All right. Well, I guess we should start. Hi, everyone. I'm Jason Kupferberg, the Payments Processors and IT Services Analyst here at Bank of America. We're very excited again, as was the case, last year, to have Michael Linford, CFO of Affirm, with us. Lots of ground to cover. We've got 30 minutes. Thanks for being here, as always. We appreciate it. Thank you for having me. Of course. I wanted to give you a chance to maybe first talk about, you've had a couple of press releases the last two days. One was about Amazon Pay and Affirm becoming an available instrument in that wallet, and then today about the authorization to buy back the convert. Maybe if you wanna just hit on both of those to give us your perspective on, you know, what investors should really appreciate from those announcements. Yeah, I mean, I think it's just more of what we've been working on here at Affirm. You know, starting with the convert, we laid out our capital priorities in a shareholder letter a few quarters ago. You saw us last quarter chip away at it. We continue to look at that as a smart thing that we can do for the shareholder to manage that liability proactively. You know, we've been running with a pretty strong amount of what we call dry powder. Not a GAAP term, but it's how we think about a view into liquidity in the business. We have a pretty strong position there, and we obviously have a lot of conviction for what we're building and think that practically managing that liability is a smart thing for the shareholder. It's tactically a smart thing for us to do, and, you know, the feedback we get from convert investors we talk to suggest that they would also receive that pretty well. With respect to Amazon and the Amazon Pay announcement, you know, again, it's more of what we've been working on with them. We talk a lot about the pride we have in being able to work with a world-class retail institution like Amazon, and we talk about the depth of relationship and how we work together to solve problems for consumers. I think the outside world wants to look at the contract and what terms there is e xclusivity and all those things, and internally, that's just not a thing. We're focused on making sure we can expand our offerings to as many consumers as possible. Being able to get off of amazon.com and support other merchants is exciting to us. Finding more avenues of distribution for our product. You know, we talk about the 60% of U.S. e-commerce that Affirm is available on. It's a good news, bad news thing, where 60 is a great number, but it's 40 points short of 100. One of the ways we get that 100 is we find ways to get our product distributed with partners who understand what we do for consumers and can offer that product proudly. We're very excited to continue to do that, and I think it's more than anything, a testament to the continued work we're doing with Amazon on behalf of merchants and consumers all over the world. Merchants who currently accept Amazon Pay as a form of payment would basically have the option to add Affirm as a payment method with. Right? That's essentially how it'll work? That's it. You know, it's obviously super important because it's with the world's leading, largest retailer, but also online retailer, but also it's part of our consistent strategy to find ways to get distribution you know, we're excited to get back to talking about those parts in our business, especially since that's always remained what we're focused on. Yeah. Do you think it moves the needle on GMV in fiscal 2024? I think it's important. It's important, like all the things are important. Right. Right. Collectively, they all add up, right? I mean, one of the things that's, I think, underappreciated a little is just how important the full distribution is for things like repeat rates. For consumers who use a product once and are delighted by it, they actually have to have an opportunity to see it again for them to use it again. While we have a strong and a lot of latent opportunity in our direct-to-consumer business, ways we can drive that, those real network effects that we see in our business, they're tethered to the distribution. Part of the reason we're so excited to have the partnerships we do with the world's largest e-commerce players. In the words of one of my former executives, "More is more," and so we're definitely focused on getting more distribution. Okay. Affirm has a really good lens into consumer discretionary spending, younger, call it maybe lower to middle income kind of cohort. Just curious, you know, what you've sort of seen from that cohort as the quarter has progressed, just given all the moving parts and uncertainty in the macro, which you may have read a little bit about. You know, in Max's shareholder letter, he talks about all of the unprecedented events that have happened over the past couple of months. The joke internally is we're just waiting for the alien invasion as the next thing that nobody had on their radar. It feels almost that fictional, the number of things that have happened. We've been experiencing an unprecedented rise in rates and associated macro response to that. You've seen banking failures, both as a result of that, but also, I think, as a result of taking the eye off the ball a little bit on some basic risk management practices. That's a lot of volatility and, you know, with the consumer who's feeling the pressure of inflation, but maintaining, you know, really strong employment. For us, it's really the same. It's