Q4 2026 Affirm Holdings Inc Earnings Call

August 27, 2026

Speaker #1: Good afternoon. Welcome to the Affirm Holdings fourth quarter fiscal 2026 earnings call. Following the speakers’ remarks, we will open it up for questions. As a reminder, this conference is being recorded.

Operator: Good afternoon. Welcome to the Affirm Holdings Q4 fiscal 2026 earnings call. Following the speaker's remarks, we will open. As a reminder, this conference 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 now like to turn the call over to Zane Keller, Head of Investor Relations. Thank you. You may begin.

Speaker #1: 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 now like to turn the call over to Zane Keller, Head of Investor Relations.

Speaker #1: Thank you. You may begin.

Speaker #2: 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.

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. Our 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 IR website.

Speaker #2: Our 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.

Speaker #2: 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.

Speaker #2: 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 IR website.

Speaker #2: Hosting today's call with me, hosting today's call with me are Max Levchin, Affirm's founder and Chief Executive Officer; Michael Linford, Affirm's president; and Rob O'Hare, Affirm's Chief Financial Officer.

Zane Keller: Hosting today's call with me are Max Levchin, Affirm's founder and Chief Executive Officer, Michael Linford, Affirm's President, and Rob O'Hare, Affirm's Chief Financial Officer. In line with our practice in prior quarters, we will begin with very brief opening remarks from Max before proceeding immediately into your questions. With that, I will turn it over to Max to get us started.

Speaker #2: In line with our practice and prior quarters, we will begin with very brief opening remarks from Max before proceeding immediately into your questions. With that, I will turn it over to Max to get us started.

Speaker #3: Thank you, Zane. As always, the performance is as good as it is, so I'll keep the impromptu remarks brief. As you may have noticed, fiscal fourth quarter was our most profitable quarter ever, even without the tax allowance release.

Max Levchin: Thank you, Zane. As always, the performance as good as it is, I'll keep the impromptu remarks brief. As you may have noticed, fiscal Q4 was our most profitable quarter ever, even without the tax allowance release. Company's thriving and the core business is firing on all business. I'm excited to announce that our veteran execs, Pat Suh and Michael Linford, are promoted to SVP/GM of Global Markets and President respectively, setting us up for an even tighter execution and allowing me to get even deeper into developing our next generation of products and services. With that, happy to address your questions. Back to you, Zane.

Speaker #3: Companies thriving in the core business is firing on old business. I'm excited to announce that our veteran execs, Patsa and Michael Linford, are promoted to SAP GM of Global Markets and President, respectively.

Speaker #3: Setting us up for an even tighter execution and allowing me to get even deeper into developing our next generation of products and services. With that, happy to address your questions. Back to you, Zane.

Speaker #2: Okay, thank you, Max. Now let's get to your questions. Operator, please begin the Q&A session.

Zane Keller: Okay. Thank you, Max. Now let's get to your questions. Operator, please begin the Q&A session.

Speaker #1: Thank you. We will now be conducting a question-and-answer session. If you would like to ask a question, please press star one. A confirmation will indicate your line is in the question queue.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star one. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from the line of Adam Frisch with Evercore ISI. Please proceed.

Speaker #1: You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker #1: One moment, please, while we pull for questions. Thank you. Our first question comes from the line of Adam Frisch with Evercore ISI. Please proceed.

Adam Frisch: Hey, guys, and congrats to you, Mike, on a well-deserved promotion. Max, at the Analyst Day, you said you're most excited about things you can't really talk about yet. If precedent holds on the initial guidance and how you ultimately will end the year, growth in fiscal 2027 should again be terrific. With investors focused on the sustainability of high growth rates, when should we expect to see some of these initiatives start to show up in future years? Do you believe that over the long term, Affirm needs to or should offer consumers multiple financial products and services in addition to what you do today? Thanks.

Speaker #3: You guys, and congrats to you, Mike, on a well-deserved promotion. Max, at the end of this day, you said you're most excited about things you can't really talk about yet.

Speaker #3: If Affirm holds on to the initial guidance and how you ultimately will end the year, growth in fiscal '27 should again be terrific. But with investors focused on the sustainability of high growth rates, when should we expect to see some of these initiatives start to show up in future years?

Speaker #3: And do you believe that, over the long term, Affirm needs to or should offer consumers multiple financial products and services in addition to what you do today?

Speaker #3: Thanks.

Speaker #2: Thank you.

Max Levchin: Thank you. It's a compound question. I'll go backwards. We already offer multiple products to consumers today. The answer to should we do that, we think it's yes, otherwise, we wouldn't have built all these other things. For the moment, the majority of our products are various expressions of offering credit, but not necessarily at the point of sale. It also comes obviously in the form of a card. We have an account. We have a version of our product that works for business purchases. So we're already spread into several other subcategories, including verticals that we address. Actually, there's a bunch of that in my notes as well. So we absolutely expect to continue expanding. In terms of when these things will show up, I think this is probably a question for our CFO and Michael in terms of how we set guidance.

Speaker #4: It's a compound question. I'll, I'll, I'll go backwards. We already offer multiple products to consumers today. So, the answer to should we do that, we think it's yes.

Speaker #4: Otherwise, we wouldn't have built all these other things. For the moment, the majority of our products are various expressions of offering credit, but not necessarily at the point of sale.

Speaker #4: It also comes, obviously, in the form of a card. We have an account, and we have a version of our product that works for business purchases.

Speaker #4: So, we're already spread into several other subcategories, including verticals that we address. Actually, there's a bunch of that in my notes as well.

Speaker #4: So, we absolutely expect to continue expanding. In terms of when these things will show up, I think this is probably a question for our CFO and Michael, in terms of how we set guidance.

Speaker #4: But a big part of the expectations from this promotion that Michael got, and my own focus, is that I plan to spend a lot more time working on things that will only show up in fiscal 2029 and beyond.

Max Levchin: But a big part of the expectations from this promotion that Michael got and my own focus is I plan to spend a lot more time working on things that will only show up in fiscal 2029 and so on. The numbers we are putting to the market today reflect our products that are working and growing and printing profits. Some of the crazier ideas from the future are in the future, and we try very hard not to overpromise and underdeliver.

Speaker #4: And so the numbers we're putting to the market today reflect our products that are working and growing, and printing profits. Some of the crazier ideas from the future are in the future.

Speaker #4: And we tried very hard not to overpromise and underdeliver.

Speaker #3: Okay, thanks. I think growth is in good hands with you taking that, Michael. Thanks, guys.

Adam Frisch: Okay, thanks. I think growth is in good hands with you taking that role.

Max Levchin: Awesome.

Adam Frisch: Thanks, guys.

Speaker #1: Thank you. Our next question comes from the line of Harry Bartlett with Rothschild. Please proceed.

Operator: Thank you. Our next question comes to the line of Harry Bartlett with Rothschild. Please proceed.

Speaker #5: Hi, thanks for taking the question. I just wanted to touch on something that you mentioned in your shareholder letter. I mean, you’re clearly doing very well, but you said that you’re only available at 8% of the top 250 e-commerce sites and 10% of e-commerce merchants.

Harry Bartlett: Hi, thanks for taking the question. I just wanted to touch on something that you mentioned in your shareholder letter. I mean, you are clearly doing very well, but you said that you are only available at 80 of the top 250 e-commerce sites and 10% of e-commerce merchants. You are very well integrated with a lot of the major PSPs now, and clearly very well known as a brand. I guess the question is, what is the impediment for getting these remaining merchants to sign up, and how do you bridge that gap to get there?

Speaker #5: you know, you're, you're very well integrated with, with a lot of the major PSPs now, and clearly very well known as a brand. So, so I guess the question is, you know, what's the impediments for, for getting these remaining merchants to sign up?

Speaker #5: And how do you kind of bridge that gap to get there?

Speaker #4: We don't think of it as an impediment. I think we have an exceptionally strong revenue team, and Wayne, who runs it, is an exceptional executive.

Max Levchin: We do not think of it as an impediment. I think we have an exceptionally strong revenue team, and Wayne, who runs it, is an exceptional executive and deserves every accolade. I expect his team to continue executing and signing each one of these merchants one by one, sometimes in bulk, but mostly one by one. I think the majority of the time for large merchants, these are long sales cycles that take a lot less convincing than ever before. People understand the value that we provide, and they are excited to see it added to their checkout. But many large enterprises that sell things online have complex and frequently outdated systems. A lot of times, adding a new major point-of-sale system requires them to do some major modifications. Sometimes it pushes them to do whatever work that they were postponing because they were not planning on adding another one.

Speaker #4: And deserves every accolade. And so, I expect his team to continue executing and signing each one of these merchants, one by one.

Speaker #4: Sometimes in bulk, but mostly one by one. I think the majority of the time, for large merchants, these are long sale cycles that take a lot less convincing than ever before.

Speaker #4: People understand the value that we provide, and they are excited to see it added to their checkout. But many large enterprises that sell things online have complex and, frequently, outdated systems.

Speaker #4: A lot of times, adding a new major point-of-sale system requires them to do some major modifications. Sometimes it pushes them to do whatever work they were postponing because they weren't planning on adding another one.

Speaker #4: So, these are not things that flip in one quarter, but the reason I mentioned the numbers you quoted is because there's just an enormous amount of greenfield.

Max Levchin: These are not things that flip in one quarter, but the reason I mentioned the numbers you quoted is because there is just an enormous amount of greenfield. If anything, this is a notion of our sales team has a lot of work to do for probably quite a number of quarters. No one should be taking a break, nor should they be thinking we are running out of the internet or anything.

Speaker #4: We, we think our you know, if anything, this is a sort of a notion of our, our sales team has a lot of work to do for probably quite a number of quarters, you know, that no one should be taking a break nor should they be thinking we're running out of the internet or anything.

Speaker #5: That's great.

Harry Bartlett: Absolutely.

Speaker #1: Thank you. Our next question comes from the line of Harshita Rawat with Bernstein. Please proceed.

Operator: Thank you. Our next question comes from the line of Harshita Rawat with Bernstein. Please proceed.

Speaker #6: Hi, good afternoon. I want to ask about in-store. As Affirm Card continues to scale and now you have the wallet partnerships, how can you scale in-store usage of Affirm, where the opportunity is arguably much bigger, as you also alluded to?

Harshita Rawat: Hi, good afternoon. I want to ask about in-store. As Affirm Card continues to scale and now you have the wallet partnerships, how can you scale in-store usage of Affirm where the opportunity is arguably much bigger, as you also alluded? I know there are unique friction points in terms of getting approvals. What happens when you get denied physically in store? I know 30% of your Affirm Card transactions are offline, but it is still very small as a percentage of your overall GMV, so we would love to hear your thoughts and product planning.

