Affirm Q3 2025 Earnings Report

Affirm EPS Results

• Actual EPS: $0.01
• Consensus EPS: -$0.09
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: -$0.43

Affirm Revenue Results

• Actual Revenue: $783.14 million
• Expected Revenue: $782.98 million
• Beat/Miss: Beat by +$153.00 thousand
• YoY Revenue Growth: +35.90%

Affirm Announcement Details

• Quarter: Q3 2025
• Date: 5/8/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 8, 2025
• Conference Call Time: 5:00PM ET

Affirm (NASDAQ:AFRM) operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. The company's platform includes point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app. Its commerce platform, agreements with originating banks, and capital markets partners enables consumers to pay for a purchase over time with terms ranging up to 60 months. The company has active merchants covering small businesses, large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. Its merchants represent a range of industries, including sporting goods and outdoors, furniture and homewares, travel and ticketing, apparel, accessories, consumer electronics, and jewelry. Affirm Holdings, Inc. was founded in 2012 and is headquartered in San Francisco, California.

Affirm Q3 2025 Earnings Call Transcript

Key Takeaways

• Affirm raised its outlook for the fourth quarter and full fiscal year, emphasizing judicious spending and a continued balance between growth and profitability as it nears GAAP profitability.
• Payments volume (GMV) grew 36% year-over-year in Q3, with March up 40%, driven by broad-based strength across merchant categories and accelerated adoption of its direct-to-consumer services and Affirm Card.
• Merchants have increasingly run 0% APR promotions, which deliver strong conversion and attract prime-credit customers who later boost lifetime value through card enrollments.
• Affirm’s credit risk remains healthy, with short loan book turnover and robust recession scenario modeling enabling rapid underwriting adjustments to sustain excellent credit quality.
• The company is expanding key partnerships—including online Costco, a Shopify renewal through 2028 and a UK launch via Adyen—and deploying advanced technologies like GenAI in dispute resolution and enhanced app features.

Presentation

[Operator]

Good afternoon. Welcome to the Affirm Holdings Third Quarter Fiscal twenty twenty five Earnings Call. Following the speakers' remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded. A replay of the call will be available on our Investor Relations website for a reasonable period of time after the call.

[Operator]

I'd like to turn the call over to Zane Keller, Head of Investor Relations. Thank you. You may begin.

[Zane Keller, Director, Investor Relations at Affirm]

Thank you, operator. Before we begin, I would like to remind everyone listening that today's call may contain forward looking statements. These forward looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website. Actual results may differ materially from any forward looking statements that we make today. These forward looking statements speak only as of today, and the company does not assume any obligation or intent to update them except as required by law.

[Zane Keller, Director, Investor Relations at Affirm]

In addition, today's call may include non GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. For historical non GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in our earnings supplement slide deck, which is available on our Investor Relations website. Hosting today's call with me are Max Levchin, Affirm's Founder and Chief Executive Officer Michael Linford, Affirm's Chief Operating Officer and Rob O'Hare, Affirm's Chief Financial Officer. In line with our practice in prior quarters, we will begin with brief opening remarks from Max before proceeding immediately into questions and answers.

[Zane Keller, Director, Investor Relations at Affirm]

On that note, I will turn the call over to Max to begin.

[Max Levchin, Founder and CEO at Affirm]

Thank you, Zane. The quarter's results, of course, speak for themselves. We are pleased to improve our outlook for the current quarter and the fiscal year. This quarter is a good example of us leaning into growth opportunities with excellent credit quality and LTV characteristics while hitting our targets. As we continue our journey as a soon to be GAAP profitable business, we'll continue to be judicious in how we spend our hard earned dollars.

[Max Levchin, Founder and CEO at Affirm]

And as opportunities to take market share arise, we'll keep balancing growth and profitability. Back to you, Zane.

[Zane Keller, Director, Investor Relations at Affirm]

Great. Thank you, Max. With that, operator, we're ready for our question and answer session.

[Operator]

Thank you. We will now be conducting a question and answer Your first question comes from Andrew Jeffrey with William Blair. Please go ahead.

[Andrew Jeffrey, Research Analyst at William Blair]

Hi, good afternoon. Appreciate you taking the questions this afternoon. Max, I noticed to call it again on the zero APR product in the shareholder letter where you're having excellent traction. Can you talk a little bit about sort of the how you balance the economics of those loans versus interest bearing loans? And whether or not you're going to see or you think you can see more merchant sort of contribution to that product as you go forward?

[Andrew Jeffrey, Research Analyst at William Blair]

Because I think you noted it's a little bit lower RLTC than interest bearing. So I'm just wondering about the mix implications and any other comments on zero interest going forward.

[Max Levchin, Founder and CEO at Affirm]

Sure. And it is a little bit responsive or reactive, if you will, versus proactive. So when a merchant shows up and says, hey, I'm thinking of doing a giant 0% promo this quarter, our answer is always going to be absolutely, let's do this. Like, yes, it makes a little bit less money, but the brand halo that drives for us, the conversion that the merchant sees and therefore attaches themselves to Affirm that much more, the incremental volume to them is just like it's all goodness up and down. And so part of what you see in my letter this quarter is me saying we had a handful of those opportunities come to us and we just couldn't get enough of them.

[Max Levchin, Founder and CEO at Affirm]

You're totally right that the revenue and ROT content is a little bit light. But on the other side of it, the credit quality is significantly better. Like I think I quoted some numbers in my notes that it's basically prime and super prime content. And so we will continue reacting towards that. One of the really big things that is worth being clear about on the zeros, they are good today.

[Max Levchin, Founder and CEO at Affirm]

In fact, I think they're great today, but they're really fantastic tomorrow. The totality of Affirm cardholders comes from the existing Affirm base. Every time we sign someone new through a 0% promo, some number of months or quarters from now, that is a prime candidate for card, and that's a lifetime value booster. You know, we haven't come up with a better one. So that that's that's why we're so happy with that.

[Max Levchin, Founder and CEO at Affirm]

And does create a little bit of delayed gratification, if you will, but it's totally worth it.

[Andrew Jeffrey, Research Analyst at William Blair]

That's super helpful. Thank you.

[Operator]

Next question, Dan Dilev with Mizuho. Please go ahead.

[Dan Dolev, Senior Analyst - FinTech Equity Research at Mizuho Financial Group]

Hey, guys. Excellent results as always.

[Dan Dolev, Senior Analyst - FinTech Equity Research at Mizuho Financial Group]

Max and team, can you maybe elaborate a little bit on the pockets of strength in GMV that we're seeing right now? And maybe some comments on Apple Pay and how much of this is sustainable on the April strength. We'd really appreciate some comments. Thank you.

[Rob O’Hare, CFO at Affirm]

Dan, this is Rob.

