Q1 2026 Affirm Holdings Inc Earnings Call

November 6, 2025

As a reminder, this conference call is being recorded and a replay of the call will be available on our Investor Relations web site for a reasonable period of time after the call.

I'd like to turn the call over to Zane Keller head of Investor Relations. Thank you and you may begin.

Thank you operator before we begin I would like to remind everyone listening that todays call may contain forward looking statements.

These forward looking statements are subject to numerous risks and uncertainties, including those set forth 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.

In addition, todays 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 todays call with me are Max Levchin affirms founder and Chief Executive Officer, Michael Linford teams, our firm's chief operating officer, and Robert Robert Ohare firm'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 your questions and answers.

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

Thank you Zane as always better the quarter the fewer the opening remarks and this one was really great. So that's really all I got actually I have one piece of breaking news actual breaking news to report earlier. This week, we extended our U S agreement with Amazon for additional five years through January 2031, we look forward to serving these customers going forward.

Alright back to using.

Okay. Thank you Max with that we will now take your questions. Operator can you. Please open the line for our first question.

Thank you we will now be starting the question and answer session. If you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using any speaker equipment. It may be necessary to pick up your handset before pressing your star keys.

Our first question comes from Dan <unk> with Mizuho you May proceed with your question.

Hey, guys Great results you forgot once you achieve fame.

Me on the call.

[laughter] cheerleader.

So guys great quarter as always some companies are pointing towards the tri color situation or blaming that poor execution in the funding markets yet a firm seems to be executing so well, including that ABS deal that you just price so maybe any thoughts.

On what's happening in the funding market and why you are still able to execute so well in the face of all these news and great stuff again. Thanks.

Yes, thanks for the question.

Yes, we're really proud of our ability to execute and the ABS market.

And then the capital markets more broadly we are expanding relationships with blue chip portfolio buyers, increasing their exposure to affirm while continuing to scale our ABS program.

Obviously the performance of the asset is a major driver.

The market's appetite for what we produce what we produce is something very special and very unique and highly valued in the debt capital market.

I'd be remiss if I didn't also call out our team we have I think the best team in the World who does this every day and our ability to get in front of investors and make sure. They understand what can be sometimes a complicated product and understand how it works and why our advantages are what they are not really does set us apart.

Okay.

Thank you.

Okay.

Our next question comes from Nathan <unk> from Deutsche Bank. You May proceed with your question.

Hey, guys Nice results I did want to ask about the PSP relationships, obviously, you announced the world pay for platform signing you had a nice little blurb in the letter on this.

I think it would be helpful to hear a little bit more about how youre thinking about that PSP strategy Holistically, what youre doing to expand those relationships, what we might expect to see in the future.

Thank you for the question.

I think PSP is a really important channel for US we are big fans of having lots of doors with a firm logo on all of them.

So thats, both the merchant and the consumer.

Their choice as to.

Who they partner with who they walked through and we will always be there to serve them.

We had relationships, we've announced and bragged about in the past. This is just one of the recent ones that we signed in the quarter. So we felt the need to include.

We kind of worth pointing out most importantly.

Is it really do help with the speed of integration.

And so as a path to get onto more doors or into more merchants and sometimes even platforms within platforms that those relationships.

Relationships are so.

Good afternoon.

That's exactly what we tried to accomplish there.

Still.

It requires us to execute on the front end the consumer conversion has to be high the approvals have to work. The critical has to perform so it's an important.

Way to ensure we get there faster on integrations, but.

<unk> products are no less and two to develop and deliver and then what do we do with direct integrations.

I don't know Michael if you say, yes.

Ed.

I really have nothing to add.

Oftentimes the platforms for us are the way, we integrate more than they are the way we acquire.

Sometimes it also acquisition that happened there, but a pretty common mode. As your top 100 E Commerce site and you leverage the existing platform partnership to get integrated we're still highly involved in the sale highly involved in the configuration of the financing program is offered on that site.

Important is our breadth of products requires and frankly allows us to make more of those connections.

And what we think other people can do in the industry.

Yes, that's a much more eloquent way of saying I was trying to say thank you.

Yes, thanks, guys.

Our next question comes from Jason Kupferberg with Wells Fargo. You May proceed with your question.

Yeah, Hi, guys. This is Cathy Chan on for Jason I, just wanted to ask or get a finer point on the our TCE trend as a percentage of DMD I mean, firstly can you. Just obviously you guys had a really good quarter for that around four 2% can you just put a finer point in terms of liar full year 'twenty guidance unchanged for that metric.

And based on your second quarter guide Youre expecting that to be like near 4%. So is it fair to assume that decelerating in the back half of the year and are there any particular factors that we should be looking for just because of that I E. Walmart.

<unk> like other than the factors that are contributing to those Ken. Thank you.

I think most broadly we're really focused on 4% being an upper bound for revenue less transaction costs take rates and I think when we're running consistently above 4%. We're always looking for ways to make sure that we're doing everything we can to expand the network either through.

Incremental <unk> or incremental reach with with users and with merchant. So I think it's really a <unk>.

Philosophical target that we have that we stay.

Pretty close to four on the high end there will be puts and takes.

Operator: We will open lines for your questions. As a reminder, this conference call is being recorded, and a replay of the call will be available on our investor relations website for a reasonable period of time after the call. I'd like to turn the call over to Zane Keller, Head of Investor Relations. Thank you, and you may begin.

For just because of that I E is there a walmart.

Within given quarters, just given different capital markets transactions and other other sort of.

Higher zero percent like a those are the factors that are contributing to those trends. Thank you.

Idiosyncratic things that can happen in a given quarter, but I think long term, we think 3% to 4% is the right range and right now with the setup that we have in the product mix that we have we have been fortunate to run slightly above 4%, but really that goal is to make sure that we're maximizing growth and profitability and so that's why.

Zane Keller: 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. 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.

4% is we think it's the right target for this year.

Through incremental <unk> or incremental reach with with users and with merchant. So I think it's really a.

Okay. Thank you.

A philosophical target that we have that we stay.

Okay.

Our next question comes from Dan Perlin with RBC capital markets. You May proceed with your question.

Pretty close to four on the high end there will be puts and takes.

Thanks, Great results. Good evening, everyone I just wanted to ask.

Within given quarters, just given different capital markets transactions and other other sort of.

Clearly the data seems to be suggesting or at least your data is that the spending environment for the consumer remains pretty pretty damn healthy.

Idiosyncratic things that can happen in a given quarter, but I think long term, we think 3% to 4% is the right range in and right now with the setup that we have in the product mix that we have we have been fortunate to run slightly above 4%, but really that goal is to make sure that we're maximizing growth and profitability and so that's why.

I know you called out sporting goods and outdoor and those kinds of things, but when you also look at the 30 day delinquency trends. It would just continue to suggest that they are relatively healthy. So the question really that I have is is that a function more of natural selection for your underwriting and your technology that you were able to use per user or do you really think and see the overall health of <unk>.

Zane Keller: 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 your questions and answers. On that note, I'll turn the call over to Max to begin.

<unk>, 4% as we think it's the right target for this year.

Okay. Thank you.

The less affluent consumer being as strong as what your data suggests.

Okay.

Our next question comes from Dan Perlin with RBC capital markets. You May proceed with your question.

I would not call our underwriting practices in natural selection just for the record I think it's highly.

Thanks, Great results. Good evening, everyone I just wanted to ask.

Unnatural very carefully constructed mathematically would take a lot of pride in just how good it is.

Clearly the data seems to be suggesting or at least your data.

Max Levchin: Thank you, Zane. As always, the better the quarter, the fewer the opening remarks. This one was really great, so this is really all I got. Actually, no, I have one piece of breaking news, actual breaking news to report. Earlier this week, we extended our US agreement with Amazon for an additional five years through January 2031. We look forward to serving these customers going forward. All right, back to you, Zane.

It's very hard to speak about kind of the broad universe in a sense that we're still a tiny tiny percentage of spend so take this with a grain of salt.

Lending environment for the consumer remains pretty pretty damn healthy.

Her soon enough I'll be opining on the state of American shopper on this TV show or another and I always try to point out that.

Typically significant sample, but we're still a pretty tiny sample.

Zane Keller: Okay, thank you, Max. With that, we'll now take your questions. Operator, can you please open the line for our first question?

Our consumer is borrowing paying us back shopping.

Less affluent consumer being as strong as what your data suggests.

Shopping fairly healthily etcetera. So generally speaking everything you said is exactly as we see it.

Thanks.

Would not call our underwriting practices in natural selection for the record I think it's highly highly unnatural to very carefully constructed it's mathematically if we take a lot of pride in just how good it is.

Operator: Thank you. We will now be starting the question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star 2 if you would like to remove your question from the queue. For participants using any speaker equipment, it may be necessary to pick up your handset before pressing your Star keys. Our first question comes from Dan Dolov with Mizuho. You may proceed with your question.

I have one fun factoid for you that may serve as a proof point that.

I, probably know what I'm talking about.

We've been looking at.

It's very hard to speak about kind of the broad universe in a sense that we're still a tiny tiny percentage of spend so take this with a grain of salt.

Data.

From government employees because of the shutdown to understand what it practically means for.

The ecosystem and us in particular, and we do not see any loss of repayment in other words, the delinquencies and defaults in that group.

Im sure <unk> seen enough I'll be opining on the state of American shopper.

Dan Dolov: Hey, guys, great results. You forgot one chief, Chief Sane, which is me. That's on the call.

This TV show or another.

Always try to point out that.

Typically significant sample, but we're still a pretty tiny sample.

<unk>.

Max Levchin: Thank you, Dan.

Dan Dolov: Chief cheerleader. Guys, great quarter as always. Some companies are pointing towards the tri-collar situation and are blaming that for poor execution in the funding markets. Yet Affirm seems to be executing so well, including that ABS deal that you just priced. Maybe any thoughts on what's happening in the funding market and why you're still able to execute so well in the face of all these news and great stuff? Again, thanks.

Finally in line with the rest of the general population, but we see a few basis points of a demand slowdown.

That's a R consumer borrowing paying us back shop.

Shopping fairly healthily etcetera. So generally speaking everything you said is exactly as we see it.

And given we are growing at 40% year over year couple of basis points is not a thing that I lose sleep over but actually very gratifying to know that in a relatively small percentage of the population.

I have one fun factoid for you that may serve as a proof point that.

I, probably know what I'm talking about.

Given that how small percentage we are of the overall commerce, we can still detect that with.

So we've been looking at.

Data.

Reasonable physical significance.

From government employees because of the shutdown to understand what it practically means for.

Michael Linford: Yeah, thanks for the question. Yeah, we're really proud of our ability to execute in the ABS market and in the capital markets more broadly. We are expanding relationships with blue chip, forward flow buyers, increasing their exposure to Affirm, while continuing to scale our ABS program. I think, obviously, the performance of the asset is a major driver of the market's appetite for what we produce. What we produce is something very special and very unique, and it's highly valued in the debt capital market. I'd be remiss if I didn't also call out our team. We have, I think, the best team in the world who does this every day.