Speaker #6: I know there are unique friction points in terms of getting approvals. What happens when you can get denied, physically, kind of in-store? So, I know 30% of your Affirm Card transactions are offline, but it's still very small as a percentage of your overall GMV.

Speaker #6: So, we'd love to hear your thoughts on product planning.

Speaker #4: Couldn't agree more.

Max Levchin: Couldn't agree more.

Harshita Rawat: Thanks.

Speaker #6: Thanks.

Max Levchin: I 100% agree. One of the things that the innovation team that I have now more time to run is working on is improving the in-store process. Most things payments, in general, are very rarely about uncovering some low-hanging fruit that was just already on the ground and you need to pick it up. It is primarily about polishing off unhappy paths. Poor connectivity. How do you make sure your product works in a large store that is essentially a Faraday cage? You cannot get connected to the internet. How do you integrate with point-of-sale systems that do not know how to read QR codes, only know how to read barcodes? It is an endless long tail, or not endless. There is a meaningful long tail of conditions that make approval or tender delivery or even handling things like card size adjustments in-store just that much harder than online.

Speaker #4: I 100% agree. One of the things that the innovation team, which I now have more time to run, is working on is improving the in-store process.

Speaker #4: And most things, payments in general, are very rarely about uncovering some low-hanging fruit that was just already in the ground. You need to, you know, pick it up.

Speaker #4: It's primarily about polishing paths. Poor connectivity—you know, how do you make sure your product works in a large store that's essentially a Faraday cage?

Speaker #4: You can't get connected to the internet. How do you integrate with point-of-sale systems that don't know how to read QR codes and only know how to read barcodes?

Speaker #4: It's kind of an endless long tail—or not endless. There’s a meaningful long tail of conditions that make approval or tender delivery, or even handling things like card size adjustments in-store, just that much harder than online.

Speaker #4: Online, you hit back on your browser and correct whatever it is you need to correct. In-store, you have to go back to the end of the queue, to the cash register, which is annoying, and people would rather not do that.

Max Levchin: Online, you hit back on your browser, and you correct whatever it is you need to correct. In-store, you have to go back to the back of the queue to the cash register, which is annoying, and people would rather not do that. So the bar for error is much lower. You have to create a much better consumer experience. So we are excited to work on that. By no means that should imply that we are unexcited about e-commerce. We actually have a lot to do. Obviously, there is still 80% more e-commerce to go, but offline is a giant portion of the market and continues to be, and we have some really interesting ideas on how to make the experience not just uniquely better, but also uniquely Affirm.

Speaker #4: So the bar for error is much lower. Like, you have experience. So we're excited to work on that. By no means should that imply that we are unexcited about e-commerce.

Speaker #4: We actually have a lot to do. Obviously, there's still 80% more e-commerce to go, but offline is a giant portion of the market and continues to be.

Speaker #4: And we have some really interesting ideas on how to make the experience not just uniquely better, but also uniquely Affirm. So maybe, maybe the best answer to your question is—I'm not quite going to pronounce anything here yet—but we expect to launch a few ideas that are uniquely Affirm-specific, which, through the lens of sort of product development, you can ask people to do more work to use your product if you're delivering disproportionate value.

Max Levchin: So maybe the best answer to your question is not quite going to pronounce anything here yet, but we expect to launch a few ideas that are uniquely Affirm specific, which through the lens of product development, you can ask people to do more work to use your product if you are delivering disproportionate value. You can consider Affirm online relative to credit cards. Credit cards are really easy. You just type in a number, or you tap it offline, and off you go. Affirm asks you to do a little bit more work to get approval, to understand why you might get declined, but the value is there. You get this amazing 0% deal. You get no fees. You get no deferral, and so the work is a little bit more, but the value is tremendous.

Speaker #4: You can consider, sort of, Affirm online relative to credit cards. Credit cards are really easy—just type in a number or you tap it offline, and off you go.

Speaker #4: Affirm asks you to do a little bit more work to get approval, to understand why you might get declined. But the value is there.

Speaker #4: You get this amazing 0% deal. You get no fees. You get no deferral. And so, the work is a little bit more, but the value is tremendous.

Speaker #4: And so we're going to bring that same ethos of, maybe the work is a little bit more, but the value is so much better than what you do with your traditional payment instrument offline.

Max Levchin: We are going to bring that same ethos of maybe the work is a little bit more, but the value is so much better than what you do with your traditional payment instrument offline. We will show something off in the coming quarters.

Speaker #4: And, you know, we'll show something off in the coming quarters.

Speaker #1: Thank you. Thank you. Our next question comes from the line of Rob Wildhack with Autonomous Research. Please proceed.

Operator: Thank you. Our next question comes from the line of Rob Wildhack with Autonomous Research. Please proceed.

Speaker #7: Hi, everyone. I wanted to ask about the UK. It sounds like you're pleased with the progress to date, but could you just tell us more about the early receptivity from consumers and from merchants?

Rob Wildhack: Hi, everyone. I wanted to ask about the UK. It sounds like you are pleased with the progress to date. But could you just tell us more about the early receptivity from consumers and from merchants? I am also curious if there has been any competitive response or changes from the incumbents there that you have seen. Any details there would be great. Congrats to Michael and to Pat on the new roles.

Speaker #7: And then I'm also curious if there's been any competitive response or changes from the incumbents there that you've seen? Any details there would be great.

Speaker #7: And congrats to Michael, and to Pat on the new rules.

Speaker #4: Thank you. Pretty excited about the United Kingdom—seeing solid results. We just held our first executive dinner there a couple of nights ago, where we met with some of the larger existing merchants and got their first round of formal feedback.

Max Levchin: Thank you. Pretty excited about the United Kingdom. Seeing solid results. We just held our first executive dinner there a couple of nights ago, where we met with some of the larger existing merchants there and got their first round of formal feedback and all that, and by all accounts, it was a love fest. I think we are doing well in terms of creating new friends and early fans. The consumer uptake, I think we said it before, and it turned out to be true. There is a lot of love to be had when you do not try to make money by sneaking your business model into the fine print and hiding things with fees and such, and we do not do any of those things. And sure enough, consumers love it.

Speaker #4: And all that. And by all accounts, it was a love fest. So I think we're doing well in terms of creating new friends and early fans.

Speaker #4: The consumer uptake—and I think we said it before, and, you know, it turned out to be true—there's a lot of love to be had when you don't try to make money by sneaking your business model into the fine print.

Speaker #4: And hiding things with fees and such. And we, we don't do any of those things. And sure enough, consumers love it. But retailers actually have a fresh appreciation for that, because to date, there hasn't been a player in the market that would build the products the way we do.

Max Levchin: But retailers actually have a fresh appreciation for that because to date, there has not been a player in the market that would build the products the way we do. On the competitive response, and I do not want to be too loud here because I might wake someone up, but we are not seeing much to report on the matter, to be honest. I think for now, at least, we are doing great in terms of feeling like our product is a unique play in the market.

Speaker #4: On the competitive response—and I don't want to be too loud here because I might wake someone up—but we're not seeing much to report on the matter, to be honest.

Speaker #4: I think, for now at least, we're doing great in terms of feeling like our product is a unique play in the market.

Speaker #7: Okay. Thanks a lot.

Rob Wildhack: Okay. Thanks a lot.

Speaker #1: Thank you. Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed.

Operator: Thank you. Our next question comes from the line of Will Nance with Goldman Sachs. Please proceed.

Speaker #5: Hey, thanks for taking the question. wanted to ask just on the, the growth and interest bearing. In this quarter, obviously very strong. I know you're, you're calling out the, the 41% growth in PayNX, but it's also great to see kind of the largest product, you know, almost keeping pace, with that product.

Will Nance: Hey, thanks for taking the question. Wanted to ask just on the growth in interest bearing this quarter. Obviously very strong. I know you are calling out the 41% growth in Pay in X, but it is also great to see the largest product almost keeping pace with that product. Just curious how you are thinking about overall product mix. Then just more of a nuance there. Just wondering if the shift of the promotional events, if that created any mix dynamics that we should consider from Q4 to Q1. Thanks.

Speaker #5: So just curious how you're thinking about overall product mix and then just more of a, of a nuance there. Just wondering if, like, the shift to the promotional event, if that, you know, created any, like, mixed dynamics that we should consider from, the fourth to the first quarter.

Speaker #5: Thanks.

Speaker #6: Yeah, great question. I think it really comes down to mix within sort of the two largest centers of gravity within the product portfolio. So, on the one hand, we have point-of-sale. We did actually see an acceleration in 0% share within point-of-sale integrations, and I think some of that is due to the big nothing event.

Max Levchin: Yeah, great question. I think it really comes down to mix within the two largest centers of gravity within the product portfolio. So on the one hand, we have point of sale. We did actually see an acceleration in 0% share within point of sale integrations. I think some of that is due to The Big Nothing event, but it has also been a push of ours, in terms of what we are selling into merchants. Then really on the direct-to-consumer side, we actually see a much higher proportion of interest-bearing loans within that product set. So we are running north of 80% interest bearing on our direct-to-consumer products. I think just with the continued growth and scaling of things like Affirm Card, it is really that that is driving the mix shift back towards interest bearing a little bit.

Speaker #6: But it's also been a push of ours in terms of what we're selling into merchants. And then, really, on the direct-to-consumer side, we actually see a much higher proportion of interest-bearing loans within that product set.

Speaker #6: So we’re running sort of north of 80% interest bearing on our direct-to-consumer products. And I think, just with the continued growth and scaling of things like the Affirm Card, it’s really that that’s driving the sort of mix shift back towards interest bearing a little bit.

Speaker #5: Got it. Very helpful. Thanks for taking the question.

Will Nance: Got it. Very helpful. Thanks for taking the question.

Speaker #1: Thank you. Our next question comes from the line of Dan Dombry with Mizuho Securities. Please proceed.

Operator: Thank you. Our next question comes from the line of Dan Dolev with Mizuho Securities. Please proceed.

Speaker #4: Hey, guys. Exceptionally as you said, Max, ludicrous quarter. I like that one. I have a question about some I I have a question about, something you said at the analyst day.

Dan Dolev: Hey, guys. Exceptionally, as you said, Max, ludicrous quarter. I like that one. I have a question about something you said at the analyst day. You said it gets easier to grow as you gain scale, but some of your competitors are not seeing that. What are you doing right or maybe what are they doing wrong that makes you benefit from that virtue? And congrats again.

Speaker #4: You said it gets easier to grow as you gain scale, but some of your competitors are not seeing that. So, what are you doing right, or maybe what are they doing wrong, that makes you benefit from that virtue?

Speaker #4: And congrats again.

Speaker #6: Thank you. I can only speak, I guess, to what we're doing right. I think we know exactly who we are. We have a very, very specific set of views on why we do what we do, why we prioritize certain things, and why we won't do other things.

