Affirm Holdings, Inc. (AFRM) Earnings Call Transcript & Summary

Good afternoon, and welcome to Affirm's Virtual Investor Forum. My name is Ronald Clark, and I'm the Vice President of Investor Relations here at Affirm. We're thrilled for joining us today. Max Levchin, our Founder and CEO, will start us off with the continuation of his comments around the great unbundling of the credit card, which we started to discuss on our Q4 earnings call just a few weeks ago, as well as provide a deeper dive on our product road map. From there, we'll also hear from some of our partners. Then I'll be sitting down with Brooke Major-Reid, Libor Michalek, Silvija Martincevic from our executive team to discuss our capital, technology and commercial relationships. After that, Michael Linford, our CFO, will take us through a discussion of our business and our financial framework. Finally, we'll cap off the day with a Q&A session with our equity analyst community. But before we get started, just a few housekeeping items. Today's presentations include forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our SEC filings, which are available on our Investor Relations website. Actual results may differ materially from any forward-looking statements we make today, and those 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 that have been adjusted to exclude certain items. These measures should be considered as a supplement to and that as a substitute for GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found on our Investor Relations website. And with that, I'll turn it over to Max Levchin, Affirm's Founder and Chief Executive Officer.

Welcome, and thanks for tuning in today. We're excited that you have joined us for what we hope will be a fun and informative session about Affirm. Affirm is almost 10 years old in our mission to build honest financial products that improve lives remains unchanged. As we shared briefly in our earnings report for fiscal '21, we continued to pursue it with great gusto and some real successes. Ever since we went public, though, we wanted to host a longer-form event to really dig into a product road map, growth opportunities and the long-term financial trajectory of our business. At our core, we are a product and engineering-driven company, constantly iterating on new ideas, only some of which see daylight. Today, we'll pull the curtain back a little and show you some of the exciting things we're getting ready to ship and concepts were only experimenting with. But for those of you who are just beginning to get to Affirm, let me start by discussing what we've built and importantly, how and why. Affirm was founded because of a generational shift. Young people, coming of age after the financial crisis of 2008, were no longer willing to tolerate getting into permanent debt by putting it all in the card or getting burned by late fees and deferred interest. These young consumers, and many like-minded older ones grew fundamentally suspicious of credit and retreated into the simplicity of their debit cards. Of course, as millennials and Gen Z after them came age, they too faced the need to purchase things that did not comfortably fit into the regular cash flow, the need to pay for things over time. This need is what gave rise to the entire BNPL industry or the great unbundling of the credit card. The credit card was conceived as the ultimate buying bundle, a great user interface to help you put purchases of all types and sizes together in one basket with a freedom to pay for them later. Unfortunately, if you couldn't pay for them later and in full, endless debt became nearly inevitable and that credit card could quickly become the financial equivalent of a ball in chain. I personally think of credit cards as a financial service equivalent of a stone age hammer, great power, 0 elegance or safety. In the first days of Affirm, we envisioned a much smarter alternative, unbundled credit card features to provide access to transaction-specific credit in a truly transparent and delightful fashion and do a way was the predatory and deceptive elements of credit cards at the same time. Our first step in pulling the bundle apart involves solving for transactions most likely to get you into longer-term debt. We made paying for these items with credit more predictable and transparent, and help consumers take back control by integrating Affirm directly at the point of sale. Building this stuff is hard. It requires some serious chops in anti-fraud and underwriting. It also requires scalability and availability to support the extreme ups and downs of the retail calendar. We relished these challenges, which when sold became our competitive moats. We built proprietary technology from the ground up to assess and price risk and to scale our access to capital markets for efficient funding of these transactions. We didn't stop there. Inspired by demand coming from apparel and beauty categories, we brought our signature convenience and transparency to smaller ticket items. We launched Split Pay a pay for 0% APR pay later solution only a little over a year ago. And today, it's the fastest-growing part of our business. The addition of Split Pay shorter-term pay later solution to our longer-term pay monthly offering has allowed us to provide consumers and merchants alternative that stands 6 weeks to 16 months in terms of length, and across cart sizes ranging from [ $50 to more than $15,000 ], all with no late or hidden fees or deferred interest. Unlike our competitors that only offer such shorter-term pay later solutions, we are neither constrained by the amount the consumer wants to spend nor the time they need to pay us back. As shoppers using Affirm felt more comfortable buying nicer items, are consumer satisfaction soared and our merchant partners to higher conversion, more sales and new customers. Today, Affirm is as much a payment network as it is a marketing solution, in particular, through interest-free loans where merchants pay Affirm for the time value of money and consumers benefit. Motivating a browser to become a buyer without having to offer an explicit discount is a powerful concept for a retailer. Our consistent results, culture of engineering excellence, focus on intelligent risk management, depth of capital markets execution and relentless search for opportunities to delight consumers helped us become the technology partner of choice for some of the world's most demanding merchants and platforms. And when we partner, we want to bring maximum value possible. Like my favorite programming language, Python, which we used to build many of the company's early systems, Affirm comes with batteries included. Our superpowers are in developing sophisticated, scalable technology, risk management and highly efficient access to capital. And wherever these strengths can become keys to help our partners unlock consumer delight, we believe we have a right to compete and an opportunity to win. And there's a certain ironic symmetry here even as we peel the part the type confusing bundle of features inside consumer credit cards, we worked diligently to bundle unique merchant services, leveraging our strengths with integrated pricing. We recently built and acquired some truly great value-added services and brought them to our partners. A shopping tab we added to our transaction management app, Affirm marketplace. For consumers, the marketplace is a great place to discuss Affirm's latest partners, the products and services and hear about the latest promotions they're offering. For merchants, this is a highly qualified user referral engine and a carefully managed marketing service. Today, 1/3 of transactions originated an our site and app representing an efficient new channel for our merchants. In addition, to our transaction fees, we earn an affiliate fee for these transactions from our partners. In fiscal 2021, we also acquired Returnly, a unique solution that helps merchants process returns, a common challenge in fashion retail and delight consumers with an exceptional value proposition. You can purchase a replacement item with an instant merchant credit before having to ship the unwanted one back to the retailer. Although there is little geographic overlap among consumers, most shop in their local geography, many of our merchant partners are multinational businesses. We see international expansion as another bundled value additive service to our partners. We are highly motivated to ensure we can serve our merchant partners wherever they operate via a single integration. That is why we acquired PayBright, the leading provider of buy now pay later services in Canada around the time of our IPO. Now partnering with Affirm in English [indiscernible] French speaking part of North America, is that much more of a no-brainer. And we, of course, won't stop with just lending in North America. After a decade of being maniacally focused on the U.S. market, expect us to start showing up in a few more geographies. So let's talk about a few more bundled products we are playing with or are about to release hot off the press, Adaptive Checkout. They truly seamless integration of our monthly installments product and the low AOV split pay. Merchants can now offer consumers a choice of 4 biweekly interest-free installments or monthly payment options in a single integrated checkout solution supporting a wide array of purchase sizes. Both short- and longer-term options have been available separately. And until now, the merchants have to enable the right product for the right item, Adaptive Checkout takes that burden completely away. We automatically present an optimized set of offers to each consumer in near seconds by using machine-learned insights to drive both maximum sales conversion and highest possible consumer delight and it drives results. Merchants with early access to this have seen an incremental 26% increase in conversion just by adding Adaptive Checkout to existing Affirm integrations. One of the amazing things about running a SKU aware payment network is that you can do some real magic. Brand sponsored promotions is a unique technology we've built that enables merchants to promote consumer brands on their platforms alongside the power of 0% APRs by enabling the brands to programmatically sponsor specific items at specific retailers. The consumers get an interest-free often long-term plan to pay. Merchants drive incremental sales. And brands are able to reach new customers. All enabled by our Affirm's technology. Brand sponsored promotions are live today at Walmart, powering head-turning deals like interest-free loans on select models of Samsung TVs and Goodyear tires, and we plan to significantly expand these promotions for the holiday season. Our software engineering DNA is why some of the best tech companies in the world choose to partner with Affirm. Shopify is one such company. Integrating Affirm into Shopify's native payment platform Shop Pay significantly accelerated adoption of our service. Today, Shop Pay Installments, which is powered exclusively by Affirm is enabled for hundreds of thousands of Shopify merchants, helping those merchants drive growth while delighting their consumers. Yet despite its sharp looks, Shop Pay Installments isn't actually one-off custom integration. In fact, this is another service of ours, something we dubbed Powered by Affirm. Powered by Affirm is the full catalog of Affirm's core services available via modern APIs from logos, of course, visible, but our partners enjoy near infinite flexibility in designing and testing user interfaces for their checkout or wallet offering. We are unique in our market -- in offering this capability, which further increases our already excellent incremental conversion at the point of sale. We plan to continue bringing innovation to the technology of BNPL expect to see more exciting services Powered by Affirm. And a glimpse of one of the more emerging areas in our product road map. We're starting to leverage our technology and proprietary data to help our merchant partners in other areas of their business, specifically in working capital. Still in its infancy, our merchant capital program has advanced millions of dollars in fiscal 2021 to several of our partners, and we intend to scale it meaningfully, expect us to look for more opportunities to buy and build as we look to leverage our core strengths, tech risk capital in the relentless search for consumer delight in partnership with our merchants. We evaluate new opportunities and enter new markets very deliberately. The central question that must be answered in the affirmative is will this new initiative strengthen the consumer and the merchant side of our network. And as we now go through some of the new concepts from the consumer road map, you immediately see the value accreting to our merchant partners, too. We believe every financial transaction would be better reinvented the Affirm way, simpler and more transparent. Until now, we've never addressed the all-important daily spend, groceries, restaurant meals, internal purchases, the things that people are most likely to pay for with their debit card. The decision to fall back on debit makes a lot of sense here, nobody wants to pay interest on a sandwich or a cup of coffee, yet affordability is still a key concern. Now instead of being faced with late fees, when they're a day late, they get hit with overdraft once for not always being on top of their checking account balance. Combining debit with Affirm style credit, we knew we'd be able to take our offering to the next level. This is why we're so excited about our latest innovation, Affirm debit+. We worked hard to create a product designed to meet the bar of convenience set by the best cards people already have in their wallet today. The effortless access it provides to a smarter, more transparent way of paying over time at brick-and-mortar stores and online is something that can only be done with excellent technology. Here's how it works. Consumer can use the Affirm debit+ card in place of the regular debit card. It connects seamlessly to their existing bank account and no new checking account is required. With Affirm debit+, you swipe or tap in store like you're used to except it's not like any other card. Post purchase, you can effortlessly change a transaction to pay over time in just a few taps, exactly like you see here. This painless access to control and flexibility in a single card is extraordinary and there are no gotchas, just incredible technology. You can also use Affirm debit+ to pay upfront for everyday items, whether you're buying gas for groceries or coffee and a pastry or use Affirm debit+ anywhere you can shop online, add items to your cart, then when you're ready to check out, enter your debit plus card number like you're used to. Just as with in-store purchases, Affirm will notify you if you can pay over time for your transaction. But it is your choice. You draw the pay upfront, feel free. Ignore the prompts and you can manage all of your payments in a debit plus companion app. Affirm debit+ really is the only card consumers will ever need. We believe debit+ is not only the most significant upgrade to the debit card since its debut over half a century ago, but a truly revolutionary idea that can help millions of people enjoy life with a lot less inks about spending, saving money. We're excited to bring this card to the nearly 1 million strong waitlist that signed up at affirm.com/card, and there's still time to add your name to that list. But beyond the elegant user interface of the debit plus app, the beauty of our card is that it's powered by software, which means you can expect us to regularly add new features and functionality via app updates. In other words, we expect debit plus card that we showed you today to improve frequently, and the possibilities are almost infinite. We have a whole host of features planned for the card already. And while we're initially only launching with our Split Pay offering, we plan to extend our monthly interest bearing and longer-term 0% APR offerings to the card. Has been keeping us very busy debit plus is far from the only exciting new product on our consumer road map. Another way we're looking to surprise and delight our users is through rewards. We have been quietly piloting Affirm cash back for a little while now in our app, and we're pleased with the initial results. In the coming months, we plan to launch an even fuller offering of Affirm rewards, which will reward users for engagement with our products and user Affirm. As users transact from our app, pay with our debit plus card or make on-time repayments, they'll earn rewards. These can be used to make purchases or payments deposited into a savings account or simply cash out into their own personal bank account. It's a lot of cool features to pack into a single Affirm mobile app. So we have to change our visual architecture to accommodate an influx of these offerings and more. The Affirm SuperApp will combine the best of the Affirm's commerce, payments and financial services into a single destination, including our existing virtual card, shopping and savings experiences. It will be the destination for savvy shoppers providing exclusive offers, curated shoppable content and smart shopping tools to inspire confidence in users as they shop. The SuperApp will be an integral tool for users to receive the convenience of Affirm everywhere they go, enabling a simpler, faster omnichannel payment mode for our consumers. And to truly extend the value of Affirm everywhere, we'll have enabled virtual card creation usage online through the Affirm browser extension, furthering the ubiquity of Affirm on all channels and devices. As you can see, our consumer road map is similarly brimming with ideas on find new features, we plan to launch everything you just saw within weeks and months ahead. And we are already working on more yet to be announced new products. After 10 years, Affirm is still very much a start-up. We're trying not to take ourselves too seriously, except when it comes to risk management, have fun, build new amazing things for our partners and our consumers. Not all these ideas will resonate with consumers and merchants and some definitely will not. But we will move quickly and bring them to market to learn, iterate and win. One last thing to show off on the consumer road map. It's time for Affirm to support cryptocurrencies in a way that feels organic to us. That's right. We will soon leverage our savings accounts to seamlessly enable crypto ownership. Consumers will be able to buy and sell crypto directly from their savings account, driving the value of their dollars even further with what has been a long-term appreciating asset class. If you got this far in our story, you may be getting dizzy with all the cool products we're working on. Allow me to try to offer a simple summary of our product strategy. We are focused on maximizing frequency of consumer engagement. It's a lot easier to improve lives if you're a daily part of someone's, helping consumers to feel smarter about and delighted with their financial decisions as they shop, spend or save is all about meeting them where they are. We're equally focused on maximizing partner value. Much of our revenue comes from the services we sell to merchants, their suppliers and their platforms. Our job is to deliver more value than they're paying us for, leveraging our unique strengths. These two goals are in parallel that are mutual referential. Consumer delight and attendant frequency gives us more opportunities to promote our merchant partners to our consumers, which in turn drives more transactions and ultimately, more delight. By focusing on these two measures, we are creating strong network effects and strengthening our consumer and partner relationships in the process. As we look to the future, I couldn't be more excited about our product road map and what lies ahead. For the past decade, consumers chose Affirm for the transparency, flexibility and ease of use of our offerings. And with all that we're building, we're confident that we'll add even more consumers to our network and delight them in new ways that will keep them coming back. Likewise, we'll even do a lot more for our merchants, and we are working on additional opportunities to leverage our technology skills, underwriting expertise and capital markets experience to bring them solutions that meet their needs and help them grow. Our unmatched product offerings for both consumers and merchants will help Affirm taking much larger share of the nearly $800 billion U.S. e-commerce markets, the $8 trillion of card spend processing online and in store and the estimated $1 trillion that merchants spend on customer acquisition. We appreciate your support of shareholders and we look forward to the many successes we'll share with you in the future.

