Earnings call transcript: Affirm Holdings Q1 2026 beats EPS expectations

Affirm Holdings (AFRM) reported robust financial results for Q1 Fiscal 2026, significantly surpassing earnings expectations with an EPS of $0.23 against a forecast of $0.11, marking a 109.09% surprise. Revenue also exceeded projections, reaching $933 million compared to the anticipated $881.84 million. Despite these positive results, Affirm's stock fell 7.73% in after-hours trading, closing at $65.99, suggesting investor concerns over future growth prospects.

Key Takeaways

• Affirm's Q1 2026 EPS and revenue significantly beat forecasts.
• Stock declined 7.73% in after-hours trading despite strong earnings.
• Extended partnership with Amazon through 2031.
• Expansion into new verticals, including service and automotive repair.
• Positive trends in consumer spending and e-commerce integrations.

Company Performance

Affirm Holdings demonstrated strong financial performance in Q1 Fiscal 2026, driven by strategic partnerships and expansion into new markets. The company's focus on direct merchant integrations and consumer channels has bolstered its competitive position. The extension of its partnership with Amazon through January 2031 highlights Affirm's growing influence in the e-commerce sector.

Financial Highlights

• Revenue: $933 million, exceeding forecasts and showing strong growth.
• Earnings per share: $0.23, a 109.09% surprise over the expected $0.11.
• Revenue-less transaction cost rose to 4.2%, above the full-year target of 4%.

Earnings vs. Forecast

Affirm's actual EPS of $0.23 far exceeded the forecast of $0.11, resulting in a significant 109.09% earnings surprise. Revenue also surpassed expectations, with a 5.8% surprise. This performance reflects effective cost management and strategic growth initiatives.

Market Reaction

Despite the earnings beat, Affirm's stock fell 7.73% in after-hours trading, closing at $65.99. This decline contrasts with the company's strong financial results, suggesting that investors may have concerns about future growth or broader market conditions affecting sentiment.

Outlook & Guidance

Affirm remains optimistic about its growth prospects, with a focus on expanding its 0% APR offerings and targeting 10 million active cardholders. The company projects continued growth in new verticals and international markets, supported by strategic partnerships and innovative products.

Executive Commentary

CEO Max Levchin emphasized the company's commitment to building honest financial products, stating, "Our mission has been the same for 15 years: to build honest financial products that improve lives." COO Michael Linford highlighted the company's strategic partnerships, saying, "We are expanding relationships with Blue Chip, Ford Clo Buyers."

Risks and Challenges

• Potential challenges in maintaining growth momentum in a competitive market.
• Risks associated with new product launches and market expansion.
• Macroeconomic pressures that could impact consumer spending patterns.

Q&A

During the earnings call, analysts inquired about the extension of the Amazon partnership and the company's 0% APR promotional strategy. Executives addressed these queries, emphasizing the potential for growth and the importance of strategic partnerships in driving future success.

Full transcript - Affirm Holdings Inc (AFRM) Q1 2026:

Operator: Good afternoon. Welcome to the Affirm Holdings' first quarter fiscal 2026 earnings call. Following the speaker's remarks, we will open lines for your questions. As a reminder, this conference call is being recorded, and a replay of the call will be available on our investor relations website for a reasonable period of time after the call. I'd like to turn the call over to Zane Keller, Head of Investor Relations. Thank you, and you may begin.

Zane Keller, Head of Investor Relations, Affirm Holdings: Thank you, Operator. Before we begin, I would like to remind everyone listening that today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our investor relations website. Actual results may differ materially from any forward-looking statements that we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them except as required by law. In addition, today's call may include non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in our earnings supplement slide deck, which is available on our investor relations website.

Hosting today's call with me are Max Levchin, Affirm's founder and Chief Executive Officer; Michael Linford, Affirm's Chief Operating Officer; and Rob O'Hare, Affirm's Chief Financial Officer. In line with our practice in prior quarters, we will begin with brief opening remarks from Max before proceeding immediately into your questions and answers. On that note, I'll turn the call over to Max to begin.

Operator0: Thank you, Zane. As always, the better the quarter, the fewer the opening remarks. This one was really great. This is really all I got. Actually, no, I have one piece of breaking news, actual breaking news to report. Earlier this week, we extended our U.S. agreement with Amazon for an additional five years through January 2031. We look forward to serving these customers going forward. All right, back to you, Zane.

Zane Keller, Head of Investor Relations, Affirm Holdings: Okay, thank you, Max. With that, we'll now take your questions. Operator, can you please open the line for our first question?

Operator: Thank you. We will now be starting the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using any speaker equipment, it may be necessary to pick up your handset before pressing your star keys. Our first question comes from Dan Dolov with Mizuho. You may proceed with your question.

Operator1: Hey, guys. Great results. You forgot one chief, Chief Fan, which is me. That's on the call today.