Max Levchin: Thank you. I can only speak, I guess, to what we're doing right. I think we know exactly who we are. We have a very specific set of views on why we do what we do, why we prioritize certain things, why we won't do other things, and not just what kind of products or what sort of structures we're willing to put in front of our customers and what we're not. We are a network. Every decision we make at the product level, at the sales level, at the capital markets level, we ask ourselves, does this benefit every part of our network? Does this grow the consumer base? Does it give them a reason to spend more with us? Does it give them a reason to spend more with our customers, the merchants?

Speaker #6: And not just what kind of products we're, what sort of structures we're willing to put in front of our customers—and what we're not.

Speaker #6: But we are a network. Every decision we make—at the product level, at the sales level, at the capital markets level—we ask ourselves: does this benefit every part of our network?

Speaker #6: Does this grow the consumer base? Does it give them a reason to spend more with us? Does it give them a reason to spend more with our customers—the merchants?

Speaker #6: By adding a merchant, are we exposing our consumers to the merchants we want them exposed to? And so on. And so, we are constantly asking ourselves, how can we create a virtuous cycle?

Max Levchin: By adding a merchant, are we exposing our consumers to the merchants we want them exposed to, and so on. We are constantly asking ourselves, how can we create a virtuous cycle? How can we aid the virtuous cycle that we've created? If you have a network, eventually you start seeing network effects. Network effects are very simply, it is expensive to leave because you're going to miss out on a large and growing body, and it's dumb not to join because you are missing out on a large and growing body of business. The larger we get, the more valuable the network becomes, the more activity there happens on the edges of the graph we're building, and the more people, the more merchants want to join the graph.

Speaker #6: How can we aid the virtuous cycle that we've created? If you have a network, eventually you start seeing network effects. And network effects are, very simply, it is expensive to leave because you're going to miss out on a large and growing body.

Speaker #6: And it's unwise not to join because you are missing out on a large and growing body of business. So the larger we get, the more valuable the network becomes, the more activity there is.

Speaker #6: On the edges of the graph we're building, and the more people, the more merchants want to join the graph. I think for most payment systems, if you sort of cast your eye across the last 50 years—and I've been building payment systems for almost that long.

Max Levchin: I think for most payment systems, if you cast your eye across the last 50 years of, I've been building payment systems for almost that long. Sadly, the ones that survive and thrive are the ones that are extremely focused on building a network, almost to the expense of anything else. By the way, if you are willing to stay focused and go long, you are rewarded with profitability, with pricing power, with sustainability of the business, sustainable growth. All of that comes in time if you're focused on building a network, and we have been from the very beginning. If you look through my letters, you'll find the word network, probably the most commonly repeated noun, and that's the secret to success so far, and we have no intention of changing that.

Speaker #6: Sadly, the ones that survive and thrive are the ones that are extremely focused on building a network, almost to the expense of anything else.

Speaker #6: And, by the way, if you are willing to stay focused and go long, you are rewarded with profitability, with pricing power, with sustainability of the business—sustainable growth. All of that comes in time if you're focused on building a network.

Speaker #6: And we have been from the very beginning. If you look through my letters, you'll find the word "network" is probably the most commonly repeated noun.

Speaker #6: And that's sort of the secret to our success so far, and we have no intention of changing that. I think a lot of the players in the space decide that the next shiny object is the thing that will create short-term value, and whatever happens next, happens next.

Max Levchin: I think a lot of the players in the space decide that the next shiny object is the thing that will create short-term value, and whatever happens next happens next. We try to measure things not in quarters, but in years, and hopefully decades. The strategy has worked for us so far. We will continue doing exactly that.

Speaker #6: We try to measure things not in quarters, but in years—and hopefully decades. So, the strategy has worked for us so far. We'll continue doing exactly that.

Speaker #4: Great. We agree. And congrats again.

Dan Dolev: Great. We agree, and congrats again.

Speaker #6: Thank you.

Max Levchin: Thank you.

Operator: Thank you. Our next question comes from the line of Jason Kupferberg with Wells Fargo. Please proceed.

Speaker #1: Thank you. Our next question comes from the line of Jason Coopersburg with Wells Fargo. Please proceed.

Speaker #7: Hey, guys. Thanks for taking the question. So, everyone's been asking you for a while—are there any signs of consumer stress in the business?

Jason Kupferberg: Hey, guys. Thanks for taking the question. Everyone's been asking you guys for a while, are there any signs of consumer stress in the business? Any concerning signals in your data on delinquencies? The answer's consistently been no. We see another strong quarter here. The consumer's really resilient. Is there a case to be made that you guys could actually loosen the credit box a little bit, or does that feel too risky in light of some of the macro uncertainty out there? Just a quick one for Rob. Any way you want us to think about modeling GAAP EPS for fiscal 2027? Thank you.

Speaker #7: Any concerning signals in your data on delinquencies? The answer's consistently been no. We see another strong quarter here. The consumer's really resilient. Is there a case to be made that you guys could actually loosen the credit box a little bit, or does that feel too risky in light of some of the macro uncertainty out there?

Speaker #7: And then just a quick one for Rob. Any way you want us to think about modeling GAAP EPS for fiscal '27? Thank you.

Speaker #8: How about you answer, and I'll think of something clever.

Max Levchin: How about you answer, and I'll think of something clever.

Speaker #6: Sure. I mean, I think we've given you a lot of the building blocks of GAAP EPS, Jason. We've given you GAAP operating income.

Rob O'Hare: Sure. I think we've given you a lot of the building blocks of GAAP EPS, Jason. We've given you GAAP operating income, and we've also given you an estimate for share count. I think the one piece you're missing is the tax rate, and I'll probably go back to some of the guidance that we gave at the investor forum in May. We think on a run rate basis, the GAAP tax rate lands in the mid to high 20% range. I would just caution, though, that there can be some volatility in the effective tax rate, just based on some of the GAAP versus tax differences and how things like stock-based compensation and some other forms of share remuneration are treated. So there's likely to be a bit of volatility, especially as we're continuing to scale profitability.

Speaker #6: We've also given you an estimate for share count. I think the one piece you're missing is the tax rate, and I'll probably go back to some of the guidance that we gave at the investor forum in May.

Speaker #6: You know, we, we think on sort of a, a run rate basis, the gap tax rate lands in sort of the mid to high 20% range.

Speaker #6: I would just caution, though, that there can be some volatility in the effective tax rate, just based on some of the GAAP versus tax differences and how things like stock-based compensation and some other forms of share remuneration are treated.

Speaker #6: So, there’s likely to be a bit of volatility, especially as we’re continuing to scale profitability. So I think that’s one of the reasons we stopped short of giving an exact guide for EPS.

Rob O'Hare: That's one of the reasons we stopped short of giving an exact guide for EPS, is just the volatility that we think may play out in the tax rate.

Speaker #6: It's just the volatility that we think may play out in the tax rate.

Speaker #4: Yeah. And, and on the credit side, sort of a couple of thoughts that are sort of disconnected. We're not so big that you can look at a firm and read the tea leaves of the overall macroeconomic state of the United States.

Max Levchin: Yeah. On the credit side, a couple of thoughts that are sort of disconnected. We are not so big that you can look at Affirm and read the tea leaves of the overall macroeconomic state of the United States. Our consumer is doing fine. You can see that in the numbers, and we are benefiting tremendously from the ability to say yes and no to every transaction. So we are literally choosing the loans we want to make in real time in very small increments, roughly 100 million times a quarter. So it is a highly differentiable curve, and we decide the shape and the area under. So in the sense of control of our credit outcomes, said it before, I will say it again a thousand times, we are in control of the credit reality.

Speaker #4: Our consumer is doing fine. You can see that in the numbers. And we are benefiting tremendously from the ability to say yes and no to every transaction.

Speaker #4: So we are literally choosing the loans we want to make in real time, in very small increments—roughly 100 million times a quarter.

Speaker #4: So, a highly differentiable curve. And we decide the shape and the area under it. So, in the sense of control of our credit outcomes—said it before, I'll say it again a thousand times.

Speaker #4: We are in control of the credit reality. You would see us slow down growth before you would see us have a real credit disturbance.

Max Levchin: You would see us slow down growth before you would see us have a real credit disturbance. Obviously these are imprecise sciences, so there are always ups and downs in the DQs. Generally speaking, we manage to a number in the sense that credit target is the input, not the output of the business. The output is the approval rate and things like that. With that, we definitely have conversations around what is the overall policy stance. Are we feeling good about the future? Are we feeling less good about the future? Should we tighten? Should we loosen? But it is never expressed in terms of some giant lever somewhere that Rob Finnegan grabs onto with both hands and opens up the floodgates of money or closes down. It does not work like that at all.

Speaker #4: And, obviously, these are imprecise sciences, so, you know, there are always ups and downs in the DQs. But, generally speaking, we manage to a number in the sense that the credit target is the input, not the output, of the business.

Speaker #4: The output is the approval rates and things like that. And so with that, we definitely have conversations around, you know, what's the overall policy stance?

Speaker #4: Are we feeling good about the future? Are we feeling less good about the future? Should we tighten? Should we loosen? But it's never expressed in terms of, you know, some giant lever somewhere that Rob Finnegan grabs onto with both hands and opens up the floodgates of money, or closes them down.

Speaker #4: It doesn't work like that at all. There's a constant conversation happening in the credit team, asking themselves: Are there opportunities for a strategically more permissive stance at a class of transactions, for a class of consumers, at a class of merchants?

Max Levchin: There is a constant conversation happening in the credit team, asking themselves, are there opportunities for strategically more permissive stands at a class of transactions for a class of consumers at a class of merchants? Those conversations happen all the time on a weekly basis, just like the credit team reports back to the management team on a weekly basis of exactly what the landscape looks like. At any given moment, you could hear them say, "You know what? Here is what is going on. An interesting standout is this." This could be anything like, "We are seeing an early signal in DQ0 or DQ1, so day after the payments are due, or 2 days after the payments are due. We are wondering what that is.

Speaker #4: And those conversations happen all the time on a weekly basis, just like the credit team reports back to the management team on a weekly basis about exactly what the landscape looks like.

Speaker #4: At any given moment, you could hear them say, “You know what? Here’s what’s going on. An interesting standout is this.” And this could be anything, like, “We’re seeing an early signal in DQ0 or DQ1—so, day zero after the payments are due or day one, two days after the payments are due. We’re wondering what that is.”

Speaker #4: We're gonna monitor it for the next six weeks and make a decision. And so we all of this all this flavor is to give you a sense that, like, it we just really do not think about credit as this binary switch that gets flipped on or off.

Max Levchin: We are going to monitor it for the next 6 weeks and make a decision." All this flavor is to give you a sense that we just really do not think about credit as this binary switch that gets flipped on or off. We never scramble to or away from it, in part because we have so much control, in part because we have an extremely serious point of view on what these numbers have to be for us to be a responsible and reliable counterparty to our capital markets partners. That is the most important relationship in the business on the supply side, and we have to maintain it.

