Affirm (AFRM) 8 Nov 222023 Q1 Earnings call transcript

Good afternoon. Welcome to the Affirm Holdings First Quarter 2023 Earnings Conference Call.

Following the speakers remarks, we will open the lines for your questions.

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, Director of Investor Relations. you. Thank

begin. may You

operator. you, Thank

set we we Relations begin, today's statements everyone that materially forward-looking available including to subject the any filings SEC, from which today. Actual I'd may contain results like are those uncertainties, call and forward-looking our numerous remind in forward-looking our to with make Investor listening on risks Before that forth website. statements. are differ statements These may

not does any of as today, and intend statements update obligation Forward-looking only to company or speak as required the by assume them, except law.

include In addition, a today's financial measures call a and measures. may should as be not supplement financial to non-GAAP considered These GAAP for substitute measures.

found financial historical slide measures, available our which supplement reconciliations on non-GAAP is can deck, comparable Relations For be our website. in Investor most earnings the directly to GAAP measures

believe to Before note prepared instead a turning the lengthy briefly press shareholder answering investment enable questions more our from time shift We this we call and letter over, a quarterly us to of that community. the release spend format will want to remarks.

to we prepared review remarks. shareholder commentary that letter encourage we in would such, As our for typically include the

was hope believe investors. any supplement, influenced with Both from informative, and in when shareholder the the with our also welcome by available on to received conjunction are documents we feedback find feedback. we We website. earnings In letter, change the Relations shareholder we will addition, This ability that our community. that enhance read communicate you investment letter Investor our

Financial and Max Executive Officer. Michael Chief Levchin, Affirm's call Affirm's are Founder Officer; Hosting today's Chief with Linford, me and

begin. call With over that, the to I'd to Max to like turn

us. taking to join appreciate the Thank you, We everyone Zane. time

our our public was XXXX, a compare private was eighth we we us. to XX were a XX ending for time Our have now Affirm's year that and opportunities. a XX, our really preparing a calendar completing months versus company. strategy company, reinforce last quarter seems it results publicly ability September which results journey for time as XX, Two years the good for We're ago, to December traded our the confidence and ending the on as capitalize company as XXXX, in the months

levels, and costs more revenue economics. our with to then, We're frequency $XXX possibly. or consumers. Both transactions sure trailing We up control to present active GMV. we've active our comparison, times, transaction XX%, charge-offs our transactions less in net than us. term, consumer long at We growing macro volatility costs been transaction XX-month over tripled the and Since while, revenue grew at credit transaction unit quintupled a maintain X.X tripled near to navigate below by have almost of focused All per strong per risk tripled and remain doubled million. to Delinquencies continuing and We making results. we've while pre-pandemic very remain on obsess very to important almost.

going network OpEx will scale investing in profitability opportunities. conviction highest carefully features we We're our while manage improve that have. always our We shift like product to and

who network partner. merchants our solidify opportunity more before. of as and economic sides need Both can trusted position consumers than with connections and a our an to us we deep and building We're as this uncertainty reliable now see navigate ever

Back to you, Zane.

question. Thank the open begin you, for that, Operator, Max. line With please now session. will question-and-answer our we first our

Faucette Stanley. first line of James Our Morgan from comes with Instructions] [Operator question the

XXXX? evolution and need bit you what of and to about sure lower talk looking profits GMV for get timing Obviously, this like first associated nevertheless, little want the that do in reiterated I or thinking profitability to breakeven top line. XXXX. about to on are you performance in but that, How to to you you you're path the make

day of time looking it on adjusted for to thanks We profitability Yes, getting everybody, James, the a the the 'XX. about still most that pace talked meaning in outlined, time much question. to recap just are starting goal our said we which achieve the repeatedly profitability to income. and very fiscal we on at that first of operating intend we'll and on sustainable to do basis, we

about not to economics And things we're that you look then the mindful for in to are business. us that, adjusted means careful, of in very And And challenge but have lot simple everything year us, our that any outlined maximize road to the line. Max sure to for expenses. do in can at pretty back The going greater We that is need having than also we unit sure we revenue have operating costs cost be we're being And the transaction controlling doing making can that hiring, all business. we're on less the of doing we key be below waste we're should the a so there letter. some we as our making math. transaction map, in expenses the if operating the of particular, the on making sure our focus and pockets half

the right system. investments, want As in we don't waste and have to we make continue also the the to dollars business scale

implied that the are really and in expenses we'll achieve like If operating at that, for kind you that the to that exiting a where to we'd year. feel our goal of so next the back of guidance, shape look by be we want we be this right year fit put half adjusted

go -- And starting places could a delinquencies. let's with start of then on -- we with lot but

where you You mentioned pre-pandemic. that you're prepared in remarks bit the a still below were

in at especially how to would about better wondering think get would to would behaving versus that they like XXXX just that, which starting if those of be since repeat customers cetera. would you there levels you're terms that repeat, an be directionally, delinquency, number that they're tend increasing et managing of least in thinking I to you're now. pre-pandemic, And close pretty think However,

that? -- I for try think what those prognosis are going the you'll we that And should to How the to at? when that you out So under and what's top conditions? guess, would do where manage you

half quantify the Michael second I'll probably start and of I think help question. can

set to take weighted to managing The life months most them. are set So not transaction from away the just whole we ultra us, we of point credit short-term every loan, stage, important X.X outcomes, of just average underwritten. the these thing is every

