Affirm (AFRM) Q2 2026 Earnings Call Transcript

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Date

Feb. 5, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Max Levchin
• Chief Financial Officer — Rob O'Hare
• Head of Investor Relations — Zane Keller

Takeaways

• Top Five Merchants GMV Growth -- Growth rate for the top five merchants reported at 23%, with management clarifying the metric is impacted by changes in merchant subset year over year due to a large partner transition.
• Active Merchant Growth -- Active merchant count increased by 42%, attributed to wallet partnership integrations that expanded the network and are included only when merchants are active transactors.
• Affirm Card Metrics -- Affirm card gross merchandise volume (GMV) grew nearly 160% year over year; active cardholders increased 121%, and 0% deals on the card rose 190%.
• Other GMV Vertical -- The "other" GMV category reached 15% of total, making it Affirm's second-largest vertical, driven by growth from numerous smaller merchants aggregated in the long-tail segment.
• Consumer Credit Performance -- CEO Levchin stated, "the consumer we see today is quite healthy. They're able and willing to pay us back [and] borrowing money," with no notable changes in credit trends quarter-to-date.
• ABS Deal Financing -- CFO O'Hare highlighted the latest asset-backed security (ABS) deal priced with a spread under 100 basis points and a weighted average yield below 4.6%, representing the lowest funding costs since 2021.
• GMV Growth Outlook -- Management guides to gross merchandise volume (GMV) growth of 30% in Q3 and 25% in Q4, referencing headwinds from the loss of a major merchant but citing no other specific drivers for deceleration.
• LTC Take Rate Guidance -- CFO O'Hare stated, "we do expect to see our LTC take rates that are slightly above four [percent]" for the next two quarters, consistent with Q2 trend dynamics and ongoing benefits from funding cost reductions.
• Forward Flow and Private Credit Funding -- Affirm reports ongoing strong demand from forward flow and private credit buyers, with O'Hare describing "having to disappoint [partners] on how much allocation we can give them right now."
• Bank Charter Application -- Affirm has applied for a bank charter, with CEO Levchin describing regulatory certainty as the "primary motivation" and characterizing approval as a multi-year process with uncertain outcome.
• Product and Network Diversification -- New segment initiatives include an early-stage rent payment test and integration with QuickBooks to offer Affirm as a payment method on service invoices, broadening network opportunities beyond core retail BNPL.
• Regulatory Environment -- Levchin indicated no active discussions regarding potential caps on BNPL rates and described federal and state regulatory dynamics as ongoing but not materially impacting current operations.
• 0% Financing for Merchants -- Larger merchants require Affirm to demonstrate conversion benefits from 0% offerings for higher fee acceptance, while smaller merchants adopt starter packages and upgrade based on performance.
• AI Product Rollout -- The "Boost AI" product is in early stages with minimal merchant adoption; management is not disclosing GMV impact or guide specifics and confirmed the AI effect is not fully reflected in guidance.
• Revenue less Transaction Costs and Margin Expansion -- CFO O'Hare expects continued operating leverage and increased margin expansion for fiscal 2026 over the prior guide, primarily from scaling revenue less transaction costs.

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Risks

• CFO O'Hare cited ongoing comp headwinds due to the transition of a large retail partner, contributing to projected GMV growth deceleration to 30% in Q3 and 25% in Q4.

Summary

Affirm (NASDAQ:AFRM) reported robust transaction and network expansion across key metrics, highlighted by Affirm card GMV up nearly 160% and active merchant growth accelerated to 42%. Funding conditions for asset-backed securities reached their most favorable levels since 2021, with sub-100 basis point spreads and yields below 4.6%. Management outlined increased product and partner diversification—including an early QuickBooks integration and bank charter application—positioning Affirm for broader market coverage and improved regulatory certainty. The "other" GMV segment became Affirm's second-largest vertical, signaling meaningful long-tail merchant growth beyond large enterprise accounts.

• Direct commentary on the regulatory environment confirms no imminent threat of BNPL rate caps, with Affirm maintaining positive relationships with regulators at both state and federal levels.
• Ongoing demand from private credit and forward flow funding partners provides Affirm with continued capital flexibility, with recent deals often oversubscribed.
• The new "Boost AI" product is in nascent deployment, with management emphasizing its innovative potential but limited financial contribution to GMV or guidance at this stage.
• Merchant pricing and take rates remain stable amid increased competition, with no reported compression linked to rival promotional activity.
• Management's guidance anticipates margin expansion through fiscal 2026, anchored by scaling revenue less transaction costs rather than one-time cost reductions or external funding tailwinds.