Operator0: Thank you, Dan.

Operator1: Chief Cheerleader. So, guys, you know, great quarter as always. You know, some companies are pointing towards the tricolor situation and are blaming that for poor execution in the funding markets. Yet Affirm seems to be executing so well, including that ABS deal that you just priced. So maybe any thoughts. On what's happening in the funding market and why you're still able to execute so well in the face of all these news and great stuff again. Thanks.

Michael Linford, Chief Operating Officer, Affirm Holdings: Yeah, thanks for the question. Yeah, we're really proud of our ability to execute in the ABS market. And in the capital markets more broadly. We are expanding relationships with Blue Chip, Ford Clo Buyers, increasing their exposure to Affirm while continuing to scale our ABS program. I think, obviously, the performance of the asset is a major driver. Of the market's appetite for what we produce. What we produce is something very special and very unique, and it's highly valued in the debt capital market. And I'd be remiss if I didn't also call out our team. We have, I think, the best team in the world who does this every day.

And our ability to get in front of investors and make sure they understand what can be sometimes a complicated product and understand how it works and why our advantages are what they are, it really does set us apart.

Operator1: Thank you.

Operator: Our next question comes from Nate Svenson from Deutsche Bank. You may proceed with your question.

Zane Keller, Head of Investor Relations, Affirm Holdings: Hey, guys. Nice results. I did want to ask about the PSP relationships. Obviously, you announced the WorldPay for platform signing. You had a nice little blurb in the letter on this. I think it would be helpful to hear a little bit more about how you're thinking about that PSP strategy holistically, what you're doing to expand those relationships, what we might expect to see in the future. Thanks.

Operator0: Thank you for the question. I think PSP is a really important channel for us. We are big fans of having lots of doors with Affirm logo on all of them. So that both the merchant and the consumer have their choice as to. Who they partner with, who they walk through, and we will always be there to serve them. We've had relationships we've announced and bragged about in the past. This is just one of the recent ones that we signed in the quarter, so we felt the need to include it. Probably kind of worth pointing out, most importantly, these really do help with the speed of integration. And so as a path to get onto more doors or into more. Merchants and sometimes even platforms within platforms, that's what PSP relationships are so. Good at. And that's exactly what we try to accomplish there. It still.

Requires us to execute on the front end. The consumer conversion has to be high. The approvals have to work. The credit has to perform. And so it's an important. Way to ensure we get there faster on integrations, but the products are no less. To develop and deliver than what we do with direct integrations. I don't know if Michael has more to say.

Michael Linford, Chief Operating Officer, Affirm Holdings: Yeah. A really small thing to add. Oftentimes, the platforms for us are the way we integrate more than they are the way we acquire. Sometimes there's also acquisition that happens there. But a pretty common mode is you're a top 100 e-commerce site, and you leverage an existing platform partnership to get integrated. We're still highly involved in the sale, highly involved in the configuration of the financing program that's offered on that site. What's so important is our breadth of products requires and frankly allows us to make more of those connections than what we think other people can do in the industry.

Operator0: Yeah, that seemed much more eloquent way of saying what I was trying to say. Thank you.

Zane Keller, Head of Investor Relations, Affirm Holdings: Yeah, thanks, guys.

Operator: Our next question comes from Jason Kupferberg with Wells Fargo. You may proceed with your question.

Kathy Chan, Analyst, Wells Fargo: Yeah, hi, guys. This is Kathy Chan on for Jason. I just wanted to ask or get a finer point on the RLTC trend of the percentage of GMV. I mean, first is, can you just obviously, you guys had a really good quarter for that, around 4.2%. Can you just put a finer point in terms of why your full year '26 guide is unchanged for that metric? And based on your second quarter guide, you're expecting that to be near 4%. So is it fair to assume that's decelerating in the back half of the year? And are there any particular factors that we should be looking for just because of that, i.e., is there a Walmart higher 0%? Are those the factors that are contributing to those trends? Thank you.

Michael Linford, Chief Operating Officer, Affirm Holdings: I think most broadly, we're really focused on. 4% being an upper bound for revenue-less transaction cost take rates. And I think when we're running consistently above 4%, we're always looking for ways to make sure that we're doing everything we can to expand the network, either through incremental GMV or incremental reach with users and with merchants. So I think it's really a philosophical target that we have that we stay pretty close to 4 on the high end. There will be puts and takes. Within given quarters, just given different capital markets transactions and other sort of. Idiosyncratic things that can happen in a given quarter. But I think long-term, we think 3 to 4% is the right range. And right now, with the setup that we have and the product mix that we have, we have been fortunate to run slightly above 4%.

But really, that goal is to make sure that we're maximizing growth and profitability. And so that's why 4% we think is the right target for this year.

Kathy Chan, Analyst, Wells Fargo: Okay, thank you.