full requiring we down payment, We of of have cetera. amount control the transactions or down et control cetera, payment, not,

about use gives over outcomes. credit many nimble levers the have we And to many, controls us We've about of this we but So said never very times, talked gets of actual that old. risk. lot control a lots

managing This book rest loans very can of industry week, full and of it. back we quickly, loans credit credit new a are or a card to stack go hit. and quite that to years formation control. things have back with every Because adjust off the back been have all get sure we we that require. get pretty of the that the cohorts So we going set personal about we make consolidation do runs we a actively number that we we lot want to active, you it compares now the that Obviously, favorably the there's still that numbers does like nothing

numbers good this important for reason you they from those really we an but thing are is works. just -- letter, So repeat, income our like strong just the hasn't credit and who are sounds lot plenty There's We're that's is business this a accident. stress at to to we lower underwrite And quality. consumer control. every this old It's today, And a I see not in can the just and have world of not as lower the how therefore, again, understand. on though and do apologize an really this in brackets, changed. transaction, as the of the managing,

of backdrop. sort the that's So

the people just this mean of The demand look credit to in to are to year are than we'll is the those exhaustion done various getting mid today, spending brackets to the when of they're increasing. forms is that. higher counterpoint trying BPL closer, we people the done is I they more see the sometime turning next savings. to not serve debt. Generally stimulus, groups consumers, our income things. turning but -- not lower do are we're at to We income and side used probably they're the for turn through going in already cards, application But demand pandemic see speaking, of

the have pretty alternative there. done firmly best we believe out We

We have that. XX% to prove consumers transaction from repeat existing

And lot. so you have have enough demand, and we do a

of box, more diversity merchants go and as enough purchase. have Connected commodity We finance big of shift homewares out our Fitness for where you folks

to there are with things. help We those all them

have is to so the our quite need can And at strong. as outcomes, once. that we number do control, still If manage we of demand we credit all we

exactly where to again, with. the intend have to doing you it. we're That's as a bit give run little thing more we contend on Michael it. this sort can data have we how a But to is choice opposed of we

That's by by right. and varies And varies merchants that it we're it product, at.

I substantial is well repeat the basis. your usage. on and with gross And a I'll see the at good still quality that acquisition is users in taken business acquiring the feeling a clip new equation, we're not we that think still certainly see more about note do done improvements So very point as pretty of we and credit side we're not thinking

a losses, this to our our important now takeaway that some that for looking spend loss, these going that And the got would in ties, in think credit The how to to losses level. then biggest additional folks are we we loans in that we respect to is the to strategic the be allows and piece our them, which that's month us about with you a see can shareholder business, to confidently we XX for where charge-off the you dial we at have we've delinquency dialing or and as trending well and cohort go we net approve given up net XX, show XX, as capital of affects of we've varies both in how letter now all then but It's confidence trends, those in a get I take those we the where encourage partners, can monthly are. down, that it such week disclosures have really time on. confidence some or things deep think P&L can got curves very with that an

strength we do, treat and That's continue real to an aspect against are the to first for people us and feel to going in most we going the really unsecured put in consumer financial you lending, a people our up everything good. that if we're who think traditional or foremost, something is do do. important we're not us, it most like it's as institution that I lightly. world And of results

company. this performance waiting, one While I'm does vintage. very it's at just you worth, who when outcomes, data I the not at only at I'm looks for But over by of tied look credit number that. I what of person basically look the our credit at significant

a business Strong we think you to that at is our plus investors we of one the at control, Michael, letter. in things for that the have are to to one us, in wanted the look should clearly over-debt put we communicate these investors, piece should. this and very please really we We look our matters as on full what a to and matter out basis

question Please proceed. next with of Suisse. line Moshe comes Our Credit from Orenbuch the

would And In the to for changes? start we've to costs transaction the if revenue process? take the less not, consumers. quarters, price talked you Does any guide fiscal potential assume 'XX that what about to pricing get to past couple it of change

Excellent question.

current is about as as have features will little example, the we that view a guidance shift rates. reflected don't that's help we to not remain are house opposed think to why the there's put at upside across look rest be in hope careful number cost to so we look live our a And pricing consumer And at about guide. and merchant, gap. guidance, items the we, certain how a things and want bit, line product. answer against short Those in really transaction current forward if will, and things the curve. close that We to try the the you our and that So of we of of proprietary deliver for are the the we

is is to higher is And of opportunity aspect the APR, on for the the consumers we but a as perspective. in have there side majority from reflected pricing of merchant opportunity higher so some APRs guide the not the

maybe going going given have where to follow-up, what generate others you little into a as seen industry given and And maybe quarter outlet mentioned potential of think how you're text Do numbers a about Michael, stresses some lower plans Could quarter, you that the the you here them? we much this the on you, could how your talk obviously, some it? you funding and of a bit loans? in for are, sale. have gain a about lot And lower? for the interest-bearing should an that, And in around put about

the health The pointing know, lower is slightly be this quarter. financing above equity what which balance in several out as in higher past a be letter that we're running Yes. will quarters. capital the over that of substantially thing think, think into been we've we the reflect we sheet, you required, particular, where That X% we'll does usage than

