Affirm (NasdaqGS:AFRM) - Industry: Buy Now Pay Later (BNPL) Key Highlights 1. Fiscal Q2 2025 Performance: - Affirm reported a 43% year-over-year growth in GMV (Gross Merchandise Volume) driven by strong demand for 0% APR loans [4][5] - Achieved operating income profitability for the first time on a GAAP basis, marking a significant milestone [5] - RLTC (Revenue Less Transaction Costs) increased by 37% year-over-year [5] - Adjusted operating income margin reached 27%, up four percentage points year-over-year [5] 2. Affirm Card Growth: - GMV from the Affirm Card more than doubled year-over-year, with a 132% increase [6] - The number of cardholders grew by 93%, achieving a 10% attach rate [6] - The card segment now constitutes over 10% of total GMV [6] 3. Market Trends: - The BNPL industry is experiencing significant growth, outpacing e-commerce growth [6] - BNPL is becoming mainstream, with consumers and merchants increasingly expecting BNPL options at checkout [6][7] 4. Offline Market Opportunity: - Currently, offline transactions account for less than 3% of total GMV, while the offline market is six times larger than online [8] - Affirm sees substantial growth potential in capturing offline market share [8] 5. FY26 Guidance: - Affirm expects GMV growth of 36% to 37% for the first fiscal quarter and a minimum of 25.5% for FY26 [9][10] - The company anticipates continued GAAP profitability [10] 6. Consumer Health and Delinquency Rates: - Overall consumer health remains strong, with 30+ day delinquencies down year-over-year [13][14] - Charge-off rates for monthly installment products are approximately 3.5%, and for Pay in 4 loans, around 60 basis points [14] 7. Funding Environment: - The funding environment is described as constructive, with strong demand for Affirm's loans [16][18] - Affirm maintains a diversified funding strategy, utilizing both on-balance sheet and off-balance sheet funding [21][23] 8. International Expansion: - Affirm has launched in the UK and is exploring further expansion into markets like Australia, Netherlands, France, and Germany [12][58] - The company plans to leverage existing partnerships, such as with Shopify, to facilitate international growth [60] 9. Competitive Differentiation: - Affirm emphasizes long-term partnerships with funding sources, differentiating itself from competitors who may focus on short-term transactions [61][62] - The company prides itself on superior underwriting capabilities and a comprehensive product offering [63][64] 10. Adaptive Checkout: - Affirm's Adaptive Checkout allows for customized offers for each transaction, enhancing consumer experience and improving conversion rates [45][48] Additional Insights - Affirm's strategy includes a focus on data accumulation to improve underwriting and offer personalization [48] - The company is committed to maintaining strong credit outcomes, which are essential for sustaining funding relationships [19][65] - Affirm's approach to funding is characterized by a focus on sustainable growth and efficient capital access [65][66]