<unk> me that all the monitoring we're doing at the macro level to make sure that we don't Miss some sort of a negative signal in the macro trends.

The ecosystem and us in particular, and we do not see any loss of repayment and other words that delinquencies and defaults in that group.

To be just fine given this is a fairly small thing to notice, but we were able to ascertain it pretty clearly.

Right now things are fine, we're looking all the time, but maybe a little bit more carefully right now.

<unk>.

Finally in line with the rest of the general population, but we see a few basis points of a demand slowdown.

Excellent. Thank you so much.

Our next question comes from Harry Bartlett Bartlett with Rothschild and co. You May proceed with your question.

Hi, guys.

I just wanted to touch on Asp's.

Given that how small percentage we are of the overall commerce, we can still detect that with.

And perhaps maybe some of them.

<unk> here.

Reasonable physical significance.

Whether there's any difference between.

<unk> me that all the monitoring we're doing at the macro level to make sure that we don't Miss some sort of a negative signal in the macro trends is going to be just fine given the fairly small thing to notice, but we were able to ascertain it pretty clearly so.

Let me deal with kind of dominant motion integrations when you when you kind of neighborhood as default.

Michael Linford: Our ability to get in front of investors and make sure they understand what can be sometimes a complicated product and understand how it works and why our advantages are what they are really does set us apart.

And also how are you thinking about PSP as part of your international expansion, whether this kind of accelerates not approached us.

Right now things are fine, we're looking all the time, but maybe a little bit more carefully right now.

Sure maybe on the first point just around economics, I would say these end up being.

Dan Dolov: Thank you.

Excellent. Thank you so much.

Operator: Our next question comes from Nate Svenson from Deutsche Bank. You may proceed with your question.

Typically a bespoke negotiations between us and the platform and so it's hard to sort of encapsulate them in a single sentence or two I think there there are more different than than they are similar and we don't really want to get into the specifics of commercial deals here.

Our next question comes from Harry Bartlett Bartlett with Rothschild and co. You May proceed with your question.

Zane Keller: Hey, guys, nice results. I did want to ask about the PSP relationships. Obviously, you announced the WorldPay for platform signing. You had a nice little blurb in the letter on this. I think it would be helpful to hear a little bit more about how you're thinking about that PSP strategy holistically, what you're doing to expand those relationships, what we might expect to see in the future. Thanks.

Hi, guys.

I just wanted to touch on Asp's.

Perhaps maybe some of the economics here.

Whether there's any difference between.

In terms of expanding internationally.

What are you really do is kind of dormant motion integrations.

And you kind of neighborhood as default.

I think.

Obviously, yeah, obviously, shopify and a lot of ways.

How are you thinking about PSP as part of your international expansion, whether it is kind of accelerates not permissionless.

Max Levchin: Thank you for the question. I think PSP is a really important channel for us. We are big fans of having lots of doors with the Affirm logo on all of them, so that both the merchant and the consumer have their choice as to who they partner with, who they walk through, and we will always be there to serve them. We've had relationships we've announced and bragged about in the past. This is just one of the recent ones that we signed in the quarter, so we felt the need to include it. Probably kind of worth pointing out, most importantly, these really do help with the speed of integration. As a path to get onto more doors or into more merchants, and sometimes even platforms within platforms, that's what PSP relationships are so good at. That's exactly what we try to accomplish there. It still.

It's been a huge distribution partner for us and really helps us access the long tail of smaller merchants in a really efficient and profitable way so.

Sure maybe on the first point just around economics, I would say these end up being <unk>.

Obviously, a very key part of our international expansion I'm not sure. If you would count them at the PSP or not but I think they bring a lot of the same benefits that we see with some of the PSP partnerships that we also have.

Typically bespoke negotiations between us and the platform and so it's hard to sort of encapsulate them in a single sentence or two I think there they are more different than than they are similar and we don't really want to get into the specifics of commercial deals here.

Thank you.

Our next question comes from Marsh Orenbuch with TD Cowen You May proceed with your question.

In terms of expanding internationally.

Great. Thanks.

So very.

I think I'm sorry.

Obviously, yeah, obviously shopify and a lot of ways. It has been a huge distribution partner for us and really helps us access the long tail of smaller merchants in a really efficient and profitable way so.

Gratifying to see another half a million.

<unk> card members in the quarter could you talk a little bit about what the factors are that drive how rapidly that can penetrate.

It's obviously, a very key part of our international expansion I'm not sure. If you would count them as the PSP or not but I think they bring a lot of the same benefits that we see with some of the PSP partnerships that we also have.

Maybe since you did mention that you're testing cash flow underwriting what kind of impact that could have.

Max Levchin: Requires us to execute on the front end. The consumer conversion has to be high, the approvals have to work, the credit has to perform. It's an important way to ensure we get there faster on integrations, but the products are no less to develop and deliver than what we do with direct integrations. I don't know if Michael had anything to say.

On your ability to approve transactions and see growth in volume per card. Thanks.

Alright, thank you.

Certainly we will try to avoid prognosticating about just how huge this whole thing can be but obviously it.

Our next question comes from Marsh Orenbuch with TD Cowen You May proceed with your question.

It is my theory child.

At least right now.

Great. Thanks.

Im just wondering is really helpful.

Very.

Gratifying to see another half a million.

For younger consumers and just folks who are kind of overlooked by the <unk>.

Our firm card members in the quarter could you talk a little bit about what the factors are that drive how rapidly that can penetrate.

Michael Linford: Yeah. A really small thing to add. Oftentimes, the platforms for us are the way we integrate more than they are the way we acquire. Sometimes there's also acquisition that happens there. A pretty common mode is you're a top 100 e-commerce site, and you leverage an existing platform partnership to get integrated. We're still highly involved in the sale, highly involved in the configuration of the financing program that's offered on that site. What's so important is our breadth of products requires, and frankly allows, us to make more of those connections than what we think other people can do in the industry.

Rest of the ecosystem, it's not to be confused.

Four kind of necessarily at least doing deeper into the <unk>.

And maybe since you did mention that you're testing cash flow underwriting.

Credit stack.

Obviously traditionally used for bringing folks that you really cannot get a good signal from the basic to their credit file, but that's both true typically for a slightly older consumers and a lower credit strata, but really pronouncedly true for.

What kind of impact that could have.

On your ability to approve transactions and see growth in volume per card. Thanks.

Certainly we will try to avoid prognosticating about just how huge this whole thing can be but obviously.

The younger millennials and Gen Z. They typically refused to borrow on average refused to borrow more on credit cards, and so perfect customer for us and Philips I don't borrow enough therefore, very hard to read anything from <unk>.

Every child.

Lease right now.

Castle underwriting is really helpful.

Max Levchin: Yeah, that seemed much more eloquent way of saying what I was trying to say.

Younger consumers and just folks who are kind of overlooked by the.

Michael Linford: Thank you.

Profile and so this is just a good online. So we think it's going to help us grow.

Zane Keller: Yeah, thanks, guys.

The rest of the ecosystem, it's not to be confused.

A little bit early days I don't want to put a number on it but.

Operator: Our next question comes from Jason Kupferberg with Wells Fargo. You may proceed with your question.

Four.

Necessarily at least doing deeper into the.

Unlocks the growth of card is.

Credit stack.

Kelsey Chan: Yeah, hi, guys. This is Kelsey Chan on for Jason. I just wanted to ask or get a finer point on the RLTC trend of the percentage of GMV. I mean, first, can you just obviously, you guys had a really good quarter for that, around 4.2%. Can you just put a finer point in terms of why your full year 2026 guide is unchanged for that metric? I mean, based on your second quarter guide, you're expecting that to be near 4%. Is it fair to assume that's decelerating in the back half of the year? Are there any particular factors that we should be looking for just because of that, i.e., is there a Walmart higher 0%? Are those the factors that are contributing to those trends? Thank you.

Obviously traditionally it's used for bringing folks that you really cannot get a good signal from the basic to their credit file, but that's both true typically for a slightly older consumers and a lower credit strata, but really pronouncedly true for.

Regulated by <unk>.

Couple of factors.

Our willingness to marketed so first of all it's entirely marketed internally etcetera, 100 times, but theres repeating like we spend no time marketing outside of firm repeat customer, which gives us a little bit of advantage and figuring out who might perfect customer for this thing.

The younger millennials and Gen Z.

Typically refused to borrow on average refused to borrow more on credit cards, and so perfect customer for us on the flipside Dunbar enough. Therefore, very hard to read anything from a credit profile and so this is just a good outlook. So do you think it is going to help us grow.

We're still not really driving it.

For us not because we don't want to not because we don't care, but because we've been just very very deliberate about opening it to.

Many segments of our users, including some of the slightly lower credit quality. So we've maintained slightly higher credit quality to the card on average as we get more comfortable with our ability to underwrite everyone for this.

A little bit early days I don't want to put a number on it but.

Unlocks.

Michael Linford: I think most broadly, we're really focused on 4% being an upper bound for revenue-less transaction cost take rates. I think when we're running consistently above 4%, we're always looking for ways to make sure that we're doing everything we can to expand the network, either through incremental GMV or incremental reach with users, and with merchants. I think it's really a philosophical target that we have, that we stay pretty close to 4% on the high end. There will be puts and takes within given quarters, just given different capital markets transactions and other sort of idiosyncratic things that can happen in a given quarter. I think long-term, we think 3% to 4% is the right range. Right now, with the setup that we have and the product mix that we have, we have been fortunate to run slightly above 4%.

The growth of card is.

Regulated by.

Couple of factors.

It's not a new product for us, but it's still a much newer than the rest of the system.

Our willingness to marketed so first of all it's entirely marketed internally.

As we get better and better underwriting more confident with many cohorts and that these things do take quarters and years.

I heard 100 times, but theres repeating we spend no time marketing outside of firm repeat customer, which gives us a little bit of advantage and figuring out who might perfect customer for this thing.

We will continue marketing it to the general population at the limit that we expect the card to be seen.

We will offer to every single user we acquired at the point of sale and elsewhere.

We're still not really driving it.

With some modulation of the product itself, the new stuff that we haven't really shown yet.

Full thrust not because we don't want to not because we don't care, but because we've been just very very deliberate about opening it too.

Darius.

Many segments of our users, including some of the slightly lower credit quality. So we've maintained slightly higher grade quality for the card.

Features within the card that make it more suitable for this or that segment of consumer so pretty excited about that but generally speaking I would look at the current active base and so the overall file of consumers we have.

On average as we get more comfortable with our ability to underwrite everyone for this.

At this point it is not a new product for us, but it's still a much newer than the rest of the system.

And use that as the natural limit of how big the card will be we certainly want it to be the preferred way of interacting with our product.