[Rob O’Hare, CFO at Affirm]

Thanks for the question. The strength in GMV that we saw in the quarter, really was incredibly broad based. I think we had one category that declined, but otherwise, we really saw strong growth across the board. And that was both growing with our largest merchants and partners, but also growing across the merchant base. Obviously, we called out in the letter that the strong growth in our direct to consumer services, those grew faster than the rest of the business at large and was led by card, of course.

[Rob O’Hare, CFO at Affirm]

But yeah, really it was strong growth. I mean, other thing that we called out in the letter was just that we did see growth accelerate across the quarter with March being our strongest month of growth at 40% GMV growth year on year.

[Dan Dolev, Senior Analyst - FinTech Equity Research at Mizuho Financial Group]

Got it. Excellent results. Thank you so much.

[Operator]

Next question, Moshe Orenbuch with TD Cowen. Please go ahead. Mr. Ornbuch, your line is live.

[Moshe Orenbuch, Managing Director & Senior Analyst at TD Cowen]

Oh, sorry. Sorry about that. I was hoping you could perhaps, you know, flesh out the commentary on the 0%. You mentioned, you know, that they're generally much higher credit quality. And, you know, is this, you know, sort of the way to think about a, kind of an acquisition channel for the Affirm card and just a different if that's the case, then maybe could you talk a little bit about when you're going to be willing to do more of it and how we should kind of think about that?

[Max Levchin, Founder and CEO at Affirm]

I'll start, and undoubtedly, Rob has much more precise contours around yeah. I it the thing in promotional finance is everybody promises you zeros. No one except for us actually delivers on it. 99.999% of the time, somebody says, hey. It's a 0% APR.

[Max Levchin, Founder and CEO at Affirm]

There's an asterisk next to it. And if you read the fine print, it says if you miss a payment or you're late or something happens or it rains or it's a Thursday, you will get screwed. And interest compounds attractively, and it's the worst thing in the world. We don't do any of those things when we tell you it's a 0% APR. It is, in fact, a 0% APR.

[Max Levchin, Founder and CEO at Affirm]

At this point, we've actually earned our right slash brand. People know when Affirm says it's a 0% deal, it is in fact you will pay no interest for as long as the number of months says. And so people respond to it very positively. The conversion rate on those sort of things is better than it's ever been. Merchants come to us and say, hey, we want to really boost our top line.

[Max Levchin, Founder and CEO at Affirm]

Let's run a zero. We'll pay the interest that consumers would have otherwise paid. Let's go for that. That typically result very, very rarely, in fact, I can't remember a time where we said, now we're not interested. Anytime this happens, we say, oh my god, of course, we would love to accommodate you, let's go now and let's do as often as possible.

[Max Levchin, Founder and CEO at Affirm]

So in that sense, it's just a great thing right now. Yes, it has great credit, externalities. It converts really well, etcetera, etcetera. It's also extremely on brand for us. So this is a really important brand deposit that we're making.

[Max Levchin, Founder and CEO at Affirm]

It also drives GMV growth. And so generally speaking, I don't have a framework in my mind of, at some point, it's too much. The card user acquisition thing is a cherry on top. It's not a thing we do because we want more card users, even though we, of course, we want more card users. It's the fact that when we do this, it results in a disproportionately higher percentage of qualified card users.

[Max Levchin, Founder and CEO at Affirm]

The card credit quality requirements that we have are higher than the broad affirm quality requirements. And so in that sense, the more zeros we run, the higher percentage of card eligible users we have. That's the qualitative answer now to Rob

[Rob O’Hare, CFO at Affirm]

Yeah. And I would just say, Moshe, you know, it really comes down to for us where is the portfolio profitability at large and, do we have maybe some surplus that we can invest through mix, not necessarily by subsidizing the MDR for merchants, but just through mix alone to help drive all of the the beneficial things that come with Xero that Max alluded to.

[Rob O’Hare, CFO at Affirm]

Right? So, modestly better credit, higher growth, slightly better user acquisition. Right? All those things are are added benefits and and we think that they drive, really nice network effects for us as well.

[Operator]

Next question, Rob Wilhack with Autonomous Research. Please go ahead.

[Robert Wildhack, Equity Research Analyst - Director at Autonomous Research]

I appreciate the commentary in the letter around your sensitivity to the recession scenario. I was wondering if you could unpack some of the assumptions that underpin that analysis. Obviously, I'd be interested to know like what you considered for GDP and unemployment, but also if you assumed anything in that scenario with respect to the business like 0% APR is increasing, decreasing or softening in the funding market, anything like that?

[Max Levchin, Founder and CEO at Affirm]

Let's see. So first of all, it's not a precise estimate. The numbers should give you a pretty good clue that this is fifty and ten are fairly general levels. What we've done is we've looked at past experience. So during COVID, we had some changes we had to implement pretty quickly because of the extremely sudden nature of the furloughs and layoffs.

[Max Levchin, Founder and CEO at Affirm]

And then in 2223, a little bit slower, but it's also a little bit of a fire drill. And so in both times, we have to estimate sort of what's the credit results we wanted in that period of time and empirically find our way to the right approval rates. The numbers I gave are roughly what we saw then. And then as we do our recession preparedness, which we always do, it's not a thing that we sort of started doing at some recent time, we just look at recession scenarios as a matter of habit, we model out what happens over what period of time as delinquencies and defaults go up. Basically, the process looks something like this.

[Max Levchin, Founder and CEO at Affirm]

We just make assumptions about the existing back book and ask ourselves what are the changes we need to do to the front book to mix into the right returns for our investors so that we continue satisfying our capital markets obligations and feel good about the results overall. We deliberately do not make assumptions around things like, well, of course, we'll do this and that and everything will get better. So there are pockets of improvements to be had after we make those credit cuts, but the assumptions are fairly black and white because that's the most conservative path to approach. And so that's the process. The numbers are empirically based from what we've seen as well as the models that we run here.

[Max Levchin, Founder and CEO at Affirm]

I think capital markets sort of behaved in all sorts of erratic ways in the past. So we have that, you know, empirically well known at this point.

[Rob O’Hare, CFO at Affirm]

Yeah. And, Rob, I this is Rob O'Hare. I I think you'll find that because the loan book turns over so quickly in our business, we tend to look much more closely at early signs of stress in our own loan book more so than we peg our assumptions or our scenario planning around external factors like, you know, US unemployment rate or something like that.

[Rob O’Hare, CFO at Affirm]

So it it's really around if we saw repayment stress in our own loan book and we sprung to action, what would those actions look like and and how how much would we have to tighten underwriting or adjust our credit posture?

[Andrew Jeffrey, Research Analyst at William Blair]

Got it. Okay. And then you've held a series of headlines recently highlighting integration and reporting back into the credit bureaus. And you do seem to be at the forefront of your industry in doing that. So I just wanted to ask, why is that something that's so important to you?