Operator: Our next question comes from Dan Perlin with RBC Capital Markets. You may proceed with your question.

Zane Keller, Head of Investor Relations, Affirm Holdings: Thanks. Great results. Good evening, everyone. I just wanted to ask. Clearly, the data seems to be suggesting, at least your data, that the spending environment for the consumer remains pretty damn healthy. I know you called out sporting goods and outdoor and those kinds of things. But when you also look at the 30-day delinquency trends, it would just continue to suggest that they're relatively healthy. So the question really that I have is, is that a function more of natural selection for your underwriting and your technology that you're able to use per user, or do you really think and see the overall health of kind of the less affluent consumer being as strong as what your data suggests? Thanks.

Operator0: I would not call our underwriting practices a natural selection, just for the record. I think it's highly. Unnatural. It's very carefully constructed mathematically. We take a lot of pride in just how good it is. It's very hard to speak about kind of the broad universe in a sense that we're still a tiny, tiny percentage of spent. So take this with a grain of salt. I'm sure soon enough I'll be opining on the state of American shopper on this TV show or another. And I always try to point out that. We're a statistically significant sample, but we're still a pretty tiny sample. That said, our consumer is borrowing, paying us back. Shopping fairly healthily, et cetera. So generally speaking, everything you said is exactly as we see it. I have one fun factoid for you that may serve as a proof point that.

I probably know what I'm talking about. So we've been looking at. Data. From government employees because of the shutdown to understand what it practically means for. The ecosystem and us in particular. And we do not see any. Loss of repayment. In other words, the delinquencies and defaults in that group. Are just fine, in line with the rest of the general population. But we see a few basis points of a demand slowdown. And given we're growing at 40% year over year, a couple of basis points is not a thing that I lose sleep over. But it's actually very gratifying to know that in a relatively small percentage of the population, given how small a percentage we are of the overall commerce, we can still detect that with.

Reasonable statistical significance, tells me that all the monitoring we're doing at the macro level to make sure that we don't miss some sort of a negative signal in the macro trends is going to be just fine. This is a fairly small thing to notice, but we were able to ascertain it pretty clearly. So right now, things are fine. We're looking all the time, but maybe a little bit more carefully right now.

Zane Keller, Head of Investor Relations, Affirm Holdings: Excellent. Thank you so much.

Operator: Our next question comes from Harry Bartlett with Rothschild & Co. You may proceed with your question.

Harry Bartlett, Analyst, Rothschild & Co: Hi, guys. Nice call too. I just want to touch on PSPs. I mean. Perhaps maybe you could talk about the economics here, whether there's any difference between. What you do with kind of direct merchant integrations when you're kind of enabled as default. And also how you're thinking about. PSPs as part of your international expansion, whether this kind of accelerates that process.

Operator0: Sure. Maybe on the first point, just around economics, I would say. These end up being. Typically bespoke negotiations between us and the platform. And so it's hard to sort of encapsulate them in a single sentence or two. I think they're more different than they are similar, and we don't really want to get into the specifics of commercial deals here. In terms of expanding internationally, I mean, I think. Obviously, Shopify in a lot of ways. Has been a huge distribution partner for us and really helps us access the long tail of smaller merchants in a really efficient and profitable way. So that's obviously a very key part of our international expansion.

I'm not sure if you would count them as a PSP or not, but I think they bring a lot of the same benefits that we see with some of the PSP partnerships that we also have.

Harry Bartlett, Analyst, Rothschild & Co: Got it. Thank you.

Operator: Our next question comes from Mosh Orenbuk with TD Cohen. You may proceed with your question.

James Fawcett, Analyst, Morgan Stanley: Great. Thanks. It's very. Gratifying to see another half million. Affirm card members in the quarter. Could you talk a little bit about what the factors are that drive how rapidly that can penetrate? And maybe since you did mention that you're testing cash flow underwriting, what kind of impact that could have. On your ability to approve transactions and see growth in volume per card? Thanks.

Harry Bartlett, Analyst, Rothschild & Co: Certainly, we'll try to avoid prognosticating about just how huge this whole thing can be. But obviously, it is my theory child. At least right now. Cash flow underwriting is really helpful. For younger consumers and just folks who are kind of overlooked by the. Rest of the ecosystem. It's not to be confused. For. Kind of necessarily at least going deeper into the. Credit stack. Obviously, traditionally, it's used for reading folks that usually cannot get a good signal from the basics of their credit file. But that's both true. Typically for slightly older consumers in a lower credit strata, but really pronouncedly true for. The younger millennials and Gen Z. They typically refuse to borrow, on average, refuse to borrow more on credit cards. And so perfect customer for us on the flip side, don't borrow enough. Therefore, very hard to read anything from the credit profile.

