Good afternoon, everybody. Welcome back again for the last presentation of the day. Last but definitely not least, the sun is out in London, so glad that you guys are all still here. That means something. As I said, last but not least, I'm super excited to welcome Affirm represented by Rob O'Hare, who is the CFO of the company, a nd my colleague John Hecht and I will go through moderating the session. John, over to you. Hey there. Can you guys hear me? Yes. [Turpin], just checking. Can you hear me? Yes, we can. OK. Welcome to, first of all, Rob. Thanks so much for being here. Good to see you. Sorry I can't be across the pond with you. I'm John Hecht, and I'm the senior analyst at Jefferies. I cover Affirm. As we all know, Affirm is a point-of-sale finance company that predominantly engages in buy-now-pay-later type of transactions and transactions processing. It's a technological-based platform that allows merchants and consumers to seamlessly engage in transactions and, in some cases, engage in services around transactions, like financing of the transactions and all the settlement associated with transactions. Affirm spend, it's the largest buy-now-pay-later in the U.S. Its key partners include Amazon and Shopify. It's currently entering into the U.K., so we'll get an update on that today. The company has very attractive growth, top-line growth in the mid-20%, customer growth over 20%. We have been seeing a very attractive expansion of operating margins and earnings power. The company has also done a remarkable job in managing expenses and managing credit risk through what we perceive to be a somewhat challenging credit cycle over the last two or three years. It has done a very good job. Most importantly, it is growing fast, and it continues to gain momentum and gain market share in the U.S., where adoption of buy-now- pay-later transactions is still very rapid. With that, I want to introduce Rob. Rob is Affirm's Chief Financial Officer. He has been with the company a few years, but just recently was promoted to this title. He has been Chief Financial Officer at Tile and in the same role at Spark Networks, so a very good, extensive background in this type of role and high-growth companies. So again, [Turpin] and I will manage this fireside chat here for the next 30 minutes or so. We'll go back and forth trying to address all the key topics and questions for Affirm. Towards the end, we may offer an opportunity for people in the audience to raise their hands as well. If you have a question, think about that, and we'll call on you at that point in time. First, again, welcome, Rob. First is the key take from the quarter. You guys recently reported a strong quarter. Maybe can you talk about what were the positive surprises and other worthy callouts from the last quarter of operating trends? Sure. Thanks for having me, John, and thanks for the lead-in and the intro there. The third quarter, we have a June fiscal year. Our third fiscal quarter, which was the March quarter, it was a really strong quarter, I would say, across the board. We grew our consumer, our active consumer base, by more than 20%. We also grew the number of active merchants on our platform by more than 20%. Those are really important leading indicators of the size and health of our network. The growth in the network translated to our third consecutive quarter of accelerating GMV growth. We grew GMV 36%, which was faster than the same period in the prior year. We're really proud of those stats. I think it's a testament not only to the strong relationships we have within our merchant base, but also just the increasing interest that consumers have in our category. The category itself, we believe, is growing about 25%. We are a clear market leader, growing slightly faster than the market at large. It is great to have those tailwinds in terms of consumer adoption. That is ultimately a big function of our growth. Looking at the P&L, we grew revenue in line with GMV. Our measure of transaction profit, revenue less transaction cost, grew north of 50% in the quarter. The strong growth there translated to really nice adjusted operating income as well. We had about a 22% margin in the quarter. That is about nine points of margin expansion on a year-over-year basis. All of the growth that we've seen for the last several quarters is really helping to drive a nice scaling in terms of profitability as well. Lastly, we're really proud of the growth that we saw within Affirm Card. Affirm Card, for those of you that haven't used the product, it's our direct-to-consumer offering. It has the functionality of a debit card, but it has the capabilities of Affirm financing embedded as well. That product grew to 1.9 million active cardholders, so just under 10% of our active consumer base. It grew to be about 9% of our GMV, so north of 100% growth rate in the quarter as well. Really a product that we're very excited about and a product that continues to scale really, really nicely. We're really proud of how we showed up this quarter, strong growth leading to strong profitability, but also doing, I think, really important things to expand the network. Okay. That's a good kind of high-level intro. We'll get into some of those topics a little bit more deeply. You did talk about GMV upside and good GMV trends overall. Can you talk about where you're seeing that upside? Is there certain channels or transaction types or transaction characteristics that you're seeing, or has it generally been fairly broad in terms of the momentum there? Yeah, I hope it's