Speaker #4: We never scramble to or away from it, in part because we have so much control, and in part because we have an extremely serious point of view on what these numbers have to be for us to be a responsible and reliable counterparty to our capital markets partners.

Speaker #4: And so that is the most important relationship in the business on the supply side, and we have to maintain it. And so I am sure somewhere right now—well, I hope they're not listening to me rant, but instead doing their job in credit—someone in the credit analytics team is putting together a scenario analysis showing how a merchant is getting slightly higher approvals and what that does for our GMV.

Max Levchin: I am sure somewhere right now, I hope they are not listening to me rant, but instead doing their job in credit, but someone in the credit analytics team is putting together a scenario analysis showing how a merchant is getting slightly higher approvals and what that does for our GMV. An alternative analysis showing how the merchant is getting a slightly lower approval and what that does for our GMV and consumer satisfaction, typically. The work is done constantly. By the end of this call, a decision to loosen and a decision to tighten will be made, and it will be executed in due notion by the end of the week.

Speaker #4: And, and an alternative analysis showing how the merchant is getting a slightly lower approval, and what that does for our GMV and consumer satisfaction.

Speaker #4: And so yes, the work is done constantly. By the end of this call, a decision to loosen and a decision to tighten will be made.

Speaker #4: It'll be executed in due course by the end of the week.

Speaker #7: Well said. Thanks, Max.

Jason Kupferberg: Well said. Thanks, Max.

Speaker #4: Thank you.

Max Levchin: Thank you.

Speaker #1: Thank you. Our next question comes from the line of James Fawcetti with Morgan Stanley. Please proceed.

Operator: Thank you. Our next question comes from the line of James Faucette with Morgan Stanley. Please proceed.

Speaker #9: Thank you very much. I want to touch on the increase in pay and X, and kind of the comments that were made in the shareholder letter about getting some increased participation from merchants there.

James Faucette: Thank you very much. I want to touch on the increase in Pay in X and the comments that were made in the shareholder letter about getting some increased participation from merchants there. Just wondering, how you think about being able to expand that program. Then at least more interestingly perhaps to me is that a gateway to improving or expanding up into 0% promotions, et cetera, for those kind of merchants? Is it basically a test/proof point for them? Thanks.

Speaker #9: Just wondering, like, how you think about being able to expand that program, and then, at least more interestingly perhaps to me, is that a gateway to improving or expanding up into 0% promotions, etc., for those kind of merchants?

Speaker #9: Is it basically a test or proof point for them? Thanks.

Speaker #4: That is a great question. I'll start this time, and Rob can speak to the exact Paynex growth, which is pretty good this quarter.

Max Levchin: That is a great question. I will start this time, and Rob can speak to the exact Pay in X growth, which was pretty good this quarter. The most important thing to understand is free use of money is valuable to all consumers. You can sort of ask, "What is Affirm for?" One version of the answer is it is for people trying to figure out how to fit a considered purchase, something that actually registers on their personal financial radar, into their monthly outflows. So it is affordability, it is access to capital when they need it, or access to credit when they need it. That is kind of a baseline answer. A more sophisticated answer is there is always alternatives in that space. The question then becomes, well, what is the cost of money? What is the cost of this purchase?

Speaker #4: So the kind of most important thing to understand is, free use of money is valuable to all consumers. So you can sort of ask, like, what is Affirm for? And one version of the answer is, it’s for people trying to figure out how to fit a considered purchase—something that actually registers on their personal financial radar—into their monthly outflows.

Speaker #4: So, it's affordability; it's access to capital when they need it, or access to credit when they need it. That's kind of a baseline answer.

Speaker #4: A more sophisticated answer is, there's always alternatives in that space. And so the question then becomes, well, what's the cost of money? What's the cost of access?

Speaker #4: And obviously, the cost is interest we charge, and the best possible deal is, well, what if there was no interest at all? What if someone else paid your interest?

Max Levchin: Obviously the cost is interest we charge, and the best possible deal is, well, what if there was no interest at all? What if someone else paid your interest? That is a really, really important function, in part because that makes the product appealing across all credit spectra. You could argue that there is a natural point where you say, "Well, you know what? I have access of cash. I just do not care.

Speaker #4: And that is a really, really important function, in part because that makes the product appealing across all credit spectrum. So you could argue that there’s a natural point where you say, well, you know what?

Speaker #4: I have access to cash. I just don't care. And if you're going to charge me interest, I'm going to pay cash and move on. Or I'm going to pay with my credit card and pay it off before the end of the month.

Max Levchin: If you are going to charge me interest, I am going to pay cash and move on." Or, "I am going to pay with my credit card and pay it off before the end of the month so there is no interest at all." The second you enter a space of very low interest, like demonstrably lower than your credit card APR or zero, which is everyone's favorite price, you end up in a place where even a super prime borrower would benefit from free use of money, and the longer term is the loan, the more obvious the benefit. Every one of these Pay in X-type products is a version of access to money at no cost to the consumer. We are always looking for ways of funding those transactions by the hands of our partners because they are the primary beneficiaries of these transactions.

Speaker #4: So, there, there's no interest at all. The second you enter a space of very low interest—like, demonstrably lower than your credit card APR or zero, which is everyone's favorite price—you end up in a place where even a super-prime borrower would benefit from free use of money.

Speaker #4: And the longer the term is for the loan, the more obvious the benefit. So every one of these pay-in-X type products is a version of access to money at no cost to the consumer.

Speaker #4: We're always looking for ways of funding those transactions by the hands of our partners, because they are the primary beneficiaries of these transactions. So it extends from merchants to manufacturers, to brands, sometimes to marketing partners, to platform partners.

Max Levchin: It extends from merchants to manufacturers to brands, sometimes to marketing partners, to platform partners. There are plenty of people who are involved in a transaction that have a degree of margin and have a differing level of excitement to see that transaction go through. The most excited ones are, of course, merchants because they are dealing with things like inventory management. They have discounts they would rather not make, but they do want to see inventory move. But then there are also people in manufacturing and the original equipment manufacturers in particular that have a predictable upgrade cycle that they are trying to stick to, and they will be very excited a year from launch to push their last year's innovation so that the new ones can go forth.

Speaker #4: So there—there's plenty of people who are involved in a transaction that have a degree of margin and have a differing level of excitement to see that transaction go through.

Speaker #4: The most excited ones are, of course, merchants, because they're dealing with things like inventory management. They have discounts they'd rather not make, but they do want to see inventory move.

Speaker #4: But then there are also people in manufacturing, and among the original equipment manufacturers in particular, who have a predictable upgrade cycle that they're trying to stick to.

Speaker #4: And they will be very excited a year from launch to push their last year's innovations so that the new ones can go forth.

Speaker #4: And so all of that adds up to ample opportunity to create more of these 'pay in X' and 'pay over time' transactions with zero.

Max Levchin: All of that adds up to ample opportunity to create more of these Pay in X and pay over time transactions with 0%. I particularly like the longer-term ones because that is where underwriting at 0% consumer interest is a really hard science. This is the kind of thing where if you screw it up a little bit, you will make a lot of unprofitable transactions. Part of our longevity in the space and our competitive strength has been our ability to precisely price these things, both on the credit side and the profitability side, the capital markets lens. It is very hard to do it right unless you are very good and very confident in both your underwriting and your control of your underwriting. That is why these transactions keep showing up. That is why we do things like The Big Nothing.

Speaker #4: And I particularly like the longer-term ones because that's where underwriting at 0% consumer interest is a really, really hard science. Like, this is the kind of thing where if you screw it up a little bit, you'll make a lot of unprofitable transactions.

Speaker #4: Part of our longevity in the space and our competitive strength has been our ability to precisely price these things, both on the credit side and the profitability side, through the capital markets lens.

Speaker #4: It's very, very hard to do right unless you're very good and very confident in both your underwriting and your control of your underwriting. And so that's kind of why these transactions keep showing up.

Speaker #4: That's why we do things like The Big Nothing. That's why we do a lot of these promotions in various forms of Paynex. That's why you see the growth of various Paynex transactions.

Max Levchin: That is why we do a lot of these promotions in various forms of Pay in X. That is why you see growth of various Pay in X transactions, and should expect to continue to see more of these. They are all building a giant book of this is proof that you, your favorite you, the manufacturer, the retailer, all the participants should participate in these because even though they tap into your margin a little bit, they drive the kind of buyer that has a lot of choices, and this is their favorite choice.

Speaker #4: And you should expect to continue to see more of these. They're all building a giant book of this is proof that you you know, your favorite is you, the manufacturer, the retailer, you know, all the participants should participate in these because even though they tap into your margin a little bit, they drive the kind of buyer that has a lot of choices.

Speaker #4: And this is their favorite choice.

Speaker #2: Yeah, and the only thing I would add to that, James, is just, I think we really pride ourselves on the breadth of our product offerings.

Rob O'Hare: Yeah. The only thing I would add to that, James, is just I think we really pride ourselves on the breadth of product offerings we can bring to a merchant that can be tailored to the basket of goods that they are selling. In most cases, the products that we are offering to that merchant's consumers will be dynamic as you go up the basket size spectrum. I think what you saw play out this quarter was we had a large merchant that has a relatively low average order value compared to the rest of our network, and they decided to make Pay in 4 an evergreen part of their financing program, and that showed up in a bit of an acceleration in growth for Pay in 4. But we are pretty agnostic ourselves around whether it is a Pay in 4 offering or a 3 month 0% offering.

Speaker #2: We can bring to a merchant that can be tailored to the basket of goods that they're selling. And, in most cases, the products that we're offering to that merchant's consumers will be dynamic as you go up the basket size spectrum.

Speaker #2: And so I think what you saw play out this quarter was we had a large merchant that has a relatively low average order value compared to the rest of our network.

Speaker #2: And they decided to make Pay in Four, you know, an evergreen part of their financing program. And that showed up in a bit of an acceleration in growth for Pay in Four.

Speaker #2: But we're, we're pretty agnostic ourselves around whether it's a pay in four offering, or a, a 3Z, a three-month 0% offering. We, we really wanna make sure we put the right offer in front of the consumer that's gonna do, the right amount of cash flow smoothing for that consumer.

Rob O'Hare: We really want to make sure we put the right offer in front of the consumer that is going to do the right amount of cash flow smoothing for that consumer. It really is going to be merchant-dependent and I think our ability to customize those financing programs specific to the merchant is a real differentiator for us in the market.

Speaker #2: And so, it really is going to be merchant dependent, and I think our ability to customize those financing programs specific to the merchant is a real differentiator for us in the market.

Speaker #1: Thank you. Our next question comes from the line of caller Allen with J.P. Morgan. Please proceed.

