We are very happy to be joined by CFO of Affirm, Michael Linford, to discuss recent trends and the outlook for the company, which, you know, has been incredibly strong for the last couple of years. So Michael, thank you for joining with us today. Thank you for having me. Maybe if we could just begin with last quarter. I mean, it feels like the holiday shopping season is kind of like so far in the rearview, but it'd be really great to just discuss that momentum that you carried out of the quarter. I mean, 32% GMV growth continues to be strong and above your medium-term targets, and revenue growth at 48% is really impressive way to end calendar 2023. Yeah, we, we feel like we had a really good quarter. We were able to grow GMV at a very healthy clip. We grew revenue faster than GMV and our, our unit economics, the revenue less transaction costs, the transaction economics, were really strong, solidly in our 3%-4% long-term guidance. And I think that's a reflection of, of a lot of the hard work the team put in over the past 12 and 18 months. As you know, we've been navigating through a lot of volatility in the macro. The last quarter showed what happened when this, when this team gets focused. Max really hit it in the letter, and would encourage all investors to take a read on it. But we were a really focused team, and that focus showed up with really excellent execution and really, I think, surprising a lot of folks around our ability to execute in any macro environment. Great. So just wanna start with a broad retail investor question to help kick off the conversation at a high level. Adam W. asks, "What would your pitch to a potential new investor in Affirm stock be? Yeah, maybe I can just explain why I'm still here and why I think this opportunity for us ahead is so large. I think we're gonna be the winner in a very big market. The market that's being created right now is being created in a way that we think is quite inevitable as consumers move away from traditional ways to pay and access credit and move towards safer and better products. That trend is, we think, very long-term and very permanent. Right now, we're in the early innings of it, with the move towards buy now, pay later as a payment option in channels like e-commerce, with offline commerce and further penetration in commerce, e-commerce remaining. And we have the best mousetrap in the industry. Our ability to create the right outcomes from a credit perspective to delight consumers and drive merchant conversion for them is really undifferentiated, and it was really differentiated and really unmatched by any of our, any of our competition. So we think we have the best mousetrap in a very big market with real moats. Very few players can do what we do on credit. That's really been on full display over the past 12 months, and our capabilities with technology enable us to partner with the world's largest enterprises. And so when you sum all that up, we've got a market-leading position in a very big market that's very high growth, and that really says to me that we have a ton of opportunity still ahead of us. Yeah. So not only you're able to differentiate yourself from the traditional consumer lenders, but also within the BNPL space, you have that sophistication that really hasn't been matched, and we think particularly on the funding side of the house as well. Yeah, I think our capital... These things are all connected, so our ability to execute well on credit creates opportunities in the capital markets, which allow us to grow quicker, and these things are all linked together. And again, when we're executing well, like we are right now, you see the machine generate real momentum, and that's what you saw last quarter, and that's what we're focused on continuing to drive. So maybe if we just talk about the customer dynamics here. I mean, now you've topped this last quarter at 17 million consumers. Obviously, in the grand scheme, that has a long runway to go. But maybe if we could just kind of understand, like, when you do add a new customer, what do the retention or churn curves kind of look like as far as the life cycle of a new Affirm BNPL user? Yeah, I think it's important to think about merchant and consumer both when we think about retention and churn and the dynamics of the business. Today, we acquire almost all, if not all, of our users at the point of sale on our merchant sites. And so merchant retention and engagement is super important. And we're really proud of the data that we have there. At the Investor Forum in November, we talked about our net retention rate on merchants as being 115%, which means that on balance, the merchants are growing and any sort of churn that's happening is less than the growth in the underlying merchant base, which is very important for us because that allows us to continue to see more users. On the consumer side, we've actually transacted with over 40 million consumers over the lifetime of Affirm. Seventeen million number that you mentioned is those who have taken out a transaction in the past 12 months. If you expand that 12-month window just a little bit, and you think about an 18- or 20-month window, the number goes up quite substantially. And so we think about the opportunity for us in driving more frequency and more engagement as one of the key ways we're gonna grow the annual actives, as users who are maybe engaging with the platform every 18 months can move to be engaging every 12 months. And we're really proud of the progress that we've made there. If you look at the transactions per user, you see pretty healthy growth and engagement on the platform over the past 12 months. Again, I think that's a combination of the strong distribution that we have, we partner with the world's largest enterprises, but also the product set that we have, where in this environment, in this macro environment, we're able to serve a lot more transaction types than really anybody else. Mm-hmm. And maybe if I could just double-click on that. The 17 within the 40 is a really interesting way to kind of, you know, paint a picture around what the immediately addressable kind of touch points are with those who are already familiar with the brand. But maybe if you give us, like, some general characteristics of, like, who ends up being retained and, like, what's the type of consumer that ultimately churns over time, and how do you kind of think about that? Well, one of the things I talk a lot about is just how really incredible our brand is and its ability to span really all income, credit segments, purchase modes, et cetera. You know, we have a brand that works with the general merchandise categories, some of the world's largest value-oriented retailers, while