Thanks so much, Max. Now I'd like to hand it over to a few of our Affirm partners to share a little about their relationship with the Affirm and the value that Affirm has driven for their businesses. While they couldn't join us live, they've sent over some remarks that I'm going to play for you. First up, Shopify's VP of Merchant Services, Kaz Nejatian, will share a brief overview of the Affirm Shopify partnership.

Affirm exclusively powers Shop Pay summons in the U.S. We've partnered with the Affirm because it was a technology company at the core. And it addressed the needs of our merchants with the best tools available to help them run and grow their business. But Affirm was more than just a technology company. Affirm's commitment to never charging consumers with late hidden fees was really appealing to us because that's part of our commitment to make sure we do right by the merchants and their customers. Look, our mission of Shopify is to make commerce better for everyone, and partnering with the Affirm enables us to do just that.

I also asked Kaz to talk a bit more about Shop Pay Installments.

We built Shop Pay Installments as a custom product together with the Affirm, and our goal was to meet the needs of our massive and diverse merchant base. We built it to be the best buy now pay layer solution on the Internet. And I think the early results speak for themselves. One in 4 merchants, who use Shop Pay Installments and early access, saw a 50% increase in average order value. That's 50% higher average order value than they would have seen with other paying methods. We saw a 28% decrease in cards being abandoned among merchants that switched to Shop Pay Installments from another provider. And shopping solvents is insanely fast. It's 30% faster checkout compared to other processors. And that's why we've seen hundreds of thousands of merchants adopt Shop Pay Installments.

Now Birdies, CEO and Co-Founder, Bianca Gates, will tell us a little about what made Affirm the right choice for Birdies.

Affirm is the only pay return provider who could offer our customers customized payment options that suit their budget as opposed to set biweekly payment plan plus the Affirm technology is unmatched, and they've consistently demonstrated an unwavering commitment to doing right by our customers and have never charged a late or hidden fees.

I also asked Bianca to speak about Bird's experience integrating Affirm.

We integrated the Affirm into e-commerce stack pretty early on when we were a very small team without any developers. They made it super easy for us to launch quickly and test the performance as we introduce new products, new price points, and we're able to grow sales 4x year-over-year, the first year we started working with the Affirm.

And about the results Affirm has driven for Birdies.

Affirm is an exceptional partner to us and has had a remarkable impact on our company. Affirm powered Birdies orders have demonstrated consistently higher AOV than our site-wide average and Affirm has helped us grow in our business over 7x since launching with them just 3 short years ago.

Last, but certainly not least, Samsung's Chief Digital Officer, Kal Raman, is going to share a little about why Samsung started working with Affirm.

Samsung is a consumer-centric company, and we start with customer experience and work backlogs. I found Affirm to be equally consumer-centric from the variety of products they offer, which is very important because we are in multiple categories. And the customer experience they give where they don't charge any late fees, the easily way consumers can access the Samsung's various products through Affirm various platforms is phenomenal. And that's the reason why we chose Affirm. I worked with lots of filet companies. I found their focus on customer experience, innovation, rage of products is unparalleled in the industry.

I also ask Kal to speak to how Affirm has helped Samsung.

End of the day, in e-commerce, especially the fact that we are in a highly considered purchase, we are in electronic business. The single biggest droppage you would get is when consumers try to click the final checkout, right? And that's where Affirm's a range of products and Affirm's ease of use has paid a big draw in improving not only our business, our conversion has gone up, our revenue have gone up, the GMV has gone up, but the customer satisfaction has simultaneously gone up. So it is truly a win-win-win partnership. It is a win for our consumers. It's a win for Samsung and it's a win for Affirm.

Having heard from our merchants, next, I'd like to invite 3 of our executives up for a fireside chat. We have with us Brooke Major-Reid, our Chief Capital Officer; Silvija Martincevic, our Chief Commercial Officer; and Libor Michalek, our President of Technology, Risk and Operations. Our questions for today come from Affirm's analysts and investors who are recently pulled and I'm really excited to have each of you here with us today. Let's start with Silvija on partnerships. Silvija, Affirm has recently won several really exciting large merchant and platform partnerships. What are the key reasons why companies such as Amazon, Walmart and Shopify choose Affirm?

That's a great question, Ron. And while these seem like recent wins, this strategy goes back to 2019. We built a very intentional strategy to win enterprise and platforms with the goal of becoming a gold standard and a premier technology platform for those segments. In turn, of course, these partnerships help us acquire customers at amazing scale. When we planted these seeds many years ago, we knew that it would take time. And so we focused on landing and expanding. We also knew that the sophisticated partners required deep and differentiated integrations into their tech stacks that only Affirm could do. And so we built a deep note. So I'll give you an example of the Walmart journey. We started over 2 years ago now and started with a small number of high order value offerings. We conducted many A/B tests to ensure incrementality and then we expanded. We expanded SKUs, we expanded verticals. We added low average order value offerings. Our partnership with Walmart is so deep that we're working with their suppliers as well. Samsung and TracFone are 2 examples where we've built brand-sponsored promotions to drive more sales of Samsung and TracFone at Walmart. And so when you look at sophisticated partners like Walmart, with complex tech and long-term product road maps, they need a partner that can work with their product and their commercial teams in lockstep whether working with them on their promotions, like deal days that they do in the summers or their Black Friday and Cyber Mondays or whether developing joint long-term road maps to drive innovation together. We also mentioned Shopify, a partnership that we have built over the last year. We would say we're still in the early innings, and we will grow that relationship over time in a similar way. The first step was to get merchants enabled on Shop Pay Installments. We now have -- I'm happy to say, hundreds of thousands of merchants that are enabled. And the next step is to drive additional merchant adoption and consumer engagement. And then similar to Walmart, we will drive and build new features together with Shopify, whether that's longer terms or returns management. And the last partner that you mentioned is Amazon. It's been in the headlines recently a little bit. It's a vast opportunity that we look forward to sharing with you as we grow. Amazon really has a wide breadth of offerings that we, at Affirm, are uniquely positioned to support from long-term financing to daily spend and really everything in between. Even with all the progress that we have made, we have a long runway ahead. I want to make that very clear. With Walmart, Shopify and Amazon, this gives us access to over half of all of U.S. e-commerce. And with that, we have an opportunity to drive adoption and drive penetration in the way that we have to date. And listen Ron, we'll keep doing what we have done well to date. We put our heads down, and we're going to work with these partners on long-term products and marketing road maps to be fully aligned with that of our partners.