So way let the me broader question answer out. for the assuming all

late that of going us confidence don't P&L worried of in business. think conviction that That loans balance be vertical GMV. November in half of as the all. really less slightly we're balance quarter pressure, factors be the the lot the it affecting question lot and creates results that of number year more is shape at acceleration. case for that for you we will a into the end back is ability that period on transaction it of see late have. revenue sheet. I means the have various meaning we and interest-bearing about that the models the sheet, the have reason They We the goes that costs, for a the of on our on percentage origination, as the quarter in two are QX And depressed QX December funding fund origination are have guide up to to The will through that you in the which a the

the back of a economics The on material the that we're at simply top be When P&L in going the you less the a That currently of to QX to back or half you we'll year. an again flowing of have that originate those meaningful is that cost. one the business in implying acceleration we're alluded to acceleration year, top, in just very out of through half transaction the that the to. change opportunities look stuff of the the assumption revenue pretty in the addition in in that actually

Our comes next question Please line proceed. with of Ramsey Barclays. the El-Assal from

other I shareholder the could that disaggregate I if you the on was out factors? wondering the impact guidance, from Peloton, called changes to you in think letter, versus

Yes.

math So and quarter. two you acutely and drivers, biggest drivers think Peloton, there's there's do. can some I are then The most both second in our

talk you be a to we instead rate give XX%. some up growth about the GMV the that the And So XX% second we context, in we'd in be would that to quarter revenue quarter. XX% a second of our would estimate on guided of second in quarter, XX% instead basis,

in XX year, And of starts headwind, are business. we our headwind points back material top in lot which to that roughly of the we're half basis very respect we in talked Back the measures a attenuate that's of the terms that the the a of the half year, RLTC But movement bit. in Obviously, mitigating with to the line take of quite half about in there impact a being guidance roughly of of the rate. rates. modeling

And so those X the biggest are drivers.

earn we'll in of of see the at originations, we'll business which a show change balance were the root margin bit warehouse is the onetime result just to cause usage we quarter, revenue will of it's next the shape are for as couple bit for of talk again, run the and the of a course important more next and talking you're the think you'd more trend more up to, throughout a the we'll will -- that that in that in and But terms the the year. effects the important continue things sheet use about of level that one as But we little change QX, and causes. little that will going quarters, we It's on expect. those about as later that

Okay. And me. one for follow-up

you has in What decreased is rate look there? What gave to You helping in drivers shareholder your at that interest us are come additional since sensitivity the also increases number the down? initially mentioned February. that letter that a

about too, obviously, think as back it's doing every think flowing -- counterparties through just initial it set February rates. seen effects. are we're and decisions the to of this of think When framework that I affect for that updating to much the it's a we've actually I our observed you taking lot impact, in we we gave there's effect, range everybody. Honestly, just and as potential anything observing the were second we order as XXX a impact framework account year, order And gave of the and a third the curve into second were basis or it because we more begins points, the first

Our Ng next Please Mike of line question comes from Sachs. with proceed. the Goldman

have just two. I

Max, wondering was map First, like the promotions like new CFPB brand-sponsored for product and if I things you the whether not product at could on and change strategy us development update an give that just or road all. things report

And excluding just of hear then GMV you Michael. the about AOI RLTC second loud And and what for I rest have you if and talk margin for may path looked I could the on the clear like, Amazon. year. wondering was

that half, back then As and we margin income late income like second that originations? fiscal gross take driven really interest on go of guess, by, improvement is into the quarter servicing in rates I because

industry. the if CFPB of it. state had a to to point important great it's most point. know the document thing the a the chance describing read of respond view, my to, probably From So I you don't

that and industry letter map did don't I doing. at think in I is my think quoted report, No, all. what to road Gratifying an have interesting has changed our both SX the a the job highlight. CFPB they was pretty interviewing summarizing thorough

In space. that's in ones doesn't doesn't only there's as highlights regulators who different. look BNPL letter have one sort ways, that there's fact, us, really far companies if you fees, And but the didn't the that very late they shenanigans we're of in essentially dislike. go of many charge the as lots naming And a other

so there. about I what pretty I said feel And great

we've closely sort history industry the the in participants to industry credit their and been of further their note reporting scores in other most agencies working along. And in NPL is pretty interesting to the essentially Probably help the thing help accredited build loans. consumers through credit coming various and with that the material

And continue definitely so I to regulators that a firm. a certainly the say the the matter very and we'll and own ideas, what listening have felt was that to our cetera. generally in for But positive thing et it for industry speaking,

what pretty impacted. making Our I becomes don't is you'll places. but forward. would there. to And the build-out in it's road that's a the all then Brand-sponsored be a -- product going engineering that and not actually components more is It you to littles actually built have great progress fully bring it manufacturers say, is we of map of building two I merchants it. them takes of it bunch matter want, has quite promotions One and to has brands. I sales the to the thing see are, a live are and where have of

will so take time these getting build. we're else that. do, to everything things we And on Like

off but more may become, them point, and some Thank there the probably out Was they to feel cool how you. Yes. that's time. break No. they conversation I just at for it? I question. a another like how to margin-rich we'll, answer sell think I are

more. to I covered don't it. I have think I say

a of back simple that meaningfully And half math. correctly, It's the GMV, year. And the year. just as of then the talking pretty in of in question understand of of percentage back the LTC half improving I terms you're about really the kind really

earn course As you loans balance throughout of payments those the defer loan. on interest-bearing are put more as the the or you revenue sheet, you interest made the

loan income that year. most take XX-month of of you originated in for December, that's a back the on if So half happened in example, the

losses for is What's for upfront. will provision those the happen though, credit loans important,

talked these have less think and early projects some just get throughout good that right And that in working revenue, then profitable even important something but the period, transaction less those the we that Max that's the so but broadly, on now, have very I that to top of the in that costs in yet more remember are very means special will the that it's though would we reflected about really how regardless. mitigants That's loans on don't There's letter. with the are the large course partners we for program the are continue us to earlier focus with year. And as as about things overall. and and business. you do ordinary on But of unit of we're economics, something forecast. that, list talked about long We

have optimizations those represent to the process in And page, here. play balance And the revenue of those work app experience. on. can take and settle we guidance upside flow-through the range goes list our can make from larger period search the for us the optimizations feature on a that lot that and how the really of in to drive we the driver sheet tweaks is those in But better the primary opportunities

proceed. Securities. of line the from comes question next Please Andrew True Jeffrey with Our