[Andrew Jeffrey, Research Analyst at William Blair]

And then is it challenging from, like, a tech perspective to build out that reporting and integration?

[Max Levchin, Founder and CEO at Affirm]

It's a great question. We do believe we are at the forefront of the industry in this sense, and it is challenging at the front end. So there's a couple of somewhat conflicting considerations in in the scenario of reporting. So there's a very small handful of people that will tell you, don't report my loans. I like the optionality of not paying my bills on time and having my credit score unchanged.

[Max Levchin, Founder and CEO at Affirm]

That is an extreme minority, and some of our competitors love to speak to that minority. But I think the vast majority of the world says, hey, if I'm borrowing money and I'm paying it back on time, I want that reflected on my permanent record. When I go to borrow money for a car or even get my credit check for an apartment rental, I want to know that if I borrowed from you, you help me build my credit history and ultimately help my credit score. And so that part is really important to us. You know, we're we're absolutely not a socialist enterprise, but we do believe in doing the right thing for our consumer.

[Max Levchin, Founder and CEO at Affirm]

And our consumer really cares about their credit rating. So helping them build it is really important. There are some downsides to it in the follower some like, the downside is the right term. Sorry. You you can't screw it up.

[Max Levchin, Founder and CEO at Affirm]

You go to a credit bureau and you tell them, here's a bunch of data, do what you will with it, that is irresponsible. So we spend years literally testing what will happen to your credit score if the NPL data is included in it. What about monthly data? What about biweekly data? What if it combines with these other transactions that we see?

[Max Levchin, Founder and CEO at Affirm]

And so we work very, very hard on making sure that we can stand up and say, we will report your data. If you pay us on time, over time, your credit score will improve and it will not have weird consequences that you might be worried about, etcetera. And so that work was really significant, took a lot of negotiating, took some real effort with TransUnion and Experian. All this announcement you see is literally results of years and years of work. The actual process of gathering the repayment data and sending it to the credit bureaus is not especially technically challenging.

[Max Levchin, Founder and CEO at Affirm]

You want make sure you format the data correctly, but that's not the hard part. The hard part is making sure that it's incorporated accurately, represents the behavior truthfully, actually helps people build their scores, doesn't disproportionately benefit or punish them in strange unexpected consequences.

[Robert Wildhack, Equity Research Analyst - Director at Autonomous Research]

Okay, thank you.

[Max Levchin, Founder and CEO at Affirm]

I'll use this one second as the opportunity to pound the table. I invite all of our competitors to do the same thing. I think it's really important. I think this country is fueled by credit, and it is irresponsible of them not to deliver information to the bureaus. And by the way, you know, whatever regulatory regime we are in or heading to, the right thing to do is to help people not stack loans, which is the number one concern regulators of all types always have.

[Max Levchin, Founder and CEO at Affirm]

If you're borrowing here and you're borrowing there, it is at least important to know the total size of your overall debt. And we'll lead the way, we'll always do the right thing first, but I think it's really important the industry embraces this price.

[Operator]

Next question, Adam Frisch with Evercore ISI. Please proceed.

[Adam Frisch, Senior Managing Director - Equities at Evercore ISI]

Thanks. A quick housekeeping and then I have a question on the AC card. If zeros didn't grow so fast, we're more in line with the prior mix, What do you think our LTC would have been in the quarter?

[Max Levchin, Founder and CEO at Affirm]

We haven't given precision around that, Adam. Other than to say, you know, zeros are profitable for us. They're profitable at the RLTC line, and they're just less profitable than an interest bearing loan that's held. But just given the complexities of of in quarter funding mix and just taking a horizontal view of an asset that lends itself to a several quarters view, it's really hard to quantify that.

[Adam Frisch, Senior Managing Director - Equities at Evercore ISI]

Okay. Okay. No worries. I just want to ask also about any specific initiatives or incentives that you could speak to in order to get people using the Affirm card more like a debit card? So you see them more get an even better understanding of their finances, etcetera.

[Adam Frisch, Senior Managing Director - Equities at Evercore ISI]

And if not, maybe provide some color on whether banking or debit or other financial services are on your roadmap? Max, I think you alluded to that very slightly in the last call. So I was hoping maybe to get a little more color on that. Thanks.

[Max Levchin, Founder and CEO at Affirm]

It's a good question. I'll try to keep it synced lest I get on the in in the feature mode again. So to get to top of wallet is is a major effort. Like, we basically have to build out all the functionality we have in mind, and we're working pretty hard towards that. But I would not expect the pay now volume to just flip up to a crazy number very quickly.

[Max Levchin, Founder and CEO at Affirm]

So it's going to be a gradual process, and we're seeing good attach rates in cohorts, but we are not obviously yet the predominant way for people to pay now. We're gaining traction pretty nicely in pay later, as in we're taking up more and more of the consumer's credit spend. The goal is, of course, to go after all transactions. What it will take not sure this is the right place on which to preannounce our product roadmap. And if I do, Michael will elbow me, and it will hurt.

[Max Levchin, Founder and CEO at Affirm]

But I think the one of the things that we did, it's it's in my notes. We just rolled out foreign transactions, which seems like a really minor thing, but I called that out because, you know, there's no network effects in payments geographically. People just don't travel that much. But nothing sucks more than pulling out your debit card in a foreign land and saying, I'm gonna buy this thing, swiping it, and it doesn't work. And so fixing these gaping user interface or user experience holes is disproportionately important for things like pay now.

[Max Levchin, Founder and CEO at Affirm]

Like, you just want it to be more bulletproof. As we clean up those things, I think you will naturally see increased pay now. And we have a bunch of ideas in what might we do to create incentives. For what it's worth, the single most valuable consumer incentive we've come up with is the 0% APR. Like, sounds sort of pedestrian, but we've run EB tests of all sorts and kinds.

[Max Levchin, Founder and CEO at Affirm]

And we can offer you 10% off or 0% deal, and nine out of 10 times the 0% is just much more compelling, even though it costs the merchants less than 10%. And so just the economics of that trade are so powerful, we will continue leaning into API reductions as a reason to use Affirm products in all sorts of ways, and the card is certainly a giant driver of that. And obviously, there's a bit of a rhyming where if you signed up through a 0% promo, you'd like to see more of those. And so creating more of those in the card is pretty valuable.

[Adam Frisch, Senior Managing Director - Equities at Evercore ISI]

Got it. Okay. Thanks, guys.

[Operator]

Next question, Andrew Bausch with Wells Fargo. Please go ahead.

[Lemar Clarke, Analyst at Wells Fargo]

Hi, guys. It's Lamar on for Andrew. On the recent headlines this week around student law enforcement by the administration and the likely wage garnishment, which potentially could affect 5,300,000 defaulted student loan borrowers this summer, are you guys internally thinking about the potential implications for a firm?