And so this is just a good unlock. So we think it's going to help us grow. A little bit early days, so I don't want to put a number on it, but. Unlocks more. The growth of card is. Regulated by. A couple of factors, our willingness to market it. So first of all, it's entirely marketed internally. I think I've said it a hundred times, but there's repeating. We've spent no time marketing it outside a firm repeat customer, which gives us a little bit of advantage in figuring out who might be the perfect customer for this thing. We're still not really driving it. Full thrust, not because we don't want to, not because we don't care, but because we've been just very, very deliberate about opening it to. Many segments of our users, including some of the slightly lower credit quality.

So we've maintained slightly higher credit quality in the card on average. As we get more comfortable with our ability to underwrite everyone for this, at this point, it's not a new product for us, but it's still much newer than the rest of the system. As we get better and better underwriting, more confident with many cohorts, and these things do take quarters and years, we will continue marketing it to the general population. At the limit, we expect the card to be a thing that will offer to every single user we've acquired at the point of sale and elsewhere. With some modulations of the product itself. So some of the new stuff that we haven't really shown yet is just various. Features within the card that make it more suitable for this or that segment of consumers. So pretty excited about that.

But generally speaking, I would look at the current active base and sort of the overall file of consumers we have and use that as the natural limit of how big the card will be. We certainly want it to be the preferred way of interacting with our product.

James Fawcett, Analyst, Morgan Stanley: Thanks very much.

Operator: Our next question comes from Rob Wildhack with Autonomous Research. You may proceed with your question.

Adam Frisch, Analyst, Evercore ISI: Hi, guys. Nice to see the Amazon agreement extended, including the HK. There's only a brief description in there. So I was just wondering if you could give us some more color on that extension broadly, how that conversation progressed, and anything new or interesting that might have come out of the new agreement.

Rob O'Hare, Chief Financial Officer, Affirm Holdings: I think the biggest thing is that we. Are going to be able to continue to work with them over the next five years. That's a pretty long. Term commitment from both the companies. I think we both are really happy with. The service we provide to those consumers and the value they get out of it. I know we are. And that's really the biggest thing for us. And I think. The conversation around renewals and ongoing for the better part of a year. And we're just really happy to have this behind us and focus on serving these consumers now.

Adam Frisch, Analyst, Evercore ISI: Okay. And then the. Slide 16 with the merchant fee rates. It does look like the core 0% longer-term rate, so the yellow line, is the only one that's trending a little bit lower the last few quarters. Could you just give us some more color on what's going on there?

Operator0: We did make an adjustment to. A single merchant's program that was. A very high proportion of 0% loans and very long-dated as well. So I think that's a pretty one-off adjustment that happened in the book, but with a pretty significant merchant.

Adam Frisch, Analyst, Evercore ISI: Thanks.

Operator: Our next question comes from Adam Frisch with Evercore ISI. You may proceed with your question.

Adam Frisch, Analyst, Evercore ISI: Hey, guys. Can you hear me?

James Fawcett, Analyst, Morgan Stanley: Yep.

Adam Frisch, Analyst, Evercore ISI: Okay, great. Thanks so much. Roughly half of the GMV growth this quarter came from direct point-of-sale merchant integrations and one-third from direct to consumers. So just wondering how you see that mix evolving through the next few quarters, particularly as wallet partner scale. Thanks and nice job on the quarter.

James Fawcett, Analyst, Morgan Stanley: Thank you.

Harry Bartlett, Analyst, Rothschild & Co: I said it before, and I'll repeat it again. We love Everydoor. Where Affirm logo is visible. We want to leave the choice of. The wallet, the. Type of checkout, to the end consumer, and to some extent to the merchant. But our job is to be available everywhere. That's why we integrate with. Every. Wallet basically out there and certainly love our direct integrations. I think we have been. Unashamed of our focus on direct-to-consumer products for quite some time. The card, obviously, is a really important piece of the ecosystem. But also, our app has served both as a way to plan loans in addition to servicing them, obviously, but also increasingly so as a promotional service for our merchant partners to advertise their reduced APRs or 0% APRs. Hopefully, some of you saw we ran a.

Major three-day promo, which we should have called the Big Nothing Day, but I got overruled and it was called Zero Days. And we'll find out what that is named next time. But. Either way, it was an extravaganza of really, really great 0% offers by our many, many merchant partners. And so that growth, I don't think we're quoting it in the letter explicitly, but we're putting a fair amount of wood behind that. Ball. And so we'll continue doing so. I wouldn't be prepared to tell you. The new breakdown. X quarters from now, but we're certainly very much investing in engaging our consumers directly. In every imaginable way. And there'll be both more events like the Big Nothing and. New products and new features as well.

Adam Frisch, Analyst, Evercore ISI: Awesome. Thanks, guys.

Operator: Our next question comes from James Fawcett with Morgan Stanley. You may proceed with your question.

