James Faucette: And then separately on Debit+ and the like. How are you seeing — clearly like you’re seeing a pickup in GMV and frequency of use, et cetera. How is that use tracking versus your expectation of people using it for debit type transactions versus some sort of credit generating transaction? Thanks.
Max Levchin: That’s definitely the star of the show next week. So, I’ll give you a light preview versus the very wholesome presentation, which you should expect next week. Generally speaking, it’s tracking two expectations. What you’ll hear a bunch about next week is it’s becoming a very clear journey where we are teaching consumers about a new product. When they just sign up for the cards — so these are all repeat consumers. They’re not — we’ve never spent a penny marketing the card. There’s no big billboards over one-on-one or anything like that. It’s just the card that you get if you like Affirm and we offer it to you and we — we haven’t pushed it particularly hard just yet. When you do get it, the first sort of comprehension hurdle is, hey, this is just like Affirm where I ask for a loan and I get approved and it works.
But now it works, I can consummate the transaction with a card. So your first intellectual hurdle is, it’s Affirm on a piece of plastic, that’s cool. So, you can’t expect that to become your daily spending instrument because Affirm today is for everything from dresses to fancy workout equipment, but it’s not in your mind just yet for a cup of coffee. Over time you see folks slowly recognize that actually it’s pretty cool. It provides some buyer protection, unlike your debit card. It has a bunch of really neat features like you can say, oh, this transaction is actually a little bit more than I wanted to spend. I can go back in time and split it, if that’s appropriate. And so, as people understand all the functionality of the card, which is not something that they pick up in a day or two, it actually – we have a whole bunch of work that we put in.
This quarter — if you have used the card before, you kind of missed out on a whole bunch of really neat things that we shipped as a first time user experience through the whole pile of features helping people understand all the various things that are capable of. We start graduating people to more and more transactions and I’ll bite my tongue on some of the really cool reveals. But we have — so the tip of the spear the consumers that really get at how it works are tracking better than expectations. I’m very, very excited about that group. And our job is really now taking the customer through, hey, this is Affirm card to — this is actually something I could use instead of my debit card. It’s good for everything and that’s going really well.
The card team will tell you that I occasionally message them in the middle of the night and mostly to find out that they’re already working on the idea that I just had and I literally — my last message in the slack channel to the car team, okay, okay, I’ll get out of your hair, you have thought of everything. So I’m very excited about how well we’re going. Lots of work to do though. Definitely very, very far from done.
Operator: The next question is from Andrew Jeffrey of Truist Securities. Please go ahead.
Andrew Jeffrey: I appreciate you guys taking the question. Very thorough discussion of the business, so that’s helpful. Max, could you talk a little bit about trends in Affirm’s tender with your enterprise customers versus across the entire business and whether you’re sort of closing that gap, we’ve seen on big days like Amazon Prime Day where apparently BNPL oversamples. What I think you’ve talked about is being your total tender share, and maybe just an update there on how much runway there is in closing that and whether or not ultimately you can grow that beyond the total company?
Max Levchin: Certainly don’t think it’s appropriate for me to comment on any one particular partner, although obviously we feel we’ve done really well there. But if you look at share of cart, as we call it, in our largest partners, we’re far from done. I refer you back to my — one of my bragging points. Shopify partnership has been around for three years, and I think several folks in the analyst community have written that off as well. It’s now stable and will grow some sort of a single digits slow grower because they’re fully integrated now and yet the volume there keeps accelerating because both companies are excited to build new things and try to deliver more value to both merchants and consumers. So we certainly have a lot more room to grow in all of our very large partnerships.
Frankly, I think we have a lot of room to grow in small ones as well. The large ones obviously pay off better because when you unlock something to the tune of 1%, you’re playing with billions instead of millions. So feel very good about there — about that. The companies are enormous. They have lots of conflicting priorities. And so, it will absolutely take longer than our average efforts, especially because — the reason these companies chose us is because we are technologists and we build software really, really well. That means that majority of integrations are complex. If you’re a tiny little company and you take our standard API and implement it and we bring you live. Literally, it can be done at this point in a self-service environment for small companies.
That’s pretty awesome, and I bragged about that in the letter as well. For a much larger partner, this is a real effort and it takes quarters to get it right and make sure all the plumbing works and scales and handles things like Prime Days, which are enormous spikes of volume. And so once that’s there, deploying optimizations and changes and new initiatives is not a thing you can sort of flip a switch and see what happens. You have to follow the thoroughness and deliberate nature of such efforts, but when they do work, they are dramatic leads. And so we certainly have many more leads to take. Obviously, I’m extremely biased, so sort of discount that appropriately. I do think the product we offer works better than credit cards, and credit cards are the dominant way to pay across all these merchants.
We feel like we have lots more share to grab it.
Andrew Jeffrey: Okay, helpful. And then — I’ve asked you this question before. The 91% of transactions from existing customers, that KPI or that stat. Does that number over time for you to achieve your goals need to come down a lot, just as far as greater acceptance and use across the base? And does Affirm Card help you get there or am I just barking up the wrong tree?
Max Levchin: I certainly don’t think you’re barking up the wrong tree. It’s something that I look at a lot. The way I think about it is every consumer has a certain amount of spend that they’re doing today, some of it on credit, some of it from cash, we are competing for that. We are not trying to create new debts where there wasn’t some because we are — obviously we don’t charge late fees, we don’t compound interest, so we don’t benefit from delinquency, we don’t benefit from spending. We are very careful not to overextend our consumers. Part of the mission is to create healthier financial realities for our customers, not to push them into unsustainable spending. And so, we are trying to shift spending onto our instruments.
Depending on kind of how far you cast your eye in the future of Affirm, obviously, first time transactions that number you’re talking about will come down. As we get to more and more customers underwritten, by definition that number will start trending up. So I don’t know if I have a — the right number is 78.37. That’s the perfect one, and — not at all, I look at it as a indicator of where we are. The reality of new versus repeating users for us kind of a two sided coin if you will. New users are the highest risk loans we will write. When you have never transacted with a firm before, by definition we don’t know you as well as we do someone who has transacted already. So, wherever we take a more careful risk stance and we have been in a relatively conservative one for quite some time, you can expect us to be deliberately careful with approving new consumers.