more of what we've been seeing throughout the beginning part of this calendar year, which is the consumer has clearly changed their financial situation from where they were a year and two years ago. The resiliency in employment has really allowed them to continue to be really performant on credit. Our delinquency trends, both what we report for the portfolio, but also our delinquency trends you see in our ABS data remain really strong, and that's because we believe the consumer is fully employed, and we're able to identify and price risk correctly in this environment. That, we think, will continue. You know, we've stopped internally talking about the change in credit outcomes that we saw about this time last year as a stress. We use the word stress a lot, but it's no longer stress. It's just the norm has been reset and w e're running the business at those new levels. You're still seeing the same trends, with I think some green shoots, but the same trends around the shift away from larger discretionary purchases and towards basic staples. That's obviously a trend the consumer is experiencing and going through. Yet, you know, talking to some folks earlier, the strength in sectors like travel remain really strong. That's in large part because, you know, a lot of deferred travel, that folks had been pushing out. We expect that to continue to be strong for us, for the foreseeable future. Maybe just reflecting back on March quarter performance a bit. Revenue, GMV, you had a pretty nice beat and raise there. In fact, I think you raised the guidance for this fiscal year by more than what you beat the quarter by. Revenue less transaction expense, there were some other dynamics going on, right? I think that the beat didn't quite flow through. Maybe just for the benefit of everyone, walk through some of that. I know there's some funding mix considerations and so forth, but maybe you can kind of lay that out and walk us through the pieces. Yeah. We're really excited for what we feel is both pockets of reacceleration of GMV growth, increased consumer engagement. We're excited for things like our Debit+ program, and where they're gonna go, all of which has us feeling a lot more excited about the growth prospects in the near term. We have always had excitement about the long-term prospects, but we knew that we were having to manage through a tight window here and feeling really front-footed there. Yet the capital markets remain extremely difficult to navigate right now. The team that we have doing the work is the best team in the industry. I was speaking to them yesterday, and I say it a lot, and I believe it, we're really good at this. Yet, the market remains a difficult one to operate in. You have the combination of higher rates, which has been discussed ad nauseam. I would encourage folks to go back actually to the last time you and I were together on stage. We talked a lot about the rate environment, and I believe the then forward curve expectation of rates was something on the order of 200 basis points. We all think that's cute now. We forget how quickly it's changed. A year and a few months later, we're in a very different universe. Alongside that, credit spreads have also widened not for us specifically, but across almost all asset classes. That's really because, a combination of making sure that the premium is appropriate for the risk that they're taking, but also a general sense of credit uncertainty that's out there. I would, I'd speculate, I guess, a shared opinion that I think, you know, when you have multiple large banking failures, it doesn't do good for credit committees thinking about risks that they wanna take. That's not a specific thing to us, right? That backdrop. Indirectly, yeah. Makes it a difficult environment to operate in. What does that mean for us? For us, it means that we're gonna continue to use funding strategies like our warehouse lines and consolidated ABS deals. It means that we're gonna have less growth in our forward flow program, and that does change the shape of the P&L in a given period. I think it's important to separate that from the asset that we're creating. Think about our model as we create an asset, and then we fund it. The asset we're creating continues to get more value in it. We've been excellent on credit outcomes over the past couple of quarters. I think our credit performance stands out in high contrast to almost any other unsecured consumer, risk-taking institution. While our funding costs are going up, so is our ability to price. Our efforts on alleviating some of the APR caps that we have for our merchants has allowed us to continue to earn enough revenue to offset that. We feel really good about the asset that we're creating. I think about the return on that asset, the economic content that you get. Feel really good about it. Yet, the shape of the P&L and the funding strategy is gonna vary a little bit. Lastly, like, look, we're any quarter that you expect to see a sequential growth in GMV, like we're forecasting for our fourth quarter, you do expect there to be a little bit of this lag effect because of the timing of how we earn and report out those revenue less transaction cost numbers. It's heavily influenced by the timing of the growth in GMV. We saw that play out. You know, our Q3 results were really strong. They were really strong, in part because we had a really strong Q2 that showed up down the P&L in Q3. So you would see the same thing play out, where the Q2 results, I think folks