still serving premium luxury brands. And I think there's a real insight there around we're solving a problem that I think is truly a universal problem. It is credit writ large. It's not credit in any one FICO segment. It's not credit in any one purchase modality. It's a very broad, very cross segmented user base. And so one of the stats we put in, for example, into our last ABS deal is, you know, the average FICO was around 660, and that's really right down the middle with respect to the U.S. consumer. If you think about what we do, what we do matters to people who are FICO 720s and FICO 600s. And I think the ability to span the applicability of our product set is really impressive, and again, very differentiated. A lot of credit card companies can do half of that on one side, and a lot of BNPL companies can do the half on the other side, and we're one of the few players who can really span the whole gamut. Why it's so important is I don't think there's really a constraint in the profile or demographics of the user that we serve. You know, we serve all ages, all income segments, all credit segments, and so I think there's a very broad-based way to engage those users. I think we think about things like distribution as being very important for giving consumers more opportunities to engage with us. Mm-hmm. Consumers love finding us on their favorite retailer sites, and I think the more distribution we have, obviously the more they can see us and engage with us. Part of the reason we're so excited about the card is it really does unlock a whole lot of opportunities for consumers who continue to repeat with Affirm, even if it isn't a way for new users to find us yet- Mm-hmm. It is absolutely a great way for them to repeat. And so broad-based user segments, broad-based merchant distribution helps us drive better retention, and I think that the thing that's maybe most common about users who end up repeating often on Affirm is that they're really good risk, because those who aren't, obviously, if you charge off, you know, you're not eligible for their engagement on the platform. And so us finding really good risk and finding users who know how to use credit the right way is probably the most important factor for determining what we think is the highest value users in our platform. A quick follow-up to that, I mean, what do you think is harder? Getting that Affirm, the new Affirm user to transact the first time, or getting that, that user who use it one time to use it the second time? That's an excellent question. I think it is harder to get that first use because it's totally brand new, but there's just as much value in us thinking about the first to second and second to third transactions. Again, specifically in the context of the card, getting the card is not enough. We need to get the card and get the user to engage on the card, and so a lot of our effort and product work right now is about making sure the user experience is good enough so that users both attempt to use it and then want to repeat it, and that's how they really begin to understand the product. Mm-hmm. So much of what Affirm is really does require us to really understand. It's a product that's new and different, and sometimes using different modalities, paying for, for example, or interest-bearing monthly installment loans, is important to really understand how widely you can use it. But once users do get through that, they understand what it is that we do, they understand how it works, they become very, very active. And our most active consumers obviously really are using our payment tools as the primary ways to pay and plan for their larger purchases, and that's the best spot to get to, but. Yep. I think we talk a lot about how that may not be for everybody. And our job isn't to try to make every user that, but make sure that the experiences are set up so that those users who do want to engage that way can. Mm-hmm. You mentioned Affirm Card multiple times, and it's, it's a, it's a product that we've been excited about for a very long time now, and it's... now that it's officially being launched out of beta, you're seeing that traction and the, the curve that you put in the shareholder letter, 800,000 consumers, $400 million of GMV last quarter. And obviously, initial traction has been strong. I mean, how has this traction, you know, kind of progressed relative to your expectations, even just like 6-9 months ago? I think we're very early, and so, you know, part of the reason we've been careful to talk about things like forecasts and, longer term expectations here is because we're humble enough to know that we don't have all the answers yet. It's early innings here, and, and we're beginning to figure out how resonant this product is. We remain super excited about it, though. I think it's probably the most viable thing that Affirm is working on right now, mostly because it, it solves a key pain point in those repeat usage modes we talked about, which is- Mm-hmm. You know, when you're shopping online, our experience is delightful. It really is a, an awesome experience that we can deliver for consumers. When you're shopping offline, there's a lot more friction that gets introduced, and our product without a physical card is delightful, and I think the neat thing about the card is it really does solve that last mile, I think, quite well. So I remain very, very excited about it, but it's super early. We have about 700,000 cards as of our last quarter. We're adding about 75,000 a month. I think the surprising things to me is how consistent the product has been since we started ramping it, both in terms of the users that we're adding on a monthly basis. That line that we put in the chart is exceptionally flat. Mm-hmm. I think it's, it shows you just kind of the natural rate of user growth in the business right now, and the spend per user has been consistent as well. Mm-hmm. I think the thing that we have been really impressed with is the fact that as we started from our most active and excited Affirm consumers and expanded the offering to more and more people on the platform, we would have expected some level of spend per user compression, and that hasn't happened, and I think that's a really good testament to some fundamentals about why that product is so valuable to these users. And it's really is serving that Affirm experience in a form factor that is useful offline and online. It's useful for pay now and pay over time, and expanding the number of times the consumer can use our product is so valuable to us. And so I think it's been impressive, and it's been consistent as it's continued to scale, although it is very early, and so I think that may not always be the case, but for