Affirm President Libor Michalek addressed investor concerns regarding forecasted GMV deceleration, attributing it to lapping a prior year that saw 40-45% growth due to significant partner volume. He characterized the current credit environment as "surprisingly and positively boring," with stable repayment trends. Key growth drivers include expanding into service categories, increasing offline penetration (currently sub-1%), and new partnerships with Intuit and Fiserv. Michalek emphasized Affirm’s competitive advantage in underwriting high-ticket, long-term transactions and argued that the transparency of their product positions them well for a future of AI-driven "agentic commerce."

Key Takeaways

• GMV Normalization: Management attributed the forecasted second-half deceleration to lapping a period of "40-45% year over year growth," noting that Q2 showed acceleration when excluding that specific partner volume.
• Consumer Health: Current consumer demand and credit performance were described as "surprisingly and positively boring," with repayments remaining in line with expectations.
• Market Opportunity: BNPL penetration is currently "8 to 9%" of U.S. e-commerce compared to "north of 20%" in other markets, with the $1+ trillion revolving debt market serving as the total addressable market.
• Retention Metrics: While 0% APR promotions impact margins, they are dollar accretive; on a four-year horizon involving "40 million users," the probability of repeat usage "approaches 80%."
• Funding Strength: Despite broader private credit concerns, Affirm executed a January ABS deal with a spread "under 100 basis points," their tightest spread to date.
• New Distribution: Affirm is rolling out partnerships with Intuit, ServiceTitan, and Lowe's, and announced a deal with Fiserv to bring Affirm to debit issuers.
• Offline Growth: Offline BNPL penetration is currently "sub 1%," representing a significant growth vector compared to online penetration.

Q&A

Morgan Stanley Analyst (Morgan Stanley): The market reaction to earnings seemed predicated on a forecasted deceleration in GMV growth for the second half; why would that be the case?

• Libor (President): The primary driver is lapping a previous year that saw "on the order of 40-45% year over year growth" due to significant partner volume; however, in Q2, the company saw "an acceleration in year over year growth" excluding that partner.

Morgan Stanley Analyst (Morgan Stanley): While merchant-funded 0% promotions cause some margin dilution, can you expand on why you view them as meaningfully dollar accretive?

• Libor (President): The strategy drives engagement and is "ultimately dollar accretive"; looking at a four-year time horizon with "40 million users," the "probability of using the product again approaches 80%."

Morgan Stanley Analyst (Morgan Stanley): Given recent wobbles in other parts of the credit market, what are you seeing regarding consumer spending and repayment data?

• Libor (President): The data is "surprisingly and positively boring," with repayments "in line with expectations" and no changes currently being made to the credit box or origination strategy.

Morgan Stanley Analyst (Morgan Stanley): As shopping becomes more "agentic" with AI assistants optimizing checkout, does BNPL become a default financing layer?

• Libor (President): Affirm is the optimal choice for agents because it offers "no late fees and no revolving, no deferred interest"; agents directed by consumer will to find the best deal will naturally select Affirm as the "best form of payment."