Eugene Simuni: Thank you very much. Hi, guys. Wanted to ask about GMV growth. It looks like it came in better than expected this quarter at 25% year-over-year. So it would be very helpful to hear what are some of the factors that helped it grow faster whether it’s macro or kind of Affirm specific? And then as a follow-up, does that — would love to hear a bit on how you thought about your GMV guide for next year because I realize that $24 billion is the floor but that floor, if I’m doing the math correctly, implies a deceleration from that level. So why would you not be able to achieve the growth rate that you achieved this quarter with GMV next year?
Michael Linford: Yes. So in terms of the fourth quarter, we saw a lot of traction in our travel and ticketing business. You saw the consumer out participating in the economy in those sort of events driven, experiential driven spending patterns. And because of our breadth of distribution there, we were real beneficiaries of that this quarter. We also have done a lot of work to continue to optimize the checkout experience so that we can increase both uptake and our ability to capture volume on those channels and others. And we continue to ramp our largest enterprise platform partnerships as well. Those were big growers for us this quarter, and many of them were even accelerating their growth. So being positioned correctly and distributed correctly at the right parts of the economy, I think definitely benefited us a lot as well as work we’ve done on our side in terms of product.
In terms of forward-looking into the year, I think there’s clearly a lot of optimism internally for where we’re taking the business and the things that we’re working on, and we’re just mindful of the economic volatility that continues to persist. And so we’re starting the year off with a thoughtful approach here and making sure we don’t sign up for more than we know we will deliver. I think the deceleration point, I think that we would expect there to be — as we continue to scale some of our largest platforms slightly lower growth rate as we do achieve something that looks more like a normalized distribution or penetration on those largest platforms. And yet on the other side, we do have a lot of upside in our direct-to-consumer business. And how those two factors play out is something that will keep you in the loop on throughout the course of this fiscal year.
Eugene Simuni: Got it. Okay. That’s very helpful. And then if I can squeeze in just one more on — related to uncertainty and economic environment next year. I don’t know if I missed it, but what is your assumption about unemployment rate for next year just because it’s such an important driver of credit as you often point out.
Max Levchin: We more than anything benefit from the fact that our terms are short and controllable by us and we price and underwrite every transaction individually. I think if we were in the business of issuing lines, we would have to have an internal economic bureau trying to predict what unemployment looks like six quarters from now because the lines we would have granted today would still be getting utilized or repaid then. And instead, we have the benefit of saying we don’t like the latest unemployment imprint, and therefore, we’re going to change our credit posture. The way we achieve the results that we are bragging about today in credit has nothing to do with our ability to see the future. We never knew what unemployment would be.
We never knew it would be better or worse, but that’s just not how this business works. We have the controls to react to literally daily outcomes of our credit monitoring and whatever the future brings, we will adjust to that future. So our assumptions are, we will continue diligence being diligent. We’re going to continue meeting. Every Monday morning the entire executive team looks at all the credit results and ask the question, is everything great or do we need to do something. So I don’t have a promise or a progesterification on unemployment, but I can assure you that whatever the number will be, we’ll be ready for it.
Eugene Simuni: Got it. Okay. Thank you, guys.
Operator: Our next question comes from the line of Dan Perlin with RBC Capital Markets. Please proceed with your question.
Daniel Perlin: Thanks. I had a question on the Affirm card, Max. In the description here, you’re talking about how it works. And I just want to make sure I’m clear on this. And the question really is around early readings and what you’re seeing in terms of engagement and frequency of views. So on one hand, you talk about consumers can request a payment plan in the app before checking out. And then you say, it were linked to the bank account to pay with Affirm card and then have a post decision kind of post swipe, post tap. So when we think about those two types of consumer experiences, what’s the early — I would imagine linking it to the bank account creates more of a habitual frequency, but I’d be interested to know what you’re seeing early stage? And is there a way to, I guess, I don’t know, incentivize the consumer to go in one of those directions that would be beneficial both to you but also not detrimental to them. Thanks.
Max Levchin: I don’t know if there’s a question in that, that was eloquently put and pretty much accurate. You’re on the dot on everything you just said. So you’re exactly right, the way the product works. And I’ll break it down for like a couple of minutes just to be super clear for everybody. So you sign up for the Affirm card, you get one in the mail. You don’t have to do very much work at all. If you are Affirm user you are eligible to use Affirm card, and it’s basically literally an Affirm card you request a loan and then you swipe the card or you chip it and the next transaction becomes that loan. So simple as that. It is absolutely much better for us and for our users if you connect your bank account because then you can swipe and if you didn’t bother asking for a loan, you can still do it ex-post facto.
And if you have nothing, it becomes a pay now transaction that settles. And so it’s basically this journey from, I like Affirm, I use Affirm, now I can use it in store, nothing new to learn. As soon as you get a card in the mail, it is our job, and this is exactly where I’m spending the most recent conversation I had about what we call the first user experience was sometime between 1 and 2 o’clock morning in last night. So what I spend my time on is making sure that, that conversion from Affirm card for my well understood part of the Affirm experience to, I can connect to my bank account and get access to all these amazing features. Of course, I want to do that. So that is where we’re spending lots and lots of cycles right now. It’s going really well.
I don’t want to get into exact numbers, but where we started and where we ended is a massive progress, and we’re very, very far from done. The economics improve, our ability to underwrite improves because we get to see your cash flow, our ability to offer you interesting access to things like zero percent loans improves because we understand the economics a little better and just see frequently high engagement. Therefore, we can make more educated bets around lifetime value over consumers. So everything you said is pretty spot. Let’s see if there’s anything else I can share on this topic. Both the frequency and the amounts and the LTV, like every metric possibly imagined is better once the card becomes fully fledged. We have internal terminology, specifically describing the sort of unconnected and connected state of the card exactly because it’s such an important thing.
And yes, we can absolutely low incentives, and we have a lot of good results that show that the incentives are not going to be especially expensive at all.
Daniel Perlin: That’s excellent. Thanks so much. I appreciate it.
A – Max Levchin: If no one can tell I’m excited by this product.
Operator: Our next question comes from the line of Bryan Keane with Deutsche Bank. Please proceed with your question.
Bryan Keane: Hey, guys. Max, you’re going to be excited because I’m going to ask you more questions about the Affirm card. So the active consumer base, I think, spiked in the quarter. I think it’s north of 200,000. I remember we had a wait list of about 1 million or so. I’m just trying to figure out, is there another big change of growth that we expect or kind of the users will be more modest growth from this level? Just trying to figure out how big that wait list is? And is there a big rollout to consumers happening as we speak.
Max Levchin: So for what it’s worth the wait list included everyone that wanted the Affirm card does not — the current active base does not necessarily include everyone who wants one because we were very, very careful as we rolled it out in terms of credit standards. In general, while I am gushing here over this amazing product that we finally rolled out and doing really well with. On the other side of that equation is a super sort of Spartan view of credit. We cannot afford to screw that up. And so we’re not going to, therefore, launching a brand-new product without a very clear understanding of exactly what repayment will look like to everyone who wants it. It’s probably not a good idea, and that’s certainly not what we did.
