Affirm Holdings, Inc.

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to Affirm Holdings Fiscal Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all lines have been placed on mute to prevent any background noise. Following the speaker's remarks, we will open your lines for your questions. As a reminder, this conference call is being recorded. I would now like to turn the call over to Ron Clark, Vice President of Investor Relations, to begin.

Thanks, Operator. Before we begin, I'd like to remind everyone listening that 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, and 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. With that, I'd like to turn the call over to Matt to begin.

Welcome everyone. And thank you for joining us on today's call. Before we get into the results, I want to start by talking about what we're actually building at Affirm. Around 10 years ago, we founded Affirm with a simple mission to deliver honest financial products that improve lives. We started by reinventing payments to make them transparent, simpler, smarter, and more delightful. Our core insight was that the generations coming of age after the financial crisis of 2008 were no longer willing to tolerate getting into permanent debt by putting it all on 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. This created no less than a once-in-a-generation opportunity to transform credit, and thus began the great unbundling of the credit card. The credit card was the ultimate buying bundle, a single product allowing you to put purchases of all sizes together in a one basket with the 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 and chain. That's where Firm came in. We deconstructed or rather we unbundled the credit card, starting with the largest purchases. We made these easier, more transparent, and helped consumers be smarter about buying now and paying later. In order to do all of this, we built proprietary technology from the ground up and developed sophisticated capital markets expertise. Our game plan was always simple, obsessed over consumer happiness, and used superior tech to give more people confidence to buy without resorting to the kind of dirty tricks the credit card industry is infamous for, late fees, fine print, deferred interest, to name a few. We believe this would earn us the right to partner with the best, most important online and offline retailers. After creating, in my personal opinion, the best imaginable alternative to using a credit card for the kind of larger purchases that are most likely to get you into long-term revolving debt, such as plane tickets, homewares, sporting goods, auto parts, We sought to bring the convenience and flexibility of our longer term pay over time solutions to shorter term, lower price transactions. Consumer demand for simpler, more transparent payments was growing rapidly in these new segments, such as fashion and apparel. These purchases naturally happen more frequently and are great opportunities to meet consumers where they shop and offer them a smarter alternative. By partnering with merchants and e-commerce platforms to offer these solutions, a firm is able to deliver meaningful incremental sales volume via increased card sizes, improved checkout conversion, and new customer acquisition, thus enabling our partners to achieve more predictable and sustainable revenue growth. Today, we offer both the long-term pay monthly and short-term pay later solutions to our merchant partners, often as a bundle. And unlike our competitors that only offer the latter, we are neither constrained by the amount the consumer wants to spend nor the time they need to pay us back, thanks to our investments in technology and capital management. We leverage this technology as well as our deep merchant partnerships to bring forward the best options to a consumer, always with an eye towards the fact that they will never offer a loan that we don't believe can be repaid. Our breadth of offerings enables our partners to offer their specific shoppers the right payment solution for the right item at the right moment. Our consistent results, a culture of engineering excellence, focus on intelligent risk management, depth of capital markets execution, and relentless search for opportunities to delight our shared consumers have earned us the trust and partnership of some of the world's largest commerce platforms. These businesses depend on having the best technology to support their needs, and that is why they overwhelmingly choose Affirm. Our technology enables superior experiences, provides unrivaled flexibility and customization, and can address the most complex requirements. and we're constantly adding to those services. In fact, Affirm's roadmap for new merchant services is very long. We see natural product expansion opportunities wherever access to capital, risk, or complex engineering requirements prevent merchants from delighting their consumers. Our acquisition of Returnly and its unique returns management capabilities is a great example of one such idea. Another is the merchant marketplace built directly into the Affirm app and website. Purchases originating on these Affirm owned and operated services amounted to nearly one third of transactions we facilitated in the fiscal year 2021. And these transactions are particularly valuable to our merchant partners. Merchants love our marketplace because the reach can be highly targeted and effective in driving conversion. In this use case, Affirm is both the provider of purchasing power to the consumer and the demand generation platform for merchants. We expect to continue to find many more opportunities like these to build and buy and offer these high-value services for our merchant partners. Meanwhile, the great credit card unbundling continues to accelerate in both the United States and internationally. The next frontier of unbundled payment is daily spend, groceries, restaurants, incidental purchases. This is why we're so excited to be rolling out the very first card of its kind, the Affirm Debit Plus card. I will tell you a lot more about it in a moment. As we speed into our fiscal year 22, I believe Affirm is strongly positioned to capture much more of the vast opportunity in front of us. We will do that by remaining obsessively focused on our two constituents, the merchant and the consumer, and by leveraging our core strengths to continue building products that delight both sides of our network. As we look back upon our fiscal year 2021, we made great progress on executing our strategy. We facilitated purchases for more than 7 million consumers, nearly twice the number of consumers we served in the prior fiscal year. At the same time, we delivered a five-fold increase in our active merchant base. That is, merchants that transacted on our platform over the prior 12 months, thanks to several large partnerships, including Williams-Sonoma, Dick's Sporting Goods, Neiman Marcus, as well as the launch of ShopPay installments, all of which helped add over 23,000 active merchants to our platform. We also expanded our product offerings. The savings product we introduced at the start of the fiscal year demonstrated the power of our platform to drive consumer engagement. By simply adding savings to the Affirm app, we've attracted total deposits of approximately $300 million with