Affirm Holdings, Inc.

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to Affirm Holdings Fiscal Third Quarter 2021 Earnings Conference Call. At this time, lines have been placed on mute to prevent any background noise. After the speaker's remarks, we will open the lines for your questions. As a reminder, this conference call is being recorded. I'd now like to turn the call over to Mr. Ron Clark, Head of Investor Relations. Thank you. You may begin.

Thanks, operator. Before we begin, I'd like to remind everyone listening The today's call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our investor relations website. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intent to update them, except as required by law. In addition, today's call may include non-GAAP financial measures. These measures should be considered as a supplement to, and not as a substitute for, GAAP financial measures. Reconciliations to the most directly comparable GAAP measures can be found in today's earnings press release, which is available on our investor relations website. Hosting today's call are Max Levchin, a firm's founder and chief executive officer, and Michael Linford, a firm's chief financial officer. And with that, I'd like to turn the call over to Max to begin.

Welcome, everyone, and thanks for joining us on today's call. We are excited to update you on the performance of our business and the progress we achieved since our call in February. But before we go through the numbers, I would like to start by sharing a few stories from the past quarter that helped demonstrate the power of Affirm. As many of you know, at Affirm, one of our core values is that people come first. That means that we constantly consider our impact on people's lives and we strive to put their interests before our own. That's why we never charge late or hidden fees. It's also why we're always looking at what consumers have to say about us and how we're helping them get the things they want and need. In March, we celebrated Affirm's ninth birthday with a giveaway on Instagram. To participate, we asked consumers to share their favorite experience or purchase using Affirm. I was inspired by many of the more than 11,000 personal stories that were posted. One nurse thanked us for the affordable monthly payments that allowed her to buy a Theragun Prime massager, which helped soothe her aches and pains after 12-hour shifts during the pandemic. A mother of two thanked us for helping her take her family to Disney World just before her new baby arrived. She appreciated that she could book a special vacation without breaking the bank. I also frequently speak with merchants Understanding their needs and how we help them achieve their goals is critical to establishing long term partnerships recently and spending a lot of time was travel merchants, in particular, as they focus on meeting consumers pent up demand coming out of the pandemic. Thanks to affirm companies like price line, which we started partnering with in 2018 have added new customers. Priceline shared with us that their consumers are booking with greater confidence because of Affirm's flexible and gotcha-free payment solutions. They also shared that Affirm helps them expand their reach among millennial and Gen Z consumers. At the heart of the value we deliver to consumers and merchants is Affirm's unrivaled technology. The speed and accuracy of our technology allows us to instantly elevate consumers' requests and provide them with tailored payment options within seconds. and the quality and scalability of our technology has led large-scale platforms like Shopify to choose us as their partner. Today, we're excited to announce that more than 10,000 merchants have gone live with ShopPay installments in just April and early May, and we expect this number to grow significantly when we move to general availability for new and existing merchants, which we expect to reach between now and the end of June. I will come back to the importance of our technology in a moment, but let me share an overview of our results for the third fiscal quarter. Affirm delivered another strong quarter that exceeded the financial outlook we provided in February. We more than doubled our active merchant count year over year to nearly 12,000. We accelerated year-over-year GMV growth to 83% from 55% in the second quarter, and excluding Peloton, our GMV grew 100%, up from 54% in the previous quarter. We also grew active consumers by 60% over the last 12 months. GMV growth was strong across all categories in the third quarter. This was driven primarily by consumer demand for our firm's offerings, as well as new and expanded relationships with merchants, such as Icon Pass, Neiman Marcus, and VRBO, among others. Categories that have fared well throughout the pandemic, such as sporting goods, furniture, and homewares, continued to perform. Nearing the end of the quarter, we also began to see a sharp uptick in spending in categories that have been pressured by the pandemic. Travel and ticketing was particularly strong. GMV for the category nearly tripled for the second quarter of fiscal 2021 and grew by more than 50% versus Q3 of last year, which was our pre-COVID quarterly high mark in travel. We are encouraged by this momentum and believe that the strengthening economy will provide another tailwind for our firm. Americans have significant spending power coming out of the pandemic after paying down a record $83 billion in credit card debt and amassing $1.7 trillion in savings in 2020. The pandemic has also trained more shoppers to buy online, growing the U.S. e-commerce markets to nearly $800 billion. We expect this improved financial health coupled with rising positive sentiment among consumers and the ongoing reopening to support our continued growth. We look forward to being