We get better and better underwriting more confident with many cohorts and these things do take quarters and years.

Michael Linford: That goal is to make sure that we're maximizing growth and profitability, so that's why 4% we think is the right target for this year.

We'll continue marketing it to the general population at the limit that we expect the card to be seen.

Thanks very much.

Our next question comes from Rob <unk> with Autonomous Research you May proceed with your question.

<unk> will offer to every single user we acquired at the point of sale and elsewhere.

Kelsey Chan: Okay, thank you.

Operator: Our next question comes from Dan Perlin with RBC Capital Markets. You may proceed with your question.

Some modulation of the product itself some of the new stuff that we haven't really shown yet.

Hey, guys.

Nice to see the Amazon agreement extended including the 8-K, there is only a brief description in there. So I was just wondering if you could give us some more color.

Zane Keller: Thanks. Great results. Good evening, everyone. I just wanted to ask. Clearly, the data seems to be suggesting, or at least your data, that the spending environment for the consumer remains pretty damn healthy. I know you called out sporting goods, outdoor, and those kinds of things. When you also look at the 30-day delinquency trends, it would just continue to suggest that they're relatively healthy. The question really that I have is, is that a function more of natural selection for your underwriting and your technology that you're able to use per user, or do you really think and see the overall health of kind of the less affluent consumer being as strong as what your data suggests? Thanks.

Darius.

That extension broadly how that conversation progressed.

Anything new or interesting that might have come out of the new agreement.

I think the biggest thing is that we.

And use that as the natural limit of how big the card will be we certainly want it to be the preferred way of interacting with our products.

We.

We're going to be able to continue to work with them over the next five years, that's a pretty long term.

<unk> commitment from them from both the companies I think we both are really happy with.

Thanks very much.

The service, we provide to those consumers and the value they get out of it.

Our next question comes from Rob <unk> with Autonomous Research you May proceed with your question.

I know we are in and that's really the biggest thing for us.

And I think the.

Hey, guys.

Max Levchin: I would not call our underwriting practices a natural selection, just for the record. I think it's highly unnatural. It's very carefully constructed mathematically. We take a lot of pride in just how good it is. It's very hard to speak about kind of the broad universe in a sense that we're still a tiny, tiny percentage of spend, so take this with a grain of salt. I'm sure soon enough I'll be opining on the state of American shopper on this TV show or another. I always try to point out that we're a statistically significant sample, but we're still a pretty tiny sample. That said, our consumer is borrowing, paying us back, shopping fairly healthily, etc. Generally speaking, everything you said is exactly as we see it. I have one fun factoid for you that may serve as a proof point.

Nice to see the Amazon agreement extended including the 8-K, there is only a brief description in there. So I was just wondering if you could give us some more color on.

The conversation around renewals and ongoing for the better part of the year.

And we're just really happy to have it behind us and focus on serving consumers now.

And that extension broadly how that conversation progressed.

Anything new or interesting they might have come out of the new agreement.

Okay, and then the slide slide 16, with the merchant fee rates.

I think the biggest thing is that we.

It does look like the core zero percent longer term rates so the yellow line.

We're going to be able to continue to work with them over the next five years, that's a pretty long.

As the only one that's churning a little bit lower the last few quarters could you just give us some more color on what's going on there.

<unk> commitment from them from both the companies I think we both are really happy with.

The service, we provide to those consumers and the value they get out of it.

We did make an adjustment to a single merchant program that was fair.

I know we are and.

That's really the biggest thing for us.

Very very high proportion of their percent loans and very long dated as well so.

And I think the.

The conversation around renewals and ongoing for the better part of the year.

I think thats, a pretty one off adjustment that happened in the book, but with a pretty significant merchant.

And we're just really happy to have this behind us and focus on serving consumers now.

Max Levchin: I probably know what I'm talking about. We've been looking at data from government employees because of the shutdown to understand what it practically means for the ecosystem and us in particular. We do not see any loss of repayment. In other words, the delinquencies and defaults in that group are just fine, in line with the rest of the general population. We see a few basis points of a demand slowdown. Given we're growing at 40% year over year, a couple of basis points is not a thing that I lose sleep over. It's actually very gratifying to know that in a relatively small percentage of the population, given how small a percentage we are of the overall commerce, we can still detect that with.

Thanks.

Okay and then the.

Our next question comes from Adam <unk> with Evercore ISI you May proceed with your question.

The slide slide 16, with the merchant fee rates.

It does look like that.

Core zero percent longer term rates, so the yellow line.

Hey, guys can you hear me.

Only one that's churning a little bit lower the last few quarters could you just give us some more color on what's going on there.

Yes.

Okay, great. Thanks.

Thanks, so much roughly half of the GMB growth. This quarter came from direct point of sale merchant integrations and one third from direct to consumer. So just wondering how you see that mix evolving through the next few quarters, particularly as wallet partners scale, thanks, and nice job on the corner.

We did make an adjustment to a single merchant program that was.

Very very high proportion of their percent loans and very long dated as well so.

I think thats, a pretty one off adjustment that happened in the book, but with a pretty significant merchant.

Thank you.

I've said, it before and I'll repeat again, we love every door.

Thanks.

We're a firm logo is visible, but we want to leave the choice of.

Our next question comes from Adam <unk> with Evercore ISI you May proceed with your question.

Max Levchin: Reasonable statistical significance tells me that all the monitoring we're doing at the macro level to make sure that we don't miss some sort of a negative signal in the macro trends is going to be just fine. This is a fairly small thing to notice, but we were able to ascertain it pretty clearly. Right now, things are fine. We're looking all the time, but maybe a little bit more carefully right now.

The wallets the.

Type of checkout to the end consumer and to some extent to the merchant, but our job is to be available everywhere. That's why we integrates with <unk>.

Hey, guys can you hear me.

Yes.

Okay, great. Thanks.

Every.

While it basically out there and certainly love our direct integrations.

I think we have been.

Zane Keller: Excellent. Thank you so much.

On the shape of our focus on direct to consumer products for quite some time to cars, obviously, a really important piece of the ecosystem.

Operator: Our next question comes from Harry Bartlett with Rothschild & Co. You may proceed with your question.

Thank you.

But also our App has served both as a way to plan loans. In addition to servicing them, obviously, but also increasingly so as a promotional surface for our merchant partners to advertise.

Harry Bartlett: Hi, guys. Nice call too. I just want to touch on PSPs. I mean, perhaps maybe you could talk about the economics here, whether there's any difference between what you do with kind of direct merchant integrations when you're kind of enabled as default. Also, how you're thinking about PSPs as part of your international expansion, whether this kind of accelerates that process.

I've said, it before and I'll repeat again, we love every door.

We're a firm logo is visible, but we want to leave the choice of.

<unk> reduced apr's or has there been any prs.

The wallets the.

Type of checkout to the end consumer and to some extent to the merchant, but our job is to be available everywhere. That's why we integrates with <unk>.

Hopefully some of you saw we ran a <unk>.

Major three day promo, which we should have called it the big nothing day, but.

Every.

I got over rules and there was called zero days and we'll find out what that is named next time, but.

While it basically out there and certainly love our direct integrations.

Michael Linford: Sure. Maybe on the first point, just around economics, I would say these end up being typically bespoke negotiations between us and the platform, and so it's hard to sort of encapsulate them in a single sentence or two. I think they're more different than they are similar, and we don't really want to get into the specifics of commercial deals here. In terms of expanding internationally, I mean, I think, yeah, obviously, Shopify in a lot of ways has been a huge distribution partner for us and really helps us access the long tail of smaller merchants in a really efficient and profitable way. That's obviously a very key part of our international expansion.

Either way it was a extravaganza of really really great Jefferson offers by many many merchant partners and so that growth.

I think we have been.

On the shamed of our focus on direct to consumer products for quite some time to card. Obviously is a really important piece of the ecosystem.

I don't think were putting it in the letter explicitly.

But also our App has served both as a way to plan loans. In addition to servicing them, obviously, but also increasingly so as a promotional surface for our merchant partners to advertise.

We're putting a fair amount of wood behind that.

So we will continue doing so.

Wouldn't be prepared to tell you.

The new breakdown X quarters from now, but we're certainly very much investing in engaging our consumers directly.

<unk> reduced apr's or has there been any prs.

Hopefully some of you saw we ran a <unk>.

Major three day promo.

In every measurable way and there'll be both more events like the big nothing and.

Which we should have called it the big nothing day, but.

I got a rule then there was called zero days and we'll find out what that is named next time, but.

New products and new features as well.

Awesome. Thanks, guys.

Either way it was a extravaganza of really really great Jefferson offers by many many merchant partners and so that growth.

Okay.

Our next question comes from James Faucette with Morgan Stanley You May proceed with your question.

Michael Linford: I'm not sure if you would count them as a PSP or not, but I think they bring a lot of the same benefits that we see with some of the PSP partnerships that we also have.

I don't think were putting it in the letter explicitly.

Hey, Thanks, very much and I wanted to follow up just on that zero percent.

We're putting a fair amount of wood behind that.

Harry Bartlett: Got it. Thank you.

So we will continue doing so.

First I guess.

Yes.

Wouldn't be prepared to tell you.

Operator: Our next question comes from Mosh Orenbuk with TD Cowen. You may proceed with your question.

They were very interesting statistics in the release about the FICO uplift you see when you firm users.

The new breakdown X quarters from now, but we're certainly very much investing in engaging our consumers directly.

Max Levchin: Great. Thanks. It's very gratifying to see another half million Affirm Card members in the quarter. Could you talk a little bit about what the factors are that drive how rapidly that can penetrate? Maybe since you did mention that you're testing cash flow underwriting, what kind of impact that could have on your ability to approve transactions and see growth in volume per card? Thanks.

Oh boy.

Oh from users that land initially with zero percent I'd love to hear how you think about how aggressively you intend to leave.

In every measurable way and there'll be both more events like the big nothing and.

And what you think the mix of zero percent can be over a multiyear period and also just anything you can share from your.

New product and new features as well.

Awesome. Thanks, guys.

Okay.

Zero days learning and kind of what the.

Our next question comes from James Faucette with Morgan Stanley You May proceed with your question.

Got it.

We noticed that you had held it but kind of what was the intention there and.

Hey, Thanks, very much and I wanted to follow up just on that zero percent.

What are you what are we trying to drive.

Et cetera.

First.

Harry Bartlett: Certainly, we'll try to avoid prognosticating about just how huge this whole thing can be, but obviously it is my theory child. At least right now, cash flow underwriting is really helpful for younger consumers and just folks who are kind of overlooked by the rest of the ecosystem. It's not to be confused for kind of necessarily at least going deeper into the credit stack. Obviously, traditionally, it's used for reading folks that usually cannot get a good signal from the basics of their credit file. That's both true typically for slightly older consumers in a lower credit strata, but really pronouncedly true for the younger millennials and Gen Z. They typically refuse to borrow, on average, refuse to borrow more on credit cards, and so perfect customer for us. On the flip side, don't borrow enough, therefore, very hard to read anything from the credit profile.