right now, it's pretty impressive how consistent it has been. Maybe if you just specify a little bit, the unique trends and different types of usage you're seeing from the Affirm Card users and the non-Affirm Card base, they're consistent? Is that the right way to... You're really not seeing too much divergence there? Yeah, I think the thing that's most impressive is the spend per card user has really been very consistent from early adopters all the way through the current adopters. And that the real growth in the card hasn't been growing share of wallet for the same users. It's actually just been further distribution of the card. And why it's so impressive, again, is that we started with our most excited customers, and so you would have assumed that the last user through the door has been a little bit less engaged, and it hasn't really proved out yet. Which tells me we're still very, very early, and there's probably a long road to hoe here. But I think if you think about that difference between the Affirm user broadly and the Affirm debit user, the Affirm Card user, the biggest difference is just level of engagement. Mm-hmm. So Affirm Card users are far more engaged on the platform, you know, more than quadrupling the amount of engagement that we see on a transaction count basis, a much healthier mix of online and offline transaction counts, where folks are actually able to get and use the product offline more effectively. But with one commonality, which is that they are printing profitable units for us, meaning that we're able to generate good and strong unit economics, whether or not they're buying through the card or through the online integrations that we have. I think the recipe for success for us is keep these users who want to engage with us able to engage on the card, drive that extra frequency with transactions that look like the rest of what we do every day. And the idea for the card really, you know, dates itself back to when we had, still do have a very large direct-to-consumer business, where we're issuing virtual cards. And what we've really done has been able to transition those more frictionful experiences into a lower friction experience for consumers, and the increased engagement that you see out of that is, you know, why I think we've been able to show so much growth early. Yeah. I mean, you mentioned the in-store and that for, you know, e-commerce provider, payment providers in the past, it's always proven a very difficult paradigm to cross. And you know, anecdotally, I was at Walmart yesterday, and I saw the little Affirm tag post up on the checkout. But maybe if you could just talk through the incremental initiative that you guys have rolled out on that over the last couple of years, that we should be considering and what can drive that further engagement and spend in store. I know, you know, last quarter, I think you highlighted that 30% of GMV on the Affirm Card was in store, if I'm not mistaken, and just how you kind of see that physical point of sale kind of evolving. Yeah, I think it's very much an unsolved problem for the industry writ large. I think you hit it quite well. I think most people who do digital payments of any kind have had a hard time making it work offline effectively, and there's a lot of reasons for that, but your anecdote, I think, is quite salient, which is when you're in a large multi-lane checkout environment, doing anything that requires fumbling with your phone and the like, is just... It's a pretty high-stress user experience. You know, I always like to talk about why a lot of loyalty programs at grocery, for example, allow you to just type in your phone number. And they do that because if they require that you are scanning a barcode on your phone or doing any of that sort of higher touch stuff, it would create the wrong user experience at a moment that's already quite stressful, which is that you're checking out in a big, kind of chaotic environment. And I think what's so important about that is, like, when you're shopping online, it's super easy to go at your own pace, and you're not worried about the two kids in the cart next to you. You're just getting through the transaction at your own pace. When you get in a physical store, there's a lot of other things going on, and so the experience really does need to be, you know, even more delightful, even lower friction. And-... The observation that we have is that a physical card is probably the best way to do that. Now, I think a lot of companies have had resistance to the idea of using a physical card combined with a digital payment method like this. And I think that's the unique thing that we've been able to do, is we bring that Affirm digital credit experience to a physical card. And so that's definitely the most important thing that we're working on with respect to- Mm-hmm. Scaling offline usage. But the problem is not limited to just that. I mean, obviously, that works for people who are highly engaged in the platform. There's a lot of work we're still doing on making sure that our experience in wallets, digital wallets, is great, so tap-to-pay can work for Affirm loans, whether you've got a physical card or not. And as you mentioned, some of our partners are beginning to experiment with physical self-checkout type experiences. And those are really great ways to keep chipping away at it. But I think, you know, I've said this before and I'll keep repeating it. I'll keep... We're very humbled by this opportunity. It's very hard. This is not a solved problem, and I don't think that we think that we have it all figured out just yet. There's a lot of work for us to do, but the prize is huge. You know, as important as e-commerce is, and as growthful as it is, it's still dwarfed by the size of offline commerce, and addressing those offline purchase modalities is an enormous prize for us when we're able to solve it. Mm-hmm. Obviously, your ambitions longer term are not just limited to the Affirm Card. And obviously, things like the Affirm account, savings, you continue to roll out. Maybe if you could just kind of think from a higher level, like, how do these things all kind of marry in? Is it just kind of, just further embedding Affirm into the consumer's financial life? And, or how can we think about that in a more cogent way? Yeah. I'm not sure I can be more cogent, but I, but- Yeah. The way I think about it is, our mission is just incredibly ambitious. Our mission is not helping consumers transact efficiently. That, that is something we do, but that's not our mission. The core of our mission is to build honest financial products that improve lives. And we know that when we do that, we can do it profitably in a way that's good for the