Operator: Thank you. Our next question comes from the line of Connor Allen with JP Morgan. Please proceed.

Operator: Thank you. Our next question comes from the line of Connor Allen with JPMorgan. Please proceed.

Speaker #5: Hi, thanks. I wanted to ask about the Services vertical. Looks like volume in that category accelerated quite a bit—almost doubled year over year.

Connor Allen: Hi. Thanks. I wanted to ask about the services vertical. It looks like volume in that category accelerated quite a bit, almost doubled year-over-year. Could you talk maybe just a little bit about services, what drove that acceleration, and then maybe how sustainable the premium growth is within that category? Thanks, guys.

Speaker #5: So could you talk maybe just a little bit about Services—what drove that acceleration, and then maybe how sustainable the premium growth is within that category?

Speaker #5: Thanks, guys.

Max Levchin: Part of it is we signed this really large services platform or two. I feel like I gave an exceedingly long answer last time, so I promise I will do a shorter one now. We signed a couple of very large services platforms. They are doing well and growing, and yet this will inevitably come up at some point in this conversation. We are still very early in all of those platforms. The product needs to be adapted to the specific motions of those products services, and we are pretty excited too. Our best integrations are always the ones where we get to co-build with the people we are integrating, and we are knee-deep in building a bunch of really cool new stuff specifically for the services platform.

Speaker #4: I mean, part of it is we signed this really large services platform, or two. And I feel like I gave an exceedingly long answer last time, so I promise I'll do a shorter one now.

Speaker #4: So, we signed a couple of very large services platforms. They're doing well and growing. And yet, this will inevitably come up at some point in this conversation.

Speaker #4: We're still very, very early in all of those platforms. The product needs to be adapted to the specific motions of those products—sorry, services.

Speaker #4: And we're pretty excited too. So, our best integrations are always the ones where we get to co-build with the people we are integrating with, and we're knee-deep in building a bunch of really cool new stuff, specifically for the services platform.

Max Levchin: So no promises how long the 2x speed is going to keep going, but I do not think we are even out of the first inning of that particular game.

Speaker #4: So no promises how long the 2x, the speed's gonna keep going, but I don't think we're even out of the first inning of that particular game.

Speaker #1: Thank you. Our next question comes from the line of Brian Kane with Citi. Please proceed.

Operator: Thank you. Our next question comes to the line of Bryan Keane with Citi. Please proceed.

Speaker #6: Hey, guys. Congrats on the promotions, of course. I want to ask about AffirmEdge. Max, I think you said that could be a source of upside in the future.

Bryan Keane: Hey, guys. Congrats on the promotions, of course. I wanted to ask on Affirm Edge. Max, I think you said that could be a source of upside in the future. Any traction to highlight during the quarter? It looks like we have a couple pilots now going to happen in H2. Maybe just how is that product resonating and the potential for it to be a needle mover in fiscal year 2028? Then secondly, just Rob, on revenue less transaction costs. I know it always gets a lot of attention. We were talking, I think 3.25% to 4%. The guidance obviously for fiscal year 2027 is a little bit above that at 4.16%. Can you just talk about mix and maybe the drivers to be above the midterm guide there? Thanks.

Speaker #6: Any traction to highlight during the quarter? It looks like we have a couple of pilots now going to happen in the second half of the year. Maybe just, how is that product resonating and the potential for it to be a needle mover in fiscal year '28?

Speaker #6: And then, secondly, just Rob, on revenue-less transaction costs. I know it always gets a lot of attention. We were talking, I think, three and a quarter to 4%.

Speaker #6: The guidance, obviously, for fiscal year '27 is a little bit above that at 4.16. Can you just talk about mix and maybe the drivers to be above the midterm guide there?

Speaker #6: Thanks.

Speaker #2: Sure. I-I-I'll take the second one first. just in terms of the revenue list transaction cost outlook, I mean, really just with the execution that we've seen, within the debt capital markets, we just we've, we've brought on a, a capital base that, that gives us a profile and a funding cost that, we think, you know, should carry on through fiscal 27.

Rob O'Hare: Sure. I will take the second one first. Just in terms of the revenue less transaction cost outlook, really just with the execution that we have seen within the debt capital markets, we brought on a capital base that gives us a profile and a funding cost that we think should carry on through fiscal 2027. The other big assumptions are things like the mix of how we fund the business, and we expect the mix to stay pretty consistent with what we saw in fiscal 2026. Loan product is the other sort of mixed component that can drive revenue less transaction costs, take rates. We may start to skew slightly higher to interest-bearing, but it would be a very slight mix shift there.

Speaker #2: And, you know, the other big assumptions are things like the mix of how we fund the business. We expect the mix to stay pretty consistent with what we saw in fiscal '26.

Speaker #2: The loan product is the other sort of mixed component that can drive revenue. List transaction costs, take rates— we may start to skew; there would be a very slight mix shift there.

Speaker #2: So, just given the setup that we have, the other piece, of course, would be consumer credit. And we're not seeing anything in the business today that gives us pause or worry.

Rob O'Hare: So just given the setup that we have, the other piece, of course, would be consumer credit, and we are not seeing anything in the business today that gives us pause or worry. I think with sort of those building blocks coming into the year, that is what informed the outlook that we gave, which really is consistent take rates with what we experienced in fiscal 2026.

Speaker #2: So, I think with, with sort of those building blocks coming into the year, that, that's what informed, the outlook that we gave, which really is consistent, take rates with, with what we experienced in fiscal 26.

Speaker #6: And, Edge, banks move slowly?

Max Levchin: Ben, Edge, banks move slowly. That is maybe not a very nice thing to say about our prospective partners, but they are deliberate. They have regulators. They need to make sure that what they launch not just looks good, and looks good to them, and looks good to us, it also has to look good to Federal Deposit Insurance Corporation and sometimes Office of the Comptroller of the Currency and so on. So there is a fair number of people that have to okay and bless these structures. That said, pretty excited. We are still building out parts of it, so a little bit of it is just, we have to build the rest of the technology. You are building a thing that you are hosting locally for a bank to log in and fine-tune their financing programs. It is a thing we did not do before. Now we have to.

Max Levchin: Bryan, Edge, banks move slowly. That is maybe not a very nice thing to say about our prospective partners, but they are deliberate. They have regulators. They need to make sure that what they launch not just looks good, and looks good to them, and looks good to us, it also has to look good to Federal Deposit Insurance Corporation and sometimes Office of the Comptroller of the Currency and so on. So there is a fair number of people that have to okay and bless these structures. That said, pretty excited. We are still building out parts of it, so a little bit of it is just, we have to build the rest of the technology. You are building a thing that you are hosting locally for a bank to log in and fine-tune their financing programs.

Speaker #4: That's maybe not a very nice thing to say about our prospective partners, but they're deliberate. They have regulators. They need to make sure that what they launch not only looks good to them and to us, but also meets all the necessary requirements.

Speaker #4: It also has to look good to the Federal Deposit Insurance Corporation and, sometimes, the Office of the Comptroller of the Currency, and so on. So there are a fair number of people that have to okay and bless these structures.

Speaker #4: That said, pretty excited. We're still building out parts of it, so a little bit of it is just like we have to build the rest of the technology.

Speaker #4: You're building a thing that you're hosting locally for a bank to log in and fine-tune their financing programs. It's a thing we didn't do before, and now we have to.

Max Levchin: It is a thing we did not do before. Now we have to.

Speaker #4: So, there's some work to be done in terms of the technical part of it, but the majority of the stuff is built. We're very excited about the reception we're getting.

Max Levchin: There is some work to be done in terms of the technical part of it, but majority of the stuff is built. We are very excited about the reception we are getting. I continue saying this sort of in various quarters, I think the second you see one, you should expect to see more, like a bunch. But the first one is always going to feel like, what if something goes wrong? How do I handle that? And we are very sensitive to that, and we know how to launch a credit product, but it is not the same thing as launching it for others. So we will frankly take as long as it takes for us, as long as we need to bring, to handhold these first launches to market to be able to report excellent results and hopefully get everybody else excited too.

Speaker #4: It continues saying this, sort of, in various quarters. I think the second you see one, you should expect to see more—like a bunch.

Speaker #4: But the first one is always going to feel like, what if something goes wrong? How do I handle that? And so we're very sensitive to that.

Speaker #4: And we know how to launch credit products, but it's not the same thing as launching it for others. And so we will, frankly, take as long as it takes for us, as long as we need to, handhold these first launches to market to be able to report excellent results and hopefully get everybody else excited too.

Speaker #6: Okay. Great. Thanks, guys.

Bryan Keane: Okay, great. Thanks, guys.

Speaker #1: Thank you. Our next question comes from the line of Matt O'Neill with Bank of America. Please proceed.

Operator: Thank you. Our next question comes from the line of Matt O'Neill with Bank of America. Please proceed.

Speaker #7: Yeah, thanks. Appreciate it. Max, I was curious—you laid out a pretty complete map of growth factors this quarter, and I didn't notice leasing or device upgrades on the list.

Matt O'Neill: Yeah, thanks. Appreciate it. Max, I was curious, you laid out a pretty complete map of growth vectors this quarter and did not notice leasing or device upgrades on the list. You presumably looked at it given how much of your volume is high-ticket electronics, you push hard into 0% APR. I was hoping maybe you could just walk us through how you think about the economics of a lease versus an installment loan for the same purchase, what an originator might gain from that, and why you conclude it is not a strategy for Affirm either now or ever. Thanks.

Speaker #7: You presumably looked at it, given how much your volume is, you know, high-ticket electronics. You push hard into 0% APR. I was hoping maybe you could just walk us through how you think about the economics of a lease versus an installment loan for the same purchase.

Speaker #7: What might an originator gain from that? And, you know, why do you conclude it's not a strategy for a firm, either now or ever?

Speaker #7: Thanks.

Max Levchin: I might host a breakout seminar on 45 minutes and deep dive in the economics and complexity of leasing. There are a couple of different things going on in that domain. The notion of a subscription to your device and an automatic upgrade to the latest and greatest on a predictable cadence is actually a really good idea. It has been around for a little while. It certainly pops up in conversations and attempted launches here and there over the last decade. So there is nothing to quibble on that front. On the other side of the equation, ask your favorite financial services, financial institutions analyst how they feel about lease-to-own and rent-to-own companies, and if it is an unedited context, you might hear some expletives. So between those two, there is a lot of complexity in leasing. It does not usually happen on day 1.

Speaker #6: We might host a breakout seminar—about 45 minutes—on deep dives into the economics and complexity of leasing. There are a couple of different things going on in that domain.

Speaker #6: So, the notion of a subscription to your device and an automatic upgrade to the latest and greatest, on an unpredictable cadence, is actually a really good idea.

