In This Article:
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Revenue: Not explicitly mentioned in the transcript.
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Gross Margin: Not explicitly mentioned in the transcript.
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Net Income: Not explicitly mentioned in the transcript.
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Credit Quality: Described as excellent with strong LTV characteristics.
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Profitability Outlook: Improved outlook for the current quarter and fiscal year, aiming for GAAP profitability.
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Affirm Holdings Inc (NASDAQ:AFRM) reported strong growth in Gross Merchandise Volume (GMV), with March being the strongest month at 40% year-on-year growth.
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The company is seeing excellent traction with its 0% APR product, which is attracting high credit quality customers and boosting lifetime value.
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Affirm Holdings Inc (NASDAQ:AFRM) has successfully renewed its partnership with Shopify through 2028 without any economic concessions.
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The company has expanded its international presence, particularly in the UK, through partnerships like the one with Adyen, which accelerates integration and implementation.
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Affirm Holdings Inc (NASDAQ:AFRM) is at the forefront of the industry in integrating and reporting back to credit bureaus, enhancing consumer credit scores and transparency.
Negative Points
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The 0% APR product, while attracting high-quality customers, generates lower revenue compared to interest-bearing loans.
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Affirm Holdings Inc (NASDAQ:AFRM) faces a highly competitive market, with pressure on merchant fee rates and competition from both pure players and incumbents in the consumer credit space.
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The company is cautious about potential economic downturns and has increased its reserve on loan losses, indicating a conservative approach to credit risk.
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Affirm Holdings Inc (NASDAQ:AFRM) is mindful of potential implications from student loan enforcement actions, which could affect consumer repayment behavior.
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The company acknowledges that its app improvements are ongoing, with a focus on maintaining repayment rates, which may delay the rollout of new features.
Q & A Highlights
Q: Can you discuss the balance between zero APR products and interest-bearing loans, and the potential for more merchant contributions to zero APR products? A: Max Levchin, CEO, explained that while zero APR products generate less revenue, they enhance brand value and customer conversion. These products attract prime and super-prime customers, which is beneficial for long-term value. Merchants often initiate these promotions, and Affirm is eager to support them as they drive customer loyalty and future card usage.