Industry glossary

• ABS (Asset-Backed Security): A debt security backed by a pool of Affirm's loans, providing a funding source at market-determined interest rates.
• LTC (Long-Term Consumer) Take Rate: Affirm’s effective revenue margin derived from long-term consumer installment loans, calculated as a percentage of GMV.
• GMV (Gross Merchandise Volume): The total dollar value of all transactions completed through Affirm’s platform during the reporting period.
• Forward Flow: A funding arrangement in which Affirm sells a predetermined portion of its originated loans to institutional buyers on an ongoing basis.
• BNPL (Buy Now, Pay Later): A payment solution enabling consumers to pay for purchases over time, typically offered at point-of-sale through Affirm’s platform.

Full Conference Call Transcript

Max Levchin: Thank you, Zane. Not a lot to add to the results, which were excellent once again. It's a biased opinion. I did want to take a moment to announce that we will convene our next investor forum on May 12 this year. Once at the event, you'll hear from a larger subset of our management team where we'll talk about our commercial and product initiatives and update our medium-term financial framework. Plenty of references. Please look for additional information, and registration details on our investor relations website as we get closer to the event.

Zane Keller: Thank you, Max. For those of you that are interested in attending the upcoming investor forum in person, please reach out to us and we will do our best to accommodate your request. Now let's get to your questions. Operator, please begin the Q&A session.

Operator: Thank you. We will now be conducting the question and answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Our first question comes from Andrew Jeffrey with William Blair. You may proceed with your question.

Andrew Jeffrey: Thanks. Appreciate it. Great to see the solid results here. Max, could you talk a little bit about the dynamics of your growth, namely the tie top five merchants growing 23% and blending down as of concentration. As I recall, they had been growing faster than overall GMV. Can you just talk a little bit about what you're seeing? The new merchant adds look great. The transaction per active looks great. Is the business truly widening out? Is that the right way we should be interpreting those results?

Max Levchin: You know, might offer Rob up as the interpreter of these results just because to be completely transparent... I mostly look at the growth of the business through the lens of things like transactions per user, active consumers, and active merchant numbers are really important to us. Generally speaking, of course, we want to have less concentration, more diversity, but we also are frequently driven or drafting behind the growth and promotional initiatives of our partners, big and small. So I think it's a little bit difficult to sort of piece it out, but I imagine Rob has a much more detailed answer.

Rob O'Hare: And tactically, Andrew, I would just point you to the fact that the top five that we disclosed for 2026 is actually a different subset of five merchants that we're comparing to in fiscal 2025 in the same period. So I think all the more reason not to read too much into that stat. Obviously, it's been well publicized that we have a large merchant partner that was transitioning off of the Affirm integration, and so that weighed on that metric. We have a new top five as a result of that. So I think that is really the crispest answer we can give there.

But otherwise, I mean, the business is growing quite well, and we're quite happy with the diversification, as Max alluded to, that we see in the GMV.

Andrew Jeffrey: I appreciate it. Thank you.

Operator: The next question comes from the line of Ramsey El Assal with Cantor Fitzgerald. You may proceed with your question.

Ramsey El Assal: Hi, guys. Thank you so much for taking my question. I was wondering, Max, if you could give us an overview of what you're seeing out there in terms of consumer trends, credit trends, overall economic health. It's such a tumultuous moment. Maybe also comment on what you've seen sort of quarter to date.

Max Levchin: So the one-liner answer is the consumer we see today is quite healthy. They're able and willing to pay us back. They're borrowing money. Obviously, the growth numbers are out there. In the sprint, so we are not seeing again, our consumer is now reaching quite a large subset of North Americans and growing nicely in the UK, but we're not everyone. We don't always say yes to a loan. So it's a little bit selective, but we feel pretty good about both the demand and the ability and willingness to repay. I don't have anything dramatic or alternative to offer on the state of affairs. In the current quarter either?

I think we're not seeing a big deviation from what I just said about the past.

Ramsey El Assal: Great. I think no news is good news. Appreciate your comments. Thank you.

Operator: The next question comes from the line of Will Nance with Goldman Sachs. You may proceed with your question.

Will Nance: Hey, guys. Appreciate you taking the question. Very nice results. This one might be for Rob, but I was just hoping we could unpack sort of puts and takes in the ROTC margin just looking back over the last year or so. Know, there have been a ton of tailwinds, both of structural to the company as well as sort of outside of your control, very favorable funding market tailwinds. Wondering if you could kind of talk to the trajectory of margins as you see them from here.