Thanks, Silvija. I know that investors will really be excited to see what's next on that partnership front. Libor,having timely and valuable insights is also critical for merchant success particularly those enterprises that Silvija just mentioned, how does Affirm leverage its data and analytical capabilities to help our merchant partners to grow their businesses?

Wonderful question. So Affirm has collected data on consumer shopping, payments and purchasing power across a wide range of merchants and products down to the SKU level. As we expand our merchant and consumer base, we continue to accelerate the breadth and rate at which we absorb this data. This data helps us to better serve consumers by allowing us to expand their purchasing power, surfacing the right opportunities, giving them the confidence to make their next purchase. It also enables us to provide our merchant partners with insights into the purchasing power and habits of their customers. More importantly, this data allows us to craft and analyze the cost and impact of the programs that attract a wider range of new customers and increase the frequency and purchase size of their existing customers. Similarly, we're able to ensure that existing Affirm customers are aware of these merchant programs through our mobile apps in a way that is relevant to the customers' shopping habits and plan future purchases. So the most value to our partners is in the analysis of this data, which unlocks their ability to work with a broader range of consumers than they are to working with today.

That's great. I know that these deep insights will certainly help us to forge even deeper partnerships with our merchants. Brooke, among our peers, Affirm is somewhat unique in our capital markets expertise and our strategic use of our balance sheet. Why are those capabilities so important to Affirm? And what long-term advantages do they provide us?

Thanks for the question, Ron. Let me start by sharing why we are so incredibly passionate and excited about this work. We firmly believe that our ability to fulfill our mission of delivering honest financial products that improve lives is predicated upon having sustainable access to deep, diverse pools of committed and flexible capital. So you see there is really no surprise that we have developed our capital program with the same level of intentionality that Silvija referenced and discipline as we -- as our overall product platform. Having a balance sheet that is optimized by the flexibility of our capital program really allows us to offer a range of offerings in a differentiated way in a very competitive space. So at the heart of this, Ron, is our capital markets expertise. It has really enabled us to deliver differentiated value across our ecosystem, which includes an enviable group of regulated, well-capitalized financial institutions, marquee, domestic and global asset managers and fund and most recently, asset-backed securities investors. So putting this in context, Ron, in the very beginning when we started this journey, we began with the basic need to fund the loans on our platform. So we leaned into warehouse facilities -- committed warehouse lines. and then we systematically migrated to a velocity-driven model, leaning into loan buyers and securitization that could sustainably support the exponential GMV growth we saw. This model helped us achieve a 78% CAGR in terms of the GMV growth over the past 2 fiscal years across our core products at scale. And Ron, the exciting piece of this is that the model is really flexible. It's flexible enough to consistently support new offerings without bloating the balance sheet. So having said all that, it really brings me to where we are today, which is very exciting. A durable capital program that delivers those benefits and so much more across three primary symbiotic funding channels, allowing us the ability to optimize economics, liquidity -- all important liquidity and balance sheet size. Ultimately, what you're looking is our ability to reduce the overall equity capital required to fund our loans as a percentage of total platform portfolio by a whopping 2/3. You're looking at 12% in fiscal '19 to 4% in fiscal '21. So as you can see, the capital program mirrors the exceptional trajectory of our overall platform. I could put it to you this way, our alpha with the warehouse lines, beta, you could see the loan buyers and then GA programmatic asset-backed securities issuance. That in itself has created a distinct competitive advantage relative to our peers. So don't get me wrong, Ron. This took a lot of time. And so our success is a direct result of our technology and analytical prowess, which Libor referenced earlier. So in addition to that, we have robust underwriting and risk management capabilities, which we bringing this all together. And so yes, the work isn't done, and we haven't stopped. We continue to refine and fine-tune the capital program with a keen focus, not only on just increasing the capital efficiency, but also effective balance sheet management, super, super important, as we set new -- set our sights on new heights for the platform, which we know we will achieve. The results have and continue to demonstrate our success in this regard. So we've proven that. So it's with all of that, that can truly Affirm one intended that we have pressure tested our capital program's ability to deliver differentiated value across not only the largest consumer enterprises, Silvija just talked about those, but also a diverse array of merchants, individuals and capital partners alike at scale, and as we've seen most recently, through fluctuating economic cycles, we really believe Ron that this is a real competitive advantage in our space.

That's great, Brooke. Our capital markets expertise is really critical to driving our future growth. And I'm looking forward to seeing how you develop that program going forward. Speaking of Affirm's competitive advantages, Libor, the strength of the firm's technology is often cited as one of our key competitive advantages. In your view, what are Affirm's primary advantages in technology? And how sustainable are they?

Ron, as an engineer, I love this question. There are two primary advantages that we believe are sustainable over the long term with continued investment of machine learning systems and our internally developed vertically integrated financial product stack. On the machine learning front, we've invested heavily in both algorithms and the data on which those algorithms operate, including how that first-party and third-party data is managed fruition all the way through model training, validation, testing and live decisioning. However, the real long-term advantage is the model development process, which brings together the algorithms, the data and the previous iterations to advance the effectiveness of the next model. This is how we approach all the models in our machine learning system that create an advantage for us in fraud, underwriting, personalization, servicing, capital management, et cetera. That aggregate machine learning system, the growing collection of models, fed from that growing body of data creates a wonderful flywheel of better decisions, more efficient decisions that improve the quality of the user experience while delivering more value to consumers and merchants. Second is our vertically integrated financial stack that is a set of loosely coupled internally developed systems that flow from user experience to our decisioning systems, to the set of ledgers that power the financial products, to our serving -- to our servicing and capital program and everything in between. While we continue to develop these abilities independently, we can also quickly enable functionality that spans the higher service, new products, new countries, new partners, new requirements, et cetera. Being loosely coupled means we can independently advance the state of art in each domain by having all the core functionality in-house means that we can tackle complex opportunities very quickly. Even more importantly is the data that comes from these core capabilities. We remain in control of the data that is produced by each of these systems, which is the same data that's being fed into the machine learning system that makes a critical element in the technology flywheel that's becoming more efficient, is able to support more functionality and deliver more value as it scales up. So I do see both of these especially together as an advantage that is not only long-term sustainable, but also an advantage that builds on itself over time.

Thanks, Libor. It's great to see how we driving our advantage in technology. I want to turn back to Silvija for a moment. The large-scale partnerships that we have have several advantages to them. One of those is bringing millions of consumers to Affirm's offerings for the very first time. How are you reengaging with those consumers and on the platform today?

For many of our new consumers, their journey really begins at the merchants point of sale. So imagine buying jeans at Walmart or a lamp at William Sonoma or a vacation at VRBO. And so after a consumer discovers Affirm at the merchant point of sales, we engage that consumer through our app. Many discover our app during the repayment process. Once the consumer is in our mobile ecosystem, there are great opportunities for engagement and reengagement with a variety of different tools. We've built dynamic life cycle marketing, 0% promotions, our savings product and many other marketing and promote tools. We really look to our app as a huge opportunity for reengagement and we'll be working diligently to continue to drive more adoption. To that end, and as Libor was speaking, earlier we also use our data very diligently. And in fact, are currently developing advanced machine learning technology to further augment consumer insights that we have gained over the last 18 months working on many enterprises. And so what we're doing there is we're hyper-personalizing and matching consumers with merchants in timely relevant ways. For example, we've created a sophisticated trigger-based automated marketing campaigns that are based on personal consumer journeys. For example, if you're buying that TV from Samsung and you're bad -- abandoned the cart we can build, that triggered campaign to drive you back and purchase that TV. Another very, very important lever for us for consumer engagement is brand building through merchant co-marketing. We work with some of the most recognized brands on the planet. And in fact, over the last fiscal year, our brand recognition has increased by 70% for Gen pop and even more for Gen Z and millennials. You can imagine, Ron, marketing with amazing names like Target and Peloton has a dual halo effect. Last, but certainly not least, we know that happy customers come back. And so we really try hard to delight our consumers with the amazing technology that Libor spoke of and also through really, really elegant and wonderful customer support experience. We always uphold our core values, one of which is no fine print and we treat our customers in the way that we would want to be treated. And they reward us with an NPS score of 78, which is on par with some of the best brands on the planet.

That's great. I'm sure investors will appreciate the flywheel effect that these large wins create on the consumer acquisition front. Brooke, I want to turn back to you for a moment. The capital markets team has executed several very successful asset-backed transactions, including Affirm's first securitization to include Split Pay in its first nonconsolidated securitization. And the cost of the capital and the advance rates for these transactions have been very attractive. How have you been able to achieve these results?