Yes.

I'll start, but I'm confident.

They were very interesting statistics in the release about the FICO uplift you see when you firm users.

Bye bye.

Compatriots here have opinions and versions of a sort of their own.

From.

From users that land initially with zero percent I'd love to hear how you think about how aggressively you intend to lean in there.

So a big part of what makes the affirm network unique.

Because we know what is being sold a lot of the time all the way down to not just the SKU, but the color certainly we know the price and what's in the basket and all sorts of good stuff like that and so.

And what you think the mix of zero percent can be over a multiyear period.

Also just anything you can share from your.

Being able to figure out how to target.

Zero days learning and kind of what the.

Got it.

The right financial offer for the end borrower.

We noticed that you had held it but kind of what was the intention there and and you know what.

With all that information is really powerful and being able to bring that value in a differentiated way to the merchant.

What are we trying to drive.

Et cetera.

As a promotional mechanism that is uniquely tailored to each borrower as they see it from checkout is just a really really efficient way of.

I'll start, but I am confident.

My my.

Compatriots here have opinions and versions of sort of their own.

Driving new sales for retailers and so.

So a big part of what makes the affirm network unique.

I'll give you sort of go out.

Contrary to answer, but it's sort of the other side of the coin I think the answer you may be looking forward, what do we do with consumers and I'm happy to talk to that and some of it is obvious European deals attract higher credit quality. There is plenty of positive self selection. We saw exactly what you might expect there I'm sure I don't remember the exact FICO drift upwards, we saw but it was there all the things we saw increased activity in the consumer.

Harry Bartlett: This is just a good unlock. We think it's going to help us grow. A little bit early days, so I don't want to put a number on it, but unlocks more. The growth of card is regulated by a couple of factors, our willingness to market it. First of all, it's entirely marketed internally. I think I've said it a hundred times, but there's repeating. We've spent no time marketing it outside Affirm repeat customer, which gives us a little bit of advantage in figuring out who might be the perfect customer for this thing. We're still not really driving it full thrust, not because we don't want to, not because we don't care, but because we've been just very, very deliberate about opening it to many segments of our users, including some of the slightly lower credit quality.

Being able to figure out how to target.

The right financial offer for the end borrower.

Et cetera et cetera.

With all that information is really powerful and being able to bring that value in a differentiated way to the merchant.

Talk to that at length as well, but maybe the most important purpose behind.

Big nothing days I'm going to keep calling them that until people get used to it.

As a promotional mechanism that is uniquely tailored to each borrower as they see it from checkout is just a really really efficient way of.

It was called <unk>.

I, just I love Michael by the way the perpetrator of Big Nothing then I think it was like maybe the best thing that ever come up with.

Driving new sales for retailers and so.

But.

The reason we were so excited about it and we saw everything we really wanted to see it.

I'll give you sort of go out.

I can try right answer, but it sort of the other side of the coin I think the answer you may be looking forward, what do we do with consumers and I'm happy to talk to that and some of it is obvious European deals attract higher credit quality. There is plenty of positive self selection. We saw exactly what you might expect there I am sure I don't remember the exact FICO drift upwards, we saw but it was there all the things we saw increased activity in it.

Letters from the participating.

Proof to the ecosystem that affirm can do more than just to fulfill the demand at the very bottom of the funnel driving awareness about merchants offering these deals to committed affirm users on the card through all the wallet integrations, we have et cetera et cetera.

Harry Bartlett: We've maintained slightly higher credit quality in the card on average. As we get more comfortable with our ability to underwrite everyone for this, at this point, it's not a new product for us, but it's still much newer than the rest of the system. As we get better and better underwriting, more confident with many cohorts, and these things do take quarters and years, we will continue marketing it to the general population at the limit. We expect the card to be a thing, which we'll offer to every single user we've acquired at the point of sale and elsewhere, with some modulations of the product itself. Some of the new stuff that we haven't really shown yet is just various features within the card that make it more suitable for this or that segment of consumers. Pretty excited about that.

Et cetera et cetera.

<unk> talked at length as well, but maybe the most important purpose behind.

Nothing days I'm going to keep calling them that until people get used to it.

We wanted to demonstrate that we can move the needle for the merchant ecosystem by deploying there essentially marketing dollars.

It was called <unk>.

I, just I love Michael by the way the perpetrator of Big Nothing then I think it was like maybe the best thing that ever come up with.

In the most targeted way possible and.

But.

This is this quarter's action not lost so we'll package it up and give you a full view of what happened, but we accomplished those goals and then some it was a great success on many fronts.

The reason we were so excited about it and we saw everything we really wanted to see it.

The letters from the participating.

Proved to the ecosystem that affirm can do more than just to fulfill the demand at the very bottom of the funnel driving awareness about merchants offering these deals to committed affirmed users on the card through all the wallet integrations, we have et cetera et cetera.

From my point of view the most important one was the.

The value of these custom.

Harry Bartlett: Generally speaking, I would look at the current active base and sort of the overall file of consumers we have and use that as the natural limit of how big the card will be. We certainly want it to be the preferred way of interacting with our product.

Correct deals with merchants, where they let us have a little bit more of their margin as they pursue targeted highly efficient promotions has worked and we tend to do it again and again and again.

Two things to add how aggressively we don't lean in Barry we've been talking about this for quite a while you should you should expect us to continue to lean in here very heavily we think is a really important part rounding out the consumer value proposition and the network.

We wanted to demonstrate that we can move the needle for the merchant ecosystem by deploying there essentially marketing dollars.

Max Levchin: Thanks very much.

Operator: Our next question comes from Rob Wildhack with Autonomous Research. You may proceed with your question.

In the most targeted way possible and.

This is this quarter's action not lost so we'll package it up and give you a full view of what happened, but we accomplished those goals and then some it was a great success on many fronts.

This is worth repeating over and over again.

Rob Wildhack: Hi, guys. Nice to see the Amazon agreement extended, including the HK. There's only a brief description in there. I was just wondering if you could give us some more color on that extension broadly, how that conversation progressed, and anything new or interesting that might have come out of the new agreement.

The reason, we are a bit tongue in cheek with the name of things like the big nothing is because our zero percent loans do not have anything else in them there are.

From my point of view the most important one was the.

No late fees Theres, No reminder, fees. There is no news feeds we're the only person who can stand up to an offer with the level of approvals that we do and honest and true transparency a percent offering that's a very unique thing.

The value of these custom.

Correct deals with merchants, where they let us have a little bit more of their margin as they pursue targeted highly efficient promotions has worked and we intend to do it again and again and again.

Robert O'Hare: I think the biggest thing is that we are going to be able to continue to work with them over the next five years. That's a pretty long-term commitment from both the companies. I think we both are really happy with the service we provide to those consumers and the value they get out of it. I know we are. That's really the biggest thing for us. I think the conversation around renewals and ongoing for the better part of a year. We're just really happy to have this behind us and focus on serving these consumers now.

We're big fans of doing more of the thing that you're best positioned uniquely able to do in this event.

Getting to add how aggressively want to lean in Barry we've been talking about this for quite a while.

Yes, great.

You would expect us to continue to lean in here very heavily we think is a really important part rounding out the consumer value proposition and the network.

Alright.

Okay.

Our next question comes from John Hecht with Jefferies. You May proceed with your question.

This is worth repeating over and over again.

The reason, we are a bit tongue in cheek with the name of things like the big nothing is because our zero percent loans do not have anything else in them there are.

Hey, guys, thanks very much.

Good quarter.

Sure.

Thank you guys.

Disclose as much on <unk> as you used to and maybe it's not as important of a factor, but I am wondering.

No late fees. There is no reminder, fees. There is no skus. These were the only person who can stand up to an offer with the level of approvals that we do and honest and true transparency percent offering that's a very unique thing.

Rob Wildhack: Okay. The slide 16 with the merchant fee rates, it does look like the core 0% longer-term rate, so the yellow line, is the only one that's trending a little bit lower the last few quarters. Could you just give us some more color on what's going on there?

Yes.

I know the transaction count per customers up pretty meaningfully year over year I'm wondering if you could just talk about kind of.

We're big fans of doing more of the thing that you're best positioned uniquely able to do in this is that.

The interaction types.

R R.

The characteristics of the transactions changing if they've been consistent I remember a couple of years back you were talking about how for instance, groceries was a growing element of what the customers are using any trends there that are worth just pointing out.

Yes, great.

Robert O'Hare: We did make an adjustment to a single merchant's program that was a very high proportion of 0% loans and very long-dated as well. I think that's a pretty one-off adjustment that happened in the book, but with a pretty significant merchant.

Great.

Okay.

Our next question comes from John Hecht with Jefferies. You May proceed with your question.

Hey, guys, thanks, very much and.

Okay.

Good quarter.

I don't think we are.

Thank you guys.

Definitely we have anything to hide on the <unk> and I think it's.

Disclose as much on <unk> as you used to and maybe it's not as important of a factor, but I am wondering.

They're getting is page seven of the supplement correctly down a little bit quarter over quarter, but.

Rob Wildhack: Thanks.

Yes.

Operator: Our next question comes from Adam Frisch with Evercore ISI. You may proceed with your question.

I know the transaction count per customers up pretty meaningfully year over year.

Last quarter to the one before with a little bit up and it's all hovering in the.

Im wondering if you can just talk about kind of.

70, <unk> hundred $60 range, so it's trended down a little bit over the last call. It two to three fiscal years.

Rob Wildhack: Hey, guys. Can you hear me?

The interaction types.

Max Levchin: Yep.

R R.

Rob Wildhack: Okay. Great. Thanks so much. Roughly half of the GMV growth this quarter came from direct point-of-sale merchant integrations, and 1/3 from direct-to-consumer. Just wondering how you see that mix evolving through the next few quarters, particularly as wallet partners scale. Thanks, and nice job on the quarter.

Characteristics of the transactions changing if they've been consistent I remember a couple of years back you were talking about how for instance, groceries was a growing element of what the customers are using any trends there that are worth just pointing out.

Mostly as we expanded into lower <unk>.

Naturally lower areas.

This.

Particular quarter as I was sort of eyeballing the results for frankly talking points to the media I saw that we saw some.

Okay.

Max Levchin: Thank you.

I don't think we're there.

Definitely you have anything to hide on <unk> and I think it's.

Better growth than maybe I expected in things like apparel, and beauty products, which tend to skew.

Harry Bartlett: I said it before, and I'll repeat it again. We love every door where the Affirm logo is visible. We want to leave the choice of the wallet, the type of checkout to the end consumer, and to some extent to the merchant. Our job is to be available everywhere. That's why we integrate with every wallet basically out there and certainly love our direct integrations. I think we have been unashamed of our focus on direct-to-consumer products for quite some time. The card, obviously, is a really important piece of the ecosystem. Also, our app has served both as a way to plan loans in addition to sourcing them, obviously, but also increasingly so as a promotional service for our merchant partners to advertise their reduced APRs or 0% APRs. Hopefully, some of you saw we ran a.