Rob O'Hare: Yep. Sure. I mean, as we outlined in the guide, we do expect to see our LTC take rates that are slightly above four. I think that's true in both Q3 and Q4 in the guidance that we provided. So we're going to stick to that, obviously, and that's the plan that we'll execute against. I think to your point, on the puts and takes, I would probably frame it very closely to what we saw in Q2, to be honest. We did see benefits on the transaction cost side, particularly on funding costs as we've seen cost of funds come in particularly within the ABS market. So we would expect that trend to continue.

We typically don't guide to specific transaction cost line items or even revenue line items, but in total, I think the take rates and the dynamics will be pretty similar to what we saw from a trend perspective in Q2. Again, it's important to remember that we've driven a lot of 0% mix, and we think that's really good for the network. And then we are seeing really nice benefits on the transaction cost with funding cost being the clearest example there.

Will Nance: Appreciate the commentary.

Operator: Our next question comes from the line of Jason Kupferberg with Wells Fargo. You may proceed with your question.

Jason Kupferberg: Yeah, Hi, guys. Great numbers. Here, and it feels like some others in the space are trying to play catch up and maybe get a little bit more aggressive over the past couple of quarters. In terms of pursuing more prominent presentment, you know, looking to win new merchants in some cases offering cash back incentives to consumers. So I'm just wondering what you're actually seeing in the field. Is this having any discernible impact on Affirm's merchant pricing, just in terms of like for like take rates?

Max Levchin: We do. We like to speak with numbers. Your answer to the question is no, I think this is like a social science theory, so discount appropriately. But we're probably in one of the noisiest environments as far as information headed for consumers' heads maybe ever, certainly in my lifetime. Like, there's news every day, and some of it reads like science fiction. So the you can have a deal and here's five paragraphs of explanation when it's valid. And it's 5%, but only if it's Tuesday. And, like, all those are promotional.

Jason Kupferberg: Just a quick follow-up. I'm looking at the GMV categories, and that other category, you're now up to 15% of total. I think it's basically your second largest vertical, Tide three, your second largest. It's growing triple digits. Can you unpack what's actually in there? What some of the major pieces? Are any of them getting to the size where you'd maybe start breaking them out on their own?

Max Levchin: Sure. That's actually a great question, although Rob is rolling his eyes. Sorry about that. We anticipated it because it is a juicy number, and yet it is, you know, non-descript. So it's actually if you wanted to look for diversification in the business, I wouldn't look at top five. I would look at the other. So if we broke it out into categories, you would see all sorts of cats and dogs of really exciting categories. And that's what you see there. It's a huge number of relatively small merchants that are realizing that they're at a disadvantage if they do not offer a firm.

So as that knowledge spreads across the merchant base, it becomes somewhat more difficult to invent new categories for them and if you decide, well, we're gonna have to be very, very precise. Then either end up in a giant bucket called other, which is what we chose, or you start doing things like stickers and novelty items or something like that. It's just really the long tail, and we're excited to serve them all. And, you know, as we've seen certain categories get to a critical mass within other, we have broken them out.

Jason Kupferberg: Thank you, guys.

Operator: Our next question comes from the line of Nate Svensson with Deutsche Bank. You may proceed.

Nate Svensson: Hey, thanks for the question. Know, there's a couple of exciting press releases from Affirm, intra-quarter. I guess I wanted to ask on the bank charter news. I think that was pretty interesting. Just hoping you could talk more about the decision to potentially go down that path.

Max Levchin: Sure. I would quibble with the evolution of thinking merely because we've answered this question a bunch of times, obviously, before we disclosed that we have applied. We've always been pretty clear. There kind of one a reason to have a bank charter is regulatory certainty. You operate as a bank partner. You want to know that your bank partner is on footing, that there are no hidden rocks for that particular bank. And if you own a subsidiary, you would presumably understand a lot better, and that's the primary motivation of why we applied. Obviously, the climate at the regulatory bodies that issue such approvals is changed, and that's, you know, something that we track very carefully.

The timeline is certainly years, so I would step away from any model modifications. You know, we don't know if we get approved.

Nate Svensson: Thanks, Max. And point taken on the, evolution of thought.

Operator: Our next question comes from the line of Dan Dolev with Mizuho. Please proceed.

Dan Dolev: Hey, team. Great results as always. Just a quick question on the ABS deals. The execution there seems to be really, really strong. Maybe if you can make a few comments. And if I can squeeze just a very quick one on the AI, that was a big surprise. It just wanna know how much of this AI boost is actually contemplated in the guide and is fully rolled out.