there for the consumers as they buy a new suit before returning to work, a wedding dress for the reception they put off, or an airline ticket to see their missed loved ones. Our team also made excellent progress on our strategic objectives over the last few months. As I mentioned a moment ago, we are continuing to expand our presence into higher frequency categories by activating our partnership with Shopify. Over the last several weeks, we have accelerated merchant onboarding, enabling shop pay installments by a firm for more than 10,000 shop merchants, up from 100 merchants in our pilot that we shared with you back in February. We believe that scaling our partnership with Shopify will position us to grow our business with a large and diverse set of merchants. Shopify's team told us that Shopify installments by a firm has enabled them to offer a solution that will scale with their rapid growth and reduce buy-now-pay-later checkout times by as much as 30% for both new and returning users. We also expanded our platform by acquiring Returnly, a technology company that makes returns and exchanges seamless for both consumers and merchants. Today, Returnly helps more than 1,800 merchants increase return-to-repurchase rates, drive revenue from returns, and elevate consumer satisfaction. We look forward to delivering returns like offerings to more merchants and introducing their more than 8 million users to Affirm. Before I turn the call over to Michael, let me briefly come back to my earlier point on our technology advantage. Affirm is a technology company, and we believe our technology is unparalleled among our competitors. We thrive on solving complex problems for both consumers and merchants that others can't or won't. The resulting technical expertise serves as an important competitive advantage. Leveraging our proprietary machine learning, we're able to personalize offers for consumers, more efficiently approve and price credit, and manage risk in ways that achieve better credit outcomes. As a result, we're able to offer more flexibility for consumers, allowing them to use Affirm across a range of price points and loan durations. These advantages differentiate us from buy-now-pay-later providers and other networks by allowing us to offer consumers much more than a short-duration, paid-in-four solution, which is critical in categories such as travel that have high transaction values. Our technology also enables us to drive measurable growth for our merchants. They see this in the volume of purchases we generate for them, increased conversion rates, higher average order values, and incremental consumers. In fact, in the third quarter, Approximately one third of transactions were driven from Affirm's app and site. Our ability to consistently deliver strong results for our merchants is why so many large enterprises, including Walmart and Priceline, choose to partner with Affirm. Of course, great technology is ultimately about great technologists. In order to sustain and extend our advantage in technology, we're investing in the people behind it and elevating its leadership within the company. As a part of that, We announced today that Lieber Michalik, a firm's president of technology, has been appointed to our board of directors. Lieber is one of the most highly regarded technology minds in the fintech industry and has played a critical role in developing a proprietary technology platform that is a key competitive advantage for our business. Building world-class technology is critical to our strategy, and we're pleased to have Lieber bring a significant software, systems, security, machine learning, and engineering experience to our boardroom. Libra's appointment reflects our dedication to leveraging technology and innovation as competitive advantages that allow us to better deliver exceptional solutions for consumers and merchants at scale. Before I conclude, let me briefly turn to some additional leadership updates. Today, we announced that our Chief Legal Officer, Sharda Carr de Castillo, has decided to step down from her role at Affirm. Sharda led our legal team during a critical time for our company as we conducted our IPO, navigated an unprecedented market period, and achieved tremendous growth. I want to thank her for her dedication and leadership. She's been a trusted and valued counselor to me and our whole leadership team, and we wish her all the best. Catherine Atkins will be assuming the role of Chief Legal Officer. Catherine has been one of Sharda's deputies, an integral part of our senior legal team, and taken on increased responsibility while supporting the important legal needs of the company. She will play a critical role as we continue to expand the ubiquity of our platform, strengthening, scaling, and growing Affirm for the long term. And we're grateful to have her as part of our leadership team. In summary, we had a strong third quarter and we made excellent progress on our strategic goals. We're seeing strengthening momentum in our business as consumers and merchant adoption continues to grow. And we believe Affirm is uniquely positioned to capture the large and growing opportunity in front of us. None of this would be possible without the hard work of Affirmers. They have delivered excellent results through the pandemic, provided exceptional service to our consumers and merchants, welcomed Paybrite and Returnly teams to the Affirm family, and prepared us for success as a public company. I couldn't be more proud and appreciative of Affirmers' focus and dedication on behalf of our consumers, our merchants, and our shareholders. Together, we have accomplished a lot, but we're really just getting started. And with that, I will turn it over to Michael to take you through the details of the third quarter and share our outlook for the fourth quarter.