James Fawcett, Analyst, Morgan Stanley: Hey, thanks very much. And I wanted to follow up just on that 0%. I mean, first, I guess, is. That there were very interesting statistics in the release about the FICO uplift you see when. New firm users that. For affirm users that land initially with 0%. I'd love to hear how you think about how aggressively you intend to lean in there and what you think the mix of 0% can be over a multi-year period. And also just anything you can share from. Your zero days learning and kind of what the. We noticed that you'd held it, but kind of what was the intentions there and what are we trying to drive, etc. Thanks.

Harry Bartlett, Analyst, Rothschild & Co: I'll start, but I'm confident. My. Compatriots here have opinions and versions of the story of their own. So a big part of what makes the Affirm Network unique is we know what is being sold a lot of the time, all the way down to not just the SKU, but the color. Certainly, we know the price and what's in the basket and all sorts of good stuff like that. And so being able to figure out how to target. The right financial offer for the end borrower with all that information is really powerful. And being able to bring that value in a differentiated way to the merchant. As a promotional mechanism that is uniquely tailored to each borrower as they see an affirm checkout is just a really, really efficient way of. Driving new sales for retailers. And so.

I'll give a sort of, I wouldn't call it a contrarian answer, but it's sort of the other side of the coin. I think the answer you may be looking for is, what do we do with consumers? And I'm happy to talk to that. And some of it is obvious. 0% deals attract to higher credit quality. There's plenty of positive self-selection. We saw exactly what you might expect there. I'm sure I don't remember the exact FICO drift upwards we saw, but it was there. All the things. We saw increased activity on the consumer side, etc., etc. I can talk to that at length as well. But maybe the most important purpose behind. Big Nothing Days, I'm going to keep calling them that until people get used to it. It was called Zero Days. But I love Michael, by the way, the perpetrator of Big Nothing.

I think it's like maybe the best thing he's ever come up with. But. The reason we were so excited about it, and we saw everything we really wanted to see. Letters from the participating. Proof to the ecosystem that Affirm can do more than just fulfill the demand at the very bottom of the funnel. Driving awareness about merchants offering these deals to committed Affirm users on the card through all the wallet integrations we have, etc., etc. We wanted to demonstrate that we can move the needle for the merchant ecosystem by deploying their essentially marketing dollars in the most targeted way possible. And this quarter's action not last. So we'll package it up and give you a full view of what happened. But we accomplished those goals and then some. It was a great success on many fronts.

From my point of view, the most important one was. The value of these custom direct deals with merchants where they let us have a little bit more of their margin as they pursue targeted, highly efficient promotions has worked, and we intend to do it again and again and again.

Rob O'Hare, Chief Financial Officer, Affirm Holdings: Two things to add. How aggressively you want to lean in, vary. We've been talking about this for quite a while. You should expect us to continue to lean in here very heavily. We think this is a really important part of rounding out the consumer value proposition in the network. And second, this is worth repeating over and over again. The reason we are a bit tongue-in-cheek with the name of things like the Big Nothing is because our 0% loans do not have anything else in them. There are no late fees. There's no reminder fees. There's no snooze fees. We're the only person who can stand up to and offer with the level of approvals that we do. An honest and true transparent 0% offering. That's a very unique thing. And.

We're big fans of doing more of the thing that you're best positioned uniquely able to do, and this is that.

James Fawcett, Analyst, Morgan Stanley: Yes.

Adam Frisch, Analyst, Evercore ISI: Great.

Operator: Our next question comes from John Hecht with Jefferies. You may proceed with your question.

Adam Frisch, Analyst, Evercore ISI: Hey, guys. Thanks very much and good quarter. I don't think you guys. Disclose as much on AOV as you used to, and maybe it's not as important of a factor. But I'm wondering. I know the transaction count per customer is up pretty meaningfully year over year. I'm wondering if you could just talk about kind of. The interaction types. Are the characteristics of the transactions changing? Have they been consistent? I remember a couple of years back, you were talking about how, for instance, groceries was a growing element of what the customers were using. Any trends there that are worth just pointing out?

Harry Bartlett, Analyst, Rothschild & Co: I don't think we're. Definitely don't have anything to hide on the AOVs. And I think it's. There. If you—I think it's page seven of the supplement, if I remember correctly. It's down a little bit quarter over quarter, but last quarter to the one before was a little bit up. And it's all hovering in the. $270, $260 range. So it's trended down. A little bit over the last, call it, two, three fiscal years, mostly as we expanded into. Naturally lower AOV areas. This particular quarter, as I was sort of eyeballing the results for, frankly, talking points to the media, I saw that we saw some. Better growth than maybe I expected in things like apparel and beauty products, which tend to skew slightly lower AOV. And so that's the boots and takes of the AOV is always a consequence of which industries are experiencing growth.

And also, yeah, fashion and beauty grew 30% in the quarter. It's also in the supplement page 10. Anyway, so that's where the mix changes entirely based on which consumer shopping trend is prevailing.

