09-05-2025
Affirm Holdings Inc (AFRM) Q3 2025 Earnings Call Highlights: Strong GMV Growth and Strategic ...
Revenue: Not explicitly mentioned in the transcript.
Gross Margin: Not explicitly mentioned in the transcript.
Net Income: Not explicitly mentioned in the transcript.
Credit Quality: Described as excellent with strong LTV characteristics.
Profitability Outlook: Improved outlook for the current quarter and fiscal year, aiming for GAAP profitability.
Warning! GuruFocus has detected 7 Warning Signs with AFRM.
Release Date: May 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Affirm Holdings Inc (NASDAQ:AFRM) reported strong growth in Gross Merchandise Volume (GMV), with March being the strongest month at 40% year-on-year growth.
The company is seeing excellent traction with its 0% APR product, which is attracting high credit quality customers and boosting lifetime value.
Affirm Holdings Inc (NASDAQ:AFRM) has successfully renewed its partnership with Shopify through 2028 without any economic concessions.
The company has expanded its international presence, particularly in the UK, through partnerships like the one with Adyen, which accelerates integration and implementation.
Affirm Holdings Inc (NASDAQ:AFRM) is at the forefront of the industry in integrating and reporting back to credit bureaus, enhancing consumer credit scores and transparency.
The 0% APR product, while attracting high-quality customers, generates lower revenue compared to interest-bearing loans.
Affirm Holdings Inc (NASDAQ:AFRM) faces a highly competitive market, with pressure on merchant fee rates and competition from both pure players and incumbents in the consumer credit space.
The company is cautious about potential economic downturns and has increased its reserve on loan losses, indicating a conservative approach to credit risk.
Affirm Holdings Inc (NASDAQ:AFRM) is mindful of potential implications from student loan enforcement actions, which could affect consumer repayment behavior.
The company acknowledges that its app improvements are ongoing, with a focus on maintaining repayment rates, which may delay the rollout of new features.
Q: Can you discuss the balance between zero APR products and interest-bearing loans, and the potential for more merchant contributions to zero APR products? A: Max Levchin, CEO, explained that while zero APR products generate less revenue, they enhance brand value and customer conversion. These products attract prime and super-prime customers, which is beneficial for long-term value. Merchants often initiate these promotions, and Affirm is eager to support them as they drive customer loyalty and future card usage.
Q: What are the current strengths in GMV, and how sustainable is the growth, particularly with Apple Pay? A: Rob O'Hare, CFO, noted broad-based GMV growth, with direct-to-consumer services, especially the Affirm Card, leading the way. Growth accelerated throughout the quarter, with March seeing a 40% year-on-year increase. The sustainability of this growth is supported by strong merchant partnerships and consumer demand.
Q: How does Affirm view the potential impact of student loan enforcement on its business? A: Max Levchin stated that Affirm has already factored in student loan data into its underwriting process. While mindful of potential changes in repayment behavior due to government actions, Affirm is prepared to adjust its strategies as needed.
Q: Can you elaborate on the significance of Affirm's integration with credit bureaus and the challenges involved? A: Max Levchin emphasized the importance of reporting to credit bureaus to help consumers build credit. The integration process is complex, requiring careful testing to ensure accurate and beneficial reporting. Affirm aims to lead the industry in this practice, advocating for transparency and consumer benefit.
Q: What are the strategic goals for the Affirm app, and how does it balance repayment functionality with promotional offers? A: Max Levchin explained that while repayment functionality is a key priority, the app also serves as a catalog for merchant offers, particularly 0% APR deals. The app aims to be a tool for consumers to make smart financial decisions, with future enhancements planned to improve user experience and engagement.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
