Sentiment Analysis of the earnings transcript to help figure out if there are any bullish or bearish sentiments that could be gathered from it. We're doing ML and AI based analysis on the earnings call to get some more insights.
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| And all of the investment that we make there is really so that we continue to have what we think is a better mousetrap that again allows us to generate really differentiated credit results, which in turn allow the capital markets to function really well for us, which in turn allows us to acquire more merchants and the whole thing really does work in concert |
| For now, we've talked about bringing the business with strong adjusted operating margins |
| I mean, 32% GMV growth continues to be strong and above your medium term targets and revenue growth at 48%, just really impressive way to end calendar 2023 |
| We feel like we had a really good quarter |
| I think we -- when we started off and it took a pretty, I think, strong position on things like late fees and deferred interest and other tools that the financial institutions had relied on historically |
| We grew revenue faster than GMV |
| Our unit economics, the revenue less transaction costs, the transaction economics were really strong, solidly in our 3% to 4% long term guidance |
| But we were a really focused team and that focus showed up with really excellent execution and really, I think surprising a lot of folks around our ability to execute in any macro environment |
| I think we're going to be the winner in a very big market |
| And stay focused on delighting as many consumers as possible, driving as high conversion as we can for merchants and delivering, we think, really differentiated performance on the asset side, so really strong execution in the capital markets |
| And we have the best mousetrap in the industry |
| So we have excellent models and I'll talk more about those in a second, but we also have a structural advantage here in doing transaction level underwriting |
| And what we've really done is been able to transition those more friction full experiences into a lower friction experience for consumers, and the increased engagement that you see out of that is why I think we've been able to show so much growth early |
| And I think that is -- I think, that's one of the real reasons we feel so confident about this environment or really any environment is we've got the tools to navigate here |
| And so when you sum all that up, we've got a market leading position in a very big market that's very high growth and that really says to me that we have a ton of opportunities still ahead of us |
| And Affirm's transaction level underwriting, our technology focus and our unique distribution has really allowed us to navigate this market better than anyone |
| So our ability to execute well on credit creates opportunities in the capital markets, which allow us to grow quicker |
| And again, when we're executing well, like we are right now, you see the machine generate real momentum and that's what you saw last quarter and that's what we're focused on continuing to drive |
| And that's a good position for us to be in because, again, I think the merchants really do get excited about what our product can do for them |
| And we're really proud of the data that we have there |
| And despite the fact that we're in a very high rate environment, we're really doing excellent there where we're right in the middle of that 3% to 4% range and we feel like we can drive sustainable long term growth staying inside of that range |
| We have a business model of building great products and partnering with the best merchants and platforms to get our product distributed, that's the approach that we've taken and it served us quite well |
| And we're really proud of the progress that we've made there |
| And so us coming along, I think, is pretty well received |
| Again, I think that's a combination of the strong distribution that we have |
| And the truth is the way in which we went about building this business allows us to drive really strong operating leverage |
| In the US, we'd estimate that we're a pretty strong market leading position, both in terms of the GMV we process on the platform but also the monetization side, so on the revenue side for sure |
| Over the past several quarters, you've seen us really do much better than we thought we would, and I think that's a reflection of the operating leverage in the business |
| And I think the ability to span the applicability of our product set is really impressive and again, very differentiated |
| But with one commonality, which is that they are printing profitable units for us, meaning that we're able to generate good and strong unit economics whether or not they're buying through the card or through the online integrations that we have |
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| The underwriting problem at Affirm is to do it quickly |
| So the challenge for the next year is to really take advantage of this opportunity that we have given all the hard work and investment we made over the past year and half to take advantage of it right now in the current market |
| And so there are certain set of problems that we do, which will always be machine learning and data science driven that will -- you'll never hear the words AI come out of our mouth, and that's certainly true for the core underwriting problem |
| I think it's very much an unsolved problem for the industry at large |
| And I know that can be sometimes unsatisfying, because there's kind of a lack of shiny balls |
| I think the inflation driven trends for consumers have been things that really will just continue to put pressure on households |
| And I think for merchants, in particular, the largest big boxes, I think they're going to have to confront what happens when the profitability of some of their private label credit cards is diminished |
| And I think the challenge for us right now is to take advantage of some of the hard work and I think even lead that we've built in a lot of areas |
| The dynamic environment with rates, you saw banks failing, you saw a lot of really difficult and sometimes really volatile things happening in the world |
| Andrew Bauch I mean, you mentioned the in store and that for e-commerce provider, payment providers in the past, it's always proven a very difficult paradigm to cross |
| The guiding principle behind the no late fees approach we have at Affirm is that we're never going to put ourselves in a position to profit off of a consumer's misfortune or mistake |
| It was a situation last year where we had to be reactive to a lot of what was going on in the world |
| The market that's being created right now is being created in a way that we think is quite inevitable as consumers move away from traditional ways to pay and access credit and move towards safer and better products |
| I mean, what are the main challenges of Affirm this year? This is from [Timista L] |
| But the problem is not limited to just that |
| And I think that sometimes the lack of options in some of those markets creates some dynamics that merchants don't love |
| That the challenge of underwriting should be borne by the provider and that you should not rely on the crutches in order to deliver the results that you need to deliver |
| And so we're really uninhibited here |
| And I think that the thing that's maybe most common about users who end up repeating often on Affirm is that there are really good risks, because those who aren't, obviously, if you charge off, you're not eligible for their engagement on the platform |
| So if you forget to make a payment or something happened to you, that's never an opportunity for Affirm to profit |
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