were concerned with, but the Q3 results were stronger. I think you're gonna see Q4 sequential growth in GMV, which is gonna suppress a little bit where Q4 is gonna be, but it's going to create, you know, value for the P&L throughout the course of next this year. Let me maybe pick up on that with revenue, less transaction costs, since it's obviously a very closely watched metric. You guys have been very consistent. Since the time of the IPO, you've said 3%-4%, 3%-4%, and you went above it, obviously, during the pandemic, right? You told us all it was gonna normalize, and you were right, it normalized. Looking forward, I think you've continued to say, with a high degree of conviction, you can operate in that range in pretty much any macro scenario. Just like a little two-part question, like, A, what sort of gives you that confidence and visibility to stay in that range? B, just hypothetically, if you were to fall below that range, what would be the most likely reason for that to happen? Yeah. Thank you. I think we have been consistent. You have. And w hen we were running at 4.5%, I got the question of, "Shouldn't it be higher?" We said, "No, no. Three or four%'s a good number. We've had quarters, and we would expect to have quarters that may dip below that number and maybe even periods of time where you're on the lower end of that. That doesn't take away from what we think is like the fundamentals there. The fundamentals are that we produce an asset that's really valuable, and we have a lot of levers at our disposal to generate the level of unit economics that we need to build a profitable, high-cash flow business, which is what we're all about. The biggest drivers in terms of, like, one quarter swinging up and down is really around the balance sheet strategy. As you think about less gain on sale and more loans on the balance sheet, with the provision for credit losses happening at the time those loans go to the balance sheet, and you think about earning the interest income over the life of the loan, it just creates this skew where you got a lot of cost up front, no revenue up front, and a lot of revenue happening later. This is a thing you saw in our second fiscal quarter, and it's a thing you should expect to see in Q2s, probably for the foreseeable future, where our second quarter is gonna have a lot of origination starting on Black Friday and through December. End-of-quarter originations, which amplifies the effect even more alongside of a sequentially growing quarter, which amplifies the effect again. You layer balance sheet usage on top of that, and you get this vertical P&L. The actual P&L we report in the quarter as being very different than the quality of the asset you produce. When you're able to sell more of your production to forward flow partners, all those dynamics go away. You produce an asset, you sell it, you book your gain, and you go on to the next quarter. Those dynamics really do factor in heavily on your balance strategy. Quarter to quarter, that's the biggest driver. If you think about over the longer term, the biggest driver of why we wouldn't be at 3%-4% is mix in our business. Okay. We talk about 3%-4% as being a function of having some businesses, like our monthly installment products, that can be more like 4%-5%, and some businesses, like our Pay in 4 business, being 1%-2%, and they average out to 3%-4%. Obviously, if we mix more towards higher velocity, Pay in 4 businesses, you'd expect that number to be lower. Additionally, we've talked a lot about how Debit+ will change the math, and we're gonna do some work to communicate how we think about Debit+ GMV, the Pay Now GMV, which we do not expect to be anywhere near the 3%-4% on a margin standpoint, given that the Pay Now GMV is, you know, maybe has a point of revenue on it. 3% margins are possible on that. Right. Why don't we go to Debit+? Arguably, your most prominent new product right now. Sounds like it's kind of ready for prime time as we go into fiscal 2024. Just walk through the value proposition for the consumer, for the merchant. Maybe any kind of update on this kind of initial rollout that's been proceeding the last couple of quarters. How will the investment community be able to track the progress of Debit+? Yeah, we are so excited about this product. That's the thing that I know we've been saying for some time. Max has been saying it for some time. Max has been saying it for some time. I am now. Now you're joining the chorus. I am now very much, in the same camp for the excitement. Let me talk about it for why it matters to the network that we're building, why it matters to consumers, and why it actually is a cool thing for merchants as well. Why it matters to our network. Today, we primarily serve considered purchases online, we have a frequency that, while it's growing at a really healthy clip, is well south of the kind of engagement that you'd expect with kind of primary payment methods that consumers use. We know our frequency is not where we want it to be, and we wanna continue to focus on that. Our network also doesn't extend itself easily offline. While you can use Affirm offline, we sure make it difficult for the consumer to do so. By giving the consumer a tried-and-true payment method that doesn't require apps and barcodes and clogging up the checkout line as you fill out your Affirm request, you give them a payment method that is truly seamless to the physical world experience, which is tapping an NFC chip or swiping a card. That