So we're quite proud and humbled by the reception we've gotten in the market. So Ron, I'll tell you that it comes back to our core competencies, which are very powerful to us. The ability to underwrite and manage risk at scale are sophisticated and very credible capital markets expertise that's coupled with our commitment to being a programmatic asset-backed securities issuer. So let me break it down in terms of where it all starts, right? So it really fundamentally starts with our ability to underwrite high-quality assets followed by our ability to do so consistently at scale, which we have. And then our job is to really align those assets for the right capital markets execution via securitization, which is a deep and efficient funding source for us. So let me give you an example, bifurcating our securitization program into a long-duration static shelf and a short duration revolving shelf allows us to optimize pricing by taking advantage of the unique qualities of our loan book and the ability to meet a variety of investor needs. Finally, we tie this all up in our ability to seamlessly replicate the transaction execution process, then again, supported by the asset performance. So each deal attracts a more diverse group of investors, and that creates a virtuous cycle with those investors. So it allows us to do 2 key things. One, gain support for new structures, which we're always looking to do; and two, be rewarded over time with better overall economics and terms. Our most recent transactions are the ultimate manifestation of the power of the cycle at work. So in May, we issued 2021 Z1 that was our first nonconsolidated deal, which got off-balance sheet treatment. That was followed in August by 2021 B that marked our sixth overall ABS transaction. Very, very proud of that. And so that deal was well received in the market. And it was our most efficiently executed transaction to date requiring minimal Affirm equity capital. So that is really, really something we're quite proud of. So needless to say, Ron, the results are impressive by any measure, but they are only effectuated by the flexibility and velocity we have created in arts program, which, again, we know is a key competitive advantage for us.

Thanks, Brooke. It's great to see us extending our advantage in capital markets with such great execution. Now looking into the future, Libor, why is Affirm so invested in building out its technology capacity? And how do you think about the scalability of Affirm's product and engineering efforts over time?

Such an important question, Ron. While Affirm has grown quickly to a meaningful scale, we have only scratched the surface in delivering on our mission of honest financial products that improve people's lives. We have significantly more ideas and opportunities than we have the people to build them in a timely manner. At the same time, as we look at those opportunities, we also need to be mindful of judicious investment in our core capabilities. Being a technology company means continuing to reinvest in improving our existing capabilities by the teams that have developed development and operational knowledge of those systems. That know-how is critical input into the next generation of the service. What we're ensuring with this feedback loop is that we don't leave behind a hollow core, which would leave us ossified and unable to adjust to the market or execute on ideas that are tied to our core functionality. Because of the speed with which the market is evolving, we're not going to rely on third parties for core technology. We've all seen what that kind of dependency does to response times and execution times. The expansion into new products, geographies, verticals as well as our growing scale and continued improvements in our existing products are all constrained by available resources, which is prompting our investment in engineering talent. To officially accelerate that expansion, we're adding a significant engineering office in Poland, along with the office we added in Madrid through our Returnly acquisition, allowing us to tap into the engineering talent available across the entire EU. We're really excited about these investments that we're making and look forward to the next year.

Thanks, Libor. It will be exciting to see how these investments in technology drive our future growth in years to come. So next question goes to Brooke. Brooke, I'm thinking about how you're managing Affirm's capital, what factors are you most focused on optimizing?

That's a critical question, Ron. One of the key factors we think about from a capital perspective is consistency of performance Ron. In a landscape as competitive and dynamic as the BNPL market, it's imperative that we manage consistent performance across the portfolio while supporting the business needs to add new products, approve new users and enter new verticals. So consequently, we have to be very mindful about how we fund these initiatives while maintaining and building upon the high-quality execution we enjoy today across our funding channels. This is really important for us, and we're very focused on it.

Thanks, Brooke. That focus will certainly help us to drive our advantage forward. Now this last question goes to Silvija. Silvija, what do customers and merchants want next to Affirm? And what directions can we expand upon our consumer and merchant relationships to drive engagement, satisfaction and ultimately create shareholder value?

Great question, predicting the future. So as we mentioned earlier, we developed deep relationships with our merchants, and we highlighted some of the largest merchants, but we work with merchants of all sizes from Walmart to Watchfinder. And when we talk to them, something that these merchants have in common, all of them, regardless of the size, is all of them are constantly looking for new ways to growing their business and attracting new customers. And so what Affirm offers is a growth platform through our technology that Libor talked about, risk and capital solutions that Brooke talked about. In short, wherever technology, risk and capital prevent merchants from growing and delighting their customers, we will be there for them. So I'll give you a couple of examples, Peloton. We've worked with Peloton for a long, long time and have really grown with them. Of course, we provided installment solutions for their bikes in the United States to make them more affordable. And when they started launching in Canada, they asked us to come to Canada with them. Another example is Samsung. We started working with Samsung on installments. And recently, as they launched the flip and fold new phones, they asked us to build a custom installment solution, try now pay later. And we built that for them, and that's now included in a lot of their marketing for those new flip and fold phones. And so as we look into the future, we see many opportunities to continue to deepen our merchant relationships in such similar ways through a suite of tech offerings. And so I'm not going to share the product road map. But what you can bet on is that we are going to invest in merchant analytics and using data to help our merchants a deeper understanding of consumer buying behaviors and also building new merchant services, whether that means continuing to serve financing for a variety of cart sizes as well as some innovative solutions like brand-sponsored promotions that I talked about earlier with Walmart. And really, as with any good product organization, we listen to our customers and we innovate based on their needs. And so while we have our internal product road map, much of the innovation will be from requirements from our merchant and platform partners. I look forward to continuing to share our plans with you over time and, of course, continuing to deliver on those plans.

That's great. I'd like to thank you, Brooke, Silvija and Libor for your thoughtful insights today. I know our investors really enjoy hearing from you. And now I'll turn it over to our Chief Financial Officer, Michael Linford for a deep dive into Affirm's financials.