consumer, the merchant, ourselves, our shareholders. And so we're really uninhibited here. We have a really big, ambitious mission, which is to improve lives, and the scope of that is honest financial products. Where we have started is thinking about ways in which consumers purchase things, and typically larger considered purchases. I think as we continue to evolve with the Affirm Card, we're trying to expand the kinds of purchases that we can serve. But even that, as you mentioned, is only a subset of people's financial lives. And I would say that so much of the bigger ambition after you get out of purchases is very down the road for us. We're very focused, and I think I'm very pleased with how focused we are right now on the shorter term opportunities. But longer term, we do continue to have a vision around building honest financial products, and I think that Affirm, the Affirm Money Account is a small, I think, window into the potential into the future. You know, I think it's I- I'm an Affirm Money Account user. It's my primary payment method with the, coupled with the Affirm Card. I think it's a great experience, but it's also not an experience that we expect everybody to be at just yet. And so we think a lot about it as not even as being able to meet the consumers wherever they are. So if you wanna use Affirm just online and just, you know, for the largest considered purchases, we wanna make sure we do that experience really well. And as consumers want to engage more with us, we wanna give them chances to do that, and the Affirm Money Account is a really good way for us to do some of that, but obviously, it's still, I think, tip of the iceberg. There's a lot underneath the surface here. Mm-hmm. I mean, so, whatever you can share from a product development standpoint, what exactly are you kind of working on behind the scenes right now that you've spoken to from a product roadmap on the next, say, 12-18 months? Is it closing the gaps on some of those products that you just recently rolled out? Is it making those more sophisticated? Is it something like additional adjacencies? But how should we be thinking about it? Yeah. I, I think we're still really early in so much of what we've built, already, and so there's a lot of work we get to do on the, on the stuff that's kind of on our plate right now. One of the stats last quarter that I was just most impressed with is some of our longer, live partnerships were showing the, the highest growth. Our partnership with Shopify grew at, at over twice our total company GMV growth rate in Q2. And that's a partnership that, that we started talking about in the summer of 2020. Yeah. And so for a business to be as quote unquote "mature," meaning number of years live on Affirm, as that relationship is to be growing that quickly, is a really good indicator for just how much opportunity we have ahead of us, because we're so early in the basic adoption of the category overall. And so whether it's with our existing largest enterprise partners or continuing to find new partners and new distribution, we feel like there's a lot to do, kind of in the core business. And that's why we talked about, at the Investor Forum, as the majority of our growth over the next 3-5 years really is going to come from what we call winning at checkout, which is doing the same thing that we do and just continuing to scale that. And there's a lot there. There's a lot of valuable work to do. There's a lot of shareholder value creation we think we can drive, and just staying focused on that core piece of our business. The things that we think layer on top are the Affirm Card, as we talked about, continue to be very excited about its long-term prospects, but given its, its low size as a starting point, I think the next several years, it's still not going to be the majority of our business. And then we have some more strategic bets going on in expanding the expanding what we do geographically and from a consumer standpoint. So we've added B2B sole props into the mix, and we're adding new geographies. Those aren't going to be super big contributors in the near term. We've talked about them as being still smaller than even the card, and obviously a lot smaller than Winning at Checkout in the core markets, but important strategically. We know we need to get those additional geographies and potential users into the system now and begin working on those problems, because in three and five years, they'll matter a lot more. Mm-hmm. To that end, we had a question come in on the international front. Skyler R. asks: So how is the international expansion going? And any rough estimates for revenue growth there over the next few quarters and/or years? I think you said a couple points from a GMV growth perspective, but maybe if you can just kind of fill out the rest. Yeah. Launching new markets for us is something that's very hard and something we take with a lot of thoughtful approach and planning. We've been very intentional about where and how we enter new markets and, you know, we've communicated that we want to be in the UK this calendar year, and we remain committed to doing that. But again, I think it's important to know that the value of these new markets is not going to be the next 12 months. Like, they're not going to show up in the P&L in a super compelling way in 12 months. These things really do take some time to seed, and so we think about it as important to get there and begin working on the problem, much more so than some sort of big overnight push. Now, that being said, we've been very pleased with the quality of the merchant conversations we've been having in some of our new markets. I think what we do is different and unique, and when we can talk to merchants who aren't able to access the kind of products that we can bring to market and we can show it to them, I think there's a lot of excitement for what we can do as we enter new markets. And so I think investor or merchant appetite, merchant interest, is really, really high, and I think we can continue to plant some seeds early with those merchant partners and, you know, we're confident they'll grow into pretty big trees down the road. Forgive me for being short-term oriented, but any kind of initial changes in your views around that from what we knew in November at that New York Investor Day? No. To what you've seen today. No, again, I think we're very thoughtful and being very intentional about it. I think the thing that I'm most excited about is just the level of merchant and partner demand and excitement for us entering these new regions. And that's true for existing partners who I think do want to take us there, but also for new partners. I think it's a good reminder