not an unsatisfactory answer, but the growth actually really was very broad-based. We had two categories in particular, general merchandise and consumer electronics, that led the growth from a category perspective. General merchandise happens to be our largest category as well. Otherwise, we saw really strong growth in almost every industry vertical that we track. You can also look at our growth in the quarter based on product type. We do a mix of loan products. We do pay-in-four loans, which are also common amongst our competitive set. About 85% of our business is done through monthly installment loans that are three months or longer. Each of those loan products grew really nicely as well. We saw the strongest growth, growth of about 44% within our monthly 0% installment loans. We think that's a pretty differentiated product in the industry. It's not something that our competitors are doing at scale. It converts really, really well for our merchants. It's a product that our consumers really like. It gives them, obviously, the low cost of borrowing through a 0% loan. We're able to extend the term lengths beyond a pay-in-four loan and go out three months or longer. We're really happy with how the loan product is shaping up in terms of mix. Ultimately, it's that mix that helps drive some of the profitability that I mentioned that we demonstrated in the quarter. Okay. J ust touching on margins in the quarter, your product-level margins or the gross margin, or we call it the RLTC, revenue less transaction cost, that has trended nicely, but also had upside relative to our expectations. Similarly, but I think from different sources, the operating income margin has also trended nicely. Maybe you can take us through what you, in terms of the product-level mix or efficiencies or scales, what you're doing to enhance margins there, and then similarly at the operating income level. Sure. Good question. In terms of the RLTC margins, we've established a long-term framework that we want to be between 3% and 4% on that metric as a percentage of GMV. In three of the last four quarters, we've been slightly above the 4% mark. We are operating at or above the high end of what we think the long-term range for the business should be. Really what drives the RLTC take rates in a given quarter is going to be our loan product mix. In the third quarter, we chose to lean in and had outsized growth, as I mentioned, in our monthly 0% loans. Those loans are nicely profitable for us, and they tend to attract a borrower from the higher end of the credit spectrum versus our interest-bearing product. Because we had slightly more mix of those loans, we feel like that's a good way for us to manage the overall profitability while also maintaining focus on what we believe is a pretty important and large market opportunity in the U.S. We want to make sure that we balance growth with profitability. Doing a bit more on monthly installment loans that are 0% APR is a way to make sure that we have a wide aperture and are putting loan products in front of borrowers of all types that are going to resonate with those borrowers. Cu stomers are obviously at the core of what you guys do. New customers' growth has been very strong, about 20%. Can you talk about the evolution of customer acquisition? Also, if you can specifically talk about the differences between existing customers and new customers in terms of spend and engagement, for example. Yeah. Really, the lion's share, almost all of our customer acquisition comes from our merchant partners. We want to make sure that we're visible and as up-funnel in the purchasing decisions of a consumer as they're navigating our merchants and our partners' sites. Most of what we do is at e-commerce today. Getting prominence on the product display page is really important for us. We want to be as up-funnel as possible. We really don't have any sort of scaled direct-to-consumer marketing efforts. Point of sale really is the primary tool for user acquisition and for network growth from a consumer perspective. Sorry, could you repeat the second part of the question? Yeah. In terms of the differences between new customers and existing customers in terms of spend and engagement with you guys. Yeah. I mean, when you look at the data on a cohort basis, because we have very large coverage of U.S. e-commerce, we've seen that new cohorts of consumers are transacting more frequently and therefore also spending more with us. You can see that also in our frequency metrics. Our frequency grew to north of 5.5 transactions per user per year, while we're also growing the consumer base at roughly 20% clip. We are seeing really nice uptake and very strong performance on a cohorted basis as we've continued to grow the network. Okay. Thanks very much. You talked about, Rob, earlier just general expansion of the TAM. But then also we noted that Affirm's been gaining share in the current environment. Maybe on the TAM, I'm sure there are certain products you guys believe you're taking share from, like credit cards. Maybe talk about that. At the first part of the question, talk about where do you think buy- now-pay- later is really taking share from, a nd then since you're growing faster within the market, who are you taking share from amongst your competitors? Yeah. Good question. I think absolutely we're taking share from credit cards. I think that is the largest addressable market for us. There's roughly $1.2 trillion of revolving credit card debt outstanding in the U.S. There's roughly $4 trillion of annual credit card