This is on Julian for Andrew.

mentioned you Just the credit I to that? in the the back want be think I that the way of, it come side. that see back front down half. kind would and provisioning -- half-weighted guess, kind more to to of just Is talk go know we'll right then about

Yes.

we provision speaking. own when time of purchase. the strictly it, always Well, at So we

versus sale sold The gain the actually And you'll sheet, the on and always less versus -- -- case. so you'll no on growth have we'll is margin, just provision. dollars the carry difference marginal balance as place provision the on that's we being the getting

versus so about balance changes you bit little off. the like think profile just as income sheet And the those loans a on being

also, versus And of guide, this seems more in can XQ good GMV like non-Amazon if growth growth just And I kind the it Amazon a Can then all pretty considered. in. quarter? you maybe things one it's embedded quantify get

kind a So just maybe that quantify little bit. of

We're up quantify. to What merchants, would we're can't point disclosing or the XXX% over growth, I had general growth you growth GMV including breaking category strong XXX% not We which we and GMV but the disclose is number in do by big, here. part. merchandise near pick does Walmart a of and that not Those of Target. out Amazon, are by all partner

And question of the Please Smith with our next comes line from Reggie JPMorgan. proceed.

slide a shows have XX-day And delinquencies. I data. presentation that the in interpreting wanted guess You your some help of kind

look So when 'XX, appears progressed. DQs at the when I increased as at declined pre-pandemic, progresses. kind year look of that kind it of the I year But it as

kind And follow we to charge? expect draw that from of going we Is And Should so to this to DQ follow-up. what our continue I increase? kind have a arc of is you're things pre-pandemic? or should what the suggesting conclusion of

Yes.

the have So as What you as consumers, expect big to did a time see. the cash refund was there the key pretty ordinary experience patterns to saw lines. for is certain available monetary pretty a our during the supply liquidity credit of affect relates pattern seasonal flow consumers both well surge given in purchasing which milestones example, to pattern to that really tax that substantially you'd and in what performance pandemic was like,

on XX you trends, of is, our 'XX to business in of terms letter, Page that's of think be. we're all you'll And seasonality. where see feel FY see that more And we're the we'd back right sitting as credit pre-pandemic if of on kind the shedding trends the which to the normal of you're to again, like we a consumer liquidity, going like referencing I for see top pattern And period. excess pre-pandemic around us why consumer so

slide. another There's

you Obviously, a zero rates mechanically may a it higher how think year, Can would interest that interest take for the again, this kind you some guess, of to And are at but And you those? Do guys raising gone how you Is recognizes sensitive out? actually process zero lot about, like I do are merchants of talk pushback? fees. play goes be that your that merchant I you've sense relatively a the of raising kind held obviously rates hinted constant. have potential merchant how higher, interest there sensitivity, out? -- that bolt-on but everybody rates rates? think have up like

right. you're So

merchants We generally or moved prices on speaking, have to date. not, either consumers

largest but one it increased supplier at think their as point, other day. the put threefold, price does everyone I Michael to cost our the that some their pass -- everyone And customers. understands on

with process different based little on merchants is partnership. of a type the The bit the

obviously, G and individual platform So third-party any list like largest partnerships a have rigs we come are direct or are on like Others segments not, the of some merchant platform And that from GMV of platform Shopify. directly Editis, but Walmart our there's relationship. Amazon. then a whole either There's no platform involved.

that because giving merchants. really virus platform that them case there's bit quantity it's to, cases, folks. example, et in a host the are integrated platform to negotiate, folks, lines the the Obviously, we've other for cetera, some time underlying are of a conversation for different of a with little they to of more in merchants of that cases, reacting, have they financial price. those change notification Obviously, a notice like whole -- a contractual relationships the In can it's in of have try large and and ways responsible have directly buckets. probably Those fully other some they committed

not thinking they a of which may of may prices, their little their So times, or on be lot schedule raising about. own depends bit a it

And what every equation consumer and is because lot the merchant laws, change obviously, more other. credit transaction underwritten quality on have change we of follow is The the bit we et a so and control quite their a side side, slower little And person price moving. lending and the have based it does one we obviously we're seeing, the or on cetera. can't so to

a amount there's there. So of fair consideration

risk that we've no beginning in before. that expect or happen think idea for you have to to done substantially. fired therefore, went exactly say, going And At and but this up because important did said, zero go it, merchants we our what's very with All with will price to very we them. to it's work to them merchants time, our next, I At we anything told we're going we us pandemic, but the of us that it the we selling. get continue

that strongly we products very feel something for our on and not done feel price fluctuations in pretty decide our the include supply. we're But to an but do should instant if see to So about execute so. before. switch, ability we've command to it's it's I that our the able we confident