no fanfare and no promotion simply through organic engagement and a great product offering. Many of Affirm's savers have gone on to use our platform to also discover great deals with our affiliate partners and manage their financial life. On the merchant side, our recent acquisition of Returnly has meaningfully expanded our addressable market. Not only does Returnly solve one of the merchant's most critical pain points, it also provides us with another unique offering for higher velocity merchants, especially in categories such as fashion and apparel, where returns are quite frequent. And of course, we extended our presence in North America by closing the acquisition of a leading pay later brand in Canada, Paybright, in January. Paybrite has not only expanded our presence in Canada, it is also winning exciting new business with powerful consumer brands and delighting Canadian consumers. And we are developing deep connection with our consumers. Brand awareness increased approximately 70% in fiscal year 2021 and was particularly strong among Gen Z and millennial consumers whose awareness increased 94% and 68% respectively. All these wins help us create a more valuable two-sided network for our consumers and merchants. as we facilitated more than 16 million transactions, totaling more than $8 billion in GMV in fiscal year 21. So what comes next? We have an ambitious plan for the fiscal year, and more importantly, for the decade ahead. To fuel the expansion of our business and to increase our share of the growing market, we're focusing on three key areas for fiscal year 22. Increasing our consumer reach and frequency, growing our merchant and partner network, and extending our product offering. Our partnerships with enterprise merchants and platforms like Shopify introduce more consumers and high-velocity merchants to a firm's honest and transparent offering. In our current fiscal year, we have continued to ramp merchant activation of Shopify installments. When we reported earnings back in May, we shared with you that we had onboarded 12,500 Shopify merchants at the time. And today, that number stands at hundreds of thousands. Our focus now is to drive more consumers to experience Shopify installments. To do so, we're activating both Shopify and Affirm's consumer networks via our range of marketing channels. Through our host of integrated partnerships with the largest merchants in e-commerce and brick and mortar retail, Affirm will be offered as a payment option for merchants representing more than half of U.S. e-commerce, which we believe will ultimately enable us to demonstrate Affirm's powerful value proposition to millions of new to Affirm consumers and grow active consumers meaningfully in fiscal year 22. What excites me the most about the year ahead is the Affirm Debit Plus cart. Currently in the hands of several hundred people, We've worked very hard to create a product designed to meet the bar of convenience set by the best cards people have in their wallet today. But we didn't stop there. Our team has designed and developed the most meaningful innovation to the debit card since its inception more than 50 years ago, putting unparalleled choice and flexibility directly into the hands of the consumer. A consumer can use the Affirm Debit Plus card in place of the regular debit card. It connects seamlessly to their existing bank account, and no new checking account is required. Once you swipe or tap your card, you can use the intuitive debit plus companion app to turn any eligible transaction into an Affirm pay over time product. All it takes is a couple of taps within a day after the transaction occurs. It's just that simple. This effortless access to a smarter, more transparent way of paying over time at brick and mortar and online is very close to being indistinguishable for magic. But as always with Affirm, there are no magic tricks or tricks of any kind, just excellent technology. The beauty of our card is that it's powered by software, which means that you can expect us to regularly add new features and functionality via app updates. I believe Debit Plus is a revolutionary idea that can truly help millions of people enjoy life with a lot less angst about spending and saving money. With the beta test wrapping up this month, we're very excited to bring this card out to the nearly million-strong waiting list of existing Affirm customers and then to the general public. I invite you to sign up for yours at affirm.com slash card pretty awesome, but don't take my word for it. Try it yourself. On the merchant side, expanding our solutions drives greater monetization by providing cross-selling opportunities designed to also increase retention. Following the acquisition of Returnly, in the coming year, we plan to accelerate its adoption among existing Affirm merchants through our cross-selling efforts. We believe the combination of Affirm's flexibility in terms and durations and Returnly's elegant solution to returns problem will deliver significant value to retailers, particularly in higher velocity categories. Beyond Returnly, we believe we can do a lot more to expand upon our strong merchant relationships and are working on additional opportunities to leverage our technology chops and underwriting expertise to address more of our merchants' needs. Combined with the momentum we generated in 2021, we believe these initiatives will deliver yet another year of strong growth at scale in fiscal year 22 with expected year-over-year GMV growth of at least 50% based on our outlook. And as we launch unique new offerings, such as Affirm Debit Plus, and activate exciting new merchant partnerships, we see a very bright long-term future for Affirm. In closing, I've never been more excited about how well Affirm is positioned to win. Even at our blistering pace of growth, the opportunity before us is vast. Adoption by consumers and merchants alike continues to accelerate, yet at the same time, we're just getting started. With our company's deep roots in product development and engineering, we are at our happiest and most productive when building and innovating. With so many new ways to delight consumers and solve merchants' problems planned for the coming years, we're poised to expand our addressable market to grow a firm and deliver on our ambitious mission to improve lives. I want to thank our team for continually delivering for our consumers, our merchants, and our shareholders. 21 has been a monumental year for Affirm. From preparing us to go public to integrating with some of the largest players in U.S. retail and e-commerce, the Affirm team has surmounted countless challenges with aplomb. Without Affirm's hard work and continued dedication, none of this would be a reality, and I'm truly grateful for the hustle and the sacrifice. Before I turn it over to Michael, I have a quick announcement that I want to make. On September 28th, Affirm will hold a virtual investor event after the market closed. We plan to share more detail about our business, our strategy, and our product plans at this special event, including and especially the Affirm Debit Plus card. I would like to invite you to join us. Please look out for more information at our investor relations website at investors.affirm.com. And with that, I will turn it over to Michael to take you through the numbers.