[Max Levchin, Founder and CEO at Affirm]

You know, it's something that we're very mindful of. I think we said two quarters ago that we have done a tenth amount of back testing of presence of student loans, presence of student loan delinquencies and defaults, which is obviously a really important signal. And so all that is already factored into our underwriting, in all the right appropriate ways. And so I can't say we are too concerned. That said, we'll obviously see if there are meaningful changes to repayment as a consequence of the actions of of the administration, and we'll we'll adjust appropriately.

[Lemar Clarke, Analyst at Wells Fargo]

Okay. Makes sense. And then a quick follow-up. In your prior shareholder letter, you had mentioned work done around the redesign of your Affirm app, just focusing on increasing utility there. And so wanted to ask you if there's anything that you may be seeing so far in terms of the impact of these changes, maybe in terms of driving conversion and incremental user engagement.

[Lemar Clarke, Analyst at Wells Fargo]

Thank you.

[Max Levchin, Founder and CEO at Affirm]

It is improving. I mean, we strongly believe in continuous deployment. So a meaningful percentage of the app changes haven't even rolled out yet. We're very careful. Reason for it, by the way, the the single most important use of the app, gets insufficient airplay from my point of view, is loan repayment.

[Max Levchin, Founder and CEO at Affirm]

The number one reason the reason we have the app and the number one reason it's used for is to pay your loan back. So as much as we love tinkering with user interface, the number one guardrail we run against is has our repayment rate changed in a way that we don't like. And so you'll actually see us trickle out quite a number of incremental user interface changes, which every one of them moves some needle somewhere positively on the conversion side of things, always against the backdrop of are we improving or hurting repayment. And if it's ever hurting, those changes don't survive very long. Like, we we're very, very careful not to mess with our payment rates.

[Max Levchin, Founder and CEO at Affirm]

There's some really cool stuff coming in the app. Like, that that's not visible yet. So it's I would say, ask me this question maybe next quarter, and you'll be able to ask to, like, hey. You changed this thing and look looks cool. If you look through the Affirm card preapproval process or loan preapproval process, you'll you'll see some really neat changes towards the end of the flow.

[Max Levchin, Founder and CEO at Affirm]

That that's a good breadcrumb if you wanted to go spelunk some user flows, see what we did. But it it did improve conversion very nicely.

[Lemar Clarke, Analyst at Wells Fargo]

Okay. I'll take a look. Thanks. Benjamin

[Adam Frisch, Senior Managing Director - Equities at Evercore ISI]

Thank you.

[Operator]

Next question, Ramsey El Assal with Barclays. Please go ahead.

[Ramsey El-Assal, Managing Director at Barclays]

Hi. Thank you so much for taking my question. Could you comment on the online partnership with Costco, that announcement, maybe in terms of impact, timing of the implementation? And then could this move in store at any point? Maybe that's wishful thinking, thought I'd ask.

[Max Levchin, Founder and CEO at Affirm]

Let's see what we can say. It's very cool. I'm very excited about this one. I I can say that much. I think it's a it's a brand renowned for its obsession with consumers.

[Max Levchin, Founder and CEO at Affirm]

It's kind of the original consumer obsessed brand in many ways on the retail side of things. So very, very proud to be a provider to their members. I don't think we are announcing a timeline, but obviously wouldn't talk about it if we didn't think that's a I think that will be, you know, at some point in a reasonable future. We're definitely not updating any numbers as to its impact on our any metric. These things, as you know, always take a long time to get right.

[Max Levchin, Founder and CEO at Affirm]

You need to launch, then you need to tune, then you need to AB test, then you need to make sure it's profitable for all sides involved. It definitely, know, don't model anything crazy in there. But like every one of our enterprise partnerships, we're very committed to it, which means that over time, we'll fine tune it to be a really great part of our business. So I would hold your horses a little bit, but we'll invest the right amount of effort into making it great.

[Ramsey El-Assal, Managing Director at Barclays]

Fair enough. A really quick follow-up for me. Any P and L impact from the Shopify renewal? I saw that was impressive that you renewed that through 2028. Was there any concessions on the economic front or any P and L impact we should think through on that renewal?

[Max Levchin, Founder and CEO at Affirm]

No economic concessions. The one housekeeping item is that it does elongate the amortization period for the warrants that were that Shopify received in the initial agreement. So it just because those are tied to the life of the agreement, there is a longer amortization period now, but that's pretty small.

[Ramsey El-Assal, Managing Director at Barclays]

Got it. Thank you very much.

[Operator]

Will Nance with Goldman Sachs. Please proceed.

[Will Nance, Vice President at Goldman Sachs]

Hey, guys. Appreciate you taking the question. Nice results as always. Well, I also wanted to congratulate you on

[Will Nance, Vice President at Goldman Sachs]

the Costco partnership. I thought

[Will Nance, Vice President at Goldman Sachs]

that was great. I was wondering if you could provide any details on sort of your latest understanding about how the Walmart relationship will be evolving over the remainder of the year given some of the headlines out recently. Thank you.

[Max Levchin, Founder and CEO at Affirm]

You know, we're currently live at Walmart. We think we're doing great work. We're actually actively investing in making sure that they are getting the absolute best possible value from our work together. The day we understand when that changes and how, we'll obviously notify you and and the market. At the moment, I think we are being a good partner and a good vendor.

[Max Levchin, Founder and CEO at Affirm]

I don't know. Rob or Michael want to add any more color?

[Rob O’Hare, CFO at Affirm]

No. I mean, we're we're still proud to power the program, and, you know, we're we're there for Walmart consumers.

[Operator]

Next question, James Faucette with Morgan Stanley. Please proceed.

[James Faucette, Managing Director at Morgan Stanley]

Thank you very much. I wanted to go back to the app. Interesting comments there. Ask about kind of using that to drive and make sure that you have good repayment engagement. But just wondering then how we should fit that together with some of the promotional and deal offers that come through the app.

[James Faucette, Managing Director at Morgan Stanley]

And I guess I would expect those to grow. So just help us think about I know that there's future improvements coming, but how should we think about the long term objective of the app? Is it still a repayment engagement mechanism? Or it seems like there's also opportunity to go after kind of your better hire quality customers that you're attracting initially 0%. So just trying to think, help us think through the long term scope of the app in that endeavor.

[Max Levchin, Founder and CEO at Affirm]

So you should think of the repayment functionality of the app as a key guardrail. In other words, whatever it is we do to the app in pursuit of other goals, we will not compromise repayment. Like, this is sort of all consistent with the credit as job number one thing that I love to repeat. We will never do something that harms repayment because it, one, hurts our capital partners, two, screws up our ability to sign more capital partners, etcetera, etcetera. So that that's the guardrail, and it's probably the reason we don't talk about it is because it's understood, you know, we will not mess with repayment.