opportunity for us and the unlock for us is huge. We talked about why distribution opportunities like Amazon Pay are so exciting to us, so is getting our product into the physical world easily. That's obviously an asymmetrically large portion of retail generally. Right. It's also an area that's benefiting from the post-COVID resetting and normalization of online, offline trends. Our product means just as much to consumers in that, in that mode. For frequency, for offline engagement, we just think it's really compelling. It's also the best way to use Affirm. I'm obviously a heavy user of it, and so are most of the management team, as we like to make sure we use all our products a whole lot. It's a substantially better way to use the product because you separate out the need for using the app from the actual last mile, and it's a great experience. That's why it matters to us and why we're so focused on it. For the consumer, they get to take the purchasing power that we give them, the transaction-level purchasing power that we give them, and apply it to a much wider set of transactions with almost no friction. We have a product today we refer to as our direct-to-consumer virtual card product. It's not actually what we call it internally, but that's what we talk about it, externally. What that product is you open up our app, you apply for a loan, a purchase amount. We go through all the process. We create the loan. We then generate a one-time use virtual card number, and then we do something that is so friction full. We ask the consumer to copy the card number, the expiration date and the three-digit code into the checkout flow online. In the store, if NFC's working, you can use it with some of the digital wallets, but sometimes the cashier has to type in the number. Like, each of those steps are terrible, all that just disappears. When consumers talk about the card and why it's so powerful is, it's everything Affirm does for them, delivered in a form factor that is just easy to use. That's really exciting. It's more than just one of those things, right? It is the payment method that you can use as your debit card for your groceries and your cups of coffee that you wouldn't ordinarily want any purchasing power expanded with. It's also the card that you can use to get purchasing power, and you can do it in a way without revolving. You know, remember, the thing that the consumer gets very quickly about the product that I think investors are slower to get, just because we live on the coasts and generally aren't the profile of users who are revolving on credit accounts, they do not want to revolve. They love the control that they get out of transaction-level credit. That to them is a huge, important feature. We're giving them the things that they love about that, while still being a very easy-to-use, everyday use card, for the daily transactions. Consumers love it for that reason. We can extend the purchasing power in more modes for them. We can take out a lot of friction for them. Merchants sort of love the product because it requires no integration work for them. Every merchant invariably wants us to create a solution for in-store. Then you start to get into all the complexities of the how, and that can show up as like something as simple as just a sticker on the checkout wall, and say, "Go download the app," and then generate a virtual card, and all that friction I mentioned comes back and is in play. You're jamming up the checkout line. Right. You can generate a QR code and have it be scanned by the register. It requires a huge technical lift from everybody involved, and oftentimes also jams up the line because the consumer still has the t he application, as seamless as it is, it takes time. This takes all that away. It, you know, we can talk to somebody in a marketing department who wants to offer a payment for a product in the store and can't get prioritized in the technology roadmap at that merchant. Mm-hmm. We can be live immediately. You've done it already. Yeah, you can market the product, you can tell consumers, we can go help them understand that we can deliver the cool features of buy now, pay later, paying for monthly installments, you name it, and requires really no lift for them. It's about being able to give consumers what they need to be able to purchase what they want without having to, frankly, fight for I.T. resources, which is actually a really hard thing for the larger enterprises who are most concerned with the online Especially in this environment, yeah. Online to offline trends. Yeah. Right. Okay. When you guys give fiscal 2024 guidance, will there be a kind of a carve-out for Debit+? I'm not going to make any promises about fiscal 2024 guidance or otherwise at this point. What I will say is, we've been consistent. We want to help investors understand, what the relative contribution. We want to help investors understand, how important the Pay Now piece is. I think for the portion of the card that's lending. Like today, we don't break out that direct-to-consumer virtual card product, even though it's a very big business for us. It's also a business that's been accelerating for us. We don't break that out, and I'm not sure that we will for the card. I'm not sure about that yet, but I do know we'll tell you for the debit portion, give you some sense of how much of that Pay Now, but the stuff that is on the card only for 24 or 48 hours. That's really important because coming back to your question around the revenue less