Speaker #6: It's been around for a little while. It's certainly pops up in conversations and sort of attempted launches here and there. Over the last decade, so it I, I, I, I don't think there's, there's nothing too equivalent on with, on that front.

Speaker #6: On the other side of the equation, you know, ask your favorite financial services or financial institutions analyst how they feel about lease-to-own and rent-to-own companies.

Speaker #6: And, you know, if it's an unedited context, you might hear some expletives. And so, between those two, there's a lot of complexity in leasing.

Speaker #6: It doesn't usually happen on day one. It happens on day 365, or whatever it is—720-something—when you find out that the thing you've been building the last couple of years, you don't actually own any of it.

Max Levchin: It happens on day 365 or whatever it is, 720 something, when you find out that the thing you have been paying for the last couple of years, you do not actually own any of it. We definitely care very much about the high-end device sales and scheduled upgrades and creating structures that help our retail partners, our manufacturing partners push their merchandise that way. So I think that is a very important task, and we are certainly quite motivated to participate in that segment. We think there are better ways. We think we can offer something to the market that is a little bit less prone to the what the bleep happened here that happens a couple of years from launch of such things. We will have more to say on the matter in some reasonably predictable future.

Speaker #6: And we definitely care very much about high-end device sales and scheduled upgrades, and creating structures that help our retail partners and manufacturing partners push their merchandise that way.

Speaker #6: So I think that's a very, very important task, and we're certainly quite motivated to participate in that segment. We think there are better ways.

Speaker #6: We think we can offer something to the market that is a little bit less prone to the 'what the bleep happened here?' that happened a couple of years from launch of such things.

Speaker #6: And we'll, you know, we'll have more to say on the matter in some reasonably predictable future. For now, I think we're all going to learn with some of the ones that have launched recently and there's certainly information to be had.

Max Levchin: For now, I think we are all going to learn with some of the ones that have launched recently, certainly information to be had, but we tend to try to build things from first principles, that is what we are going to try to do here too.

Speaker #6: But we tend to try to build things from first principles, and that's what we're going to try to do here too.

Speaker #7: I appreciate the candor. Thanks, Max.

Matt O'Neill: I appreciate the candor. Thanks, Max Levchin.

Matt O'Neill: I appreciate the candor. Thanks, Max.

Speaker #1: Thank you. Our next question comes from the line of Andrew Bosch with BMO Capital Markets. Please proceed.

Operator: Thank you. Our next question comes from the line of Andrew Bauch with BMO Capital Markets. Please proceed.

Speaker #5: Hey, great quarter, guys. I wanted to ask about Affirm Money accounts. I feel like it hasn't been discussed in some time, so could you please provide an update there?

Andrew Bauch: Hey, great quarter, guys. I wanted to ask about Affirm Money accounts. I feel like it has not been discussed in some time, so could you please provide an update there? As we think about your list of priorities, are there any interplays to consider with Affirm Card as it pertains to Affirm Money accounts? Meaning, does Affirm Card serve as an on-ramp to Affirm Money accounts similarly to overall active accounts serve as an on-ramp to Affirm Card? What could that ultimately look like?

Speaker #5: And then, as we think about your, your list of priorities, are there any interplays to consider with a firm card? Is it as it pertains to a firm money accounts?

Speaker #5: Meaning, does Affirm Card serve as an on-ramp to Affirm Money accounts, similarly to how overall active accounts serve as an on-ramp to Affirm Card?

Speaker #5: And what does that—what could that ultimately look like?

Max Levchin: Well, for one, it's really important for us to have a first-party product that is the most beautiful version possible of a first-party debit card that speaks to a tightly integrated checking/savings account that works really well with the Affirm Card structure because that's literally what Edge is. So anytime we go tell a bank, "It's going to be amazing. Look at these stats," we better have something that's real. So it happens that we have one of our own. Don't talk too much about it, but it's a great product. I happen to think it's the best way to use Affirm Card. Don't want to reveal too many reveals here, but it's something that my zero to one team has full ownership of, and we're working quite hard on making it an exceptional product. It's already a great product.

Speaker #4: That's a great question. Well, for one, it's really important for us to have a first-party product that is the most beautiful version possible of a first-party debit card that speaks to a tightly integrated checking/savings account that works really well with the firm card structure, 'cause that's literally what Edge is.

Speaker #4: So, you know, anytime we go to a bank, it's going to be amazing to look at these stats. We better have something that's real. So, it happens that we have one of our own.

Speaker #4: Don't talk too much about it, but it's a great product. I happen to think it's the best way to use a firm card. I won't make too many reveals here, but it's something that my Zero-to-One team has full ownership of.

Speaker #4: And we're, we're working quite quite hard on making it an exceptional product. It's already a great product. If you if you haven't connected to your firm card to your firm money account, you should definitely try that.

Max Levchin: If you haven't connected your Affirm Card to your Affirm Money Account, you should definitely try that. But it has been iterated on and is looking better than ever, and it is the experience that Affirm Edge will offer to our bank partners on the issuing side. But there's even more to come. I'll bite my tongue on that one, but ask me again in a quarter.

Speaker #4: But it has been iterated on, and it's looking better than ever. And it is the experience that Affirm Edge will offer to our bank partners on the issuing side.

Speaker #4: But there's even more to come. I'll bite my tongue on that one. But ask me again in a quarter.

Speaker #6: Great. Thank you, Max.

Andrew Bauch: Great. Thank you, Max Levchin.

Andrew Bauch: Great. Thank you, Max.

Speaker #1: Thank you. Our next question comes from Moses Orenbook with TD Cowen. Please proceed.

Operator: Thank you. Our next question comes from Moshe Orenbuch with TD Cowen. Please proceed.

Speaker #8: Oh, great. Thanks very much. I wanted to, follow up on an earlier question, if, on the firm card. y-y-y given that, you know, you get much higher spending, I think you mentioned twice as much on the card versus, you know, a, a typical customer.

Moshe Orenbuch: Great. Thanks very much. I wanted to follow up on an earlier question on the Affirm Card. Given that you get much higher spending, I think you mentioned twice as much on the card versus a typical customer, but at the same time, in-store commerce is 3 or 4x, and the card is still growing at a rapid pace. Could you talk a little bit about how you think or what the drivers are for its contribution to GMV? Is it going to be more about the attach rate? Is it going to be more about the spending per card? Anything that you would share with us about things you are doing to enhance both of those metrics.

Speaker #8: But at the same time, in-store commerce is three or four X. and the card is still growing at a rapid pace. Could you talk a little bit about, you know, how you think, you know, or, or what the drivers are for, you know, for its contribution to GMV?

Speaker #8: Like, is it gonna be more about the, the attach rate? Is it gonna be more about the spending per card? And, you know, anything that you would, you know, share with us about things you're doing to, you know, to kinda enhance both of those metrics?

Speaker #6: Good question. I think the, the honest answer is both. And we care we care a lot about attach rates. I think we try not to be overly aggressive in pushing it because it is kind of the more sophisticated like, you have to work your way to understanding why you want one of these products.

Max Levchin: Good question. I think the honest answer is both, and we care a lot about attach rates. I think we try not to be overly aggressive in pushing it because it is the more sophisticated, you have to work your way to understanding why you want one of these products, so it is not a thing we hammer you with. But then again, we do see 2x the use, so we should obviously be hammering it perhaps harder. Attach rate is important. We are at 19% right now relative to actives. We will, I think, see it increase. That is a reasonably good guess. On the flip side, we love the idea of higher usage per consumer too, and we are working on that.

Speaker #6: So, it's not a thing we hammer you with. But then again, we do see 2x the use, so you know that we should obviously be hammering it.

Speaker #6: Perhaps harder. And so anyway, attach rate is important. We're at 19% right now relative to actives. We will, I think, see it increase.

Speaker #6: You know, but that, that, that's a reasonably good guess. on the flip side, we love the idea of higher usage per consumer too. And we're, we're working on that to, to, to accomplish that.

Max Levchin: To accomplish that, I think a key goal in managing a successful credit business is you have to remember that your job is to help someone spend money responsibly. It is not very difficult to convince someone to borrow money, especially if you are not particularly concerned with how they will pay you back, and it is a much tougher job to convince them that to spend money with you is a better idea than through another product. So there is some degree of transference that we need to engineer. It has been pretty successful at it, obviously, given the 2x number, and we are finding more ways to do so. One way of thinking about it, or at least the way I speak to the team about it, is we need to make sure that the Affirm Card is not just the best card in the world, it is also the best way to use Affirm.

Speaker #6: I think a key goal in managing a successful credit business is that you have to remember your job is to help someone spend money responsibly.

Speaker #6: It's not very difficult to convince someone to borrow money, especially if you're not particularly concerned with how they'll pay you back. It's a much tougher job to convince them that spending money with you is a better idea than spending it on another product.

Speaker #6: So, there's some degree of transference that we need to engineer. It's been pretty successful at it, obviously, given the 2x number. And we're finding more ways to do so.

Speaker #6: One way of thinking about it, or at least the way I speak to the team about it, is we need to make sure that the Affirm card isn't just the best card in the world.

Max Levchin: One way of thinking about it, or at least the way I speak to the team about it, is we need to make sure that the Affirm Card is not just the best card in the world, it is also the best way to use Affirm.

Speaker #6: It's also the best way to use Affirm. So as you serve Castromine across various Affirm offerings, you should always come back to, you know, if I use the card, I will get even better blank.

Max Levchin: As you cast your mind across various Affirm offerings, you should always come back to, if I use the card, I will get even better blank. So you should expect us to launch features and products that are card-specific that make it more compelling, which in turn will help attach rates, because we are obviously not going to keep it a secret. So telling people, if you use the card, you will get X and Y and Z. If you use just Affirm, it may be slightly less amazing. We are definitely not going to nerf the Affirm at the point-of-sale experience, but we will keep on finding interesting and exciting ways to reward card usage. Then, there was another leg to this question. I talked for too long, forgot.

Speaker #6: So, you should expect us to launch features and products that are card-specific, that make it more compelling, which in turn will help attach rates.

Speaker #6: 'Cause we're obviously not gonna keep it a secret. So telling people, if you use the card, you'll get X and Y and Z.

Speaker #6: If you use just a firm, you maybe, maybe slightly less, amazing. And we're definitely not, not going to nerf the affirm at the point of sale experience, but we'll, we'll keep on finding interesting and exciting ways to reward card usage.

Speaker #6: And then there was another leg to this question. I've talked for too long. I forgot. I think that that's probably—those are definitely the important two dimensions.

Max Levchin: I think those are definitely the important two dimensions to be able to. The Affirm Card is still a very profitable product for us. It is not a trade-down in terms of profitability. We are not going to make it different in terms of financing programs. You will still get all the financing programs you get at the point of sale. We never want to be less for our merchant partners, but there are ways of making the card even more compelling, and we will work on that.