to ourselves just how different our product solution set really is. I think a lot of folks want to just group it into the easy buckets of things, and the truth is, there's very few people who do the kind of work that we do. And that's just because it's really hard. You know, it's everything that we do is not easy to pull off, and I think the ability for us to do that is something the merchants get really, really excited about. So I think that's the only minor update, but yeah, no, I think the right timeline to think about for international is measured on years, certainly not months. If I could just quick follow up. Is there a different, like, competitive environment in international versus the U.S. that we should be, like, contemplating? Yeah, definitely. In the U.S., you know, we'd estimate that we're a pretty strong market-leading position, both in terms of the GMV we process on the platform, but also the monetization side, so on the revenue side for sure. And so we have that position of strength. We partner with the world's largest enterprises, we partner at scale, and we have what we think is the most viable network. When we enter a new market, we have none of that. We're really starting from ground zero, and very few of these markets are lacking some existing players. And so we think about our opportunity to go into some of these new markets as a chance to be somewhat disruptive to the incumbents. And that's a good position for us to be in, because, again, I think the merchants really do get excited about what our product can do for them. And I think that sometimes the lack of options in some of those markets creates some dynamics the merchants don't love, and so us coming along, I think, is pretty well received. Yeah, and seeing something new is kind of exciting. Had a question come in from Oren A.: What do you think about Affirm having loyalty and quick pay reward options for users who pay faster? Broadly speaking, can you speak to Affirm's plans for potential reward programs and what impact they might have on unit economic margins over time? It's a great question, and much like with what we have in our offline approach, I would say we're pretty humbled with the fact that we don't actually have all of the answers figured out yet, but we do know that driving some kind of loyalty or rewards ecosystem is gonna be important for us. I think that's especially true with the card, but it's true more broadly. I think we know that that's a thing that we need to continue to work on. Right now, our unit economics, which we measure with this revenue less transaction costs as a percentage of GMV, we talk about that as being 3%-4%, and despite the fact that we're in a very high-rate environment, we're really doing excellent there, where we're right in the middle of that 3%-4% range, and we feel like we can drive sustainable long-term growth, staying inside of that range. And that does give us the ability to think about where and how we would invest, but we would never do so in a way that takes us away from that 3%-4% commitment that we've made. I think, the early pay or quick pay concept is very interesting. I think that, you know, we, we believe that our credit outcomes are really excellent, as they are, and so we don't think we need to incentivize, users to, to make payments, as a way to, to drive better credit outcomes. But we do wanna make sure that the experience is great for consumers who are our best consumers, and our best consumers are those who, who, who do engage in the platform a lot and pay us back on time, and I think that is how we would approach the problem. Let's make sure that those users have a really, rewarding and positive experience with us. Mm-hmm. Makes a lot of sense. The topic that's capturing it feels like our collective zeitgeist right now is AI. And we have a question from an investor, Zushan Z., asks: "How is Affirm trying to leverage and adopt large language models to improve the efficiency of the company? It's a great question, and yes, it definitely has captured the imagination and focus of a lot of folks. What I would start with is, machine learning and data science have been at the core of what we do from day one. Right. That will always be the case. But we've always stopped short of using the moniker AI to describe what we do, mostly because we think things like explainability and repeatability are really important for our platform. Because of the nature of the regulated space that we're in, I think it's really important that we're not building models that are difficult to understand and/or subject to things like hallucination. So there are a certain set of problems that we do, which will always be machine learning and data science driven, that you'll never hear the words AI come out of our mouths, and that's certainly true for the core underwriting problem. But there's a lot more than underwriting, as the question implies. There's opportunities for developer productivity enhanced with large language models and various offerings out there that we do both use and think are really valuable. Our developers do benefit from all the trends that are out there with respect to you know, assistant technologies in developing new software. And then obviously, there's a lot of work that we think there is in the core customer service and user engagement, but maybe not in ways that people think quite so linearly. You know, one of the things that Max, our CEO, talks a lot about is the fact that you know, these are great tools to assist in doing work more efficiently. And so one of the things that, you know, we would always look to do is how can large amounts of text and other recordings be consumed more efficiently by human beings? And those efficiency opportunities are very real for us and things that we're focused on. But again, I think pretty far away from the core problem at Affirm, which is really managing strong credit outcomes. And so it's just not a thing I don't think you're gonna see us try to wave a lot of flags on just because it's kind of core or away from the core problem that we solve, and it's much more a way for us to move more quickly and gain a little bit of speed and efficiency, much more so than something transformational for Affirm. And so maybe as it relates to the underwriting, maybe we should just set, like, step away from the moniker AI. But in the same sense, like, one of the things that we've always appreciated, about Affirm is the just the sheer amount of data that can go into your underwriting capabilities, right? And we think that obviously differentiates itself from consumer lenders, who are just making one underwriting decision based on their credit score, versus your transaction-level