They're getting is page seven of the supplement.

Slightly lower.

It's down a little bit quarter over quarter, but last quarter to the one before with a little bit up and it's all hovering in the 270 $260 range. So it's trended down a little bit over the last call. It two to three fiscal years.

So that's and the puts and takes of the <unk> always a consequence of which industries are experiencing growth and also.

Yes, fashion and beauty grew 30% in the quarter also and supplement page 10.

Mostly as we expanded into lower <unk>.

So that's where the mix changes entirely based on which consumer shopping trend is.

Naturally lower AAV areas.

This.

And I think the question behind the question is really around what's the share of spend we're capturing with consumers.

Particular quarter as I was sort of eyeballing the results for frankly talking points to the media I saw that we saw some.

It's pretty stable <unk> and pretty meaningful growth and frequency, we feel really good that we're taking more meaningful share of consumer spending we see that obviously, mostly.

Better growth than maybe I expected in things like apparel, and beauty products, which tend to skew.

Slightly lower.

Example of that is the card, but we're seeing that even on the consumers who tend to use us not through the direct to consumer channels, but through the other channels and then really healthy sign for the resilience of the network and the loyalty of the consumers are giving us.

And so that's and the puts and takes of the <unk> always a.

Consequence of which industries are experiencing growth and also.

Harry Bartlett: Major three-day promo, which we should have called the Big Nothing Day, but I got overruled and it was called Zero Days. We'll find out what that is named next time. Either way, it was an extravaganza of really, really great 0% offers by our many, many merchant partners. That growth, I don't think we're quoting it in the letter explicitly, but we're putting a fair amount of wood behind that ball. We'll continue doing so. I wouldn't be prepared to tell you the new breakdown X quarters from now, but we're certainly very much investing in engaging our consumers directly in every imaginable way. There'll be both more events like the Big Nothing and new products and new features as well.

Yes, fashion and beauty grew 30% in the quarter. It's also in our supplement page 10.

Great. Thanks, guys.

That's where the mix changes entirely based on which consumer shopping trend is.

Our next question comes from Jeff Cantwell with Seaport Research you May proceed with your question.

And I think the question behind the question is really around what's the share of spend we're capturing with consumers.

Okay. Thanks, a lot.

Most of mine have been asked.

Ask you can you maybe talk about.

Your operating margins for the full year guide is now more than seven 5% last quarter.

Pretty stable <unk> and pretty meaningful growth in and frequency, we feel really good that we're taking more meaningful share of consumer spending we see that obviously, mostly.

Got it to four years more than 6%, so that's coming up.

Where do you see additional operating leverage coming from what are you leaning into there and then just wanted to ask you where not the expenses do you mind, giving us a feel for.

Example of that is the card, but we're seeing that even on the consumers who tend to use is not through the direct to consumer channels, but through the other channels.

A really healthy sign for the resilience of the network and the loyalty of the consumers are giving us.

What do you expect for G&A sales and marketing type of data analytics and how those might look over the remainder of the year I just wanted to make sure we had been bright and our models. Thanks.

Great. Thanks, guys.

Our next question comes from Jeff Cantwell with Seaport Research you May proceed with your question.

Yes, thanks for the question.

Rob Wildhack: Awesome. Thanks, guys.

Terms of whereas the operating leverage coming from really it's a function of growth youll notice in our updated FY 'twenty six outlook, we are taking revenue less transaction cost dollars up.

Okay. Thanks, a lot.

Operator: Our next question comes from James Fawcett with Morgan Stanley. You may proceed with your question.

Most of mine have been asked.

Ask you can you maybe talk about.

Your operating margins before your guide is now more than seven 5% last quarter.

Max Levchin: Hey, thanks very much. I wanted to follow up just on that 0%. I mean, first, I guess, is. There were very interesting statistics in the release about the FICO uplift you see when new Affirm users that. For Affirm users that land initially with 0%. I'd love to hear how you think about how aggressively you intend to lean in there, and what you think the mix of 0% can be over a multi-year period. Also, just anything you can share from your zero days learning and kind of what the. We noticed that you'd held it, but kind of what was the intentions there and what are we trying to drive, etc. Thanks.

And so those incremental dollars a good portion of them are flowing down to the operating income line and really thats driving the leverage that you are seeing in the updated outlook, it's really not a function of any sort of cost cutting or anything else in the opex space. It's really a function of growth, which we think is a really healthy way to grow and it has been.

Got it to four years more than 6%, so that's coming up.

Where do you see additional operating leverage coming from what are you leaning into there and then just wanted to ask you where not the expenses do you mind, giving us a feel for.

What do you expect for G&A sales and marketing type of data analytics and how those might look over the remainder of the year I just want to make sure we have been right in our models. Thanks.

A key driver for us over the last couple of years now as we've driven pretty incredible operating leverage.

Yes, thanks for the question.

We typically stop short of giving details around the various opex lines individually wed like to just guide to a margin there can be opportunities that arise for investments over the course of a year. So we typically haven't steered folks towards targets for those line items.

Terms of whereas the operating leverage coming from really it's a function of growth youll notice in our updated FY 'twenty six outlook, we are taking revenue less transaction cost dollars up.

And we're not going to start this quarter.

Harry Bartlett: I'll start, but I'm confident my compatriots here have opinions and versions of the story of their own. A big part of what makes the Affirm network unique is we know what is being sold a lot of the time, all the way down to not just the SKU, but the color. Certainly, we know the price, what's in the basket, and all sorts of good stuff like that. Being able to figure out how to target the right financial offer for the end borrower with all that information is really powerful. Being able to bring that value in a differentiated way to the merchant as a promotional mechanism that is uniquely tailored to each borrower as they see an Affirm checkout is just a really, really efficient way of driving new sales for retailers.

Got it okay, great ill give a shot.

So we're a leader.

On your GMB.

In Q2, the guidance range, <unk> 13 billion or $13 3 billion and there's a lot of moving pieces of the business. So.

A follow up to Adam's question, maybe talk a little bit more about the GMP guide and how that might breaks out in terms of contribution from interest bearing versus quarter X versus paying X et cetera, where you're seeing growth. The strongest right. Now if you think about the volumes this quarter and any further thoughts on the remainder degree would be great as well thanks very much.

A key driver for us over the last couple of years now as we've driven pretty incredible operating leverage.

Yes, we really again haven't even gone into those details typically I would say, obviously, we're talking a lot about leaning into zero percent here on this call. We ran a zero percent promotional days. So I would expect that zero percent monthly installment loans continues to be our fastest growing loan product that's been true for a cup.

And we're not going to start this quarter.

Got it okay, great ill give a shot.

The leader.

On your GMB.

In Q2, the guidance range, <unk> 13 billion or $13 3 billion and there's a lot of moving pieces of the business. So.

Full of quarters now and so I think we would expect those trends to continue.

Harry Bartlett: I'll give a sort of, I wouldn't call it a contrarian answer, but it's sort of the other side of the coin. I think the answer you may be looking for is, what do we do with consumers? I'm happy to talk to that. Some of it is obvious. 0% deals attract to higher credit quality. There's plenty of positive self-selection. We saw exactly what you might expect there. I'm sure I don't remember the exact FICO drift upwards we saw, but it was there. All the things. We saw increased activity on the consumer side, etc., etc. I can talk to that at length as well. Maybe the most important purpose behind Big Nothing Days, I'm going to keep calling them that until people get used to it. It was called Zero Days. I love Michael's, by the way, the perpetrator of Big Nothing.

Got it thanks for all the color appreciate it congrats.

Our next question comes from Zachary <unk> with Ft Partners. You May proceed with your question.

Hi, there. Thanks for taking my question. So I just wanted to ask on the product side. So we've seen some earned wage access companies talk about pushing into be NPL and that it's a very logical area given the amount of overlap they see with customers using GWA in the NPL.

And just given the focus and traction that you all have with the firm card in these kind of consumer products do is there a world where a firm could look that AWS potential products down the road or just curious if that's on the roadmap person that's been thought about at all thanks.

Harry Bartlett: I think it's like maybe the best thing he's ever come up with. The reason we were so excited about it, and we saw everything we really wanted to see. Letters from the participating. Proof to the ecosystem that Affirm can do more than just fulfill the demand at the very bottom of the funnel. Driving awareness about merchants offering these deals to committed Affirm users on the card through all the wallet integrations we have, etc., etc. We wanted to demonstrate that we can move the needle for the merchant ecosystem by deploying their essentially marketing dollars in the most targeted way possible. This quarter's action not last, so we'll package it up and give you a full view of what happened. We accomplished those goals and then some. It was a great success on many fronts.

Full of quarters now and so I think we would expect those trends to continue.

Got it thanks for all the color appreciate it congrats.

I've learned the hard way to not pre announce products in these calls they tend to.

Our next question comes from Zachary <unk> with Ft Partners. You May proceed with your question.

Take longer than I want them to and so on.

Stop myself short of any.

<unk> I do think that we have a relatively durable mode in terms of both the data and the process of building lending products.

And access is a form of lending.

But it typically averages something like eight days, if I remember correctly and so.

And just given the focus and traction that you all have with the firm cars and these kind of consumer products do is there a world where a firm could look at AWS potential products down the road or just curious if that's on the roadmap for something that's been thought about at all thanks.

Less complicated problems youre lending at no interest no late fees and no.

No other.

Forms of revenue other than merchant discount over 36 months that would be pretty sure what youre doing to say nothing of access to capital and balance sheet management. So I think we're relatively safe from that cohort.

I've learned the hard way to not pre announce products in these calls they tend to.

Harry Bartlett: From my point of view, the most important one was the value of these custom direct deals with merchants, where they let us have a little bit more of their margin as they pursue targeted, highly efficient promotions. This has worked, and we intend to do it again and again and again.

Take longer than one and two and so on.

Competition.

But.

Stop myself short of any.

Certainly.

<unk> you too our stated mission, which has been the same for 15 years and that is to build on its financial products that improve lives.

<unk> I do think that we have a relatively durable mode in terms of both the data and the process of building lending products.

We will not.

Short the option.

Robert O'Hare: Two things to add. How aggressively we want to lean in? Very. We've been talking about this for quite a while. You should expect us to continue to lean in here very heavily. We think this is a really important part of rounding out the consumer value proposition in the network. Second, this is worth repeating over and over again. The reason we are a bit tongue-in-cheek with the name of things like the Big Nothing is because our 0% loans do not have anything else in them. There are no late fees, no reminder fees, no snooze fees. We're the only person who can stand up to and offer with the level of approvals that we do an honest and true transparent 0% offering. That's a very unique thing.

