Michael Linford: A couple of things just to add. The market will continue to be competitive. This is a growing category for a reason. Consumers are seeking out alternatives. And so we expect the market to continue to be competitive. We expect to continue to be rational in the face of competitors who want to be less rational, but we expect competition. And then, to specifically answer your question around the pipeline, we don’t disclose any pipeline stats, but we feel good about the level of commercial activity right now. There’s lots of great conversations happening and we remain, in conversations today that we probably couldn’t have had a few years ago given some of the irrationality. So, we think that’s a good thing, but those are conversations in pipeline, so there’s certainly nothing concrete there.
Ramsey El-Assal: Fantastic. And then, a quick follow-up for me. In the shareholder letter, you mentioned some improvements at checkout with Affirm at brick and mortar, big box partner and also I think expanding the partnership with Verifone. How should we think about that physical opportunity, the brick and mortar opportunity? And does that kind of change now with Affirm Card in terms of how you’re thinking about monetizing sort of the physical transaction, or are there still — is there still another leg potentially that you can develop here by perfecting that physical Affirm at checkout experience?
Max Levchin: You must have been spying on our conversation with Michael yesterday. Jokes aside. Yes, the short answer is absolutely, we’ve been caged in this e-commerce cage for a very long time and feel very good about our — breaking out into the bigger wide open commerce space writ large. Affirm works pretty well in store if the merchant is cooperating. So depending on where you go you’ll find us in a kiosk, you will find us on your phone, but speaking to the phone of a store associate. There’s a bunch of modalities that we’ve developed over the years. And they all work fairly well for existing users. And if the merchant helps, they can even help us with user acquisition. The card just supercharges this thing like a totally different level.
Again, I’m going to bite my tongue on some of the cool stats, I think we’re going to show off next week, but we’ll talk a little bit about the success we’re seeing offline with the card. But even beyond that, we do think that there’s work to be done, ideas to be tried offline, even before the consumer gets the card, and that’s a pretty exciting thing. At this point, as Michael put it yesterday, Wi-Fi or cell coverage in a store next to a store to solve problem. And we do have a 80%-ish app download for existing users and a very, very high propensity to download our app just because the brand and the app reviews have been so strong. So feel very good about what we’ll do offline. It is brick and mortar, which means that it moves a little bit slower, but the price is worth the effort.
Operator: The next question is from James Faucette of Morgan Stanley. Please go ahead.
James Faucette: A couple of follow-up questions on things you’ve already talked about, Max and Michael. First, in terms of like the engagement with the merchants and that kind of thing. I’m wondering how active your conversations are beyond just kind of making available to them what they’re — what they could do from a promotional perspective on interest rates, et cetera? And the reason I ask is because in the period of rising interest rates and kind of normalizing retail activity, I would have thought we would have seen a bit more 0% promotional activity on the part of merchant partners to date and maybe I’m just missing it, et cetera, or its impact on your financials so far, but just wondering what that process looks like.
Max Levchin: That’s certainly a major part of the conversation. I think I sort of started answering this and Michael has a lot of opinion on this one, so I’ll call him in a second. But the shorthand is it really depends on the merchant margin structure. If your overall world view is co-points to margin, lots of turns of inventory, you just don’t have the margin capacity to drive these 0% deals unless the manufacturer is willing to contribute. And we’ve sort of dropped the breadcrumbs of that idea for quite some time and obviously it’s a massive sales and engineering effort where you’re trying to tie more than just the consumer and the seller, but also consumer and the seller and a manufacturer or brand or some other third-party that wants to subsidize the interest.
So, that’s a fun design and engineering challenge, but we’ve been making very, very steady progress. There’s a sort of a point in my letter about what we internally call mixed carts, which I think I referenced as the ability to combine multiple financing programs. If you have a manufacturer or brand that’s sponsoring a 0% deal, let’s say it’s a TV manufacturer and you’re buying that TV and a bag of cookies and the cookies are not 0% sponsored, you have to be able to provide correct accounting for both sides of the transaction, but consumer think of it as a single basket. And so before we got to full distribution of the brand sponsor promotions as we call them, we have to deploy robust implementation of mixed cart accounting and sort of downstream transactional and capital markets work.
So, that took us a fair amount of time and effort just to sign as to how complex some of this stuff can be. Now that we have that that live, we have a variety of really rich conversations around, hey, let’s have a 0% promotion and no, you don’t have to directly fund the EPR discount, Mr. Merchant. So that’s one side of it. If your margin structure is, I got 60% gross margin and maybe a subscription to support future revenue streams, of course, you want to do 0% deals and that becomes a much, much easier conversation. So we have merchants of both kinds and everything in between. We work pretty closely with them. As the holidays roll along, people start becoming very concerned with driving inventory off the shelves, sometimes into the holidays, sometimes right after depending on sort of what they think will happen to them or what does happen to them around five days of sales around Thanksgiving, and so we’ll certainly support all those, but a big part of who we are is we’re fundamentally an engineering company, and so building these tools is what we enjoy the most.
As we ship new tools, we immediately bring them to market to our merchant partners, offering them new ways of driving more sales. And so, we have quite a lot of fun stuff that we shipped in the last 60, 90 days and all of that will get deployed and into the holidays.
Michael Linford: The only thing I’d add is, we have been intentional around introducing fixed APR offers. This is low APRs, I think 5% and 10% APR offers into the merchant base. And those serve, the same — the promotional role that is 0% served in a 0% rate environment. And I think those have been well received and have consumed a lot. And then lastly, I just — there’s a merchant mix here that matters a lot in this conversation. The merchant platforms that are stealing the most right now have the most interest bearing mix. And I think that probably distorts the trend I think you’re pulling on, which is a little bit below the surface and overwhelmed by just the mix across our merchant base. So as you sell less exercise bikes and you sell more general merchandise that those trends tend to play out that way.