underwriting. But I think also that you guys differentiate yourself from the other BNPL providers, given, you know, with the relationships you've had in the past that are very high-value transactions, those are much more difficult to, to underwrite than say, you know, a $150 pair of shoes. So maybe you can talk about, like, what that machine learning and sophistication looks like, and do we see, like, an inflection curve in either the ability of your underwriting capabilities or growth potential from, you know, that compounding data accumulation? No, I... We talk a lot about our continuous improvement in underwriting as needing to sprint to stay where we are. So we feel like we have an advantage. We feel like it's very real, and a lot of our work is to maintain that advantage. We don't see some sort of breakthrough in or inflection on the horizon with respect to credit outcomes. You know, if anything, that's what you saw last year, is you saw this inflection around how Affirm was performing and how the rest of the market performed. Right. More of just a display of what happens when we choose to operate the business the way we did last year. And I think it's reflective of everything you mentioned. So we have excellent models, and I'll talk more about those in a second, but we also have a structural advantage here in doing transaction level underwriting. It creates better credit outcomes, which are good for all involved, and it creates the ability for us to sort risk with more opportunities to sort risk. And when you have that, combined with really good models, you're able to generate differentiated credit results. And our models are really good. You mentioned our ability to consume data. We do consume a lot of data. We're one of the larger consumers of the raw credit bureau data. We ingest all that information. We are able to retrieve data in real time, and that's so important. The underwriting problem at Affirm is to do it quickly. You know, if you're thinking about a mortgage, consumers are well trained to expect that to take a long time, days, weeks, even. Mm-hmm. I think when you're purchasing a pair of shoes, as you mentioned, it's really important that we're able to to make a decision in real time. And a lot of our technology advantage and data and underwriting advantage is also in how it's applied. To be able to do that- Mm-hmm ... in real time, in a low friction way at checkout, is very special. And so, our data science team, machine learning experts, I think they're the best in the world, and they are tackling a very specific problem, which is how do we sort risk in as near real time as possible with the signals that are available in real time? And that is the challenge for them that they're, I think, quite good at. All of the investment that we make there is really so that we continue to have what we think is a better mousetrap, that again, allows us to generate really differentiated credit results, which in turn allow the capital markets to function really well for us, which in turn allows us to acquire more merchants, and the whole thing really does work in concert. Yeah, that's very interesting. One recent headline that I don't think many investors, and ourselves included, have fully grappled with what the implications of it could be, and I'm talking about the CFPB late fee pronouncement, where they're taking it down from the $31 max down to $8. Given you guys don't charge late fees in your ethos, would you see any impacts from this, be it from competitive perspective or otherwise? I start to think if these other businesses have a significant dependence on late fees, that may kind of constrict, like, the amount of loan growth they're willing to kind of extend, potentially you guys step in place. Yeah. You know, I think we—when we started off, and took a pretty, I think, strong position on things like late fees and deferred interest and other tools that the financial institutions had relied on historically, a lot of folks, a lot of investors, partners, et cetera, I think regarded what we were doing with some level of skepticism that it could work. And I think even still, it's pretty interesting to me, if you look at a lot of the traditional financial institution response to the late fee, proposed late fee rules, they seem to imply that they can't possibly underwrite without them, and I think that's, that's very interesting to me. And yet, we were intentional about it and consistent about it. The guiding principle behind the no late fees approach we have at Affirm is that we're never gonna put ourselves in a position to profit off of a consumer's misfortune or mistake. So if you forget to make a payment or something happened to you, that's never an opportunity for Affirm to profit. And what that does, it keeps us aligned with the consumer, we think. And it... Yeah, it makes underwriting a really important part of our business, but that we thought was table stakes anyway, and so you can't make it more important. It's just obviously very important. And so we felt like we were pretty bold in how we started, but we're pretty excited now that that's clearly where this industry is headed. I think the expectation will increasingly, we believe, you know, be set that these products should be delivered without late fees. That the challenge of underwriting should be borne by the provider, and that you should not rely on the crutches in order to deliver the results that you need to deliver. And so we look at this as saying, like, it's great, and we think we're ahead of the curve, and we welcome the level playing field that will start to get created. And I think anything more tactically is, like you said, it's a little bit hard to understand exactly how it plays out. I think that undoubtedly some of the more traditional financial institutions will attempt to offset the lack of late fee revenue with other ways to extract value out of consumers. I think the more that they do the fine print, random fees and the like, the more it accretes to us, just because I think consumers are pretty fed up with that. And I think if, if you have a simple, transparent, and honest product like ours, it, it looks even better the more gunk, I think, is thrown into the system. And I think for merchants, in particular, the largest big boxes, I think they're gonna have to confront what happens when the, the profitability of some of their private label credit cards is, is diminished. I think it's going to create competitive opportunities for us that we're pretty excited about, because a lot of merchants have, you know, really profitable private label card programs that sometimes get in the way of us developing direct relationships. I think anything that is weakening