spend in the U.S. Buy- now-pay- later, Affirm in and of itself, I mean, we're a very, very small portion of the broader, what we would argue, consumer credit market if you're including credit cards in the picture. Obviously, the category, Affirm itself, is growing multiples of what credit card growth rates are. We think that's, again, a testament to the fair and honest financial products that we put in the hands of our consumers and consumers discovering Affirm at stores and merchants where they're already shopping and having a good experience and wanting to repeat with us. We think we have a nice flywheel. I think it's inherent to the ways that we treat the consumer. That's really important, internally, that's incredibly important to us that we never charge a penny of late fees and that we are aligned with the consumer and don't profit if the consumer were to stumble. There's no ability to revolve. There's no late fees in our ecosystem. That's incredibly important to us. I think that's helped us grow the business nicely. I think that resonates with merchants, which merchants, I believe, are increasingly aware of the financing products that are being pushed to users from their services. They want to make sure that those financing products do right by the consumer. I think the combination of all of those things is helping us to grow faster than even the BNPL industry, which is very growthful at roughly 25% a year. Rob, how competitive is the market now? Any update you can give us there? Obviously, we can't talk about competition without talking about Klarna. Have they had anything you've noticed differently from them given the IPO process that they've started? Yeah. I mean, the market continues to be competitive. I would make a point that most of the competition we see tends to cluster around the pay-in-four product in the U.S. You look at our mix of loan products, it's about 15% of what we do. When you look at our competitors, it tends to be the large majority of what they're doing. That really is the most competitive of the competitive surfaces within the industry. We typically go to market with merchants with a product that we call Adaptive Checkout, which allows us to change the mix of loans that are offered to the consumer on behalf of the merchant. Typically, we put three options in front of a consumer. We can set up a program where one of those options is a pay-in-four option, but the other two might be monthly installment options, either 0% or interest-bearing options. That allows us to craft a program that works for the merchant in the context of what the merchant's objectives are for bringing on a financing partner. Sometimes, to be honest, that's cost of acceptance. Some merchants are laser-focused on getting their cost of acceptance sort of down or in line with what they're paying for credit cards. In some cases, merchants are really laser-focused on conversion. By being able to extend our financing offerings and doing longer terms than what our competition typically does, that helps us show up well if that's the rubric that the merchant is applying. We pride ourselves on creativity and the flexibility that we can bring to our financing programs. I think that allows us to show up well and really meet the merchant wherever they're at in terms of their margin structure, in terms of the goods that they're selling. In terms of Klarna, I think Klarna has been a competitor of ours for the entirety of my tenure at Affirm. I've been here almost five years. They've grown the business in the U.S. The U.S. is an expansionary market for them. We bump into them in RFPs. We're aware of them. I can't comment on how a financing event like an IPO is going to dictate their near-term strategy. Yeah, I mean, we definitely bump into them in the market. Okay. I want to turn to the consumer now. I think that's a big topic, just spend trends, credit trends. How are the consumers? It seems like in the U.S., predominantly, the consumers have been more resilient than maybe we would have expected. How do you guys see spend trends, payment trends, and maybe just give us kind of an update of the flavor of the consumer from your perspective? Yeah. We called out in the last quarterly call that we did see accelerating growth over the course of our March quarter. March was the highest growth month that we had in the quarter. We grew GMV about 40% in that month. It's really hard for us to ascertain was that pulling from the tariffs. I think that's one of the theories that's out there. Or was it just a change in consumer engagement, maybe partially driven by the 0% programs that we were leaning into at the time? Those convert really well with consumers. For what it's worth, we saw that growth continue to be at roughly the 40% level in April as well. We shared that on the last call. We really haven't given an update beyond that. Suffice it to say, we did see accelerating growth over the course of Q3. We saw strong growth in April. We have guidance out for GMV in the quarter that is at the 34% level. We did bake in some conservatism that the growth that we were seeing in April would not subsist. We really haven't given an update much beyond that. I think whenever we see a change in consumer purchasing patterns, I think we're trained at Affirm to make sure that we're not changing the credit profile of that incremental volume that is coming in. The good news is that's been the case for us. We've seen credit outcomes continue to be right in line with expectations. We're seeing delinquencies that are in line with