And access is a form of lending.

Building any.

Financial products over the course of our hopefully very long lifetime. So watch the space, we'll announce some fun things at some point soon.

But it typically average is something like eight days, if I remember correctly, and so slightly less complicated problems youre lending at no interest no late fees and no.

Okay.

No other.

Forms of revenue other than merchant discount over 36 months that would be pretty sure where youre doing to say nothing of access to capital and balance sheet management. So I think we're relatively safe from that cohort.

Our next question comes from Joel Rakers with William Blair. You May proceed with your question.

Attach for the affirm card seems to be kind of steadily marching higher and I was just kind of curious if you could give us some insight around what you're observing in terms of top of wallet behavior on the affirmed card.

Competition.

But.

We certainly I refer.

<unk> you too our stated mission, which has been the same for 15 years and that is to build on its financial products that improve lives.

And if theres any kind of substitution dynamic that youre seeing versus traditional bank card. That's my first question.

We will not.

Robert O'Hare: We're big fans of doing more of the thing that you're best positioned, uniquely able to do, and this is that.

Short the option.

Building any.

Financial products over the course of our hopefully very long lifetime. So watch the space, we'll announce some fun things at some point soon.

We're seeing really nice trends in.

Max Levchin: Yes. Great.

Both.

Operator: Our next question comes from John Hect with Jefferies. You may proceed with your question.

Okay.

Overall discretionary spend capture as well as a higher.

John Hect: Hey, guys. Thanks very much, and good quarter. I don't think you guys disclose as much on AOV as you used to, and maybe it's not as important of a factor. I'm wondering, I know the transaction count per customer is up pretty meaningfully year over year. I'm wondering if you could just talk about kind of the interaction types, the characteristics of the transactions changing. Have they been consistent? I remember a couple of years back, you were talking about how, for instance, groceries was a growing element of what the customers were using. Any trends there that are worth just pointing out?

Our next question comes from Joe <unk> with William Blair. You May proceed with your question.

Starting points.

For each new cohort.

<unk>.

I'll stop short of <unk>.

Attach for the firm card seems to be kind of steadily marching higher and I was just kind of curious if you could give us some insight around what you're observing in terms of the top of wallet behavior on the affirm card.

Giving any.

Specific answers too.

How are you doing relative to other bank cards I think we are capturing.

And if theres any kind of like substitution dynamic that youre seeing versus traditional bank or that's my first question.

Spend.

Rapid enough clip, where I'm sure it's coming out of.

Spent elsewhere.

As I'm sure you know it is not our business too.

We're seeing really nice trends in.

<unk> four given entice consumers into more spending we are capturing the spend it wouldn't have happened because theyre not willing to use credit cards and revolve and.

Both.

Overall discretionary spend capture as well as a higher.

In some cases, perhaps cannibalizing existing credit card volume.

Starting points.

Although.

Harry Bartlett: I don't think we're definitely don't have anything to hide on the AOVs. I think it's there. I think it's page seven of the supplement, if I remember correctly. It's down a little bit quarter over quarter, but last quarter to the one before was a little bit up. It's all hovering in the $270, $260 range. It's trended down a little bit over the last, call it, two, three fiscal years, mostly as we expanded into lower AOV, naturally lower AOV areas. This particular quarter, as I was sort of eyeballing the results for, frankly, talking points to the media, I saw that we saw some better growth than maybe I expected in things like apparel and beauty products, which tend to skew slightly lower AOV.

For each new cohort.

Obviously, we would have to earn our keep with merchants.

<unk>.

Now I'll stop short of.

If we were purely.

Getting any.

Purely responsible for substitution. So I think we're doing really well there.

Specific answers too.

How were doing relative to other bank cards I think we are capturing.

I think the.

Two or three quarters ago, now I said something along the lines of 10 million active cards.

Spend.

Rapid enough clip, where I'm sure it's coming out of.

$75000 per year of discretionary spend is the goal.

Spent elsewhere.

As I'm sure you know it is not our business too.

We are.

We were up just under a third of the way to the former and.

Or given entice consumers into more spending we are capturing the spend that wouldn't have happened because theyre not willing to use credit cards and revolve and.

On the order of a third to a half of the way to the latter so.

In some cases, perhaps cannibalizing existing credit card volume.

Progress from my point of view, but we've got a pretty long way to go.

Although.

And hopefully by the time, we get to the.

Obviously, we would have to earn our keep with merchants.

Target number of the first of these two metrics.

If we were purely.

Overall consumer base of a firm will be meaningfully larger and so we can just move the goalpost.

Purely responsible for substitution. So I think we're doing really well there.

Harry Bartlett: That's the books and takes of the AOV is always a consequence of which industries are experiencing growth, and also, yeah, fashion and beauty grew 30% in the quarter. It's also in a supplement, page 10. Anyway, that's where the mix changes entirely based on which consumer shopping trend is prevailing.

I think the.

Awesome. Thanks, and then just as a last question.

Yeah.

Two or three quarters ago, now I said something along the lines of 10 million active cards.

As it relates to the Amazon partnership.

$75000 per year of discretionary spend is the goal.

And I guess, the Shopify partnership are you willing to quantify.

We are.

What share of card it looks like today.

Roughly just under a third of the way to the former and.

With those partners just so we kind of have an idea of like what the upward potential looks like for those opportunities going forward.

On the order of a third to a half of the way to the latter so.

Robert O'Hare: I think the question behind the question is really around what's the share of spend we're capturing with consumers. With pretty stable AOVs and pretty meaningful growth and frequency, we feel really good that we're taking more meaningful share of consumer spend. We see that, obviously, mostly. The best example of that is the card, but we're seeing that even on the consumers who tend to use us, not through the direct-to-consumer channels, but through the other channels. That's a really healthy sign for the resilience of the network, and the loyalty that consumers are giving us.

Yes definitely.

Great progress from my point of view, but we've got a pretty long way to go.

Cant breakdown.

And hopefully by the time, we get to the.

Any of those numbers specifically here.

Target number of the first of these two metrics.

But we feel like there is an awful lot of green space and both of those partnerships.

Overall consumer base of a firm will be meaningfully larger and so we can just move the goalpost.

Both able to be accretive to growth.

Despite the company growing at really really healthy clips and within that there remains a lot of things that we can work on together. They are both really good examples of what we think is.

Awesome. Thanks, and then just as a last question.

As it relates to the Amazon partnership.

And I guess the Shopify partnership are you willing to quantify like what share of cart looks like today.

John Hect: Yep. Great. Thanks, guys.

I think sometimes investors have a hard time really understanding.

The winning of a relationship to the start of our relationship.

Operator: Our next question comes from Jeff Cantwell with Seaport Research. You may proceed with your question.

With those partners just so we kind of have an idea of like what the upward potential looks like for those opportunities going forward.

Is it like a light switch flipped that all of a sudden you turn the switch on and you get all the volume.

Jeff Cantwell: Hey, thanks a lot. Most of what I've been asked, I wanted to ask you, can you maybe talk about your operating margins? The four-year guide is now more than 7.5%. Last quarter, you guided the four years more than 6%. That's coming up. My question is, where is the additional operating leverage coming from? What are you leaning into there? I just wanted to ask you around the expenses. Do you mind giving us a feel for what to expect for G&A, sales and marketing, tech and data analytics, and how does Mike look over the remainder of the year? Just want to make sure we have them right in our models. Thanks.

These programs have a lot of investment that follows the launch and optimizing the program.

Yes.

Definitely.

Cant breakdown.

Any of those numbers specifically here.

Whether thats, bringing forward new products like AI or doing connected accounts, where we can share information about the user in a way that allows us to offer the most Taylor and the best solutions.

But we feel like there is an awful lot of green space and both of those partnerships.

<unk> been able to be accretive to growth.

Despite the company growing at really really healthy clips and within that there remains a lot of things that we can work on together. They are both really good examples of what we think is.

These pieces of work really do allow us to continue to grow share beyond just the network effects that you see in scale.

And I think about this.

I think sometimes investors have a hard time really understanding.

Say that when there is a lot of runway ahead of us.

The winning of a relationship to start of our relationship.

John Hect: Yeah. Thanks for the question. I mean, in terms of where is the operating leverage coming from, really, it's a function of growth. You'll notice in our updated FY26 outlook, we are taking revenue-less transaction cost dollars up, and so those incremental dollars, a good portion of them are flowing down to the operating income line. Really, that's driving the leverage that you're seeing in the updated outlook. It's really not a function of any sort of cost-cutting or anything else in the OpEx space. It's really a function of growth, which we think is a really healthy way to grow. It's been a key driver for us over the last couple of years now as we've driven pretty incredible operating leverage. We typically stop short of giving details around the various OpEx lines individually. We like to just guide to a margin.

Thank you.

Is it like a light switch flipped that all of a sudden you turn a switch on and you get all the volume.

Our next question comes from Reggie Smith with Jpmorgan you May proceed with your question.

These programs have a lot of investment that follows the launch and optimizing the program.

Thank you.

Quarter guys.

And multi tasking Tonight, so I apologize in advance if this question's been asked but I was curious as you guys move into I guess kind of different verticals, you highlighted service tighten and I guess like automotive repair and things like that as you move into these services, how if any way does that change your underwriting.

That's bringing forward new products like <unk>.

AI or doing connected accounts, where we can share information about the user in a way that allows us to offer the most taylor and invest solutions.

These pieces of work really do allow us to continue to grow share beyond just the network effects that you see in scale.

Honestly, you're underwriting the consumer but I would imagine there is some risk related to the actual service provider as well. So I was curious how you guys think about that in my am I off.

And I think for both of us.

Say that when there is a lot of runway ahead of us.

Thank you.

With that I'll, just if there's any changes that need to happen with your underwriting as you consider those factors.

Our next question comes from Reggie Smith with Jpmorgan you May proceed with your question.

It's a great question Youre thinking about it exactly right that's actually what makes this business defensible.

John Hect: There can be opportunities that arise for investment over the course of a year. We typically haven't steered folks towards targets for those line items, and we're not going to start this quarter.

Thank you great quarter guys.

At least a couple of different dimensions. It is not a guarantee in fact, it's frequently.

Multi tasking into nice I apologize in advance if this question's been asked but I was curious as you guys move into I guess kind of different verticals, you highlighted service tighten and I guess like automotive repair and things like that as you move into like these services, how if any way does that change your underwriting it's obvious.

A guarantee that it's not the case that a model that worked for you in a specific type of or set of Skus will work just as well in another.

Jeff Cantwell: Got it. Okay. Figured I'd give it a shot. The related one, on your GMV. In Q2, the guidance range there, it's $13 billion to 13.3 billion. There's a lot of moving pieces to the business. Just to follow up to Adam's question, maybe talk a little bit more about the GMV guide and how that might break out in terms of contribution from interest bearing versus Corex versus Pan-X, etc., where you've seen growth the strongest right now as you think about the volumes this quarter. Any further thoughts on the remainder of the year would be great as well. Thanks very much.