transaction cost, we need to make sure people understand the impact that that has on the number, which obviously will drag it down and we don't think is negative. To be painfully repetitive, our 3%-4% range did not include Pay Now business in that range. Mm-hmm. Okay. Okay, got it. Basically, the consumer is gonna essentially be linked up to whatever their existing checking account is with this Visa-branded card? Yeah. Right. Sorry. Very familiar. I missed that. I missed that piece. No, it's okay. No, I just wanted to make sure. Yeah. No, I really appreciate that. Thank you. It's that other piece that's really cool for the consumer is we're not asking them to change their account. Right. They certainly can open a savings account with Affirm today, we would love that, we don't make that a requirement. It's not a requirement to have an Affirm, you know, demand account in order to use this product. That today looks like either we call it linked and unlinked. You can have your account linked to the card in which we can offer you more product and features. You can also operate unlinked, which still just delivers that same credit product that we have in the app in a physical form factor. What's actually compelling is we're not asking the consumers to, like, change their whole financial life. We're asking them to begin to use a financial product that we think sits on top of and leverages their existing financial life. You have a checking account with, you know, large money center bank, great, keep it. You don't need to change that. Right. Right, right. Easy for consumers, easy for merchants. Okay. Right, right before we started this, you and I were talking about the P word, profitability. It's becoming more prominent, to use another P word, and you've talked for a while now about achieving sustainable positive adjusted operating income, really, I guess, exiting this month, right? Which is the end of your fiscal 2023. You know, you clearly seem on track to do that, but can you give everyone a sense of how you're just broadly thinking about the longer-term potential trajectory of adjusted operating income margin? It is upon us. You know, we've had several quarters in our history where we've had, you know, brief moments of adjusted operating income positivity. The real focus on us right now is making sure that we're getting our operating expenses levered appropriately with the growth in revenue in the business so that we can do that, you know, on a sustainable basis. We're happy with the progress that we're making, and there's no. There's no sense that, like, the work is done. We very much have a lot of work to do to live up to that commitment that we've made. The team is focused on it and will remain focused on it. From there, we haven't made any commitments as to how we think about profitability trending from that point, and certainly not going to today. We can begin to talk about how we think about investments in a slightly more rational way, right? If you think about our history over the 4.5 years I've been here, we've always been invested well ahead of the business, and we really didn't take a lot of time to think about what is the level of profitability that we want to reinvest in the business, because we were obviously running at a negative operating margin for most of our time. What I think we'd like to do is think about getting to profitability and getting to thinking about what level of investment makes sense, how do we think about these specific opportunities that we wanna invest some of that positive margin into, and what do we think is important for us to continue to grow for the shareholder. We're not interested in giving up on the opportunities that are in front of us, so you're gonna see us continue to wanna invest a healthy portion of this because we think the opportunities set remains really big. We're gonna wanna create space for that, but we're also gonna wanna be mindful of showing investors that when we say we have confidence in the long-term operating margins of this business and its cash flow generation profile at scale, we wanna make sure we're giving investors enough confidence that that path is something that we're actually on and isn't just something we believe. Okay, that makes sense. We've been getting some more questions about, you know, with student loan repayments starting back up pretty soon here. I'm sure you guys have been thinking about that. Do you anticipate any material impact, either on GMV or delinquencies? We're not currently very focused on the first-order impact that it's going to have with us. We feel really good about our ability to control credit. We think that things happen. They definitely could impact us or anybody, and we'd need to react to it. Given the short duration of our asset, we're not sitting here saying, "Let's tune the decisions today for a thing that might happen in the future." We can be a lot closer into it. That being said, I do think it is, it's on our list of things that we're looking at from a macro standpoint, that we're paying close attention to. You know, the consumer remains fully employed today and healthy in that respect, despite some of the pressures on them. It's not so perfect that they couldn't withstand any shock, and so we're mindful of what impact that may have on the consumer more broadly, and we're certainly gonna take that into consideration in how we run the business going forward. All right. With that, we're out of time. Thank you, Michael. Appreciate it.