past years. The consumer, from a credit perspective, despite maybe some outsized demand, the delinquencies are right in line with expectations that we're seeing really strong credit performance. C onsumption trends, has there been a shift to or from discretionary worth noting? Or has it been fairly stable the past few quarters? No. I mean, as I mentioned, really, we saw growth of north of 20% in literally every category with the exception of sporting goods. I think there's some idiosyncratic things about our sporting goods portfolio where lower growth there makes sense to us. Yeah, the growth has been very broad-based, as we outlined in the Q3 results. Okay. Turning to funding balance sheet considerations, just to touch on that briefly, maybe first question on that is, talk to us about how interest rates impact the business. Can you kind of give us sort of some high-level framework to think about sensitivity to changes of rate? When you look at our loan book, our average term length is about 12 months typically. Our weighted average life, because our loans pay down on a monthly basis, is about five months. The relationship between those two numbers is 0.4. We have established a framework externally that if you think about a one-point movement in rates in either direction, the impact to our funding costs should be 4/10 of that movement in rates. It is important to remember that the duration in our loans is quite short and that insulates us a bit from movements in rates. We also fund the business through a handful of different funding channels. Some of those funding channels are floating-rate debt instruments. Some of them tend to have a fixed component or even a more episodic repricing that is reflective of rates, but not immediately. That 4/10 movement for any change in rates, really, you need to think about that over maybe a one-year or even a two-year time horizon. I think we're a lot less sensitive to rates than it may appear from our business model alone. Yeah, that's how we think about movements in rates. Funding markets. You've got a lot of capital raising within private credit. It seems like the asset-backed securitization markets are relatively strong now. You guys have announced some good off-balance sheet funding partnerships like with Sixth Street. Talk about how these constructive funding markets, do they impact your thinking or your strategy in terms of which way you're going to take the balance sheet? Or is that just a function of what's in the market at that time? Yeah. No, we have an amazing team within Affirm that we call the Capital Team that owns all of those funding relationships for us and really does an amazing job of making sure that funding never has been, never will be a constraint to growth in the business. We are really fortunate to have that team. They have had an amazing last year with some of the large partnerships, really strong execution on the ABS markets as well. Yeah, we ended the March quarter, I think, with $23 billion of funding capacity, which is a high watermark for us. Maybe more importantly, we were at, I think, 59% utilized within that funding, which is a low watermark for us, which is a really great number to have too, especially as we are seeing this accelerating growth and outsized growth in our business. Yeah, we're really proud of the capital markets team. They've had an amazing run over the last year. I think there's a lot of growth to come. On your question around does it impact the on- versus off-balance sheet, for those of you that didn't see it, the Sixth Street partnership is quite large. It's also a three-year relationship. It's a $4 billion commitment with a three-year time horizon. It's the largest forward flow relationship that we've ever brought into the platform. On the margin, that may mean that we're slightly more off-balance sheet with our funding just because we do have this new large partner that wants to put money to work with us. Other than that, we're always looking to add capacity across all three of our funding channels. As we add more capacity, we're able to, or as we add more volume and collateral, we're able to do larger ABS deals as well. I think there's been nice growth across the board. It won't really change our biases in terms of on- versus off-balance sheet. Rob, there is obviously a new administration in the U.S., just in case anybody did not notice that. We have all felt it one way or the other. My question is on regulation. Is there any update on regulation you can give us or any changes coming up that you can talk about? Really, I mean, nothing to report. I mean, there has been some turnover at the CFPB with the change in administration in the U.S. We do not really look to the CFPB to set the product roadmap for us. We want to make sure it is a huge part of our value proposition to both merchants and to consumers that we treat the consumer well, that we are transparent with our products. I do not think that we have ever been "close to the line" in terms of how we have created products that we put in the hands of consumers. We want to align with consumers. We have a business model that does that by not ever charging late fees and not having compounding or revolving interest in the product. Again, we are, of course, aware of the regulatory environment. There have been some changes with the new administration. It doesn't really change our roadmap or change the product set that we want to offer. Okay. We've only got a couple minutes left. If anybody in the crowd has a question, go ahead and raise your