Operator: [Operator Instructions] Our next question comes from the line of Jason Kupferberg with Bank of America. Please proceed with your question.
Jason Kupferberg: Great. Thanks. I just wanted to start with the guidance on RLTC as a percent of GMV for F ’24. I know we’re saying it’s going to be similar. It’s hard to be precise in this macro backdrop. But just want to get a sense of kind of range of outcomes. I mean, are we talking about 10-ish basis points or so on either side of the F ’23 results or just trying to get a sense of how wide of a range you guys might be envisioning? Like do you think there’s a wider range of outcomes in F ’24 compared to the way you guided F ’23 for example? Just wanted to get a little more detail on that. Thanks.
Michael Linford: Good question. And the first part of your question is exactly right. I think that we’re not giving a precise range because of the uncertainty and macroeconomic backdrop. I think that if you look at the range that we guided to in Q4, which we were ahead of, you can get a pretty good sense of the fact that we are sitting in a period where you’re going to see a quarter-to-quarter variability. What is not in doubt in our eyes is continuing to stick within the 3% to 4% long-term framework we’ve put out there for revenue less transaction costs as a percentage of GMV. And what’s nutting out is our ability to pull the right cost and revenue levers to choose that outcome when we talked about full year guidance as being things that were within our control, and we think this is one where we’re going to be able to deliver. We’re not going to get more specific than similar to last year right now.
Jason Kupferberg: Right. Okay. So I guess it kind of sounds like you see maybe a fairly similar probability of being a little better in F ’24 than being a little worse in F ’24 because I know similar could obviously mean in either direction. Is that kind of how it feels?
Michael Linford: Yeah, it’s exactly right. We’re — we feel like in this rate environment, the results that we delivered in ’23 are representative of the results that we would like to deliver. That being said, of course, any given quarter can move around a non-trivial amount, but nonetheless, feel like similar to ’23 is a good place to model the business.
Jason Kupferberg: Yeah. For sure. Just a quick one on Affirm card. I saw $130 million of GMV in Q4. What are you assuming in the Q1 and the full year guidance for the Affirm card GMV and will you disclose the Affirm card volumes each quarter going forward as you did this past quarter?
Michael Linford: Yeah. We do intend to share the Affirm card GMV every quarter. We may not share all the same stats that we did this quarter as we get going. We do think it’s important to communicate the total volume there. We’re not going to give super precise numbers with respect to the Affirm card guidance for the year, but what we will say is there’s a couple of points of growth that we think the card will drive.
Jason Kupferberg: That’s helpful. Thank you, Michael.
Operator: Our next question comes from the line of John Hecht with Jefferies. Please proceed with your question.
John Hecht: Good afternoon, guys. Thanks very much for taking my question. I guess it’s more tied to balance sheet stuff in marketplace stuff. I mean the — your interest income as a percentage of total revenues has moved up as you’ve increased your balance sheet. So maybe some commentary on — should that trend persist or should we see a leveling out of the contribution of interest income. What kind of leverage are you guys comfortable with on the balance sheet? And then final tied to that is, how is the marketplace developing? And when do you think you’ll start being more active in selling loans to third parties?
Michael Linford: Yeah. So there’s a couple of drivers that are driving the interest income up. One is, as you pointed out, the loans held for investment is higher. The second is the mix of business where we do have some of our largest enterprise partners scaling mostly with interest-bearing programs. And so the product mix has shifted. And then lastly, we’ve taken on some efforts to raise APRs and all of those taken together has resulted in more interest income. What’s important from our perspective is the ability to do that at the point of sale and to do that in a way that doesn’t impact conversion really reflects our true technology leadership in a way that I think is pretty difficult for other people to match. With respect to the forward flow program or selling whole loans, it is definitely the case that the volatility in the macroeconomic conditions, definitely changed the mix of business that we were doing with respect to on balance sheet or off balance sheet — loan funding.
That being said, the tone and tenor conversations with Capital Partners today is very constructive. We have a really differentiated credit performance got something that I think loan investors really appreciate about our platform. They know that we are both attending to it, but also can deliver differentiated results, and we’re not afraid to eat our own cooking as they say. And I think that gives us some cause for being optimistic about the longer term here. And yet, we’re still in a period of pretty high volatility uncertainty. And so as we think about starting the year off and giving guidance here, we’re being pretty thoughtful about not signing up for more than we know we can deliver.
John Hecht: Okay. Thanks very much. It’s helpful.
Operator: And our next question comes from the line of Michael Ng with Goldman Sachs. Please proceed with your question.
Michael Ng: Hey. Good afternoon. I just have two. So the first one is just about the strength of your enterprise partnerships amidst BNPL competition. Are non-exclusive merchants incentive to offer as many BNPL products as possible, including an in-house product. If not, what are some reasons that they choose Affirm. Is it the adapted checkout, the reputation for underwriting and transparency, a desire to have a less clutter checkout. Just any thoughts there would be great. And then I have a quick follow-up.
Max Levchin: You certainly No. The — you say parts of the answer really well. In general, I think we’ve been saying this for a while. There’s some slow-moving tendency in the industry towards what we call side by side. That said, we are — I think, at this point, we can claim the best underwriters in the space and the ones with the best suite of products. There are very few players that can scale long-term zeros, short-term zeros, [indiscernible]. We’ve experimented with other products that are not even sort of widely available just yet, but we’re introducing new financing programs all the time. And we also have a whole what we call power by Affirm, the PBA stack is what our friends at Shopify for example used to do a much deeper integration.
So the technical skill set, the scalability, the ability to support every imaginable product in the space typically makes us the dominant player in all these enterprise partnerships. There’s definitely interest, I think, from everyone. It’s still a very competitive space. There’s plenty of people asking themselves, well, maybe we need to have an in-house product. I think in practice, if your business is not very similar to Affirms. It’s pretty hard to replicate what we do. We’ve been at it for nearing 15 years and have done a pretty good job with it. So I think we expect to continue dominating certainly that part of the curve. And enterprises like to partner with serious people that have serious engineering teams that bring strength to those kind of relationships.
That’s why we won the original sort of big API deal, if you will, Shopify, and we’ve sort of gone from strength to strength. So I don’t expect that to change very much. Undoubtedly, there will be players popping up alongside us. We don’t expect that to dramatically change our results.
Michael Ng: Great. Thanks, Max. And then the second question was just about Affirm card. I was surprised to read that the card volumes are delivering at a similar RLTC as Affirm overall. And I was also surprised that pay now was only 10% of volumes. Was that surprising to you at all? Is there anything that you guys are doing that have resulted in interest-bearing being such an outsized volume on the Affirm card for with such a high frequency kind of top of wallet product.
Max Levchin: Surprise, no. Food for thought, for sure. So we designed the card with a very specific agenda of creating top of wallet experience or habituation as sort of the pop psychology term. Affirm on average is used basically 4 times a year, and that’s great, but that’s not nearly enough. You’re trying to be a payment network, you have to be there for doughnuts and coffee and for bicycles and couches. And we’ve more or less conquered the bicycle and couch space, and we’re trying to take our unfair share of doughnuts and coffee. And so the pay now volume we expect to grow and we’re certainly going to make it compelling to use us for pay now transactions, not necessarily just doughnuts and coffee, but given some items between that and the several hundred dollar average that we normally run, without fall modestly here, it’s going according to plan.