Speaker #6: So, to avoid any doubt, the card is still a very profitable product for us. It's not a trade-down in terms of profitability. We're not going to make it different in terms of financing programs.

Speaker #6: You'll still get all the financing programs you get at the point of sale. We never want to be less for our merchant partners. But there are ways of making the card even more compelling.

Speaker #6: We'll work on that.

Speaker #8: Right. Thanks.

Moshe Orenbuch: All right. Thank you.

Speaker #1: Thank you. Our next question comes from the line of Darren Peller with Wolfe Research. Please proceed.

Operator: Thank you. Our next question comes from the line of Darrin Peller with Wolfe Research. Please proceed.

Speaker #7: Hey, guys. Thanks. Can you just give us a quick update? I mean, obviously, you're outperforming the majority of players in the market. In fact, I think pretty much all of them.

Max Levchin: Hey, guys. Thanks. Can you just give us a quick update? Obviously, you are outperforming the majority of players in the market. In fact, I think pretty much all of them. When you think about the competitive landscape, we have seen, obviously, a number of your peers doubling down on BNPL and some rolling out Debit Flex Cards. Your Debit Flex Card, is there a differentiation you see there? More broadly, anything in the market in general you are seeing changing as these competitors start to roll out more and more products also? I cannot say we spend a ton of time obsessing over our competitors. I think we are fairly fixated on ourselves, selfish as that sounds.

Darrin Peller: Hey, guys. Thanks. Can you just give us a quick update? Obviously, you are outperforming the majority of players in the market. In fact, I think pretty much all of them. When you think about the competitive landscape, we have seen, obviously, a number of your peers doubling down on BNPL and some rolling out Debit Flex Cards. Your Debit Flex Card, is there a differentiation you see there? More broadly, anything in the market in general you are seeing changing as these competitors start to roll out more and more products also?

Speaker #7: But when you think about the competitive landscape, how do you— I mean, we've seen, obviously, a number of your peers doubling down on BNPL.

Speaker #7: And some are rolling out debit flex cards. So, you know, your debit flex card—is there a differentiation you see there? And just more broadly, is there anything in the market in general you're seeing changing as these competitors start to roll out more and more products also?

Speaker #6: I can't say we spend a ton of time obsessing over our competitors. I think we are fairly fixated on ourselves, selfish as that sounds.

Max Levchin: I cannot say we spend a ton of time obsessing over our competitors. I think we are fairly fixated on ourselves, selfish as that sounds.

Darrin Peller: Right.

Speaker #6: As selfish as it sounds, I think the product that we have is really compelling. It is different. I, I still am not aware of any product out there that offers exactly what we do.

Max Levchin: Or selfish as it sounds, I think the product that we have is really compelling. It is different. I still am not aware of any product out there that offer exactly what we do. I think the Visa Flexible Credential that we put together with them is a unique construct and has now been adopted by a couple of players, which is great. I am excited to see more innovation come through the networks and that is always a good thing. But the way we built our virtual card is quite unique. It connects to our accounts in a very specific way, and again, I am not aware of anyone else who is quite replicated it perfectly.

Speaker #6: I think the Visa Flexible Credential that we put together with them is a unique construct, and it has now been adopted by a couple of players, which is great.

Speaker #6: Like, I'm, I'm excited to see more innovation come through the networks and, you know, that, that, that's always a good thing. But the way we built our VFC card is quite unique.

Speaker #6: It connects to our accounts in a very specific way. And we're, again, I'm not aware of anyone else who's quite replicated it perfectly.

Speaker #6: The other thing, like Rob mentioned—and I'll repeat it—one of the unique strengths of ours is we have a large collection of financing programs that we bring to bear for our merchants, but also for our consumers, as they decide what fits their bill, their monthly exposure.

Max Levchin: The other things, like Rob mentioned, and I will repeat it, one of the unique strengths of ours is we have a large collection of financing programs that we bring to bear for our merchants, but also for our consumers as they decide what fits their bill, their monthly exposure. I think our card is still highly unique in just how wide that collection of offerings is.

Speaker #6: And I think our card is still highly unique in just how wide that collection of offerings is. Literally, every quarter, it has more and more of these truly unique 0% programs added to it.

Darrin Peller: Right.

Max Levchin: Literally on every quarter, it has more and more of these truly unique 0% programs added to it, like the rewards in the Affirm Card. People often ask us, "Where is the rewards program? Why is there not a 1% cashback or 2% cashback?" The honest answer is you are getting an extraordinarily more value in every transaction where the merchant is funding your zeros. That is effectively an 8%, 9%, 10%, 15% cashback. We would not ever express it that way because that is not how it is understood, but it is the same price except you are paying no interest on it at all for sometimes up to three years.

Speaker #6: Like, the rewards in the Affirm card—you know, people often ask us, "Where's the rewards program? Why is there not a 1% cashback or 2% cashback?" And the honest answer is, you're getting extraordinarily more value in every transaction where the merchant is funding your zeros.

Speaker #6: That's effectively an 8%, 9%, 10%, 15% cashback. And so, like, we wouldn't ever express it that way, because that's, you know, that's not how it's understood.

Speaker #6: But it is the same price, except you're paying no interest on it at all, for sometimes up to three years. And that has definitely not been replicated by anyone, and I don't expect it to be easily replicable by anyone at all.

Darrin Peller: Right.

Darrin Peller: That has not been replicated by anyone, and I do not expect it to be easily replicable by anyone at all.

Speaker #7: Yeah. Programs are compelling. Okay, that's great. Thanks, guys.

Darrin Peller: Yeah. Programs are compelling. Okay. That's great. Thanks, guys.

Speaker #1: Thank you. Our next question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed.

Operator: Thank you. Our next question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed.

Speaker #5: Thanks. Good evening, and congratulations on the quarter and, obviously, the promotions. I wanted to just touch quickly on the gain on sale revenues, which, once again, was really the strongest line item for growth.

Dan Perlin: Thanks. Good evening, and congratulations on the quarter and obviously the promotions. I wanted to just touch on quickly the gain on sale revenues, which once again, was really the strongest line item for growth. I know you have pretty balanced growth, but this one continues to stand out, but it also looks like it might be normalizing a bit. I am just trying to think about the revenue mix expected around your 2027 guide, and that's really just predicated off your roadmap, the product roadmap, and maybe some international expansion, which it sounds like isn't going to be overly meaningful yet. But any kind of, I guess, mix shifts that we need to be mindful of would be helpful. Thank you.

Speaker #5: I know you have a pretty balanced growth, but this one continues to stand out. But it also looks like it might be normalizing a bit.

Speaker #5: And so I'm just trying to think about the revenue mix expected around, you know, '27 guide, and that's really just predicated off your roadmap, your product roadmap, and maybe some international expansion, which it sounds like isn't going to be overly meaningful yet.

Speaker #5: But any kind of, I guess, mix shifts that we need to be mindful of would be helpful. Thank you.

Speaker #6: I, I, I think the one thing that, that I would call out and, and this, this has been true for several years, but it, it should play out similarly in fiscal 27 as well, is just that we will have quarters where and, and Q4 is an example of this.

Rob O'Hare: I think the one thing that I would call out, and this has been true for several years, but it should play out similarly in fiscal 2027 as well, is just that we will have quarters where, and Q4 is an example of this. We will have quarters where when we do a non-consolidated ABS deal, like we did in the fourth quarter, you will see a bit more gain on sale revenue in those quarters around. So, we stopped sort of sharing an exact schedule of non-consolidated ABS deals for fiscal 2027, but, I think we did two in fiscal 2026 and we would expect to have a pretty similar funding plan from that perspective going into fiscal 2027.

Rob O'Hare: I think the one thing that I would call out, and this has been true for several years, but it should play out similarly in fiscal 2027 as well, is just that we will have quarters where, and Q4 is an example of this. We will have quarters where when we do a non-consolidated ABS deal, like we did in the Q4, you will see a bit more gain on sale revenue in those quarters around. So, we stopped sort of sharing an exact schedule of non-consolidated ABS deals for fiscal 2027, but, I think we did two in fiscal 2026 and we would expect to have a pretty similar funding plan from that perspective going into fiscal 2027.

Speaker #6: We'll have quarters where when we do a, a non-consolidated ABS deal, like you did in the fourth quarter, we'll see a bit more gain on sale revenue in those quarters around the time of the deal.

Speaker #6: So, we stopped sort of sharing an exact schedule of non-consolidated ABS deals for fiscal '27, but I think we did two in fiscal '26.

Speaker #6: And you know, we would expect to have a pretty similar funding plan from that perspective going into fiscal '27.

Speaker #5: Thank you.

Dan Perlin: Thank you.

Speaker #1: Thank you. Our next question comes from the line of John Hecht with Jefferies. Please proceed.

Operator: Thank you. Our next question comes from the line of John Hecht with Jefferies. Please proceed.

Speaker #8: Good afternoon, guys. Congrats on the promotions and the Max. I'm looking forward to the 2029 product launch. The question I have is—

John Hecht: Afternoon, guys. Congrats on the promotions, and Max, I am looking forward to the 2029 product launch. The question I have is

Max Levchin: Are you mocking the fact that it takes me three years to do anything good? Which is okay, it is true.

Speaker #7: Are you blocking the fact that it takes me three years to do anything good? Which is okay, it's true.

John Hecht: No, I think, Max, you implied that you are now focused on the way out in the future opportunities.

Speaker #8: No, no. I think I think I thi I think Max, you, you implied that you, you're now focused on the, way out in the future opportunities.

Speaker #8: So, we will look at.

Max Levchin: That is mostly to prevent you guys from putting it into a spreadsheet. Sorry, I don't.

Speaker #7: That's, that's mostly to prevent you guys from putting it into a spreadsheet. Sorry. I don't—

Speaker #8: Anyway, the question I have is, it's just sort of the maturation or seasoning of both your customers and your merchants. You know, at the customer level, are you seeing things like a more rapid path to repeat usage?

John Hecht: Anyway, the question I have is, it is just sort of the maturation or seasoning of both your customers and your merchants. At the customer level, are you seeing things like a more rapid path to repeat usage? Or at the merchant level, are you seeing more rapid pace to a certain level of penetration? Or are there tools that you guys can use to get there?

Speaker #8: At the merchant level, are you seeing a more rapid pace to a certain level of penetration? And, you know, are there tools that you guys can use to get there?

Speaker #7: we're, we're actually seeing really good results on both. And so a lot of it, it's sort of embarrassing. Like, I'd love to take this great credit for, like, you know, we, we, we discovered electricity and everything is, you know, faster now.