[Max Levchin, Founder and CEO at Affirm]

That said, the app fundamentally is two more things. It's a catalog of merchants and their offers, most importantly, 0% offers, that are currently available on the network. And it's really important in the sense that consumers do not come to the app to start their shopping journeys. What they do come to the app for, in addition to repaying their bills, is to check if a thing or a merchant they're interested in has a great financing offer, be it a 0% or a reduced APR or a longer period or increased purchasing power. There's many different kinds of promos that we know how to run, and we know how to run very profitably both for our partners and for ourselves and delight consumers.

[Max Levchin, Founder and CEO at Affirm]

And over time, we will send out more reasons to consumers to come to the app to check-in on the offers available to them. One of the things that we rolled out within for to within our adaptive checkout solution that lives on merchant sites is something that we've built for the app a little while ago called dynamic optimization, which in real time figures out the best possible terms, by that I mean term lengths of the loans you might take out, and APR offers for that single consumer given something we know about their current set of interests. Maybe the best possible approximation for the app, which will sound a little controversial, but I actually think it probably is the best way I reason about it, It's a search engine that you come and query on the topic of, I have this thing in mind or I have this merchant in mind. What's the smartest financial decision I can make with Affirm as my tool to fulfill this financial objective? And we expect to lean into answering that question more and more and more.

[Max Levchin, Founder and CEO at Affirm]

And you can sort of imagine some product ideas and maybe features that come out of that. The search engine that we have today is pretty good. We are working on improvements on that pretty relentlessly. I think, if I'm allowed a super minor comment on the topic that's not come up yet, which I'm somewhat thankful. If you look at how the world is changing in the context of generative AI, every search is going to be an AI conversation.

[Max Levchin, Founder and CEO at Affirm]

Like, that that that's very, very apparent at this point. You should absolutely expect us to have an answer for that as well.

[James Faucette, Managing Director at Morgan Stanley]

Got it. That's helpful context. Thanks, Max.

[Max Levchin, Founder and CEO at Affirm]

Thank you.

[Operator]

Matthew O'Neil with Feet Partners. Please go ahead.

[Matthew O'Neill, Managing Director at Financial Technology Partners]

Yes, good afternoon. Thanks for taking my questions. I was curious if you could give us a little bit of an update on the international expansion, particularly in The U. K, notably following the partnership with Adyen. Is that something we should expect to be somewhat step functional?

[Matthew O'Neill, Managing Director at Financial Technology Partners]

Or maybe just kind of how to dimensionalize that as well as other partnerships like the one with JPMorgan?

[Max Levchin, Founder and CEO at Affirm]

Adyen, similar to some of the other payment providers or payment processors, the most important value from that partnership, from a kind of partnership, really, is speed to integration, speed to going live. So it it doesn't necessarily increase our pace of sales, but it moves our pace of implementation from whatever averages to much shorter. Because if you already plumb through with Adyen, you can just light up a firm in The UK very, very quickly. So in the in the sense that whatever we have in a pipeline that we have signed going live, if they're on Adyen today, will be a faster process. And we have many of those relationships in The US.

[Max Levchin, Founder and CEO at Affirm]

This one isn't the first one internationally, but it's definitely, I think, the most significant or the most visible one right now. In terms of the sense for things in The UK, Just came back from London. I feel like I'm spending half my time in London at this point. Going well, doubling down on sales. I spent lots of time visiting merchants.

[Max Levchin, Founder and CEO at Affirm]

Obviously, we are the upstart brand in the market, so I have to spend a lot of time just educating the market about who we are, how we do business, how we're a little bit different from the incumbents. Obviously, we already said out loud, so it's no surprise the big step function will come when we take Shopify live there, and that's definitely on the horizon. We're we're working towards that. We won't get there before we get through the beta period with Shopify in Canada, which is live now. Just, you know, limited number of engineers we can throw at this, but Canada beta is going well.

[Max Levchin, Founder and CEO at Affirm]

I am confident UK beta will happen in reasonable time and very well as well.

[Matthew O'Neill, Managing Director at Financial Technology Partners]

Thanks, Max. Maybe as a follow-up speaking of large international incumbents, one that has a particularly aggressive posture on AI historically took a bit of a turn today. And I was wondering if you can sort of address where AI is working. I noticed in the note the dispute resolution process, for example, but maybe where you found the most success, and know you've been a proponent of machine learning and AI for a long time, and maybe where the human touch still reigns supreme. Thanks.

[Max Levchin, Founder and CEO at Affirm]

That's a great question. I can spend a lot of time on it. We are applying and unfortunately, the world has gotten really confused about what is and isn't AI under today's definition versus yesterday's definition, so I'll try to be very precise. So we've used machine learning since the day of our founding. In fact, the idea was to build a credit score that was built on alternative data and modern machine learning techniques, and obviously we've been pretty successful with it.

[Max Levchin, Founder and CEO at Affirm]

So we use that all the time, every part of the business, etcetera. So that's just sort of the baseline. Gen AI or LLMs, large language models, have been really, really helpful in a bunch of places. Internally, we use them in all kinds of ways, including and we're we're quite actively investing into internal adoption of AI, where we have teams that are tasked with finding use cases for Gen AI specifically inside their teams through increasing productivity, anything from we have literally hundreds of thousands of legal contracts with merchants. You need to find a clause that we need to modify for whatever reason.

[Max Levchin, Founder and CEO at Affirm]

That's a great task for an LLM. Read 435,000 contracts or whatever the current number is. Find the clause that we need to change, which very subtly different contract to contract, summarize it, and, you know, construct a thing that we need to go out there and get resigned. So that's the thing that humans would take thousands of hours for potentially, can be done in minutes with AI. And this isn't a made up example, it's very real.

[Max Levchin, Founder and CEO at Affirm]

The thing that I referred to in the letter, a big part of consumer delight is least for us anyway is transparency and speed to resolution. And the ability to speak to a human and explain your case is really powerful. That's one thing that I don't think will ever go away, like having empathy from someone who gets it and can actually speak to you with a human emotion in their voice. You know, machines aren't there yet, and it may actually be irreducible. But if you kinda know what you want and you don't wanna wait and you have it all figured out and, most importantly, have the evidence that there's a dispute and it's just gonna go a very specific way and we can use machine learning to adjudicate the outcome, you can package the entire thing with GenAI and say, alright.

[Max Levchin, Founder and CEO at Affirm]

Let's have an interaction. And you understand you're talking to a robot, but this robot can take in all your evidence, process it, run it through machine learning model in the back end and say, yeah. This basically means you get a refund. We'll tell you right now. The refund is coming.