I say two a that are are scrutiny. clearly, now, as additional tugging conversation. of of anything an pieces focused all under would And lot merchants of right margin. partners, cost a around lot from is a tone the lot is on and that's merchant our perceived One this that there's And

them. the I On are that lot hand, they own they But holiday looking some volume drive year and constraints and us back services that right two Those can Merchants next real season for we to to out to economist the is do had have deal allows the at in of other looking outlook, to net think of it the volume a a now. their things good merchants growth before. always part that early we get of unconstrained. need need are and ways margin

Got it. in quick? Can more real I sneak one

ahead. Go Yes.

a explain down I that that are like mind anything how and months better So then my your I'm Or to to investors view it rate? more obviously, about customer. life to address reserve got now. there? there else you concerns about average was Thinking come and going sequentially. your maybe add the guys things customers, report got can declining repeat you've else to the of a your reserve you of only am missing what we portfolio also X was And Is rate

Yes. Again, -- start just I'd I would we first, about reserve. think how the with,

and state I every with tower, time the a thinking the loans we by team got think have the about If a consumer who that the have reserves. their would of some to back. answers are institutions financial trying economists the paid from forecast we of make did the

whether the of credit will not at originated, do driven. lot here or give We're loans, judgment deterioration very use we they’re look how trends loans of those in and indicate down loans we and prognostication about look to future And with those up the up. that's we is [IPAC] are predictions that performance we we at at and a things look performance so math And then math-driven. instead the or not sitting actual perform. model And score, and of holding It's score very what X credit. when those and the

letter, that look performance, loan [indiscernible] And material again if in on XX, we the Page our at, you example, our have for reduction for credit of XX the losses pay-for-product. pretty Slide see you for

as is see While and on it the has, therefore be it does turn going needed quality to balance the over allowance to sheet of isn't biggest it very product, losses our all you that the for will allowance, improve less part it. in fast, and you're continue of obviously

the took half this year. end less loans -- about good a It's into we're It's not to the And thing. it's It's into we starting lower a in this quarter originating. going year, and thing. similarly, us that originating see asset very quality stress not a back I estimate a in it And content. last we the suggest in of higher a fiscal the of our think that of that bad higher-quality that would resulted mitigates that thing good talked losses lot that we asset has the loss a

line comes Chris Our Davidson. the next D.A. question of with from Brendler

quantify the on a across the and consumer Can X credit trends a for done, number much we of given all tightening really But about it's another side. the on concerns had credit -- issues. you obviously, just at are with changed consumer. on the environment difficult sort GMV. the that hear of of start I'll you've more think an much impact does your of But this how impressive maybe don't that year? all guidance forecast you I your sort really growth for

tighter the product there factor? demand that's conditions? is is So that Or a enough offsetting that,

And The When that impact credit the update on an guidance some we business in near from saw might far set impact It's that for as I in has pretty I in And thought guidance were we bigger that, lot this think we for the driver year. of our year. as reduction you in a headwind is of the impact conservative it's Peloton. the that that's bar. we business that underperformed had outlook being a our of folks our take biggest substantial like definitely volume. just that There's even where the nowhere think. think the

movement tightened quantify view we is the a guidance take sequentially credit. don't on but example, in have we because given haven't that, our We to it, the way for

we've heard on competition. helpful. demand believe, on of and Super follow-up the Great. side, have a are than struggling lot firm I to think I really competitors more Okay. some A areas a is. their

you And merchants you one are ability to the love of coming of conversation off I Or seeing sort your guess, temperature in thinking hear talk improved yet as to environment? is be already to froth an I'd that sort that come? you any a to you've on So take your, your talk competitive started? to or the of still going that like as merchants, benefits is

I'm really spike the out that the about is going to yes. long and cetera, and been we're not trunks to some victory football take time swimming try about quote a tide sound for short this coming glib and hard et saying people noticing on. answer laps, without are that I've to

our I accretive our classify exactly And is wouldn't are. I affairs competitors struggling, of as us. to but state some believe of do it

well. "Hey, the quite in ask and are they in consider competitor?" approvals approvals good, are will were and not. would come where in are past, doing still fine, a we merchants guys now have coming saying, and they'd consider say the side-by-side And would ours We with and And it, you them they

So easier makes that take it share. much just to that

sometimes brands line on could either well used the side approve longer our because us the to. driving they as by are Sometimes continue side, off and turning probably of can feel that or to need their they rattle no into and some as alongside top competition they esteemed competitors of instead

quite that the been helpful It it's a quarters hitting out yes, to approvals reduce absolutely we give bit to So just seems a a that We high, credit, curve to promising the which continue way and our you us, on we all these tend keep sense so which numbers long do, should as prospective really move it. working need promised our is GMV little to to lot. been losses steep. be we our I've by

we'll share. long it taking as So going, continue keeps

Awesome. thanks tough And a And the congrats for all the disclosures helpful. on really on It's also credit. environment.