Thanks for joining us today. I'm excited to share more about how we plan to build on our significant momentum and how we envision our financial future. As Max discussed, we have a robust road map for Affirm that we believe will deliver sustainable growth with strong long-term unit economics for years to come. We have built and continue to build trust-based relationships on both sides of our network. Aligning our interest directly with consumers and merchants isn't just the right thing to do, it's a good business that delivers results. During our most recent fiscal year, we powered more than 16 million transactions totaling more than $8 billion in GMV, a 78% compound annual growth rate from fiscal year '19. In fiscal '21, we grew total revenue to $870 million, an 81% compound annual growth rate for fiscal '19. We see attractive opportunities to build on the strong performance. Affirm is a leader in a massive and fast-growing market and benefits from long-term secular trends. These include the ongoing growth in e-commerce and changing consumer preferences for payments. Finally, we have compelling unit economics, driven by our diverse product portfolio, excellent risk management capital markets expertise and proprietary technology. These moats have helped us grow revenue less transaction costs at a 182% compound annual growth rate since fiscal '19. We've made tremendous progress over the past year, but we believe that we're really just getting started. Affirm is the partner of choice for merchants and platforms in North America, thanks to our unrivaled technology, which allows us to facilitate a wide range of transaction types and provide a high degree of customization and flexibility. Put simply, we turn browsers into buyers for our merchant partners. We drive demand generation, customer acquisition and conversion at the most critical part of the purchase decision. We do that by providing affordability for both low and high ticket items with 0% APR and interest-bearing offerings and have flexibility in our terms, ranging from 6 weeks to 5 years. In our most recently completed fiscal year, our 0% APR offerings accounted for 43% of our GMV. This includes Split Pay, our short duration interest-free offering. And for the first time, we are breaking out Split Pay from that 43% as we expect its adoption to accelerate through our partnership with Shopify to power Shop Pay Installments. Interest-bearing offerings accounted for 57%. This includes most transactions completed through our app via a single-use virtual card, which enables consumers to use Affirm wherever they shop, even if the merchant is not integrated with the Affirm. We also have an expanding set of unique services for merchants, including Returnly, which we acquired in the fourth quarter of fiscal '21. We are excited about this opportunity to deepen our relationship with both new and existing merchants with these offerings. Before I dive into the economics of each product, I'll provide an overview of our capital strategy, which Brooke discussed. Capital is critical to our ability to serve merchants and consumers, and we believe it is a point of strength for Affirm. We fund our business with 4 different funding sources. First, we have access to committed warehouse lines that allow us to borrow at floating interest rates in advance 80% to about 90% of consumer balances. While this has been an essential tool for operating our program, we have increasingly funded our recent growth through other sources. Second, we have forward flow agreements that facilitate the sale of whole loans to counterparties. These allow us to earn upfront revenue, generating a 1% to 5% gain on sale, while eliminating the need for equity capital. We also collect servicing income on the loans that we service on behalf of those counterparties. Finally, we sponsored 2 types of securitization programs. Our revolving asset-backed security program provides fixed rate funding at both the lower cost of capital and a higher leverage ratio than our warehouse lines. In fact, our most recent transaction encumbered only 1% of our own capital, while allowing us to fund $2.5 billion of assets over the deals lifespan. Second, our static ABS program is optimized to fund our longer-term 0% offering. We achieved off balance treatment with our latest issuance, which allowed us to recognize upfront revenue similar to our forward flow. Now let's dive into each product, starting with Split Pay. While Split Pay resembles the buy now pay later offerings that have become so popular today, Affirm offers a superior checkout experience, and we never charge any late or hidden fees. As a result, Split Pay has a very simple revenue model. We earn income from the fees merchant partners pay us as well as the interchange fees when we use our virtual card product. While we offer Split Pay in partnership with a number of merchants, we expect the lion's share of the growth in the coming year to come from our long-term partnership with Shopify to power Shop Pay Installments. Given Split Pay's extremely fast turnover, it has a weighted average life of just 3 weeks, this asset turns over 15 to 17x per year. Thus, we can efficiently process a large amount of GMV with our warehouse funding. We also have recently begun funding a portion of our revolving securitization program. To illustrate the capital efficiency of this product, consider that $3 billion of annual split pay volume would result in just approximately $200 million of balance sheet impact. This, in turn, would be supported by less than $20 million in equity capital or less than 1% of total volume. And speaking about the economics, merchant fee for Split Pay transactions can range up to 8% of GMV. Card sizes can vary from $50 in the lower end up to $3,000 in higher end. Let's go back to how the revenue is recognized in our P&L. While the consumer never pays interest or fees for this product, we do recognize part of this income as interest income through the amortization of loan discounts depending on the nature of the relationship with the merchant. We estimate that a large majority of the revenue from facilitating Split Pay loans will be recognized as interest income in any given quarter. Affirm's ability to offer merchants and consumers much more than a simple 6-week payment plan is a key reason why we win. To put it in practical terms, if you're only providing an option to pay for a multi-thousand-dollar family vacation and a few biweekly payments, you're not solving affordability problem for consumers. That's why we deliver longer duration financing with our 0% APR offering. We've seen that this solution is highly compelling for consumers and merchants alike. Our proprietary technology enables us to assess and price these offerings within seconds and provide consumers with the bespoke set of offers designed to suit their needs. Today, terms can range from 3 to 60 months, spend from $50 to over $17,000. Like Split Pay, our revenue source for this product is through the merchant discount rate that we earn from facilitating the transaction. Our capital markets expertise is critical to providing these offerings as it allows us to efficiently fund the loans without requiring significant amounts of equity capital. Like Split Pay, these transactions never charge any interest or fees to consumers. However, we do recognize some interest income on them. In fiscal year '21, we recognized over $100 million of interest income from our 0% financing products with 0% installment loans driving the large majority of those balance. When we sell our 0% loans, we maintain the servicing relationship with our consumers and earn a fee from the owners of the loan, which we recognize as revenue in the servicing income line. We offer an interest-bearing product as a way to responsibly and safely expand purchasing power for larger, more considered purchases. Expanding access to credit is a fundamental part of our mission, and these transactions allow us to serve more consumers, merchants and use cases and our competitors from tires at Walmart to plane tickets. We typically offer interest-bearing financing by integrating directly with our merchants, but we also offer interest-bearing loans through our nonintegrated direct-to-consumer virtual card product. This allows consumers to take out longer-term Affirm loans at any merchant online or in-store. As with our 0% APR loans, we provide customers with offers tailored to their needs with interest rates ranging from 10% to 30% in durations from 3 to 60 months. As mentioned earlier, purchases can range from $50 to more than $17,000. Although we primarily derive revenue from consumer interest on these offerings, we also earn merchant fees and virtual card interchange fees on the interest-bearing transactions we facilitate. Given our differentiated credit underwriting approach, our interest-bearing loans are attractive, high yield, high velocity assets with strong investor demand in the capital markets. We currently finance these loans through both on and off-balance sheet funding sources, warehouses and securitizations on the balance sheet and forward flow loan sales off balance sheet. For interest-bearing transactions, our revenue is generally determined by whether we hold or sell on our balance sheet. As with all of our pay-over-time products, we earn merchant network revenue and virtual card network revenue upfront and pay for the processing and servicing costs over the loan's life regardless of funding channel. When we hold a loan, we make interest income over the loan's life. However, given that we hold the loan, we must take an upfront provision expense for expected losses and incurred net funding costs. On the expense side of the loans that we sell given that we did not hold that we do not incur provision expense or funding costs, but we do incur processing and servicing costs. One point to reiterate that we never sell the servicing rights to outstanding consumer balances. This allows us to control the full consumer experience, and we also earn servicing income for managing the loans on the investor's behalf. That brings me back to Returnly, which is a leader in the online return experiences, solving a critical pain point in e-commerce enabled by underwriting and risk management. The addition of Returnly's platform provides us with a complete solution for acquisition, retention and loyalty. Returnly product maps to the key problems and challenges caused by returns, wasted time, lost sales and profitability optimization and of course, the big challenge of rising customer expectations. To help merchants, we offer self-service returns with automated e-mails on the return progress, fully branded touch points and order and return value. Returnly Also helps merchants retain revenue via in-app exchanges, upsell capture on exchanges deliver product recommendations after returns while driving customer satisfaction and loyalty. On top of that, when merchants use our instant store credit product, we allow consumers to select a new item before they return the original one. This goes a long way to building trust and save the transaction that was headed towards a loss sale. Returnly primarily makes money via merchants paying Returnly as Saas fee as well as a percentage of orders made with Returnly credit. Returnly is free for shoppers. While modest in size, Returnly earns a SaaS fee that is high margin and the MDRs earned on credit can range up to 10%. And of course, like Max, we are all very excited about the debut of the Affirm Debit+ card. Debit+ will leverage existing network rail at launch, and Affirm will earn interchange fee on debit transactions, which we estimate to be between 1% and 1.5%. Ultimately, Debit+ economics will be based on the consumer uptake of our post-purchase offers. While we were initially launching with our Split Pay offering, as Max alluded, our roadmap contemplates adding monthly interest-bearing and longer-term 0% APR offerings to the card. As we introduce interest-bearing loans, we would earn consumer interest as well. On the expense side, we expect fraud and dispute charges, marginal cost for the 2 days of funding and some incremental servicing costs. For those transactions using our Split Pay feature, we expect to incur the typical costs associated with that offering, albeit with lower credit losses over time. We plan on relying on ACH to settle the transactions, yielding lower payment processing costs. As we develop the card's features and associated revenue streams, we believe Debit+ will deliver attractive returns. Though in the near term, like any new product, the economics will improve over time. While we have not factored potential volume or revenue from Debit+ in our guidance for fiscal '22, we believe it will contribute meaningfully in fiscal '23. Debit+ will expand firms reach into everyday spend transactions and grow our share of wallet with our consumers. However, we do expect the growth in Debit+ to reduce a portion of the volume that is currently running through our direct-to-consumer single-use virtual card offering. While there are many important elements to Affirm, I think one of the most important and differentiated is our ability to assess and manage risk. To highlight this, we want to show investors where delinquencies have trended and where we expect them to be going forward. We combine a unique blend of human and machine learning expertise to be at the forefront of fraud detection. We can connect to our merchant's inventory and order management systems, allowing us to cancel a transaction, stop a product from shipping or even recall a shipment when it is determined to be fraudulent. This approach has proven robust and allows us to consistently maintain a very low fraud rate. Unlike legacy payment and credit systems, we assess and underwrite risk at a transaction level. Our integration with merchant partners allows us to consider the product that the consumer is purchasing while we assess a credit application. We have also leveraged our transaction level risk models and data sets to develop proprietary consumer level credit models for applications like Debit+, where item and transaction level data may not always be available at the moment of credit decisioning. Overall, the precision of our risk model allows us to facilitate a greater volume of transactions from a wider and more diverse segment of consumers. At the same time, we're able to minimize risk and maintain attractive economics, providing a fertile ground for our network to grow. To that end, it is important to look at delinquencies in context. Going into the pandemic, we were comfortable with the level of delinquencies in our business, hovering around 2%. As we responded to the pandemic and tightening credit, our delinquencies dropped to a historically low level of less than 1%. Efforts to loosen the credit block showing the beginning of the growth in DQ in the last month of fiscal '21. We expect delinquencies to remain consistent with what is required for strong unit economics in line with our guidance. We do expect a return to pre-pandemic levels in the coming months. With all the exciting initiatives we are pursuing, we expect to continue driving strong growth and unit economics well beyond our current fiscal year. We have an exciting opportunity set in front of us, and we expect to continue to compound GMV and revenue at outsized rates for the next several years. As our revenue continues to scale at rapid rates, we expect to demonstrate operating leverage and drive annual profitability improvements beginning in fiscal '23. Ultimately, the degree of operating leverage we demonstrate and in turn, the rate at which we progress to profitability, will be managed in conjunction with our expectations for GMV and revenue growth in that period. Of course, to deliver that product roadmap and capitalize on the growth opportunities in front of us, we plan to invest in the future of our business. As we outlined a few weeks ago when we shared our financial outlook for fiscal '22, we are investing in technology and marketing to drive growth in the years ahead. However, as our business scales in the years ahead, we expect to drive operating leverage from our fixed expenses, including technology and data analytics, sales and marketing and G&A. During our growth phase, we expect to deliver GMV growth of 30% to 40% on a compounded annual basis. As you can see from our guidance for fiscal '22, we believe we are still growing faster than the rates implied for that phase. We expect total revenue to grow at 20% to 30% rate as we expand into lower AOV categories, which carry lower revenue take rates than our 0% APR offerings. Accordingly, we expect revenue as a percentage of GMV to stay within a range centered around 8%. On the expense side, we expect transaction costs to remain steady as a percent of revenue in the same 5% range that we delivered in fiscal year '21 and now expect in fiscal year '22. And as I mentioned, even as we plan to invest to drive continued consumer awareness and adoption and bring our product roadmap to life, we expect to drive leverage in our operating expenses. As a result, we expect adjusted operating income as a percentage of total revenue in the range of approximately breakeven to 10%. Looking longer term, we expect take rate of total revenue as a percentage of GMV to settle in the 6% to 8% range with transaction costs of 3% to 5% of total revenue. Again, we expect a slower rate of investment, bringing our adjusted operating expenses as a percentage of total revenue to 18% to 20%, yielding healthy long-term adjusted operating margins in the 20% to 30% range. We believe Affirm will not only continue to grow, but deliver attractive margins at scale. In summary, we have a tremendous opportunity ahead. We are attracting more and more consumers to experience the flexibility, convenience and delight of our offerings, while giving them even more reasons to choose Affirm. We are forging deep relationships with the top merchants and platforms as we continue to address more of their needs and help them thrive. By expanding our 2-sided network, we believe we will drive growth for the years to come while delivering attractive unit economics as we scale. To sum it up, we've never been more excited about the future of Affirm.

Thanks, Michael. We'll now begin our analyst Q&A session with CEO and Founder, Max Levchin; and CFO, Michael Linford. Our first question comes from Ramsey El-Assal from Barclays.

Max, I wanted to ask you specifically. You unveiled a really large spectrum of new products today, some of which assumed to open up pretty significant new kind of growth runways. I want to ask about your longer-term vision for Affirm. Let's see, over the next 3 to 5 years, how do you see the company evolving?

So thank you for teeing me up. It's a great question. Best way to think about Affirm or at least the way I think about Affirm, so it's worth is as a software-defined, data preserving, vertically integrated network. So it's kind of a mouthful, but each one of these components is really important. If you compare and contrast us to existing payment networks out there, one of the sort of greatest missed opportunities, if you will, is the fact that they do not preserve majority of the transactional data as transactions move through the system. So the entirety of old networks and certainly, payment networks is really all about message passing and it's a tragedy and a giant opportunity that data doesn't stick to the transactions as they move through the system. And this extent is far beyond the point of sale all the way out to financing for things like manufacturing and logistics all the way out to rewards. The data just keeps on getting chopped off and then inferred later on or just completely discarded. So the idea for Affirm has always been this notion of connecting all the financial dots by preserving the data from the very beginning when the consumer has intent that's forming in their head all the way out to the culmination of the transaction as the money changes hands and all the way out to fulfillment and should there be a dispute or repayment cycle, et cetera. And so the way I think about Affirm is -- that's what I just described as an operating system for applications. I think that there's near -- I'm sure it's countable, but it's a very, very large set of possible applications that can be built on this foundation as applications. In fact, if you saw through the SuperApp idea that we just covered, you can always think of that as the consumer side manifestation of applications we're going to start delivering on top of this operating system. There's just so much to build on top of it. And I realize that there's no name for it yet. We think we're paving fundamentally new round here and hence, the long-winded answer.