[Max Levchin, Founder and CEO at Affirm]

You're gonna be okay. We'll take care of the rest. That is a huge booster of customer satisfaction. And so that's a actually, that's what I'm referring to in the letter. That's also an example of both Jet AI as a user interface and machine learning on a back end as a resolution device.

[Max Levchin, Founder and CEO at Affirm]

Machine learning is much more stable, if you will. The models are highly, highly predictable and repeatable. That's why they're favored in precise things like credit underwriting, and, Gen AI models are somewhat less predictable. You know, everybody's heard about hallucinations, but they make for an amazing, very flexible user interface. And we use both very actively.

[Max Levchin, Founder and CEO at Affirm]

I'll skip the part where I talk about how we have lots of engineers using lots of AI to write code, and so on, but obviously we're doing that as well. So we don't spend a ton of time talking about it. We are very enthusiastic adapters of adapters of all this new stuff, but we also kinda think that it's a bit of a set of tools. You you use what is available to you. You try to find the very best ones, and you maybe don't make such a

[Max Levchin, Founder and CEO at Affirm]

big story out of it.

[Matthew O'Neill, Managing Director at Financial Technology Partners]

Appreciate it. Thank you.

[Max Levchin, Founder and CEO at Affirm]

Yep.

[Operator]

Kyle Peterson with Needham and Company. Please proceed.

[Kyle Peterson, Managing Director, Equity Research at Needham & Company]

Great. Good afternoon, guys, and nice results. I wanted to ask a little bit about credit and what you guys are seeing there. Obviously, delinquency trends look to be pretty healthy. But I noticed you guys did take up the reserve on for loan losses and balance sheet up a bit sequentially.

[Kyle Peterson, Managing Director, Equity Research at Needham & Company]

So was there anything in terms of like concern or is there mix or anything like just I guess how should we think about the allowance creeping up and how should we think about that?

[Max Levchin, Founder and CEO at Affirm]

Yeah, thanks for the question. I'll start and Max may have some color to add as well. You know, we are seeing really healthy repayment rates come through. We do about $100,000,000 of GMV a day and so we get a pretty fulsome dataset every day as those cohorts are coming in for repayment thirty days later. So we're not seeing any signs of stress with the consumer in the repayment rates.

[Max Levchin, Founder and CEO at Affirm]

One small thing that did happen during the quarter is we actually saw a slight uptick in prepayments. And so we take that as a pretty positive credit signal actually. It is there is some tax seasonality, but even adjusting for that, we saw an increase year on year in prepayments. So we think that's a modest positive and that does on the margin change the mix of loans that are still on the balance sheet. And we still feel like the allowance rate while up marginally is still in a really healthy place.

[Max Levchin, Founder and CEO at Affirm]

And I think delinquencies are good leading indicator of where the credit box is and how the book is performing.

[Kyle Peterson, Managing Director, Equity Research at Needham & Company]

Okay. That's helpful. Thank you.

[Operator]

Next question.

[Max Levchin, Founder and CEO at Affirm]

This is a snapshot. Sorry. I I just wanted to comment that it's really important to be intellectually honest about credit. Like, in the current moment, the snapshot looks fantastic. Things could change.

[Max Levchin, Founder and CEO at Affirm]

We are very attentive. We will change with things. The good news or the the the most important property of our business, we have a very, very short term length. And so as the book goes through, we adjust our required credit quality on the front book as the back book mixes out, and, we will always get to the numbers that we need to have for us and for our capital partners.

[Operator]

Vincent Santic with BTIG. Please proceed.

[Vincent Caintic, MD & Finance Analyst at BTIG]

Hi, good afternoon. Thanks for taking my questions. I wanted to get updates on two topics. I'll just ask both of them now. So the first one about competition, so kind of related to that discussion earlier related to Walmart, you know, in this environment where maybe you have competition willing to give back economics to win merchants.

[Vincent Caintic, MD & Finance Analyst at BTIG]

Just wondering if you're seeing a lot of that sort of competition. And then second update, if you could talk about your funding structure and actually specifically, if you had any updated thoughts about becoming a bank. And the reason I asked is it does seem like the regulatory environment is more conducive to becoming a bank, whether it's build or buy. So just, wanted to see if there's any updated thoughts there. Thank you.

[Max Levchin, Founder and CEO at Affirm]

I'm gonna make Michael answer the competition question because I feel like I've been completely monopolizing airtime, but I'll answer the bank question first. There are three distinct things having to do with bank charters. Number one that really does not apply here, and it's important to just get that out of the way, Even if we woke up tomorrow morning with a bank charter in our back pocket, we would not be able to lend from deposits that that bank had. It would take a long time to gather deposits. It would be regulatorily encumbered in what's called a de novo period, where you really wouldn't be able to do all that much at all with it.

[Max Levchin, Founder and CEO at Affirm]

And so it's a bank charter is just not a solution for our funding strategy. That's sort of full stop. And if we had a bank charter tomorrow, five years from now, we could have a conversation about what is that doing for your funding cost, and even then, probably not. So that's not a thing. There are two other things.

[Max Levchin, Founder and CEO at Affirm]

There's regulatory certainty where if you have your own charter, you can have a little bit more clarity as to how the regulators think of you. The bank partner model gets interrogated by the regulators, both federal and state level, fairly frequently. We have done really well. It obviously doesn't hurt that we look our bank partner make our bank partners look good by not charging any late fees, by not doing any questionable anti consumer things. So our partnerships have been strong, and we've enjoyed a plurality of bank partnerships over the years.

[Max Levchin, Founder and CEO at Affirm]

That said, there's some argument to be had there. The most important thing, and I've said it before and I'll say it again, we are regulatorily driven or motivated towards features or by features. In other words, if there were a feature that we just couldn't build without a bank charter, we would absolutely consider pursuing one. And there is a handful of those. There's no point in sort of rattling them off, but you could construct a straw man around.

[Max Levchin, Founder and CEO at Affirm]

You would want to do this because it's great for consumers. It's on mission. A firm would be good at it. And yet you can't because there's no bank charter. If and when we prioritize one of those things, bank charter will become part of the consideration.

[Max Levchin, Founder and CEO at Affirm]

And that's where we've been in that mode for quite some time, and you're totally right that the current regulators, I think, have publicly called for wanting to see more applications, so it's not lost on us. But we would do it if we felt the need to pursue it for a product construct that we had in mind. Michael, now on competition.

[Michael Linford, COO at Affirm]

Yeah. Look. On competition, the first thing I'd say is it's very competitive today as it's been since the day we went public. The category will, we believe, remain competitive, well into the future. Anytime a category is being defined like ours, where there's, meaningful adoption of a new category, It attracts competition from pure players, but also attracts competition from the comments in the broader consumer credit space who would like to compete.