Max Levchin: We are actually seeing really good results on both. A lot of it is sort of embarrassing. I would love to take this great credit for we discovered electricity and everything is faster now. We launched Crate & Barrel a few days ago, and then I saw an email in my inbox telling me, "Hey, hooray, you are a Crate & Barrel customer, because good news is you are an Affirm customer, and Affirm now works with Crate." I think in the past, five years ago, I am not sure I would have gotten that email two years ago. I would have gotten that email a month after the launch, and a year ago, I would have maybe gotten it the same week. Now, just all those things are much tighter coordinated. There are machines, not people, who are responsible for running through a checklist, and it happens.

Speaker #7: Like, we launched Crate and Barrel a few days ago. And then I saw an email in my inbox telling me, "Hey, hooray, you know, Crate and Barrel customer, 'cause good news is you're an Affirm customer, and Affirm now works with Crate and Barrel." Like, I think in the past, like, five years ago, I'm not sure I would've gotten that email.

Speaker #7: Two years ago, I would've gotten that email a month after the launch. And a year ago, I would've maybe gotten it the same week.

Speaker #7: And now, just like all those things are much more tightly coordinated. There are machines, not people, who are responsible for running through a checklist to ensure it happens.

Speaker #7: So, the time from launch to meaningful impact, to the first report to the merchant saying, "Hooray, we're doing this for you. Let's get excited."

Max Levchin: So the time from launch to meaningful impact to the first report to the merchant saying, "Hooray, we're doing this for you. Let's get excited. Let's do more together." It just all is a lot tighter. We are doing all those things, we are doing them better. So on the merchant side, we are just constantly improving the post-sale support, if you will. On the consumer side, best number I can point you to is transactions per user per year just steadily rises. If anything, I rage at our product team for not sending me enough email or enough notifications, or in any form of telling me, "Hey, did you know that you haven't used Affirm in the last couple of weeks?" I would welcome it.

Speaker #7: Let's do more together," it just all is a lot tighter. And so we're doing all those things. We're doing them better. So on the on the merchant side, we're just constantly improving the post-sales support, if you will.

Speaker #7: And then on the consumer side, the best number I can point you to is: transactions per user per year just steadily rises. And we—I mean, if anything, I rage at our product team for not sending me enough email or enough notifications or, in any form, telling me, "Hey, did you know that you haven't used Affirm in the last couple of weeks?" I would welcome it.

Speaker #7: I'm not sure everybody else would. But we don't really do a whole lot of, "Hey, hey, please come back." Just sharing a number of more surfaces where our logo is visible acts as a great reminder for consumers to say, "Oh yeah, that was a great experience."

Max Levchin: I am not sure everybody else would, but we do not really do a whole lot of, "Hey, please come back." Just the sheer number of more surfaces where our logo is visible acts as a great reminder for consumers to say, "Oh, yeah. That was a great experience. I will do it again." Cards obviously help, et cetera, but all in, the growth of transactions per user is actually a fairly natural phenomenon. We continue to just make sure that merchants. We sign a lot of merchants. We bring them live. We help them promote us. We co-market things together. We now have a very large user base that we can tell excitedly about brands that we love, that we are excited to come into the fold. That has a predictable effect where people say, "Oh, yeah.

Speaker #7: I'll do it again. And cards obviously help, etc. But all in, the growth of transactions per user is actually a fairly natural phenomenon. And so we continue to just make sure that merchants—you know, we sign a lot of merchants.

Speaker #7: We bring them live. We help them promote us. We co-market things together. We now have a very large user base that we can tell excitedly about brands that we love, that we're, you know, excited to come into the fold.

Speaker #7: And that has a predictable effect, where people say, "Oh yeah, I'd love to use Affirm at Crate & Barrel." So I think both those things are happening.

Max Levchin: I would love to use Affirm at Crate & Barrel." So I think both those things are happening fairly organically. I am sure we can do more, by the way. So I suspect we will only accelerate from here.

Speaker #7: Fairly, fairly organically, you know, and I'm sure we can do more, by the way. So I suspect we'll only accelerate from here.

Speaker #8: Great. Thank you very much.

John Hecht: Great. Thank you very much.

Speaker #1: Thank you. Our next question comes from the line of Timothy Chiodo with UBS. Please proceed.

Operator: Thank you. Our next question comes from the line of Timothy Chiodo with UBS. Please proceed.

Speaker #7: Hey, thank you. I want to talk a little bit about what we were discussing regarding credit loss. It's kind of a given number that you set.

Timothy Chiodo: Thank you. I want to talk a little bit about approval rates. I know earlier on the call, we were talking about how for credit loss, it is a given number that you set. You can dial it up, you can dial it down. It is in your control. The approval rate is sort of related to that at a given level of revenue or unit economics for that loan on the top line. The question that we get often from investors is around your approval rates relative to the other BNPL offerings that are out there. Clearly, they must be much stronger. When the enterprise sales team goes in to meet with a new prospective merchant, what are they pitching in terms of how much better those approval rates are, and how much more GMV they could deliver to that merchant? Thanks.

Speaker #7: You can dial it up. You can dial it down. It's in your control. And the approval rate is sort of related to that at a given level of revenue or unit economics for that loan on the top line.

Speaker #7: The question that we get often from investors is around your approval rates relative to the other BNPL offerings that are out there. Clearly, they must be much stronger.

Speaker #7: But when the enterprise sales team goes in to meet with a new prospective merchant, what are they pitching in terms of how much better those approval rates are and how much more GMV they could deliver to that merchant?

Speaker #7: Thanks.

Speaker #8: I'm allowed to spread a slight amount of FUD. I will—I will do so. We're definitely all compared on the approval rates, and merchants love to ask for guaranteed approval rates.

Max Levchin: If I am allowed to spread a slight amount of FUD, I will do so. We are definitely all compared on the approval rates, and merchants love to ask for guaranteed approval rates. As a rule, we try very hard not to even talk about those things because that is always a counterweight to our ability to modify our credit policy on the fly as we must. The typical competitive bake-off often enough includes us launching a checkout experience as we would anywhere else, and our esteemed competitors launching one where they remove underwriting and fraud prevention, and demonstrating extraordinary approval rates, only to then have to pull back very hard because you can only make so many bad loans for a while. We tend to be very focused on our numbers and our losses.

Speaker #8: And as a rule, we try very hard not to even talk about those things because that's always a counterweight to our ability to modify our credit policy on the fly, as we must.

Speaker #8: The typical competitive bake-off often enough includes us launching a checkout experience as we would anywhere else, and our esteemed competitors launching one where they remove underwriting and fraud prevention, and demonstrate extraordinary approval rates.

Speaker #8: Only to then have to pull back very hard, because you can only make so many bad loans for a while. And we tend to be very focused on our numbers and our losses.

Speaker #8: And again, there's—I've said it a million times, so I'm not gonna dwell too much on it. But it's not enough to have great unit economics.

Max Levchin: Again, I have said it a million times, so I am not going to dwell too much on it, but it is not enough to have great unit economics. We can obviously approve much deeper and just charge more interest, and the profitability would be more or less the same. But anyone who is observing our credit results, independent of profitability, would say, "Wait a second. These guys are now going much deeper. Maybe this is not going to be as durable in a macroeconomic change reality." So we tend to be very careful about not just the net result, but also the gross losses of the loan content itself. So we pretty rarely ask ourselves, how can we compete with approval rates? We, all the time, literally every single quarter, ask ourselves, how can we refine our models? Which, if you want to imagine a credit model, it is a sorting function.

Speaker #8: Like, we can obviously approve much deeper and just charge more interest, and the profitability would be more or less the same. But anyone who's observing our credit results, independent of the profitability, would say, "Wait a second."

Speaker #8: Like, these guys are now going much deeper with, maybe, 'this isn't going to be as durable in a macroeconomic change reality.' And so we tend to be very, very careful about not just the net result, but also the gross losses of, of the loan content itself.

Speaker #8: And so, we pretty rarely ask ourselves, how can we compete with approval rates? We all the time—like literally every single quarter—ask ourselves, how can we refine our models? If you want to imagine a credit model, it's a sorting function.

Max Levchin: We, all the time, literally every single quarter, ask ourselves, how can we refine our models? Which, if you want to imagine a credit model, it is a sorting function.

Speaker #8: It's a very, very sophisticated sorting function, but it looks at a large number of applicants in any given unit of time and sorts them from least risky to most risky.

Max Levchin: It's a very sophisticated sorting function, but it looks at a large number of applicants on any given unit time and sorts them into least risky to most risky. The job of a credit policy is to say, after this level of most risky, I don't want to approve anymore because that's the only risk I'm going to be able to stomach today. So long as our sorting is as precise as the future reality, or as close to the future reality as we can possibly get it, that's what we must do. There's not really a shortcut where we say, what if we just approve deeper because the competitors might do so? If anything, we kind of want them to approve deeper than us because they are not as good as we are at sorting risk, full stop.

Speaker #8: And the job of a credit policy is to say, after this level of most risky, I don't want to approve anymore because that's the only risk I'm going to be able to stomach today.

Speaker #8: And so long as our sorting is as precise as the future reality—or as close to the future reality as we can possibly get it—then that's what we must do.

Speaker #8: There's not really a shortcut where we say, "What if we just approve deeper because the competitors might do so?" If anything, we kind of want them to approve deeper than us, because they are not as good as we are at sorting risk. Full stop.

Speaker #8: And so long as we are given enough time to compare and contrast, very quickly, you start realizing that what looked like a great approval rate on day one looks like a rug has been pulled and the approval rates are down.

Max Levchin: So long as we are given enough time to compare and contrast, very quickly, you start realizing that what looked like a great approval rate on day one looks like a rug has been pulled, the approval rates are down, and the losses, of course, accumulate from the prior time periods. Michael Linford is putting his head down because he's heard enough of this. I'll stop there.

Speaker #8: And the losses are, of course, accumulated from the prior time periods. Michael is putting his head down because he's heard enough of this.

Speaker #8: I'll stop there.

Speaker #7: Thank you, Max. That was a really helpful answer.

Timothy Chiodo: Thank you, Max. That was a really helpful answer.

Speaker #8: So, how am I feeling during both today?

Max Levchin: Somehow I'm feeling very opposed today.

Speaker #1: Thank you. That concludes today's question-and-answer session. I'd like to pass it back over to management for closing remarks.

Operator: Thank you. That concludes today's question and answer session. I'd like to pass it back over to management for closing remarks.

Speaker #7: Hey, great questions. Thank you all for joining the call today. I think we'll be seeing many of you on the conference circuit soon, so see you there.

Max Levchin: Hey, great questions. Thank you all for joining the call today. I think we'll be seeing many of you on the conference circuit soon. See you there. Have a good day. Thanks again.

Zane Keller: Hey, great questions. Thank you all for joining the call today. I think we'll be seeing many of you on the conference circuit soon. See you there. Have a good day. Thanks again.

Speaker #7: Have a good day. Thanks again.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.