That's fascinating. I wanted to drill down into one of the products that you mentioned today, the working capital and merchant working capital product, which also seems to open up a pretty significant new kind of growth vector. Can you provide any more details on that product in terms of how it works or maybe the distribution model you're going to foresee there?

That was a great question. The -- but a little insight that powers us sort of to go back immediately to your third question. So we know a lot about a merchant's business because we see a very frequently, very meaningful fraction of their consumer transactions. One of the ways you can think about merchant's capital profile is through the lens of prequalifications that consumers have asked for. When we approve a customer to go shopping at brand X or merchant X, we are basically sizing up both their capital needs and their future cash flow because we know, ultimately, they will have to go and purchase the supply -- and/or manufacture the supply of the consumer is about to purchase. They're committing to purchase. And so we have this really unique data-driven lens over what that merchant might need. And not only can we underwrite that merchant based on how strong their cash flow has been and what we expect them to do, but also we can understand what their future demand and therefore, future manufacturing needs will look like. And so that's sort of the foundational idea of why we think we have a right to win here. We have something extra that others don't perhaps know as well as we do. It's super early. Again, somewhere in my talking points, it's just bold statement saying, please don't drop these things into your models as yet. This is a preview of the product roadmap as opposed to financial roadmap, but we're super excited about this. I think we've talked to merchants plenty and they told us over and over again, this is a fantastic idea. We love the accelerants that you're offering us. It's a fairly small amount of money, relatively speaking. I can throw it over to Michael, if he wants to comment on the specifics of the financial component of this. It's just a little too early.

Our next question comes from James Faucette of Morgan Stanley.

I wanted to ask you, Michael. On your slides on Slide 36, you talked about delinquencies, how we should expect those to evolve, and 37 you kind of gave up exposed business developing. Maybe on Slide 36, when you talk about getting back to pre-pandemic levels, you mean hovering around that 2% range. How should we interpret that or as we translate to losses? And then hopefully, give us a little more color about the signs that you're thinking for the different phases and market impact that we were bringing forward.

Thanks for the questions. Let me start with the second one first because I think it's kind of illustrative of where we're at. So our framework for how we'll think about fixed cost investments and the shape of the income statement is really a framework, not a forecast. And so we've given guidance for fiscal '22 that clearly puts us ahead of that growth phase that we highlight on that slide. What that means is for the foreseeable future, we think we're going to be growing faster than even that growth phase and certainly, well ahead of the right-hand column in that chart. And we think that's probably also going to be true for fiscal '23, although it's quite early. The way to think about that framework is our willingness to invest is a function of our growth expectations and when our growth expectations are exceeding that level, we're going to keep investing, and you see that in fiscal '22. And with all the great exciting things we're working on, we're pretty excited about where our future is, and we're probably even before the growth phase for the foreseeable future. Now with respect to credit losses, it's actually kind of a similar theme. So when we entered the pandemic, we took a much tighter credit posture, and you saw on the chart that quick drop-off in delinquencies. And that's too tight. We've been talking about this now for 2 or 3 quarters around the credit benefit that we've received as being too tight, mostly because we want to serve more consumers in these transactions. And so we are loosening and we're back to pre-pandemic levels of risk decisioning, and we would expect delinquencies to rise to that 2% range. With respect to actual losses, you should think about the historical loss rates as being pretty similar, although we do get better over time. And so the question is always, does it show up in losses or does it show up in slightly better unit economics? And as you know, we're running a little bit ahead in our unit economics. And so we're in a position to keep investing that in deeper approvals, all while being in complete control.

Our next question comes from Tim Chiodo at Credit Suisse.

So the first part here is around the shopping installments offering to the extent that -- maybe you can just put some context around the possibility for you to move ex-U.S. with Shopify on that, and then also add Shop Pay Installments moves off platform. So Facebook, Google and potentially, other non-Shopify platforms.

Great questions. Thank you. As always, we try to take the posture of not speculating on things that seem exciting. Some exciting might be and are not yet in conversation. The one thing that Tim I am very, very clear through my remarks said earlier, we see international opportunity as essential and important to us. We are not limiting ourselves to North America. Obviously, we are now past the U.S. border, but there is a lot more to the world than just U.S. and Canada. So, we absolutely intend to go outside of our current geographic footprints and the way we intend to do it is exactly through partnerships with our existing large merchant and platform -- existing customers because we have these deep trust-based relationships. They value us for exactly the things that we want to be valued, which is technology, ability to manage risk, access to capital in a very efficient way. And so the actual results, as always, will announce when they do happen as opposed to speculating on them, but the line of reasoning is very, very sensible.

Okay. I'll take that. A quick follow-up is for you, Mike. On Slide 37, during the growth phase there, I know your current year guide does not include Amazon. But is it fair for us to assume that Amazon might be included in the growth phase and maybe the longer term as well?

Yes. Again, this is less of a forecast and more of a framework. Clearly, any benefit that we have from any partnership that's currently being tested or worked on would show up in those periods. But again, the way I think about it is, if any new partnership were to put us at a higher growth rate, then they would put us before the growth phase. And again, if we ever slowed down to where we were slower than we are today or slower than the growth phase is when you start to deliver those adjusted operating income numbers or that different shape of the whole income statement with respect to revenue contribution and unit economics.

Okay. So said differently, Amazon and/or any other large partner would have the potential to essentially delay the time period until we reach the growth base.

Yes, that's right. I mean, again, we think about the growth as an input to decisions we make around investment profile in the business. The input would include any partnership, any new product that Max talked about international, all those things would be inputs to where we're actually at on our maturity. And as we scale the business, we're committing to being responsible about where we invest our fixed costs, but for now, we think the opportunity is just too great to limit ourselves.

Our next question comes from Andrew Jeffrey from Truist.

Max, I have one for you and then a follow-up for Michael. Can you -- there's been a number of competitive announcements to say least in BNPL recently, Mastercard today. Would there ever be a circumstance in which a firm will think about white labeling solutions for banks? Or do you see yourself much more as a direct merchant partner?

That's a fantastically insightful way of reasoning about the space and lots of good stuff to dig into there. So we have never white labeled. Generally speaking, we have no intention of doing so for two very pragmatic reasons: Number one, when someone sends you a bill, and the bill says, hey, we're from Affirm you owe us money. You haven't seen the Affirm logo and haven't been fully indoctrinated that it is, in fact, Affirm you're transacting with, you're just much less likely to pay the bill. And so from the point of view of consumer delight being a cornerstone of how we want to conduct our business, that means we can't let go or sell servicing rights, collection rights, et cetera. That means we will bill you. Affirm will be sending you a note saying, hey -- perhaps, in partnership with Shopify or other partners, but that Affirm label has to be visible to you -- just visible enough for you to know that we are the ones talking to you. And two, if you're building a network, you ultimately -- the thing you're hanging our head on is network effects and the fact that consumers that recognize you and say, oh, yeah, I've dealt with Affirm before, they are the honest, control giving financial product provider that has made my life a little bit better, so I'll do it again. So all those things compound to the idea that, no, we don't intend to white label. That said, I do think the industry is really -- and we set it for 10 years, so it's very gratifying actually to see all these competitive announcements as you put them, because frankly, it suggests that, hey, these folks are now, say, wait a second, this whole idea of unbundling the credit card is real, and I got to react and I got to do something. You didn't ask the question, but I'll sort of speak to it for a second anyway. Networks are, generally speaking, are natural partners. A big burden that we took on is connecting to literally hundreds of thousands of merchants now, and we get something very, very special from those connections, but there's always more to connections to create. And between now and the time we have them writing existing network rails is very powerful. It gives consumers access to -- gives consumers ubiquity of being able to use Affirm. And so networks getting into BNPL API delivery is a positive force for the industry, but also a positive force for us. The idea of partnering with banks that want to offer BNPL-like products to their consumers, certainly not something we've announced, but is a -- I think, a profound opportunity for lots of especially smaller banks. I think folks that do not drive the primary profits from credit card portfolios should be looking at BNPL when asking the question. All right. So now that the network support this and Affirm has this powered by firm API, what can I put together that would delight my consumers. And so we're very excited about that, and that opportunity is deep and interesting and there's a lot to do there.

Hopeful. Especially, the bifurcation of the market opportunity. And then, Michael, as a follow-up, on Adaptive Checkout, can you speak to yield lift. I assume it's included in your weighted average yield outlook, sort of the format or the structure. But can you speak discreetly to yield lift and also attach rate and how we might think about that?

Yes. So the Adaptive Checkout product is really designed to drive better results for our merchant partners, especially living up to our real point of differentiation, which is our ability to serve transactions of all sizes and durations. We tend to think about going to market with that product in a way that's neutral to our total business and still driving better results with respect to conversion and consumer adoption. What that really means for us is, we think there's a marginal impact on GMV and a meaningful impact on users in our network while driving really outstanding results for our merchant partners.

Our next question comes from Jason Kupferberg at BofA Securities.

I wanted to see if you could spend a minute just giving us your latest views on the regulatory backdrop as the binocular space continues to obviously expand in popularity. Certainly, there have been some media reports from time to time about some consumers getting themselves into a bit of trouble, which can certainly be a one-off situation, but -- which is fact that this may get more attention as the industry continues to experience significant growth. And I know you've been proactive with the regulators in general, but I'd love to get your perspective and how that perspective may evolve as you take your business overseas?

Great question. So first of all, for the point of doubt, not only have we been engaged with a variety of regulators over the years, we are a very regulated business. We see regulatory attention through our bank partners. We speak directly to state regulators. So we have a full complement of regulatory relationships that we need to be very attentive to and are. Two, I think I speak with the entire team, but I certainly personally generally fairly pro regulation when it comes to these new financial products because in the business we're in, unless you see some degree of coordination among players, even competitors that want to edge each other out in the market, you want to make sure that consumers and merchants aren't inadvertent victims there. And so what that means is, you have to standardize around the way of communicating, what isn't is offered in a product and the way you report it to credit bureaus, if that's part of the offering, et cetera. And so generally speaking, I think regulatory attention is a positive thing so long as it is rooted in understanding of the product, understanding of what the intent is, et cetera. And so all of that is why we engage with the regulators. That's why I spent several years on the CFPB's Advisory Board, specifically to make sure that we have a chance to communicate our value proposition. We tend to think of ourselves as sort of the one honest actor in the space, having chosen from the very beginning to charge no fees of any kind, including neither the late fees. The reason for it is as much about creating a unique brand and unique value proposition to the consumers, but also to, frankly, align our incentives, the consumers and the regulators. Ultimately, when a regulator says, All right, so what percentage of your profits come from the fact that consumers just forgot to pay your bill. It's like zero. If someone forgets to pay their bill, my #1 incentive to say, please pay your bill on time because I'm losing money as a result, and there's nothing I'm going to do about it other than remind you a few more times. And I think that direct connectivity with persons well-being and the regulatory intent has served us really, really well and grounded our regulatory conversations just the right way for many years now. I think the industry frankly could use some of that. And so I would love for my competitors, both tiny and huge, to join the idea of no late fees, get rid of the terrible thing called deferred interest once and for all, which -- if there's one thing I'm passioned against its deferred interest and many other gimmicks of the industry [indiscernible]. So I pardon so boxing, but it would be some welcome attention in those areas.