[Michael Linford, COO at Affirm]

That has been true for the past five years. We include in our supplement a chart that shows the trends of our merchant fee rates over the past five years over the past several years. Sorry. And it's the thing that jumps out to me and hopefully to investors is how consistent our pricing has been despite the extreme competitive environment. And the reason why is we don't win on price.

[Michael Linford, COO at Affirm]

We obviously have to put forward competitive pricing, and our cost structure and ability to do things that we do in the capital markets allows us to be aggressive. But it's really important given the risk management mindset that we

[Michael Linford, COO at Affirm]

have in our business that we

[Michael Linford, COO at Affirm]

can generate enough profit to operate the business the way we wanna operate it, which means we don't, do the same thing that some competition might do with respect to pricing. We went on conversion. We went on impact. We went on putting ourselves out there for the consumers of the brands that we work with. And I think the the track record we have on our distribution is is evidence of that.

[Michael Linford, COO at Affirm]

And I think, you know, the more successful we are improving there's a really good business to be had here, the more competition it will attract. We've never thought about our contracts or our distribution as being something that, you know, cements our leadership, we have to earn it every day by driving real impact for our merchant partners. And that's where our our focus certainly lies. But but make no mistake, we think the market is competitive and will remain competitive for as long as we're out, you know, changing the world.

[Vincent Caintic, MD & Finance Analyst at BTIG]

Thank you.

[Operator]

Next question, David Scharf with Citizens Capital Markets. Please go ahead.

[David Scharf, Analyst at Citizens JMP Securities, LLC]

Hey, good afternoon. Thanks for taking my questions as well. Hey, Max, just wanted to circle back to the 0% loan focus in mix. I appreciate the commentary that it's been more reactive to what partners are asking for as opposed to proactive. I guess the main question I have is, maybe you can give us a little more color on just why.

[David Scharf, Analyst at Citizens JMP Securities, LLC]

I mean, what do we generally take away in periods where you see, particularly some of the larger enterprise partners, want to lean into it? Is it a statement about what they're seeing on retail sales and worries and concerns trying to drive more volume? Is it competitive in terms of playing you off of, let's say, another competitor? What should we basically take away from kind of this uptick in interest in promotional activity?

[Michael Linford, COO at Affirm]

Let me try to maybe add a little color here. I think it's important to think about the state and condition of our merchant partners when we think about these kind of programs. And in our experience, merchants who are, wanting to to do 0% promotions tend to be the ones who are most most growth oriented. It's a reflection of strength in those merchants where they really wanna go out and be front footed and grow their businesses. It's an incredibly powerful growth tool for them.

[Michael Linford, COO at Affirm]

I think the truth is when we were dealing with a surge in in rates and associated pressures to the merchant partners, it became very difficult to make the economics work for these. But when you're in a scenario that we were most of this quarter and certainly the prior couple of quarters where the market conditions were favorable for the provider and the firm, and the brands really wanted to invest dollars in growth, it's a great lever to pull. Where I think merchants pull back on zeros is when they feel like they need to be less growthful and more focused on the cost structure of the business. And so I've always thought about it as a real sign of strength for the merchants, knowing that that's a great way for them to to grow their business. There's nothing defensive about it.

[Michael Linford, COO at Affirm]

But the last thing to note, it's really important, our merchants' partners are reactive. I think they're some of the best retailers in the world. But even with that, don't react in minutes and days. These things take months to think about and plan and execute. And as a result, I think it would be a big mistake to look at what we saw this quarter and associated with anything you're reading in the news.

[Rob O’Hare, CFO at Affirm]

Yeah. And I would just add to to what Michael said. You know, some of the largest merchants that chose to run seros this quarter really have business models where they're both selling direct to consumer and then they're also selling into a distribution channel. And when you look at the unit level economics for that merchant, selling direct is the most profitable action they can do. And so while the MDRs that they're paying to a firm might be higher than the credit card processing rate that they're paying on the direct channel, if they can drive more volume through direct, it's still really accretive to their gross margins versus selling into wholesale or selling into a channel.

[Rob O’Hare, CFO at Affirm]

That is really important.

[Max Levchin, Founder and CEO at Affirm]

I just want to underline what Rob just said. That is like a very, very key thing to understand about the business.

[David Scharf, Analyst at Citizens JMP Securities, LLC]

No, no. That's terrific color. Thank you.

[Operator]

Next question, Giuliana Mello with Compass Point. Please go ahead.

[Giuliano Bologna, Managing Director at Compass Point Research & Trading LLC]

Hi, Kevin. Congrats on continued incredible results. But one thing I was curious about asking you was when I look at the outlook, it kind of implies a continued acceleration in GMV growth. And I'm curious to ask you if there's any if you have any sense of any potential pull forward that may or may not have happened related to the whole tariff discussion in Liberation Day? And how you think about that because you probably have a lot more insight being a month plus beyond that.

[Giuliano Bologna, Managing Director at Compass Point Research & Trading LLC]

And I'm curious how you think about that and when you look to think about the outlook for the rest of the year, what that implies for GMV growth acceleration?

[Max Levchin, Founder and CEO at Affirm]

Yes, thanks for the question. So I think at the high end of the GMV range, we're calling for 34% year on year growth and that's down ever so slightly from the 36% growth that we saw this quarter. So we're not calling for an acceleration on that basis in the guide. And then we alluded to it in the letter, but we did see elevated growth rates in April. Those were roughly in line with what we saw in March, we had called out as 40% year on year growth in the month.

[Max Levchin, Founder and CEO at Affirm]

So we are expecting that growth will moderate from the levels that we've seen quarter to date.

[Giuliano Bologna, Managing Director at Compass Point Research & Trading LLC]

That's very helpful. And then you've obviously said, okay, pretty incredible funding structure. But when you think about the percent of the loans that you might sell on a quarter to quarter basis, we think about that running at the high end of the historical range for a while in the near future? Or just because of the volume of partnerships are out there and the demand for private credit? And just how that should flow through at least in the near term?

[Max Levchin, Founder and CEO at Affirm]

I mean, I think when you think about the funding mix, the biggest variable in any given quarter is whether or not we're going to do a non consolidated ABS deal. We did just price a non consolidated ABS deal last week. And so that will have an impact on the mix of off balance sheet funding that we see intra quarter. But we've also had really strong execution with on balance sheet ABS too. So and we're fortunate to have really great funding partners in all of our channels, forward flow included.

[Max Levchin, Founder and CEO at Affirm]

So, yes, think there will be a modest uptick in off balance sheet funding as a result of the ABS deal that we did. But otherwise, we really haven't commented on funding mix.

[Giuliano Bologna, Managing Director at Compass Point Research & Trading LLC]

That's very helpful. I appreciate it. I'll jump back in the queue.

[Operator]

Next question, Reggie Smith with JPMorgan. Please go ahead.