Part of our.

Defensive mode or just.

You are underwriting the consumer but I would imagine there is some risk related to the actual service provider as well because I was curious how you guys think about that in my am I off base with that or just if there's any changes that need to happen with your underwriting as you consider those factors.

I hate the term secret sauce, but this is probably one way to refer to it we.

We don't just have great models that we build and great data to build them from we have a really good very robust process by which we build new models or modify existing ones and the frequency with which we can ship. These models and include new types of data to incorporate new learnings from each new vertical is very very quick now and thats actually a.

It's a great question Youre thinking about it exactly right, there's actually what makes this business defensible.

John Hect: Yeah. We really, again, haven't gone into those details typically. I would say, obviously, we're talking a lot about leaning into 0% here on this call. We ran the 0% promotional days. I would expect that 0% monthly installment loans continues to be our fastest-growing loan product. That's been true for a couple of quarters now, and I think we would expect those trends to continue.

A couple of different dimensions. It is not a guarantee in fact, it's frequently.

Quite a difficult thing to reproduce even if tomorrow morning somebody somehow got a hold of the significant amount of data without the process.

Hey guarantee that it's not the case that a model that worked for you in a specific type of or set of Skus will work just as well in another.

Knowledge and the system development, we've taken undertaken over the last 15 years is very difficult to build these things quickly and so we feel comfortable entering new verticals.

Part of our.

Defensive mode or.

I hate the term secret sauce, but this is probably one way to refer to it.

Harry Bartlett: Got it.

Jeff Cantwell: Thanks for all the calling. Appreciate it. Thank you, guys.

In part because we've gotten so good at.

Rigorously, taking onboard new data new kinds of Disruptors of merchandise being sold in the case of surface tightened. Its op merchandize is actually a service et cetera, incorporating that signal into our models and recruiting and back into the underwriting process and just improving return so.

Operator: Our next question comes from Zachary Gunn with FT Partners. You may proceed with your question.

Zachary Gunn: Hey there. Thanks for taking my question. I just wanted to ask on the product side. We've seen some earned wage access companies talk about pushing into BNPL, and that it's a very logical area given the amount of overlap they see with customers using EWA and BNPL. Just given the focus and traction that you all have with the Affirm Card and these kind of consumer products, is there a world where Affirm could look at EWA as a potential product down the road? Just curious if that's on the roadmap or something that's been thought about at all. Thanks.

Quite a difficult thing to reproduce even if tomorrow morning somebody somehow got a hold of the significant amount of data without the process.

10 years ago entering a new vertical would have been a lot more of a hey can we figure out how to underwrite as quickly enough will to start overwhelming our nico or delinquencies, we feel a lot more comfortable linked claim to services.

Knowledge and the system development, we've taken undertaken over the last 15 years is very difficult to build these things quickly and so we feel comfortable entering new verticals.

Or elective medical or auto parts, our auto repair because we feel very good about our ability to incorporate new data very quickly into our models and if necessary breakout new ones.

In part because we've gotten so good at.

Rigorously, taking onboard new data new kinds of Disruptors of merchandise being sold in the case of service item. It's op merchandize is actually a service et cetera, incorporating that signal into our models and recruiting and back into the underwriting process improving returns.

Harry Bartlett: I've learned the hard way to not pre-announce products on these calls. They tend to take longer than I want them to, and I'll stop myself short of any pre-announcements. I do think that we have a relatively durable moat in terms of both the data and the process of building lending products. I think earned wage access is a form of lending, but it typically averages something like eight days, if I remember correctly. It's a slightly less complicated problem if you're lending at no interest, no late fees, and no other forms of revenue other than merchant discount. Over 36 months, you better be pretty sure you know what you're doing, to say nothing of access to capital and balance sheet management. I think we're relatively safe from that cohort of competition.

<unk>, the underwriting processes et cetera et cetera. So.

It's actually a.

If anything an infant structure maturity marker that we can point out. The fact that we are willing to enter these new businesses fairly quickly.

No.

That's kind of what I expected.

Listen great quarter, and I appreciate the insight as always guys.

Thank you.

Our next question comes from Jamie Friedman with Susquehanna International You May proceed with your question.

Or elective medical or auto parts or auto repair because we feel very good about our ability to incorporate new data very quickly into our models and if necessary breakout new ones.

Wanted to ask about the.

Continued hyper growth that youre seeing in zero percent apr's.

<unk>, the underwriting processes et cetera et cetera. So.

And if theres any way to observe.

It's actually a.

If anything an influence structure maturity marker that we can point out. The fact that we are willing to enter these new businesses fairly quickly.

Harry Bartlett: We certainly, I mean, I refer you to our stated mission, which has been the same for 15 years, and that is to build honest financial products that improve lives. We will not short the option of building any financial products over the course of our hopefully very long lifetime. Watch the space. We'll announce some fun things at some point soon.

Yeah.

Not only the behavior of where those are going in terms of your.

Travel or larger ticket items, but the.

No.

That's kind of what I expected.

Listen great quarter, and I appreciate the insights as always guys.

The profile of those cohorts like where are they on the platform previously and moving here or are they new to the platform.

Thank you.

Our next question comes from Jamie Friedman with Susquehanna International You May proceed with your question.

And any demographic data that you might have about them. Thank you.

I think.

Wanted to ask about the.

We will probably.

Operator: Our next question comes from Joel Rikers with William Blair. You may proceed with your question.

I can't see the future, but I am confident we will want to talk a lot about the.

<unk> hyper growth that youre seeing in zero percent APR.

The three day of zero is that we just ran.

John Hect: The catch for the Affirm Card seems to be kind of steadily marching higher. I was just kind of curious if you could give us some insight around what you're observing in terms of top-of-wallet behavior on the Affirm Card, and if there's any kind of substitution dynamic that you're seeing versus traditional bank cards. That's my first question.

And if theres any way to observe.

I will I will remember to dig into the demographics I can tell you that the credit quality is naturally higher just because there's a fair amount of self selection and credit in general.

Not only the behavior of where those are going in terms of your.

Travel or larger ticket items, but the.

I think majority of participants in this event were existing consumers, we certainly marketed.

The profile of those cohorts like where are they on the platform previously and moving here or are they new to the platform.

Harry Bartlett: We're seeing really nice trends in both overall discretionary spend capture, as well as a higher starting point for each new cohort. I'll stop short of giving any specific answers to how we're doing relative to other bank cards. I think we're capturing spend in a rapid enough clip where I'm sure it's coming out of spend elsewhere. As I'm sure you know, it is not our business to push or even entice consumers into more spending. We are capturing the spend that wouldn't have happened because they're not willing to use credit cards and revolve, and in some cases, perhaps cannibalizing existing credit card volume. Although, obviously, we would have to earn our keep with merchants if we were purely responsible for substitution. I think we're doing really well there. I think the.

Not entirely internally, but.

<unk> vast vast majority of marketing about hey, we have this cool new promo coming come to the App and Youll see all sorts of really cool offers that was mostly went into our existing users and so.

And any demographic data that you might have about them. Thank you.

I think.

We will probably.

I can't see the future, but I am confident we will want to talk a lot about the.

It's only natural to assume that.

The word of state had stayed pretty pretty closely within the community.

The three day of zero is that we just ran.

I will I will remember to dig into the demographics I can tell you that the credit quality is naturally higher just because there's a fair amount of self selection and credit in general.

Yes, I don't want to steal.

The team put together a pretty incredible project and it was it was a long time coming we started thinking about this.

More than six months ago, maybe maybe more like nine months ago. So it was quite a buildup a lot of new things have to be invented most importantly, the sales motion to explain what this will look like to the merchants to explain how they're going to benefit.

I think majority of participants in this event were existing consumers, we certainly marketed.

Not entirely internally, but.

<unk> vast vast majority of marketing about hey, we have this cool new promo coming come to the App and you will see all sorts of really cool offers mostly went into our existing users and so.

Obviously, we've said it before and a huge percentage of our zero offers are funded by merchants and we obviously aspire for 100% of those to be funded by merchants and so.

It's only natural to assume that.

A lot of different things that came together for this to.

The word of state had stayed pretty pretty closely within the community.

<unk> it worked really well, we intend to come back to it in a bigger and better way.

Yes, I don't want to steal.

Now going to pre announce when but it is definitely another one is coming.

The team put together a pretty incredible project. It was it was a long time coming we started thinking about this.

But we'll talk about the learnings probably in the next earnings call in some detail.

Harry Bartlett: Two or three quarters ago now, I said something along the lines of 10 million active cards, $7,500 per year of discretionary spend is the goal. We are just under 1/3 of the way to the former, and on the order of 1/3 to 1/2 of the way to the latter. We're making great progress from my point of view, but we've got a pretty long way to go. Hopefully, by the time we get to the target number of the first of these two metrics, the overall consumer base of Affirm will be meaningfully larger, and we can just move the goalpost.

More than six months ago, maybe maybe more like nine months ago. So it was quite a build up a lot of new things have to be invented most importantly, the sales motion to explain what this will look like to the merchants to explain how they're.

Okay, and then if I could just ask about the R. L. T C rising 48 basis points to four 2%.

And I know that this was asked earlier, but.

Theyre going to benefit.

And I know your goal is to reinvest that but some of that actually according to the shareholder letter was related to provisions better provision performance.

Obviously, we've said it before and a huge percentage of our zero offers are funded by merchants and we obviously aspire for 100% of those to be funded by merchants and so.

So.

Yes, So I guess my question is.

A lot of different things that came together for this to.

Via thing it worked really well, we intend to come back to it in a bigger and better way.

If you have any perspective as to.

When you will return to the targeted range of 3% to 4%.

Now going to <unk>, but it is definitely another one is coming.

Is.

That would be helpful. Thank you.

John Hect: Awesome. Thanks. Just as a last question, just as it relates to the Amazon partnership, and I guess the Shopify partnership, are you able to quantify what the share of card looks like today with those partners, just so we kind of have an idea of what the upward potential looks like for those opportunities going forward?

But we will talk about the learnings probably in the next earnings call in some detail.

Yes.

We are maintaining our 4% target for fiscal 'twenty six right. So I think that's an important marker we tend to look at the business in longer time horizons than just these 90 day quarters that we reported on.

Okay, and then if I could just ask about the R. L. T C rising 48 basis points to four 2%.

And I know that this was asked earlier, but.

And it's also important to remember that.

And I know your goal is to reinvest that but some of that actually according to the shareholder letter was related to provisions better provision performance.

When we talk about provision being favorable to revenue less transaction costs, that's as a percentage of GMB and so upstream of that there's also a point around on balance sheet versus off balance sheet funding mix and so changes there can can have.

