Affirm Holdings, Inc. Q2 FY2025 earnings call

Key Points

• Max Levchin thanked Libor for his ten years at Affirm, noting their history together at University of Illinois.
• Discussed zero percent loans as part of merchant/manufacturer subsidized programs available across Affirm's surfaces (app, card, wallets).
• Reinvesting excess RLTC margin into zero percent loans, which is margin dilutive but beneficial for network reach.
• Progress in UK launch with Shopify as a major enterprise scale integration coming soon; positive merchant interest.
• Use of AI for productivity in legal, compliance, accounting, marketing, enhancing operating leverage.
• Redesign of Affirm app focusing on utility, showcasing zero percent deals with increasing search to transaction initiation rates.
• Affirm card has strong metrics (engagement, margin, transactions per year) with plans to expand use cases.

No detailed breakdown of product segment financial performance in absolute terms and revenue contribution % provided in the transcript.

Guidance Points

• Exceeded three percent to four percent RLTC guide, with benefits from securitization and loan sales.
• Sixth Street partnership expected to ramp up in second half of 2025, scaled carefully over next year.
• OpEx expected to be roughly in line with Q2 in Q3 and Q4.

Risks

• Forward-looking statements subject to numerous risks/uncertainties in SEC filings.
• Funding costs beneficiary of current market conditions, durability in recession is a consideration.

Q: About noticeable increase in zero percent loans and deployment strategy.

A: All the above, including opening new merchant doors, targeting verticals, and existing partners.

Q: RLTC margin and reinvestment.

A: Leaning into zero percent, which is slightly margin dilutive but good for network reach.

Q: Funding mix and sixth Street partnership.

A: Sixth Street partnership to ramp over next year, scaling capital program thoughtfully.

Q: AI use and operating leverage.

A: AI used for productivity in various functions, enhancing operating leverage and allowing hiring choices.

Q: Card performance and consumer behavior.

A: Card has strong metrics, best economics, and plans to expand use cases.

Q: Impact of macro/political news on Affirm.

A: Rates and regulations don't faze Affirm, as it has thrived in various environments.

Q: Durability of funding cost improvements.

A: Beneficiary of market conditions but differentiated by credit performance, which is durable.

Q: Market share and international opportunities.

A: Taking share in the US, with international opportunities and no limiting factors for scaling with partners.