of those programs really is a benefit to us. So we think that's all great, and yet, we're mindful of the fact that there's no rule or regulation that ever really does happen quickly or in a way that's as linear or as overnight as people think. And so I don't think in the near term it changes a whole bunch about what we do, except it's a good data point to reinforce that what we've been doing, the way we've been going about it, is different. And beyond that, we just think it's a net on the margin, net benefit to level the playing field a little bit. ... Yeah, could be a fascinating development over time, though. You know, now that growth has stabilized post-rate cycle to a certain extent, obviously, the Fed was out on Tuesday, giving their forward expectations, but we do have more visibility than where we were this time last year, right? And so with that visibility, do you see, you know, do you gain greater confidence in your investment strategy because of that visibility? And how are you thinking about that, you know, in the year ahead? It's a good question. I think that we feel like we've done all the work that we're supposed to do to operate in this macro environment, and we feel really proud of that. Again, if you think about our Q2, which is usually seasonally the low point in the year for unit economics, just given the way the math works on the income statement and balance sheets, the fact that we were as strong as we were in our Q2 is a point of real pride for us. And so we feel like from a macro perspective, the business is in really good shape to navigate the current macro environment. And so when the Fed does or doesn't move, really doesn't change anything about how we make our investment decisions. Right now, we're the most important thing was to be able to retool the business to operate in a higher rate environment. We've done that. And so at this point, we're not watching the Fed to get signal about how we invest. We're building the business we want to build. And I think that's a pretty positive thing for the future for us. I think there are players out there who are waiting for cuts to make investments, and we're not in that mode. We're in a mode of, we really like our the work that we've done already, and that allows us to be more aggressive and to get on to the task of scaling the network versus being reactive to the macro environment. Mm-hmm. No, it makes a lot of sense. Getting a common question from the retail community here, I think best succinctly summarized by Adam W., is when and how do you plan to reach GAAP profitability? So we have not given any outlook for GAAP profitability, either in our annual outlook, nor have we communicated any dates. I can't do that now. I think the how, though, we can talk through. If you look at the last quarter, we had $172 million of GAAP operating loss. $134 million of that was associated with the enterprise warrants, the associated comp expense from the enterprise warrants. And as a recap, there are two big pools of enterprise warrants, some from Shopify, a deal that we did again in 2020, and some from Amazon, we did in 2021. The mechanics of how those things get valued and expensed to P&L is a bit arcane, but suffice it to say, those are things that happened very much in the rearview mirror, and they're really not addressable, and the majority of the dilution has already been borne from both of those two programs, if not almost all of it. While it is a real expense and it definitely hits the P&L, it's also a non-cash item that isn't going to repeat and isn't even driving dilution right now. When you think about what's left over, that number is obviously much smaller, and I feel like the calendar does a lot of work, meaning eventually the warrants fully expense out and the scale of the business will, we think, eclipse the rest of it. So we remain very confident that we will both generate strong GAAP profitability, but also, generate strong cash flow, in the business, both of which I think we're excited about into the future. For now, we've talked about running the business with strong adjusted operating margins, and I think, again, that's a number that's been a bit ahead of schedule. Over the past several quarters, you've seen us really do much better than we thought we would, and I think that's a reflection of the operating leverage in the business. And so whether it's on an adjusted basis, on a GAAP basis, the way in which we drive profitability is grow the top line of the business to grow those unit economics, that revenue, less transaction costs, faster than we're growing our expenses. The truth is, the way in which we've went about building this business allows us to drive really strong operating leverage. We're not a company that's reliant upon performance marketing to drive the short-term results. We're not a company that has massive levels of marginal cost for marginal growth. We're a company that builds software and technology products that scale really, really well, and a lot of our investment is for incremental step changes of new scale, not for continuing to run the programs that we have in place. That's why over the past year, you've seen us drive so much leverage, because we haven't had to add a lot in order to generate some real growth. But let's say you did want to add a lot, to add more growth. Where would you kind of, like, outline the most exciting investment opportunities for you? Yeah, I hate to be a broken record on this, but, you know, we think the biggest opportunity in dollars and in percentage of growth is right here in the North American market, in our core business, you know, driving further share of checkout. That'll show up with more distribution, i.e., new partners. It'll show up with more programs, more product offerings at the merchant sites, and it'll show up with other distribution, with partnerships like we have with wallets. And all of those opportunities for us, we think are very big, and those will remain the area where most of our investment sits, because those are the biggest things.... I think the things that we talked about as being slightly more strategic, like international, will attract some investment dollars, but we don't expect those to be material contributors in the super near term. Those are things that we're doing for more medium-term strategic reasons. And so the biggest stuff is really the core. And I know that can be sometimes unsatisfying because there's kind of a lack of shiny balls, but I think the opportunity ahead of us is so big, the market is so large, and that focus has served us so well, I think we're gonna keep chipping away at the core problem as the primary focus for us. No, no, I, I think I understand, the