Sandler. of question Piper line Barker the Kevin comes Our next from with

unemployment additional something to what starting we the to forecast going up and are growth you've case to beyond considering obviously you or measures you're are to When is -- is I that XXXX, something slowing it's you the be for in economists indicates? unemployment follow whether guidance, slow wanted due have underwriting, lot most than just assume and Or in there curve managing in place at expect to pay, there's you assuming to tightened or but that spike your Peloton. put spending? going on Is to there a their look what base is forward for? worse what anticipating

things. has I'll comments side on the and start on Michael credit of rate side, probably the

That important to just of of some So we the concern things. mitigate. really really said, next volume. degree months the X.X with side on That's we of are worsening really, ourselves credit anticipating

demand we the we to do quickly. everyone We're we're a manage with single granting lend. will in make choose product. that it consequence deal even of it choose to most last time we lines, structural very ability have But get made else of credit a which is is we to the be and different we made ability to today, Our we're means from the mistake. data that we and not that part very important a decision our erroneous, if it's underwrite short-term the that market credit able to And how -- lot more need numbers the probably sources that

And more that more of consumers to care apply so change we That loan us we often. that as diligence they stretched, every level to and not underwrite. feel the come does same

change have years X, including are that current focusing we correctly absolutely volatility. are X the so fresh, in behavior, primarily that of last over the react consumer last seen, sources on our of making given just macroeconomic which models operating, And to X data the our the we months sure

So demand all product. is fed ability we be rooted in speaking, deeply that we weather our our we make whatever storm to fact no relatively short-term, for our that underwrite, incoming might decisions. credit is the way very of the headed into of have but And shortage how very,

but there. a I make, has I'll point another to to want pause Michael just had few.

current the don't there's a look, of -- could rate always number just or to approach it play way the No, to And that a try we the curve grow. take out very take is assumption, we forward consensus, differently. scenarios to

out, As we have into could you employment. point a enter recession and more

probably would be get with currently that the and pressure course, employment on could side to have Of robust. continue less is come very rates modeling. probably flip we're the probably could And than rate worse

the forecast always current we're to very is this And macro I to out, be assuming have of are middle road we're when play but of -- what will and here understanding sure we trying wrong, the around that just the consensus that make think close business be is where something.

of like the businesses we year, And beginning rates it expect going did the move, we should in. as framework And to to peg the at when with given that guidance that just rate gave you the curve. our so our to we we're impact

That's short of really I very… helpful. the And product. the appreciate then duration Obviously,

point, sorry, -- was thing the going on. last One on I make point I to blanked that that

us. is the determined of terms So will X about wanting because of Checkout, things of launch by other to the we year ago, which a that presence menu consumer the of the programmatically see the have we Adaptive had

quality control shorter over the short, so we And of isn't longest enormous also average. applicant credit longer ones. X.X% of sees the just have in The decide this, particular product itself versus a get durations we amount whether to or

or just sure starting our for make would X.X% to rapidly, in and opportunities go to we default. borrowers to of right the necessarily make about the X to terms go there pull have you fewer are we up could really spike we down although felt things to the so is do, don't on And that now, unemployment preparing act it if that average to say we're

lives as much, another buying that's nicely purchasing. terms to make the control don't of cash research luxury therefore, and we have. shorter with for that level general need typically the from flow. corresponds past just that So borrow And from sense shift People very quite to more and merchandise

impact reduce actually the So our on side take will our real on not have consumer rate should but the this risk.

about do Sorry, RTLC on just velocity Max. to like quite of slowing mean, obviously, and you're near does if the shift. bit you being something feel going worse? growth the your term, maybe further, tightening the Yes, a certainly the but get still could continue some out more that was Or When a bit in to Go half quite you guide that rapid of improvement, year back hit little implying lending of that I I those guidance? you remains saying of pushed think advantage to things bit there's a and see having in focus ahead. but of the there's hitting a able you can get future, on underwriting, on profitability? to at for little least

not. read to my joke, of make some will lips but sort attempted I've I

hit on schedule. will profitability We

not product about focusing The RLTC, some more we're volatility. of But we off are creating the creating -- profitability. ultimately, our rate pushing very about mitigating feel on We are good schedule.

postpone to destiny. any suffering are from on need deed We our not with

alliteration. I'm think the but say I like not supposed that, I to

the that I onto guidance And outlook seriously, feel objective are here here, not sit we changed, There as Peloton. pretty our that we on GMV our our and it. And what big digesting and in last grow guidance is very conditions today. could thing think then saw headwind pretty something thought And of take come moves think if then goal through, we rate. a but talked big about, macro we're obviously, as make impact certainly you we confident we the we really because has a

in not included guidance. of our are God Act

question Bryan next Bank. comes line with the our And Deutsche of from Keane

X Just to we get. popular on questions ask want

Just down do a they maybe just rates, expect? approval outlook what then they Maybe you on were approval and bit like quarter. clarify that you in stayed little high, the rates, it the sounds can but on

The approval rate has actually stayed relatively flat throughout quarter. the

X X interim in in basically flat a the In for serves, slight uptick memory the stayed last fact, months months, in -- they with the between. if

and a first approval bit. we last the rate increased little The actually X the X,

And to this this -- month sort went is tiny that so bit. But back a the maybe we consumers. down of quarter, it products offer this

an control over have to shape take of on. of we enormous So the going the amount actual we're risk

way not $XXX a carry I have don't monthly is, over finding going can say want to says, in the you in think way no, yes If to happen because of x a speaking, "Hey, just burden generally some answer consumer. to months much We, to borrow and flow somebody comes a cash that's or basis. a situations, this on y weeks," we