Rob O'Hare, Chief Financial Officer, Affirm Holdings: And I think the question behind the question is really around what's the share of spend we're capturing with consumers. And with pretty stable AOVs and pretty meaningful growth and frequency, we feel really good that we're taking more meaningful share at consumer spend. And we see that, obviously, mostly. The best example of that is the card, but we're seeing that even on the consumers who tend to use us, not through the direct-to-consumer channels, but through the other channels. And that's a really healthy sign for the resilience of the network and the loyalty that consumers are giving us. Yep. Great. Thanks, guys.

Operator: Our next question comes from Jeff Cantwell with Seaport Research. You may proceed with your question.

Adam Frisch, Analyst, Evercore ISI: Hey, thanks a lot. Most of what I've been asked, I wanted to ask you, can you maybe talk about. Your operating margins? The four-year guide is now more than 7.5%. Last quarter, you guided the four years more than 6%. So that's coming up. My question is, where is the additional operating leverage coming from? What are you leaning into there? And then just wanted to ask you around the expenses. Do you mind giving us a feel for what to expect for G&A, sales and marketing, tech and data analytics, and how does my. Look over the remainder of the year? Just want to make sure we have them right in our models. Thanks.

Rob O'Hare, Chief Financial Officer, Affirm Holdings: Yeah. Thanks for the question. I mean, in terms of where is the operating leverage coming from. Really, it's a function of growth. You'll notice in our updated FY26 outlook, we are taking revenue-less transaction cost dollars up. And so those incremental dollars, a good portion of them are flowing down to the operating income line. And really, that's driving the leverage that you're seeing in the updated outlook. It's really not a function of any sort of cost-cutting or anything else in the OPEX space. It's really a function of growth, which we think is a really healthy way to grow. And it's been. A key driver for us over the last couple of years now as we've driven pretty incredible operating leverage. We typically stop short of giving details around the various OPEX lines individually. We like to just guide to a margin.

There can be opportunities that arise for investment over the course of a year. So we typically haven't steered folks towards targets for those line items, and we're not going to start this quarter.

Adam Frisch, Analyst, Evercore ISI: Got it. Okay. Figured I'd give it a shot. The related one, on your GMV. In Q2, the guidance range there, it's $13 billion to $13.3 billion. There's a lot of moving pieces to the business. So just to follow up to Adam's question, maybe talk a little bit more about the GMV guide and how that might break out in terms of contribution from interest bearing versus 0% APR versus Pay in 30, etc., where you've seen growth the strongest right now as you think about the volumes this quarter. And any further thoughts on the remainder of the year would be great as well. Thanks very much.

Rob O'Hare, Chief Financial Officer, Affirm Holdings: Yeah. We really, again, haven't gone into those details typically. I would say, obviously, we're talking a lot about leaning into 0% here on this call. We ran the 0% promotional days. So I would expect that 0% monthly installment loans continues to be our fastest-growing loan product. That's been true for a couple of quarters now. And so I think we would expect those trends to continue.

Adam Frisch, Analyst, Evercore ISI: Got it. Thanks a lot for calling. Appreciate it. Keep it up.

Operator: Our next question comes from Zachary Gunn with FT Partners. You may proceed with your question.

Operator0: Hey there. Thanks for taking my question. So I just wanted to ask on the product side. So we've seen some earned wage access companies talk about pushing into BNPL. And that is a very logical area given the amount of overlap they see with customers using EWA and BNPL. And just given the focus and traction that you all have with the firm card and these kind of consumer products, is there a world where a firm could look at EWA as a potential product down the road? Or just curious if that's on the roadmap or something that's been thought about at all. Thanks.

Harry Bartlett, Analyst, Rothschild & Co: I've learned the hard way to not pre-announce products in these calls. They tend to take longer than I want them to. I'll stop myself short of any pre-announcements. I do think that we have a relatively durable moat in terms of both the data and the process of building lending products. I think earned wage access is a form of lending, but it typically averages something like eight days, if I remember correctly. It's a slightly less complicated problem if you're lending at no interest, no late fees, and no other forms of revenue other than merchant discount over 36 months, that'll be pretty sure you know what you're doing, to say nothing of access to capital and balance sheet management. I think we're relatively safe from that cohort of competition.

We certainly, I mean, I refer you to our stated mission, which has been the same for 15 years, and that is to build honest financial products that improve lives. We will not. Short the option of building any. Financial product over the course of our hopefully very long lifetime. So watch the space. We'll announce some fun things at some point soon.

Operator: Our next question comes from Joel Rikers with William Blair. You may proceed with your question.

James Fawcett, Analyst, Morgan Stanley: The patch for the Affirm card seems to be kind of steadily marching higher. And I was just kind of curious if you could give us some insight around what you're observing in terms of top-of-wallet behavior on the Affirm card. And if there's any kind of substitution dynamic that you're seeing versus traditional bank cards. That's my first question.