Robert O'Hare: Yeah. We definitely can't break down any of those numbers specifically here, but we feel like there is an awful lot of green space in both of those partnerships. They've both been able to be accredited to growth despite the company growing at really, really healthy clips, and we think that there remains a lot of things that we can work on together. They're both really good examples of what we think is. I think sometimes investors have a hard time really understanding. The winning of a relationship, the start of a relationship isn't like a light switch flip that all of a sudden you turn the switch on and you get all the volume. These programs have a lot of investment that follows the launch in optimizing the program.

So.

Yes, So I guess my question is.

If you have any perspective as to.

When you will return to the targeted range of 3% to 4%.

Impacts in either direction frankly in terms of our LTC in a given quarter.

Is.

That would be helpful. Thank you.

Yes.

Thank you very much.

Our next question comes from Kyle Joseph with Stephens You May proceed with your question.

Hey, good afternoon, and thanks for taking my questions.

And it's also important to remember that.

Well, thanks, asking a little bit this afternoon and apologies if you covered it just kind of looking for an update on the competitive environment kind of by product.

When we talk about provision being favorable to revenue less transaction costs, that's as a percentage of <unk> and so upstream of that there's also a point around on balance sheet versus off balance sheet funding mix and so changes there can can have.

And thing.

Robert O'Hare: Whether that's bringing forward new products like Boost AI or doing connected accounts where we can share information about the user in a way that allows us to offer the most tailored and best solutions, these pieces of work really do allow us to continue to grow share beyond just the network effects that you see in scaling. I think for both those two partners, we would say that there's still a lot of runway ahead of us.

If youre seeing any sort of benefits from capital markets getting a little more skittish.

Yes.

Impacts in either direction frankly in terms of our LTC in a given quarter.

We're fairly focused on our own.

Product and other motion so not a ton of.

Yep.

Thank you very much.

Updates on behalf of <unk> competitors in fact.

Our next question comes from Kyle Joseph with Stephens You May proceed with your question.

That we are.

Live in the UK with Shopify and scaling that nicely I'm sure, giving some of our competitors a bit of a heart ache, but that's it's good to have multiple.

Hey, good afternoon, and thanks for taking my questions.

John Hect: Thank you.

Well, thanks, asking a little bit this afternoon and apologies if you covered it but just kind of looking for an.

Operator: Our next question comes from Reggie Smith with JPMorgan. You may proceed with your question.

Contenders in every market to ensure the best product win.

An update on the competitive environment kind of by product and thing.

Max Levchin: Thank you. Great quarter, guys. I'm multitasking tonight, so I apologize in advance if this question has been asked. I was curious, as you guys move into, I guess, kind of different verticals, and you highlighted Service Titan and, I guess, automotive repair and things like that, as you move into these services, how, if any way, does that change your underwriting? Obviously, you're underwriting the consumer, but I would imagine there's some risk related to the actual service provider as well. I was curious how you guys think about that. Am I off base with that, or just if there's any changes that need to happen with your underwriting as you consider those factors?

Our numbers speak for themselves.

If youre seeing any sort of benefits from capital market is getting a little more skittish.

We are growing well and maintaining profitability and so.

We are executing well.

As far as capital markets go I should probably.

We're fairly focused on our own.

Michael or Rob weigh in.

Product and other motions.

But I think we.

We would just priced to deal.

Not a ton of.

It was quite good.

Updates on behalf of our esteemed competitors.

Yes.

The capital markets.

That we are.

Probably continue to be very constructive for our asset.

Live in the U K with Shopify and scaling that nicely I'm sure, giving some of our competitors a bit of a heart ache, but that's it's good to have multiple.

Yes.

I think there was a lot of activity in the ABS market over the past three or four months.

John Hect: It's a great question. You're thinking about it exactly right. That's actually what makes this business defensible in at least a couple of different dimensions. It is not a guarantee. In fact, it's frequently a guarantee that it's not the case that a model that worked for you in a specific type of or set of SKUs will work just as well in another. Part of our defensive moat or just uni—I hate the term secret sauce, but this is probably one way to refer to it. We don't just have great models that we build and great data to build them from. We have a really good, very robust process by which we build new models or modify existing ones. The frequency with which we can ship these models and include new types of data to incorporate new learnings from each new vertical is very, very quick now.

And tenders in every market to ensure the best product win.

And we were really pleased with.

Just the engagement.

So many of our investors gave us.

And the flight to quality that we're seeing.

Our numbers speak for themselves.

We're growing well and maintaining profitability and so.

Got it.

A lot of investors dealing with a lot of headlines and a lot of going on they want to focus in on names that they can trust to deliver the kind of results that we do and that's why we get to partner with the Blue chip investors on on what we consider to be best in class execution.

We are executing well.

As far as kind of a market go should probably.

Michael or Rob weigh in.

But I think we.

We would just priced to deal.

It was quite good.

Yes.

Great very helpful. Thanks, Michael.

The capital markets.

Okay.

Probably continue to be very constructive for our asset.

This now concludes our question and answer session I would like to turn the floor back over to Zane Keller for closing comments.

Yes.

I think there is a lot of activity in the ABS market over the past three or four months.

Well. Thank you everyone for your time today, we appreciate all the questions and we'll speak to you again next quarter talk to you then.

And we were really pleased with.

Just the engagement.

Many of our investors gave us.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

And the flight to quality that we're seeing.

John Hect: That's actually quite a difficult thing to reproduce. Even if tomorrow morning somebody somehow got a hold of a significant amount of data without the process, knowledge, and the system development we've undertaken over the last 15 years, it's very difficult to build these things quickly. We feel comfortable entering new verticals in part because we've gotten so good at just rigorously taking on board new data, new kinds of descriptors of merchandise being sold. In the case of Service Titan, it's not merchandise, it's actually a service, etc. Incorporating that signal into our models and regurgitating it back into the underwriting process and just improving our charts. Ten years ago, entering a new vertical would have been a lot more of a, "Hey, can we figure out how to underwrite this quickly enough?

Got it.

Great very helpful. Thanks for taking my question.

Okay.

This now concludes our question and answer session I would like to turn the floor back over to Zane Keller for closing comments.

Well. Thank you everyone for your time today, we appreciate all the questions and we'll speak to you again next quarter talk to you then.

Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

[music].

John Hect: Will this start overwhelming our NACO or our delinquencies? We feel a lot more comfortable laying claim to services, or elective medical, or auto parts, or auto repair because we feel very good about our ability to incorporate new data very quickly into our models and, if necessary, break out new ones and bifurcate the underwriting process, etc., etc. I'd say it's actually, if anything, an infrastructure maturity marker that we can point at the fact that we are willing to enter these new businesses fairly quickly.

Okay.

[music].

Max Levchin: No, that's kind of what I expected. It was a great quarter, and I appreciate the insights as always, guys.

John Hect: Thank you.

Operator: Our next question comes from Jamie Friedman with Susquehanna International. You may proceed with your question.

Zachary Gunn: I wanted to ask about the continued hypergrowth that you're seeing in 0% APRs. If there's any way to observe not only the behavior of where those are going in terms of your travel or larger ticket items, but the profile of those cohorts. Were they on the platform previously and moving here? Are they new to the platform? Any demographic data that you might have about them? Thank you.

John Hect: I think we will probably—I can't see the future, but I'm confident we will want to talk a lot about the three-day of zeros that we just ran. I will remember to dig into the demographics. I can tell you that the credit quality is naturally higher just because there's a fair amount of self-selection and credit in general. I think the majority of participants in this event were existing consumers. We certainly marketed it, not entirely internally, but significantly, vast, vast majority of marketing about, Hey, we have this cool new promo coming. Come to the app, and you'll see all sorts of really cool offers. That mostly went to our existing users. It's only natural to assume that the word had stayed pretty closely within the community.

John Hect: Yeah, I don't want to steal—I mean, I think the team put together a pretty incredible project, and it was a long time coming. We started thinking about this more than six months ago, maybe more like nine months ago. It was quite a build-up. A lot of new things have to be invented. Most importantly, the sales motion to explain what this will look like to the merchants, to explain how they're going to benefit. Obviously, we've said it before, a huge percentage of our zero offers are funded by merchants, and we obviously aspire for 100% of those to be funded by merchants. That was just a lot of different things that came together for this to be a thing. It worked really well. We intend to come back to it in a bigger, better way.

John Hect: I'm not going to pronounce when, another one is coming. We'll talk about the learnings probably in the next earnings call in some detail.

Zachary Gunn: Okay. If I could just ask about the RLTC rising 48 basis points to 4.2%. I know that this was asked earlier, but I know your goal is to reinvest that. Some of that, actually, according to the shareholder letter, was related to better provision performance. Yeah, so I guess my question is, if you have any perspective as to when you'll return to that targeted range of 3 to 4%. That would be helpful. Thank you.

John Hect: Yeah. I mean, we are maintaining our 4% target for fiscal 2026, right? I think that's an important marker. We tend to look at the business in longer time horizons than just these 90-day quarters that we all report on. It's also important to remember that when we talk about provision being favorable to revenue less transaction cost, that's as a percentage of GMV. Upstream of that, there's also a point around on-balance sheet versus off-balance sheet funding mix, and changes there can have impacts in either direction, frankly, in terms of RLTC in a given quarter.

Zachary Gunn: Yep, I follow. Thank you. Thank you very much.

Operator: Our next question comes from Kyle Joseph with Stephens. You may proceed with your question.

Max Levchin: Hey, good afternoon. Thanks for taking my questions. Multitasking a little bit this afternoon, so apologies if you covered it. Just kind of looking for an update on the competitive environment, kind of by product, and seeing if you're seeing any sort of benefits from capital markets getting a little more skittish.

John Hect: We're fairly focused on our own product and other motions, so not a ton of updates on behalf of our esteemed competitors. I think the fact that we're live in the UK with Shopify and scaling that nicely, I'm sure is giving some of our competitors a bit of a heartache, but it's good to have multiple intenders in every market to ensure the best products win. Our numbers speak for themselves. We're growing well and maintaining profitability, and we are executing well. As far as capital markets go, I should probably let Michael or Rob weigh in. I think we would just price to deal again, and it was quite good.

Robert O'Hare: Yeah. I mean, the capital markets probably continue to be very constructive for our asset. I think there was a lot of activity in the ABS market over the past three or four months, and we were really pleased with just the engagement that so many of our investors gave us, and the quality that we're seeing. Where you've got a lot of investors dealing with a lot of headlines and a lot going on, they want to focus in on names that they can trust to deliver the kind of results that we do. That's why we get to partner with the Blue Chip Investors on what we consider to be best-in-class execution.

Max Levchin: Great. Very helpful. Thanks for my question.

Operator: This now concludes our question-and-answer session. I would like to turn the floor back over to Zane Keller for closing comments.

Zachary Gunn: Well, thank you, everyone, for your time today. We appreciate all the questions, and we'll speak to you again next quarter. Talk to you then.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.

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