Makes sense. And just a follow-up question for Michael. It sounds like you do expect this hyper growth phase to continue beyond fiscal 2022, and we can debate how long that will continue. But once you move from hyper growth to growth, how long roughly would you expect that growth phase to potentially last?

We don't know. It's super early in our industry. The fact that we're where headline news every day in our space, just says that there's a lot of dynamic stuff going on. Not to mention our own road map, which I think takes us in a lot of different directions. So really uncertain as to how long it will be in any of those phases, but we're making a positive commitment that when we're growing at those rates of GMV and revenue, you should expect the associated revenue, unit economics and adjusted operating income.

Our next question comes from Rob Wildhack at Autonomous.

A quick one to start. Is there anything different where you need in how you monetize the brand-sponsored promotions?

Sorry, I want to make sure I understand the question. Is there something uniquely different about how we monetize it?

Right. Is it -- is there so many you can generate from the brand? Or is it quickly flows through the traditional merchant discount rate?

I'm kind of almost hearing you, but for the -- yes, the brands are contributing financially to the outcome. It's sort of the magical experience where you pay no interest and no fees and no deferred interest, no gimmicks. And the merchant does not have to pay an outsized MDR, and yes, you have a 0% transaction and are never going to pay a penny of interest or penny more than a cash transaction would be and that is because the brand is motivated to subsidize the transaction.

Got it. And as you become more and more of a platform, customer relationships, customer retention is really important. I won't ask you about any partnership specifically, but maybe you could talk roughly and strategically about the considerations that go into ownership of customer relationship, especially when you're in enterprise partner?

To the extent that I can synthesize it since every one of our relationships is different, and we've become sort of the provider of choice for a lot of these very large retailers, very large platforms. Each one of those has a contour that's probably beyond the scope of this conversation. Generally speaking, what we found is that making sure that our brand is visible enough to the end consumer is the thing that sort of drives a lot of our consideration. And you can literally see it in the numbers. As we add more of these partnerships, the network effects are kicking in where consumers say, Oh, I've seen you before. I bought item X on retailer Y, and now I'm here. And I know that you are the one provider that won't screw me. And pardon the blunt language, but consumers pick us because we give them a sense of control and don't charge them late fees. And that is [indiscernible] we're looking for, frankly. And so ultimately, the consumer ownership is a fickle thing. You can have all the rights to spam someone and they will never transact again. If you are treating them right and making sure that they are feeling in control, you end up in a pretty good place.

Our next question comes from Dan Perlin at RBC Capital.

Just a quick question on the Affirm Debit+. How portable is it across DDA accounts? Said differently, are you decoupling it from the bank potentially, if you want to move it around to different accounts overtime? Or do you have to be completely tethered to one account as you issue specific cards?

That is a fantastically payment nerd question. I commend you on your interest in payment. It is not tethered. You'll be able to -- it will be affordable.

Okay. That's pretty awesome. And I would think some banks should be nervous.

No. I think it's the other way around. I think banks thinking, Oh, wow, these guys are coming in from my users, should breath a sigh of relief. Like your users are your users, we're trying to offer them something unique and special and very Affirm-specific and not trying to take over your DDA relationship.

Yes, that's fantastic. All right. Let me ask a nonpayment nerd question.

I hope you took it as a complement because this was not...

I did. Believe me. After 20 years man, you've earned that, right? So...

I consider myself a payment nerd and I delight in -- ask me again about the soft descriptor character limit.

Absolutely. Well, this one is a balance sheet question, so it's pretty simple. But as we think about the product roadmap that you've outlined for us today, how do we think about what's going to be on balance sheet, what's off balance sheet? I know you talked about this most recent securitization. So that's pretty exciting, especially for the AOV, which I think removes some of the concern around that, but if you would elaborate on that, that'd be fantastic.

It might be for Michael.

Happy to take it. So we think about the balance sheet strategy is varying by product. We walked through a little bit today for our existing Pay Over Time products the way we think about how each one fits. We mentioned that the Split Pay business, for example, which is predominantly a warehouse-funded product, we've begun putting it into securitizations. And you'll see us make improvements like that over time. If you think about the rest of the portfolio, each one will have a different flavor. And the guiding principle is always, first and foremost, we're going to enable growth. So our capital program is going to make sure that we can fund all of the great ideas that we have on our roadmap, and we don't limit our growth based upon our ability to access capital, but then we want to make sure that we're really attending to taking care of the equity capital required, the shareholders' money. We put that as a pretty important number to manage to because we do think that the value of owning Affirm isn't in the assets we produce, that's where we access the debt capital markets. We think about the value of owning Affirm is in the way in which we're building, we think the most valuable network.

Our next question comes from John Hecht at Jefferies.

I guess this [indiscernible]. With respect from the channel realization factors Affirm buyers, what's the mix of that right now? How is that aggregate over time? What degree [indiscernible]?

You were breaking up quite a bit, but I think the question is, how is the funding mix of our business evolved over time?

Correct.

You're quick. I have no idea.

Zoom was crippling us.

I apologize.

No, it's not yours, it's our Zoom. So first of all, like the evolution of our funding over time. We began funding our business with equity in the early days of the business when we were really small and nascent. We introduced our first leverage when we began open these warehouse lines, and we got modest amounts of leverage, but it was expensive and not that efficient. We then introduced the forward flow relationships, which are very, very efficient, obviously, with respect to equity capital, but there's real economic gift to the counterparties in order to move the loans over and sell the risk. The securitization program, which is now a year old, is really designed to get to the most efficient frontier of how we will fund the business, both with respect to the actual funding costs as well as the ability to get leverage out of it. And whether it's evolving securitizations, which are on balance sheet or our term securitizations, which we've recently begun getting off balance sheet, they're both very efficient with equity capital. And we view that as again one of our guiding principles. If you think about going forward, again, our first and most important job in the capital team is to enable growth, which means we're going to use any or all levers. We're not shy about that. We think it's important to have warehouse capacity just like it's important to have committed whole loan buyers and will continue to be a regular issuer in the securitization market. I know it's an unsatisfying answer because some folks really want to model out things specifically, but I think the guiding principle is, we're going to be really careful with your equity capital, and we're going to grow the business a lot.

Our next question comes from Chris Brendler at D.A. Davidson.

I guess I'll piggyback on the securitization question. Michael, I'd love to hear a little more detail about the off-balance sheet program. I guess people who follow this space for a long time like myself, we had some problems with off-balance sheet treatment kind of muddies the economics, if front-load is a gain. It may not be cash. So maybe just philosophy around off-balance sheet? Is there a limit to how much you want to use it? Is there a pickup in capital efficiency it's worth some of the noise at companies with it? And is there certain product benefit that fits better in that program than others?

So your last question first.

That was my first question.

Okay. So the last part of your first question first. Yes, of course. So if you look at our off-balance sheet securitization program, it's all fixed term length, longer-term loans. The revolving program is required because the assets turn over so fast that we would be doing a new deal every few months and that's just not sustainable. These are longer-term deals where we warehouse some loans and then package them up and securitize. And that product then is limited to a long-duration program. In terms of the motivating factor for off-balance sheet versus on-balance sheet, remember, these -- longer-term loans tend to be our 0% loans, where there's not a lot of interest income in them anyway. So our economics really relate to upfront merchant fees as well as the gain on sale flowing through the income statement on the mechanics that I won't bore you all with right now. But if you think about the gain on sale piece of that, that's secondary to the merchant fee, and we view, again, all of that is something we need to do to enable this really delightful customer experience in facilitating a transaction. We don't have a goal to be offer on balance sheet. It's one of these things that I think a lot of folks get a little bit frustrated with because they want us to think about, well, how much is going to be on the balance sheet, how much is going to be off. We're pretty agnostic as to whether or not we account for as on or off, we're just always compliant with the GAAP standards. However, we are interested in accessing growth. And if we can be efficient with the equity capital and more efficient, we will. The revolving securitizations are being done at something around 99% of consumer balances, which is super efficient and frankly, from a capital standpoint, isn't all that different than a loan sale, which is obviously 0 capital required. And so we're not focused on managing the trade-offs between those two and not particularly worried about being on versus off balance sheet. We're just interested in funding the growth and being really efficient with your equity capital.

Your disclosure is already pretty good. So it helps us sort of those pieces space lot more confusing is off balance sheet. My follow-up question is also from a payments BNPL nerdy question. When it comes to the virtual card, which of the [indiscernible] ______(1:45:37) virtual card at the bottom of that awesome chart you put up on Slide 12 of the earnings release. And I want to know like this whole idea of providing BNPL after the purchase, just like your Debit+ shows as well, like you're not really getting a merchant fee there. So if it's not a consumer-funded loan, there's not on revenue and interchange. That seems to be the way that the incumbent credit card providers are attacking the business, by trying to speed after the fact BNPL provider and without a merchant or getting involved in paying a fee. What's your perspective on that part of the business? And I think we've talked about the fact that you drive a lot of sales in that business so you should be able to get a little affiliate fee or referral fee that maybe -- even that put you are still on and step ahead of your competitors and that's how the business.