However, they delta us risk adding we're to that make shape help levers and we a burden unnecessary basically. very the are where without have And other happy consumers willing take the that if we our prepay the you're to number sure dozen to allow provision. to need a you with lower monthly

sometimes So But levers. have approvals. that. again, on to We needed in by number because we this been at things one. like very are can merchant certainly SKU we merchant and which have the credit and is those job before, it using we not the said brakes getting SKU by level, products repayments do to infer slam how date, prioritized And I and active level

feel generator it's a larger we their as the In to at somewhat some request. yield to does managing data, information. that prioritize cases, no. some we down most we It them. cash this away need for us In for best burdensome, see see will turn hit always means will cases, is the for some But which we will mean people capital told flow We must door. being partners more better that that predictable ensure have us not numbers need to yield, that have payment does but people to slightly that ask than we

to rates. a to while like they to don't first helps with agree competitors, approvals they wouldn't approval lot our we have us generally our and because contractually and on drive if confidence you the rates, keep happened the guaranteed speak line maintain in And their foremost, that Affirm. hire hired, and top and ability always will, And we have deliver that so and sales them reason without we us of our merchants, reason over

Got then it. Debit+ update, product No, there. Max, the And that's on maybe just helpful. rollout an the and

I Thank somebody wondering might you for asking. was if remember.

be trying to actually So not glib.

roll are with Product X as now the I to do a in feel that of a can fundamentally like I the things and economics ago could business. product Chief feel is that don't accretive So don't the year I out

of So the meaningful level quarter time, we've to thousands the that in sort generated the beginning think of that right number tens of last a I active basically cards and type observe around people we pretty of list or given usage. of cards sometimes week taken

funds, that to SuperApp. inhibition choose now pay into or the split, a As for up is where of the which you And with kind pre-transaction, fraud the losses many vectors transaction where that could with obviously spent product swipe end happen which particularly there's a There's and every might have loss the then possibilities credit away limbo There's economics turn are can months and in become pay all and bunch you last product, pay you one, become we similar then write-off. new these default how just we and -- post which to And don't of various new also the X like. debit XX-hour whole inside really chiseling at very is of the now later. you a loss. the is

to every both the the reality So product. good the here the awesome, about a debit spent out loss everything unit is going very thought. there's not than a new, of I it. bunch be about brand forward. going kind than vectors, pushing sure turn except start frustrating number, be time about is to X last I probably there. to, economics product this we almost will And of of unintentional that losses, intentional, realistic nothing this we're January that question we're good of when really feel profitability, making We're loss new just months X feel is our more Again, given today's we're hitting saying term line

So will not that sorry profitability happen. postponed. is That about

you lot in a now good or I it, whole And selected go the And this but said, the promote right where on a you it bit we will delivering to I'll product if a when get is of of to be quite easily work. we planned. know expect it's I want Debit+, cards. your that of group feel little to we That about in pretty January to better or have you feel either have kind start actually profitability you these know to mean bunch you more way. can that's today. have

starting in get hard little bit that to enter guide Debit+, too a it's because now. just the -- will calendar year. more quite promote The we're app basis day Debit+ know saying, what again, But starting lot aggressively. quite you a a that see ILTC talk your actual will a we're tile quite hey, terms in the next for right probably model And on Affirm revenue yourself including in you'll about to our about or product do volume us more of not anything we it expectations

you about, we than Hopefully, give there’s the at people we to to about economics cool today. least our new product economy the not think a how launch sooner point just risk will we're unit ready,

the Our next Mihir question line of comes of from with America. Bank Bhatia

couple want ask Kupferberg. questions. to just for Jason a I on just I'm of

of these be years? gain locked So couple sale more? how I And quarter, buyers. I think First years? does but Or QX higher about with sales get the you're the how gain up, stay X does mentioned of to lower was on you is in just adjusted? next I results in does you until now exactly certain on lower just I to that talk mean, understand going sale pricing for flow are into to think lower pricing understand, on those first the your that Can to often trying pricing impacting the interest trying rates agreements little like tend Obviously, work? that gain with interest X, kind understand a rates forward

a yes. The That's question, commentary the good the really vary. is year-on-year comparison. And agreements about

duration Some are of the contract. in agreements the for locked

repricing floating Some triggers have it even with varies arrangement. months X regular and to

wouldn't rate. in -- I'm flavors. So being different not worried locked But the of we kind have worst -- at lots I not we're of about

think rates good decline I be and a then. in would for us

just operating adjusted Okay. ask wanted then I And to about margin.

slowing the The first top I guidance, your -- obviously, down better you've came But also is little in in also bit. quarter -- you coming but line than hiring. a mean, guidance you're

to happening there? unusual quarter, the understand, was what's pushed about expenses or something Just to trying like out? first Just there to got the quarter something? some Anything call second

for hiring as 'XX. plan is with In is the it about number combined No. We as did have the transaction bit slightly were cost less about the biggest the below hiring a course with in of throughout first the the year, repeatable managing managing items us. strength much a plan associated little the some revenue quarter, fiscal that but is the drivers of benefit aren't 'XX reduction

last about fiscal we think really doesn't we us our that and the plan. Obviously, right-sized but to like expense an want year, the as that next possible. we units the be as Just to get is get take And focus I timing think in as lean we going next fit profitability operating possible of it and the the costs as in can year extra year. in affect employee as hire the feel year of we hiring the for as and strong day healthy fiscal we to into is the into the have when

from the question Simuni of with next comes Eugene MoffettNathanson. Our line

question X platform. engagement consumer the got on Just

we So Peloton that. talk to to going some the the user do more here, keeps influencing per that great. great per spent getting sort bit? might of mix a if be math understand can your trend up, that? you that might better keeps And how But your time? consumers to which that about But And -- to encourage you them to in are able consumer, factors down. do platform active I is path It's of over And active is spend little transactions engagement. see a use on perhaps what sign be a there leverage do you dollars dollars going with

vectors every be engaging. to consumers often, you if People you sorry, smaller are trying tickets, convince they're aren't use we're absolutely right? more couch or with signing more for different -- buy you're exercise you transactions, average my transaction a and completely So of honest, more once I buy I are maybe to then think competing it size for contours is, there frequency, an going track which year X are so, here. to money I case and the to the is -- get but And high certainly per kind bike that kind slightly every ask And ticket care number trying user. metrics. through our if of chasing a to you active in consumers fact, of you to of transactions going you're Those quarter, someone spend about really what to up here.