reasons for that. And, and I think you gave a little bit more color, that if there was a step up in investment, it'd primarily be in sales and marketing and not necessarily big investments into the R&D side to kind of get the platform where it needs to be. No, I think the other way around. I think that the investments in technology and R&D would be for net new things. So I think- Oh, okay. Big unlocks, we build new products, that would be an area of investment. I don't think that we need investments, a step change, certainly on a percentage basis in sales and marketing investments in order to enable growth, mostly because of the nature of how we go about growing. We build products, and we have an awesome go-to-market team, and they're really important to what we do, but we don't have a business model that says a dollar of ad spend results in a dollar ten of revenue. That's just not the business model that we have. We have a business model of building great products and partnering with the best, merchants and platforms to get our product distributed. That's the approach that we've taken, and it served us quite well. Mm-hmm. A Field of Dreams approach. If you build it, they will come. Pretty much. Another retail investor, Abdul A., asks the macro question of the time: How do you feel about today's economic environment, in which American citizens have a record amount of debt and are dealing with inflationary pressures on basic living expenses? And do you think Affirm thrives in this environment? We think we thrive in any environment, but it is worth acknowledging that or pointing out, reminding people that we believe that what we do is more valuable in a high rate environment. Everything that we do is more valuable when money is more scarce or more expensive. And that's because of the core thing that we do, is we help consumers find ways to pay for things that they need and want. And when rates are at zero, a zero percent loan is okay. It's not as interesting to consumers. When rates are where they're at now, and people are staring down high single-digit mortgages or 30% APRs on credit cards, the ability for us to offer a cool mix of 0% paid for interest-bearing loans to consumers is truly viable to them in a way that really is, I think, highly differentiated, highly, highly visible to them in the current rate environment. I think the inflation-driven trends for consumers have been things that really will just continue to put pressure on households. I think a large part of that has played out already. We feel like- Mm-hmm ... most of the pressure on consumers is already embedded in kind of the current macro environment. That doesn't mean it's gonna get better, right? The stress is very much there, but we feel like it's been very consistent. And if you think about one word that I think is pretty fair to describe the past 18 months or so, it's volatility. It's that things have changed a lot, and I think that whenever you have a dynamic situation, whenever you have a lot of volatility, the players that do best are the ones who have the most tools, the most flexibility, the most agility. And Affirm's transaction-level underwriting, our technology focus, and our unique distribution has really allowed us to navigate this market better than anyone. And I think that is... I think that's one of the real reasons we feel so confident about this environment or really any environment, is we've got the tools to navigate here. Mm-hmm. And that's an interesting way to put it, where the consumer has the consciousness of rate dynamics, but then you guys can step in and present those dynamic offerings is a really interesting way to frame it. You know, we're coming up to the top of the hour here, but I wanted to squeeze in a broad retail investor question to help kind of bookend the conversation. I mean, what are the main challenges of Affirm this year? This is from Tamista L. Maybe if I could follow onto that. You know, fast-forward one year from now, and we're having this conversation again, you know, what would you kind of envision as a baseline level of success in the eyes of Michael Linford? I think, you know, we really do measure ourselves in years and even decades, and so we have a very long-term perspective on where we're headed. So I think the next 12 months are really about executing the stuff that's already right on our plate. We have a lot to do in the next 12 months, and we're gonna stay focused on that. We're gonna stay focused on delighting as many consumers as possible, driving as high of conversion as we can for merchants, and delivering, we think, really differentiated performance on the asset side, so really strong execution in the capital markets. And I think the challenge for us right now is to take advantage of some of the hard work and, and I think even lead that we've built in a lot of areas. It was a situation last year where we had to be reactive to a lot of what was going on in the world. The dynamic environment with rates, you saw banks failing, you saw a lot of really difficult and sometimes really volatile things happening in the world. I think this year, we feel like we've gotten through all of that, and so the challenges are pretty exciting for us because they really relate to going back to the core thing of scaling our network. And I think it's really interesting from my perspective anyway, the way in which this company has gone from really being completely unaware. A lot of consumers were even unaware of who we were. So as the category has grown, we became more aware to both merchants and consumers. I think we got in the period of 2021, there's a lot of excitement for what it can be. And I think the volatility of the past year caused a lot of people to think about what is the actual role of a business like ours in the future of commerce? I think where we are now puts us back into where we were a few years ago, with a real chance to demonstrate the inevitability of the category, of the future of these kind of alternative ways to access credit and the value that we can drive to consumers when we do it. So the challenge for the next year is to really take advantage of this opportunity that we have, given all the hard work and investment we made over the past year and a half, to take advantage of it right now in the current market. Yeah, that's great. Well, Michael, we will give you three minutes of your Friday back. We want to thank you so much for allowing us to host this fireside chat, and we will be looking forward to documenting that growth that you continue to speak about in every step of the way. So for that, have a great weekend, Michael. Thank you, Andrew, and thank you, everybody, for listening. Thanks. Bye. Take care.