Affirm's Growth and AI Integration in Fintech Landscape

Affirm is thriving in the competitive buy now pay later market, showcasing strong growth and profitability while prioritizing consumer safety.

### Affirm's Growth Momentum and Market Positioning
* 📈  Affirm has demonstrated **impressive growth metrics**, outperforming the credit card industry in **managing credit** and **expanding its merchant partnerships**.
* 💪  Despite increased competition in the buy now pay later space, Affirm continues to thrive, with **optimism particularly noted in the US market**.
* 🌍  The overall e-commerce market is vast, with Affirm and its competitors collectively holding **less than 10% of the market**, indicating **significant opportunities for growth**.
* 💳  Affirm's approach to consumer borrowing remains strong, as evidenced by **controlled delinquency rates** compared to traditional credit card companies.
* 🌟  The company is actively leveraging AI in its operations, utilizing machine learning for individual loan underwriting, which **enhances productivity and profitability**.
* 💡  Affirm's commitment to profitability has been a long-standing part of its strategy, and the company is on track to achieve **Gap profitability soon**.
* 🛍️  The integration of Affirm at the point of sale enhances **consumer confidence**, making it easier for customers to **finance larger purchases** like Peloton products.
* 🔒  Regarding ongoing legal matters, Affirm assures that customer card information remains **secure**, emphasizing the **safety of its services** amidst the situation.

Tell me the story of what's happening behind your platform and your user base. I think there's a real momentum. You can tell by looking at our metrics and the qualitative measures that we take and just the fact that we've outperformed the credit card industry, which is our direct competitor in terms of managing credit and just the sheer number of launches and merchant signings. Every metric that I could catch my eye on about that is a really good quarter. So, you know, sometimes you got to think about the, let's say, the buy now pay later space is, let's say, more competitive since last year on the program. Maybe in that time, Caroline and I spoke with the client, the CEO, for example. They seem very optimistic, particularly about the United States, and yet you continue to grow. I don't have the data for market share, but could you just contextualize your performance in that sense? Well, I think we are outpacing them reasonably well in terms of our growth.

relative to theirs, at least according to the stated numbers. Not that I am too competitive, but I'm very competitive. Let's be honest. But the reality is it's a giant market and all of us together add up to less than 10% of e-commerce, and all of us are now looking at offline. And so just the real share-taking that's taking place is happening against cash, against credit cards, against debit cards, all the other payment types. And so there's just an incredible amount of road available to all of us and Affirm in particular. What does that mean in terms of the macro context, then, Max, how confident are you of the US consumer, the global consumer right now? Well, we're about to launch in the UK, so we'll find out exactly how confident I should be about the UK consumer. But the US consumer, and again, look at our investor supplement. Credit card companies have built and built and built up their delinquencies.

and ours remained very firmly in control. Our consumer is borrowing and shopping and paying back, which is really important for our credit business. But so far so good. We do not see a major slowdown. We do not see a significant pullback in demand. There's always new industries. Quarter or two ago, I was lamenting the loss of interest in electronics. It came back roaring through the last quarter. Travel is a little bit softer. I think people got their COVID post-COVID fix, but all in all, consumer is effectively shopping and buying and paying back and I don't see problems. Meanwhile, you're taking a bow and the market in particular likes the focus on profitability. Now, I hate to bring them up again, but Connor actually did post a profit, even though there's still a private company that eyeing a $20 billion valuation and they're cutting costs by leading into AI. Is that something that you look at, Max? Something that you feel you have to

compete in, too? Well, the good news is that we've been in the AI business since inception, so 100% of our loans are underwritten individually every single time entirely by machines. And so we've been on the machine learning and A.I. training since zero, and we don't think of it as a way to replace humans or to get rid of humans. We think of it as a great tool for increasing productivity, to give us an edge in underwriting, customer service, etc. So yes, we're very, very active in AI with lots of really fun things happening, both visible and not to the investor eye, but it's a huge part of what we do in terms of profitability. You know, I started last night on the earnings call and I just want to make sure I repeat it. This was not a contortionist thing we just did when we said, Hey, profitability is on the horizon.

It is very much part of the plan. It's always been part of the plan. It's just now close enough where I can say, Here's a data history. We're going to get Gap profitable and move right past that and do more. Max and Carol. So bear with me. I am a firm customer in the sense that, you know, I used a firm to finance a specific thing. For what it's worth, it was the Peloton tread. But the reason I did it is actually an emphasis on point of sale. So when you go through this, the audience of many, if you go and try to buy something from Peloton, it's kind of a weird transaction, but you're presented with the firm as an option almost straight away. Do you negotiate that aggressively for those kind of bigger ticket items? I'm not sure individual deals are worth commenting on, but every deal where we are presented at the point of sale and

every deal where you see it up funnel, as one might call it, before you even get into the checkout, are absolutely directly integrated. So, we go to the merchant, we spend a lot of time with it, making sure that we are as helpful as possible to their ability to sell, be it a pellet on tread or a mattress or anything in between. And that is what gives us a huge advantage. The consumer has the confidence and the clarity of what it might cost them to borrow money to buy something while you're here. Can I please ask you, as a story out from Bloomberg Law about a firm facing a class action suit after the Evolve Bank breach situation? Comment on that, please. Probably a very bad idea to comment on ongoing or potential future litigation, so I'm not sure I have anything to say on that. You know, I started the day of Evolve News, which is certainly unfortunate that the firm card numbers were all safe.

We did not need to rotate them and give people new cards. That is now confirmed. No card numbers have been leaked, and our consumers are safe. If you have your firm card, please continue using it. It works just fine.

Fintech Affirm Outpacing Industry Rivals

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Momentum and Growth in the Buy Now Pay Later Space

The platform has outperformed the credit card industry in managing credit, with strong metrics and a significant number of launches and merchant signings.

Despite increased competition in the buy now pay later space, the platform is outpacing its competitors in growth.

The market for e-commerce is still vast, with all players combined holding less than 10% of the market, indicating plenty of opportunity for growth.

Consumer Behavior and AI's Role in Profitability

The consumer is actively borrowing, shopping, and paying back, with no major slowdown in demand.

New industries are emerging, with a recent resurgence in electronics and a softer travel sector.

The company has been using AI for loan underwriting since its inception, viewing it as a tool for increasing productivity and profitability, rather than replacing humans.

The speaker emphasizes their commitment to making Gap profitable and expanding beyond that.

They use a firm for financing, particularly at the point of sale, to help merchants sell bigger ticket items.

The speaker avoids commenting on ongoing litigation but mentions that the firm's card numbers were safe during the Evolve Bank breach.

There was no need to rotate or issue new cards, as there has been no leakage of card numbers.

Consumers are safe, and those with their firm card can continue using it without any issues.