[Reggie Smith, Executive Director - Equity Research at JP Morgan]

Hi, guys. Appreciate you taking the question. I've got, I guess, one more and I hate to beat a dead horse, but I have a question about the zero coupon offers. And I'm specifically interested in the ones where you guys are doing the funding. I was hoping you could share typically when I think about those zero financing, my mind always goes back to kind of the Peloton bikes.

[Reggie Smith, Executive Director - Equity Research at JP Morgan]

And I'm guessing that's not either the price point or the duration for those loans. So maybe if could just talk a little bit about those loans in particular, the zero coupon loans that you guys are financing yourselves. And then again, just reading the note, sounds like those are primarily showing up in your app. Maybe talk about where, like, how you're deploying them a little bit? Thank you.

[Max Levchin, Founder and CEO at Affirm]

Yeah. Rajeev, to your question, about 10% of the 0% volume would come on what I would consider our surfaces either the Affirm card is the best example and the largest example in the quarter, but also some of the wallet partnerships, right? We can dictate dictate what the financing program is there and we're not there's not a merchant necessarily that's part of the equation in that function. So those are the two best example. Again, that was only about 10% of the 0% volume.

[Max Levchin, Founder and CEO at Affirm]

And we can dictate the exact cutoffs for when the 0% is presented. And we can filter there either based on the credit quality of the consumers. It may be obvious, but I'll say it anyway. Higher credit quality consumers, there typically are lower cost for us elsewhere in the transaction. And so we can lean in by foregoing some of the interest revenue that we would get in an interest bearing loan and present more zeros as a result.

[Max Levchin, Founder and CEO at Affirm]

But yes, that's really how we're thinking about it. I mean, do we've typically had some 0% in all of our own services card again is the best example. And we can play with the mix of zeros that we want to run-in any given quarter and be thoughtful about the consumers we present zeros to and when and why.

[Reggie Smith, Executive Director - Equity Research at JP Morgan]

Got it. So it sounds like for those zeros in particular, those are people that you know, they already have the card. It's almost like a reward to them as opposed to in the case of you self funding, those aren't you, like, acquiring new customers, it's it's primarily people that you already know.

[Max Levchin, Founder and CEO at Affirm]

That's right. And, again, I wanna make sure we address the self funding piece because when we look at, you know, the top 20 merchants that drove 0% volume, I mean those are mostly negotiated 0% programs where there's a healthy MDR to cover the costs. And to the Peloton point that you raised, Peloton was obviously a very long dated loan program and it had a very, very high percentage of 0% loans. And so it's altogether just a different equation. The zeros that we saw this quarter clustered around roughly twelve months in term length.

[Max Levchin, Founder and CEO at Affirm]

And so the MDR that we need to make the math work there is just it's different than a three year loan program like we had in the Peloton.

[Michael Linford, COO at Affirm]

Maybe just to expand this. I think we're making I think we have maybe, talked about self funding these things a little bit too much. It's not a binary thing of is it a firm funded or not. We we look at the merchant fees that we get either through the merchant discount rate and negotiated deal or the interchange on the card, including Visa flexible credential interchange, and we make a financing offer based upon that revenue mix. There's there's always revenue in in the picture.

[Michael Linford, COO at Affirm]

When we talk about self funding it, what we mean is that we can intentionally direct, a higher mix of offers to that consumer, and maybe that means we're intentionally accepting slightly lower margin. But we're not walking into situations and saying, let's go acquire users by offering twenty four months zero percent promotional financing. That's just not the business model.

[Max Levchin, Founder and CEO at Affirm]

Yes. And again, we try to be really transparent with the merchant discount rates that we collect by product, and you can see the consistency that we've driven there across each of the product lines in the earnings supplement.

[Reggie Smith, Executive Director - Equity Research at JP Morgan]

That makes sense. I'm glad you guys clarified that because they made a bit of confusion about that. So thanks.

[Operator]

Next final question comes from Jeff with Seaport Research.

[Jeff Cantwell, Senior Equity Analyst at Seaport Research Partners]

Hey, thanks for allowing me to join these calls. Most of my questions have been asked. Just have a quick clean up one maybe for Rob, which is how are you thinking about that sales and marketing line going forward? It looks like it stepped down this quarter $74,000,000 Just trying to get a sense of, A, what got into that number this quarter? And B, what the right level is for your sales and marketing?

[Jeff Cantwell, Senior Equity Analyst at Seaport Research Partners]

And maybe just touch on qualitatively any initiatives that

[Jeff Cantwell, Senior Equity Analyst at Seaport Research Partners]

are worth calling out? Thanks.

[Rob O’Hare, CFO at Affirm]

Yes. I think the biggest change there was just that the amortization of warrant expense from one of our large partners came to the end of its amortization period in the December. And so this was the first quarter without that expense flowing through that line.

[Rob O’Hare, CFO at Affirm]

So there was a step down in the non cash warrant amortization and that'll be the case, going into this current, you know, June as well. That that was the biggest change.

[Jeff Cantwell, Senior Equity Analyst at Seaport Research Partners]

Got it. And so that goes through going forward or how should we think about that? I'm just trying to get a sense of

[Rob O’Hare, CFO at Affirm]

The the amortization period had ended there. So, the run rate that you saw this quarter will be roughly what what you should expect in the June.

[Jeff Cantwell, Senior Equity Analyst at Seaport Research Partners]

Got it. Great. Thanks very much.

[Operator]

I would like to turn the floor over to Zane for closing remarks.

[Zane Keller, Director, Investor Relations at Affirm]

Okay. Thank you, everybody, for joining the call today. We look forward to speaking with you again next quarter.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

Participants

Executives

• Zane Keller, Director, Investor Relations
• Max Levchin, Founder and CEO
• Rob O’Hare, CFO
• Michael Linford, COO

Analysts

• Andrew Jeffrey, Research Analyst at William Blair
• Dan Dolev, Senior Analyst - FinTech Equity Research at Mizuho Financial Group
• Moshe Orenbuch, Managing Director & Senior Analyst at TD Cowen
• Robert Wildhack, Equity Research Analyst - Director at Autonomous Research
• Adam Frisch, Senior Managing Director - Equities at Evercore ISI
• Lemar Clarke, Analyst at Wells Fargo
• Ramsey El-Assal, Managing Director at Barclays
• Will Nance, Vice President at Goldman Sachs
• James Faucette, Managing Director at Morgan Stanley
• Matthew O'Neill, Managing Director at Financial Technology Partners
• Kyle Peterson, Managing Director, Equity Research at Needham & Company
• Vincent Caintic, MD & Finance Analyst at BTIG
• David Scharf, Analyst at Citizens JMP Securities, LLC
• Giuliano Bologna, Managing Director at Compass Point Research & Trading LLC
• Reggie Smith, Executive Director - Equity Research at JP Morgan
• Jeff Cantwell, Senior Equity Analyst at Seaport Research Partners