You're tickets, travel. things maybe looking apparel, like at

general the And all so happens everything name kind umbrella we're industries, in of time. very active that all for those you merchandise buy

AOV continue success, just It's of measure our frankly. coming is expected down. So important to an

the uniquely think is growth for lower these of I the suitable [pain indication transaction category, transactions. in user per increasing spend an frequency is which of shorter-term for] AOV

so of coming gris for a that's from. And lot

a expect, longer U.S. We're into AOV the AOV very might the we've expanding short-term you very for transactions. periods markets. in rapidly high lower still dominated time As long

old the I that to any trying in naturally the the number dollars Affirm very transactions result that think in with paid we're will to long of sure ticket in most possible. for trend I size in for If So term, consumer focused get for by on the but we're about making spent consumer, possible goes And think I now, goes active down, X success. there monthly on average payments. care that

Just real math. quick on the

purchase the is wallet longer not opposed averages repeatable think even if looking share of would here. to it, what like -- the maybe and at not how a $XXXX never you're average can I as $XXXX you're can quite those One maybe math it's consumers lie lot but really I'm entertain a sure doing look who purchase.

believe share we have I are definitely a on that their think, today, we of consumers platform engaging higher for our the spend.

Thank Bauch you. with of Securities. And Nikko from our line final question the comes Andrew SMBC

great. the this consumer it in at other wallet you could the share e-commerce function the on U.S. and provide of side? a above prior is of making go looking would around hand Affirm know beyond that spend, and growing of trajectory Or of of the with I and continued they of the expansion Just be 'XX you hand, within kind dovetails question, merchants? is any is but progress more that, fiscal color X% more in likely the

about the assuming of a now currently e-commerce. the earlier X% And all other The at X of shop more with and I feel -- to And guess good soon. begets XX% e-commerce. good building today U.S. back. we are about network. are integrated that I pretty We got I is news

So merchants. getting of with by the penetration X% more we share wallet that increase can

generated their from integrated, really app because merchants dollar for times it need inflationary a not. lot really is some own stretch of our that it in them. a to but of merchant services is our in dependent there and And business Our that we these we're us healthy have consumers on is

like we a importantly, less extends to And excited about very which us. the play don't us purchase still XX% number, us but offline, It today. where into amount trivial what included do gets very, volume. for nicely is not will by very Still of for us daily is things and it growing,

lots we I'll that this have grow we point. that, expect there, will So When above getting at again of get of -- we'll ways too.

be pretty getting next taking obstacles of to speak kind Just grow into roads could about airline couple mean could is travel X industry and segment, Maybe opportunity be. looking thinking that vertical what like you to purchases up at ticketing opportunity the us out XX% to that the just that, the or I a sticks over over that the sizable hotels. potential further of years that or mix, would time and about inside

opportunity. a great It's

place to I offer. have apply think we to a what wonderful it's

travel partnerships and of hotels We penetrated really view. airlines least -- both point good in have industry the from are handful in of a probably today, our

work years do a there's newer, more online agency extraordinarily integrations had with of Direct for is there good them. bit that airlines little as have and to well. We bunch done integrations and a years travel we've with have and

how about now thing thing some kind that the use in do sweet sort start much But retailers and team things, cool second. do consumer I'll of but the work with case with what looking credit largest and do. it's the is spot with a expanding underwriting big-box done know look if and we're as a and really we've the of you work far, with understanding a here travel, for The do not to All and thing well. hotels our in as you you in inevitably I'll at platforms, we in these a of general, including get It's OTAs, others it very do -- product. to

as to the walk. very the of a example. don't think time in out, you room leave except check I checkout you can you them perfect give you the pay checked last back sort Hotels, key you a and of out, you and you lot

And know of you'll real. a exact loan it going is into so we're amount. pay time. total And transaction to the it now mechanics actual over this now turn the and We

buying different very a hotels very, Just and between couch.

very others built that ability is unique to industry. and are that And to well for the product inevitably a have to expect to to convert right that long-term fine-tuned so And our products do of to all our opportunities around deliver do replicate. build growth merchants are to create to as us our this you of lot a hard to, that consumers are really particular value

very say strongly Affirm So feel to careful a we’re in, is I about used machine, out, a hiring. very with being RLTC long Obviously, it. engineers I for time,

amount right probably to rattle we'll of that off get travel. definitely bigger do industries faster, probably discipline the didn't but some of terms And in even there's maybe of it, varies and immediately. So these XXX opportunities to

than bigger break just We’re and through the and right become average. product, we'll

Thank Keller. turn Zane concludes question-and-answer to like back you. call session. gentlemen, our and to this I would Ladies the

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

you conference. This Thank concludes your for today's participation.

disconnect. now may You