hand. [Turpin], I'll let you let me know if anybody's raising their hand because I can't see the audience. Yeah. There's one. Thank you very much for your presentation. I think I just want to get a better understanding of two parts. One is, as [audio distortion], there's a lot of competition. How easy is it for Affirm to write in any sort of clause that if you merchant only use Affirm, then we are your exclusive partner. You can't take on any, so say Klarna or say Afterpay as an additional BNPL option. I want to focus on the TAM discussion that you previously talked about. I recognize that you're taking market share from credit cards. How much of this volume do you think is actually, I guess, tackable for Affirm? Because I assume there's a good chunk of credit card deals that people say, "Oh, I can get good miles or good bonuses from these credit cards. But I'm paying it down every month. I will only use this for a working capital option, not really an installment type of payment." Sure. Thank you. I'll take them in order. In terms of the merchant contracts and pushing for exclusivity, I would say the merchant engagements we have, we have 350,000 different merchants that are active with us. They really take all the forms you might be able to imagine. We certainly have contracts that have periods of exclusivity that can range from one year to three years to maybe even five years in some cases. We have integrations with merchants that maybe started as an exclusive, but the exclusivity is gone, and we're earning our prominence with that merchant by showing up well and driving conversion for them. Also, increasingly, we're winning deals that are what we call side-by-side deals where maybe the merchant started with a competitor for whatever reason, but now that the exclusivity has lapsed, we're able to come in as a second provider of financing. Because we have a different product set than most of our competition, we're able to drive real incrementality even as a second provider for those merchants. I help lead our pricing efforts that are at the table for a lot of these merchant discussions. We really pride ourselves on being as flexible and as creative as we can be and understanding the merchant situation and putting the right offer in front of the merchant that makes sense for them. If exclusivity does not make sense for whatever reason, because maybe they have an incumbent provider, we're not wed to that approach. We love exclusivity where we can get it, but it's not the only way that we engage with merchants. On your question about how much of the credit card spend is addressable, again, I think time will tell there. I think we're not seeing any sort of slowdown or saturation in our business. We're seeing accelerating growth. It's quite the opposite of a saturation. That tells us we're on the right course. We are seeing a deepening of frequency when you look at our overall transactions per user per year versus what we're seeing on Affirm Card. Affirm Card is running at roughly 20 transactions per user per year versus 5- 1/2 times for the user base at large. That tells us that we have a product that resonates, that allows for consumers to make plans and predictably plan their financial lives on a monthly basis. We're doing it in ways that align with the consumer and don't have some of the financial penalties that exist in credit cards. We think that's a better experience for consumers. We also think we're incredibly early in the market opportunity. We try to take the long view in terms of how much of that maybe $1.2 trillion of revolving spend we can penetrate. We're really optimistic about our chances there. Thank you. Great. The session, actually, we're at the end of our time. Rob, I don't want to put you on the spot. I didn't really get to ask about all your new growth endeavors, which includes the Card product that you mentioned, direct-to-consumer, entering the U.K. and maybe some other European markets, and then the Apple Pay partnership. Maybe just since we have a limited time, maybe just give us the state of the union on those and what kind of KPIs or growth objectives we might be looking at over the next couple of years with those. Yeah. I mean, I think all of those are incredibly important. The Wallet partnerships in conjunction with Card, we think that's a really elegant way for us to play in-store with buy-now-pay-later. No one has really cracked the code in terms of in-store commerce yet. We think there's an immense opportunity there. We think a form factor that consumers know, like Affirm Card, that's a really elegant way to do it along with the companion app that's a part of Card. The same is true with the Wallet experience. We're really excited for the Wallets to start to move out of just e-commerce and start to show up in-store as well. I think that's an immense opportunity in the U.S. There's no reason why that opportunity can't work in the new markets that we're also very excited about. Yeah, we've been on record to say the U.K., we launched with a small number of merchant partners in November. We're excited to get going with Shopify in the not- too- distant future. We also are looking to expand in continental Europe and also looking to go to Australia in the long term too. Yeah, we're really excited about taking the Affirm brand out of just North America. All right. We've got a little bit over the limit. Really want to thank you, Rob, and [Turpin], thanks for co-hosting this with me. Thanks to everybody for participating. Have a good evening. Yeah. Thanks, John. Thank you, Rob.