Harry Bartlett, Analyst, Rothschild & Co: We're seeing really nice trends in. Both. Overall discretionary spend capture as well as. A higher. Starting point. For each new cohort. And. I'll stop short of. Giving any. Specific answers to. How we're doing relative to other bank cards. I think we're capturing. Spend. In a rapid enough clip where I'm sure it's coming out of. Spend elsewhere. As I'm sure you know, it is not our business to. Push or even entice consumers into more spending. We are capturing the spend that wouldn't have happened because they're not willing to use credit cards and revolve, and in some cases, perhaps cannibalizing existing credit card volume. Although. Obviously, we would have to earn or keep with merchants if. We were purely. Responsible for substitution. So I think we're doing really well there. I think the.

Two or three quarters ago now, I said something along the lines of 10 million active cards, $7,500 per year of discretionary spend is the goal. We are. Just under a third of the way to the former and. On the order of. A third to a half of the way to the latter. So we're making great progress from my point of view, but we've got a pretty long way to go. And hopefully, by the time we get to the. Target number of the first of these two metrics, the overall consumer base of a firm will be meaningfully larger, and so we can just move the goalpost.

James Fawcett, Analyst, Morgan Stanley: Awesome. Thanks. And then just as a last question, and. Just as it relates to the Amazon partnership. And I guess the Shopify partnership, are you able to quantify what the share of card looks like today. With those partners just so we kind of have an idea of what the upward potential looks like for those opportunities going forward?

Rob O'Hare, Chief Financial Officer, Affirm Holdings: Yeah. So we definitely. Can't break down. Any of those numbers specifically here. But we feel like there is an awful lot of green space in both of those partnerships. They've both been able to be accredited to growth despite the company growing at really, really healthy clips. And we think that there remains a lot of things that we can work on together. They're both really good examples of what we think is. I think sometimes investors have a hard time really understanding. The winning of a relationship, the start of a relationship isn't like a light switch flip that all of a sudden you turn the switch on and you get all the volume. These programs have a lot of investment that follows the launch in optimizing the program.

Whether that's bringing forward new products like Boost AI or doing connected accounts where we can share information about the user in a way that allows us to offer the most tailored and best solutions. These pieces of work really do allow us to continue to grow share beyond just the network effects that you see in scale. And I think for both those two partners, we would say that there's still a lot of runway ahead of us.

James Fawcett, Analyst, Morgan Stanley: Thank you.

Operator: Our next question comes from Reggie Smith with JP Morgan. You may proceed with your question.

Reggie Smith, Analyst, JP Morgan: Thank you. Great quarter, guys. I'm multitasking tonight, so I apologize in advance if this question has been asked. But I was curious, as you guys move into, I guess, kind of different verticals, and you highlighted service titan and, I guess, automotive repair and things like that, as you move into these services, how, if any, does that change your underwriting? So obviously, you're underwriting the consumer, but I would imagine there's some risk related to the actual service provider as well. And so I was curious how you guys think about that. Am I off base with that, or just if there's any changes that need to happen with your underwriting as you consider those factors?

James Fawcett, Analyst, Morgan Stanley: It's a great question. You're thinking about it exactly right. That's actually what makes this business defensible in at least a couple of different dimensions. It is not a guarantee. In fact, it's frequently. A guarantee that it's not the case that a model that worked for you in a specific type of or set of SKUs will work just as well in another. Part of our. Defensive moat or. Just unique, I hate the term secret sauce, but this is probably one way to refer to it. We don't just have great models that we build and great data to build them from. We have a really good, very robust process by which we build new models or modify existing ones.

And the frequency with which we can ship these models and include new types of data to incorporate new learnings from each new vertical is very, very quick now. And that's actually quite a difficult thing to reproduce. Even if tomorrow morning somebody somehow got a hold of a significant amount of data without the process. Knowledge and the system development we've undertaken over the last 15 years, it's very difficult to build these things quickly. And so we feel comfortable entering new verticals in part because we've gotten so good at. Just rigorously taking on board new data, new kinds of. Descriptors of merchandise being sold in the case of service titan that's not merchandise, it's actually a service, etc., incorporating that signal into our models and regurgitating it back into the underwriting process and just improving our charts. And so.

10 years ago, entering a new vertical would have been a lot more of a, "Hey, can we figure out how to underwrite this quickly enough? Will this start overwhelming our NACO or our delinquencies?" We feel a lot more comfortable laying claim to services or elective medical or auto parts or auto repair because we feel very good about our ability to incorporate new data very quickly into our models and, if necessary, break out new ones and bifurcate the underwriting process, etc., etc. So I'd say it's actually, if anything, an infrastructure maturity marker that we can point at the fact that we are willing to enter these new businesses fairly quickly.