I'll answer it from the product value point of view, and Michael probably wants to comment on the economic side of it. So this is going to be my closing statement, but I'll just say out loud now. The one takeaway -- the two takeaways actually to get from this whole extravaganza is, we're in a business of consumer frequency, which is a fancy way of saying we want to make sure you have a reason to come back and come back and come back. And if we're successful there, we'll continue providing merchants and platforms -- merchant platforms with more value. Those are the 2 metrics we're trying to maximize, and they're not -- at out with each other, they're actually mutual reinforcing. And so you're right that there are some areas that are more or less profitable on a different variety of transactions. But fundamentally, if consumers say, this BNPL thing powered by Affirm was amazing, I'm going to do it again and again. There's a natural creation of value for the merchant. And in those scenarios, merchants are more than happy to say, you're no longer just a payment facilitator, which is, in fact, a very sort of boxed in margin structure. You can be more and more efficient, but you're not going to be a charge a lot more than 3% ever. If you're in the business of marketing surface provision or creating new leads or bringing in consumers with a predetermined idea of what they're going to buy and how they're going to be able to afford it, you're now playing at the marketing budget of the merchant and you become a marketing partner and a marketing value provider as much as a payment facilitator. And so that's where we see opportunities to grow our business lines in terms of creating more value for the merchant and therefore, being able to command a larger share of their overall growth budgets by giving them more committed customers, customers that didn't know about them yet, et cetera. So that's sort of the product side of the equation. I agree, I think, with your implicit criticism that some of the traditional players basically addressing BNPL as a post-transaction feature, that is fundamentally kind of a repartitioning of consumers' financial reality efforts. I don't think that's such a bad idea. In general, I think that's the right direction for the end consumer. They will feel more in control. They are going to be able to have a slightly better sleep over when they're going to be out of debt. If they're revolving on something now, they'll just have a paydown plan. But I don't think there's a tremendous amount of value delivered to the merchant, and therefore, the economic transactions are constrained which, unfortunately, I think, suggests a natural pull by the financial institutions that are offering these things towards making money from the consumer. And so if you are able to intertwine the value to the merchant and the frequency of consumer, you then don't have to rely on finding a new way of monetizing the consumer in these expose factor transactions. And so I think that's a unique advantage that we have. And the point-of-sale integrations that we have and the partnerships that we start with platforms are all about that, this idea of using the merchant value to feed consumers more delightful positive transactions that they can feel good about. If you, Michael, want to comment on the economics of it.

I think you nailed it. The only thing I'd add is, if you look at our app, if you just go download our app, which everyone should do and you look at the shopping component of our app, you'll see interest-bearing offers. You also see 0% offers. And again, we think about that surface as driving as many results as we can for our merchant partners. And if we earn an affiliate fee, we may reinvest that into a really compelling offer that could be cash back, it could be a discount on the item. We also will try to figure out a way to make 0% magic happen in the app, even if there's not a direct integrated merchant relationship. So we think about that surface and the virtual card product is really just -- it's a way for us to then close a transaction for a nonintegrated merchant. We think about the marketing surface as a way to make money from merchants. And of course, we also have interest-bearing loans there, too. For what it's worth the interchange that we do make on those virtual cards is a key part of the economics there. So I don't want to be dismissive of that either.

Our next question comes from Vincent Caintic at Stephens.

So first question, I just wanted to unpack guidance a little bit. So I appreciate all the detail here. And one of the things I want to talk about is all the merchant wins that you've announced, and I know you're not particularly giving guidance, I mean, for any pretty good guys. But if you talk about how you expect those to play out at a time in terms of your piloting your fully launched, you generate revenues? And how you expect that to play out? And is additionally kind of the same thing with Debit+?

With respect to any new partner and if you're speaking about the Amazon, I would tell you I got to stick back to what we've disclosed in our press release and what we filed in the 8-K. It's way too early for us to give you any indication about timelines, process, et cetera, and it wouldn't be smart. With respect to Debit+, that product is still new. It's an awesome product, and I use it every day. So it's very much live, and we are thinking about the right way to get the product rollout. I'll let Max speak to more specific timelines because he's accountable for it. But I will say that we've been intentional around not including anything in our guidance for fiscal '22 associated with the debit card. And by that -- by anything, I mean specifically GMV and revenue. Those numbers aren't reflected there. If you think about longer term, the meaningful contribution of debit-only transactions is not reflected in any of that financial pro forma, and that really reflects the lack of certainty we have around when, and where and how it's going to hit. But you should think about the lending aspect, the loans that would be generated on the card, whether it's a Split Pay transaction or an interest-bearing transaction or 0% longer-term transaction, those would be considered part of how we deliver that long-term GMV and revenue growth that we guided to or indicated in our framework. And Max, do you want to make a commitment?

There's some fancy explaining there. I was trying to keep track. So I'm just trying to deflect attention from the -- so here's the roadmap on Debit+. And Michael is right on the question of any large partner. We moved very deliberately, and we're in a business of a consumer delight, it's easy to lose and it's very hard to get it. And so if you're going to bring something out there and start forecasting volume, you better believe that you have product market fit and your EV testing has delivered the kind of lift that you're looking for. So when that is fully set their heads, then we'll start forecasting it. For now, we're really just very, very busy testing. Debit+ is in market. So it's a little bit easier to say what we'll do in terms of timeline. So we're wrapping up closed beta, which means internal employees and couple hundred, if I hear correctly, or if I know the latest, outside folks that we invited in. And there are things like user diary every day, I get the super cool experience where I read someone's diary of here's how I use it Debit+ and here's what I bought, and here's what working. And that's really, really close to being done. Next up for that is, we're going to start fulfilling the very, very large, fortunately, list of folks that added themselves to the wait list. And we're somewhat rate limited by the number of cards we can print. And so there's a little bit of the physical reality of -- and we really love the experience of sending you a thing that you can say, Oh, that's Affirm in my wallet. And we are asking for you to consider this as a top-of-wallet product, which is a tall order. So we have to make sure it works in every circumstance where it should. And so we expect several thousand, let's call it, sub-10,000 in pre end of year number of cards out there, where we'll really start just doing reps of it works in the circumstances and that. And then starting with the beginning of the year, we're going to indiscriminately fulfill the wait list and just take it to a general population. One thing that maybe a wrinkle that is worth highlighting, so Debit+ ships with its own separate app. Part of the reason for it is, we developed it concurrently with the SuperApp architecture. And so you should expect Debit+ to become a mini app inside of the SuperApp offering. But the second part of it is, we anticipate Debit+ to be such a standalone powerful product that folks may will discover Affirm through the Debit+ offering first and only then decide that they will notice Affirm logo and all these super cool retailers that we've been able to start a partnership with. And so you may well sort of rabbit hole into Affirm from either the Debit+ app or the Affirm proper as found at the point of sale. We think sometime through the second half of the year is when we'll start looking at real metrics and being able to forecast. The most important question there, and you can hold me accountable to this one or maybe Michael, half a year from now or maybe 3 quarters here from now is, what is that frequency? Did you get top of wallet? Are you getting close to top of wallet? And I think that that's the -- that is the bid, and we'll find out how well we do, but we're -- needless to say, I'm very excited. I also use it every day, so I'm a little bit biased, but that's part of the job.

And actually, I wanted to follow up on that Debit+ comment. So in the presentation, you made a comment that the bank shouldn't be worried about this. So the banks are actually going to be -- should be happy about this to take the customer. It seems like since the bank is keeping this relationship, is there a possibility of working with the bank as a -- this is an opportunity for them to offer buy now pay later using Affirm or -- just kind of trying to think of how the different players work towards this?

I think we'll speak to that when we find a willing participant, but I certainly think that eventually most debit cards out there will need to have a BNPL component. I think that's a fair complete in my -- if I'm allowed some prognostication, I think the credit card as a catch-all tool for all payer time transactions where you end up revolving and couches and bicycles and doughnuts and coffees is going away. I think that's a past product that does not really have a place in the world of smart apps -- smartphone apps. And so the natural place to put your overtime transactions as conducted, especially in a physical reality, is your debit card and Debit+ is that idea. And we built it for a reason, really were excited about it is we do think it's representing a new category of products. And I do expect lots of financial institutions who are in the business of issuing debit cards to say, "Hey, I should have one of these things." And it won't necessarily all come by way of partnering with Affirm, although we do think that there's a really good reason to partner with us. The biggest reason is, we are the tech company of the set -- sort of legitimately real tech chops companies. So we can help folks build these things the right way, a scalable way, and we know what we're doing, managing risk, which is a thing once you're in a pay-over-time business, you kind of have to know what to do by risk. And we do have capital markets expertise that Michael spoke about a little bit earlier. And so I think the opportunities exist. We'll certainly announce partnerships if and when they come.

Our last question comes from Jason Kupferberg at BofA Securities.

Quick follow-up. It's for Debit+. And I wanted to just see if you can share with us who the network and issued partners are for off card? And then perhaps if you can just elaborate a little bit on the comments that you made around moving of time to some form of ACH that will mind?

The quick answer to your first part of the question is, not yet, but watch the space. And the most important thing about Debit+ and Affirm worth large and our vision for this industry and this company is what I meant by the slangy term software-defined. The thing that's really cool about what do we do and how we build things is this idea that we can give you a product, be it a piece of plastic or an app and then over-the-air update the functionality and whether it's settlement, functionality that we choose or the rewards package you're going to get or the special offers you get at a retailer, we are uniquely unconstrained because we are literally updating these things on the fly over software. And we have full SKU level visibility into the data as consumers go around and transact with various merchants where we're integrated and that creates just an absolute barrage of opportunity that we can take on. And so the answer to a lot of these, will you choose to try this? If it's economically viable and it makes sense and delights consumers and brings more value to merchants, the answer is, yes, we will. It's almost a fair complete that we're going to have to try it because it's there for the taking.

All right. That concludes our Q&A session today, and it also concludes our event for today. I'll turn it over to Max to take us out.

Thanks, Ron. Thank you, everyone, who stuck around with us this long. This is a lot of fun to produce, and hopefully, you enjoyed some of the answers in the banter. I already sort of set out the one thing that I really want everybody to take home. Consumer delight or metrically speaking, consumer frequency, merchant value are the two things that we're truly really focused on. And we feel like we are just hitting our stride in both those. So I'm very excited. I need sort of the buzz you hopefully feel is genuine. We're shipping a ton of product, which as an engineer, that's sort of what gets me going. A lot of momentum, a lot of great partnerships that we announced and more good stuff coming. The only thing I would be absolutely miss if I didn't say, and I hope at least a subset of our team is watching, all of this is thanks to you. The fact that we are here today and can trade company with amazing prospects and 10 years in is all because of the amazing people that we've had and have and continue to bring on. So Affirmers, all of you watching, please know that we are here because of you. That's all I have to say.