Reggie Smith, Analyst, JP Morgan: No, that's kind of what I expected. Listen, great quarter, and I appreciate the insights as always, guys.

James Fawcett, Analyst, Morgan Stanley: Thank you.

Operator: Our next question comes from Jamie Friedman with Susquehanna International. You may proceed with your question.

Operator0: I wanted to ask about the. Continued hypergrowth that you're seeing in 0% APRs. And if there's any way to. Observe. Not only the behavior of where those are going in terms of your. Travel or larger ticket items, but the. Profile of those cohorts, like were they on the platform previously and moving here? Are they new to the platform? And any demographic data that you might have about them? Thank you.

James Fawcett, Analyst, Morgan Stanley: I think we will probably. I can't see the future, but I'm confident we will want to talk a lot about the. Three-day of zeros that we just ran. I will remember to dig into the demographics. I can tell you that the credit quality is naturally higher just because there's a fair amount of self-selection and credit in general. I think the majority of participants in this event. Were existing consumers. We certainly marketed it. Not entirely internally, but significantly, vast, vast majority of marketing about, "Hey, we have this cool new promo coming. Come to the app, and you'll see all sorts of really cool offers." That mostly went to our existing users. And so it's only natural to assume that the word had stayed pretty closely within the community.

Yeah, I don't want to steal—I mean, I think the team put together a pretty incredible project, and it was a long time coming. We started thinking about this. More than six months, six ago, maybe more like nine months ago. So it was quite a build-up. A lot of new things had to be invented. Most importantly, the sales motion to explain what this will look like to the merchants, to explain how. They're going to benefit. Obviously, we've said it before, and a huge percentage of our zero offers are funded by merchants, and we obviously aspire for 100% of those to be funded by merchants. And so that was just a lot of different things that came together for this to be a thing. It worked really well. We intend to come back to it in a bigger or better way.

Not going to pronounce when, but another one is coming. But we'll talk about the learnings probably in the next earnings call in some detail.

Operator0: Okay. And then if I could just ask about the RLTC rising 48 basis points to 4.2%. And I know that this was asked earlier, but. And I know your goal is to reinvest that. But some of that, actually, according to the shareholder letter, was related to better provision performance. So. Yeah. So I guess my question is. If you have any perspective as to. When you'll return to that targeted range of 3 to 4 percent. That would be helpful. Thank you.

James Fawcett, Analyst, Morgan Stanley: Yeah. I mean, we are maintaining our 4% target for fiscal '26, right? So I think that's an important marker. We tend to look at the business in longer time horizons than just these 90-day quarters that we all report on. And it's also important to remember that. When we talk about provision being favorable to revenue-less transaction cost, that's as a percentage of GMV. And so upstream of that, there's also. A point around. On-balance sheet versus off-balance sheet funding mix. And so changes there can have. Impacts in either direction, frankly, in terms of RLTC in a given quarter.

Operator0: Yep. I follow. Thank you. Thank you very much.

Operator: Our next question comes from Kyle Joseph with Stevens. You may proceed with your question.

Kyle Joseph, Analyst, Stevens: Hey, good afternoon. Thanks for taking my questions and. Multitasking a little bit this afternoon. So apologies if you covered it. But just kind of looking for an update on the competitive environment, kind of by product, and. Seeing. If you're seeing any sort of benefits from capital markets getting a little more skittish.

James Fawcett, Analyst, Morgan Stanley: We're fairly focused on our own. Product and other motions. So not a ton of. Updates on behalf of our esteemed competitors. The fact that we're. Live in the UK with Shopify and scaling that nicely, I'm sure is giving some of our competitors a bit of a heartache. But. It's good to have multiple. Intenders in every market to ensure the best products win. Our numbers speak for themselves. We're growing well and maintaining profitability. And so. We are executing well. As far as capital markets go, I should probably let Michael or Rob weigh in. But I think we would just price to deal again, and it was quite good.

Rob O'Hare, Chief Financial Officer, Affirm Holdings: Yeah. I mean. The capital markets probably continue to be very constructive for our asset. I think there was a lot of activity in the AVS market over the past three or four months, and we were really pleased with just the engagement that so many of our investors gave us and the flight to quality that we're seeing. You've got. A lot of investors dealing with a lot of headlines and a lot of going on. They want to focus in on names that they can trust to deliver the kind of results that we do. And that's why we get to partner with the Blue Chip investors on what we consider to be best-in-class execution.

Kyle Joseph, Analyst, Stevens: Great. Very helpful. Thanks for my question.

Operator: This now concludes our question-and-answer session. I would like to turn the floor back over to Zane Keller for closing comments.

Operator0: Well, thank you, everyone, for your time today. We appreciate all the questions, and we'll speak to you again next quarter. Talk to you then.

Operator: Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines and have a wonderful day.

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