Rob O'Hare: I think I think Dan's asking about the guide. Not allowed to speak to the guide. Yeah. I think the guide. In terms of the guide, we're not you know, we have a pretty nice trajectory with those two product lines, but we haven't called out specifically how much is in the GMV guide.

Max Levchin: It's definitely early days for the Boost AI. I was trying to sneak into the letter exactly how few merchants have adopted Boost AI. Adapt AI has been around for a couple of years. It's generally speaking, batteries included, part of the product. Boost AI is new and it's super cool because it does automated AB testing but it also has a channel it is a channel for incremental merchant dollars. Like, the thing that's exciting because it just gives our machine learning engineers a lot more freedom to really do some amazing things for our merchant customers. So super excited about the product. It is pretty early. We're not breaking out what it does for our numbers.

Rob O'Hare: As for the ABS, the deal we just did and just generally, the market is still very constructive and the team is really well out there. The last deal we just priced was done with a spread of under 100 basis points. It's really remarkable. We haven't done that since 2021. The weighted average yield in the deal was below 4.6%. Again, we haven't seen that kind of cost of financing since then. And so we're operating and executing in capital markets really the best we've seen post the rate movement of the world. A reflection of two things.

One is just the continued vote of confidence that the market has and our ability to control credit outcomes and deliver the kind of returns that we sign up to deliver.

Dan Dolev: Thank you.

Operator: The next question comes from the line of Moshe Orenbuch with TD Cowen. You may proceed.

Operator: Sorry. Let me try. Can you hear me now? We can. Much better. Much better. Okay. Sorry about that. Please go ahead.

Moshe Orenbuch: The first question asked about growth and, you know, growth your specific. But there's... could you just give us, like, some update I saw the attach rate and related stats on the Affirm card, but could you just flesh that out for us as to how those are going and what you know, how you see the development over the course of the next several quarters. Thanks. And sorry for this background noise.

Max Levchin: So the card is just continuing to grow very quickly. GMV year over year for the quarter reporting was up just under a 160%. Active cardholders went up 121%. 0% deals on the card went up 190% year over year. So, like, it's not the only growth engine, but it's a big growth engine for our metrics. And it's not a material to the overall business. It's no longer a kind of a cool novelty product for our die-hard users, and it's helping us create more die-hard users. The card is doing really well. We have a lot more planned for the card, so we don't intend to slow it down, if you will.

Probably my personal focus on the product side of things is still predominantly on the card and adjacent things in the card.

Moshe Orenbuch: Thanks very much.

Operator: The next question comes from the line of Rob Wildhack with Autonomous Research. You may proceed.

Rob Wildhack: Hey, guys. One question on the updated outlook. As we see it now, you're kind of pointing to a slowdown in GMV growth to 30% in the third. 25% in the fourth quarter. I know a long time between now and the end of the fiscal year, but could you just talk us through the cadence there and if there are any specific callouts for the deceleration in the coming quarters?

Rob O'Hare: No specific callouts. I mean, we are obviously comping the transition with a large retail partner, obviously, we had that headwind from a comp perspective this quarter as well and grew at 36%. So really nothing specific to call out in terms of drivers for the deceleration.

Rob Wildhack: Okay. And then, one more on funding. You know, we see, you had the new forward flow deal, but we also see some of the headlines in concern around private credit, many of whom are Affirm loan buyers. So just what's the current temperature from the forward flow and loan buyer channel right now?

Rob O'Hare: Yeah. I think it's still extremely constructive. Yeah. I think the conversations we're having with our partners is usually around having to disappoint them on how much allocation we can give them right now. And that's a qualitative read, but tends to be the conversation we're having today. I think a lot of the conversation about the market more broadly really pick up the specifics of what a firm's asset creates and the kind of people that we partner with. We've been very selective about how and who we partner with, and that puts us in a position, we think, to have a very durable set of partners who are really excited to continue to go deeper with us.

Rob Wildhack: Okay. Thanks a lot.

Operator: The next question comes from the line of Rayna Kumar with Oppenheimer. You may proceed with your question.

Rayna Kumar: Good evening. Thanks for taking my question. Could you just comment on what you're seeing out there in the regulatory environment? Like, are you hearing anything about potential caps on BNPL rates?

Max Levchin: Really not hearing about potential caps on BNPL rates specifically. It's a very dynamic set of conversations happening at the federal level about credit card rates, whenever Republicans are in the White House, you can expect more attentive and act active attorneys general from all 50 states, both red and blue. Generally speaking, have positive relationships with them. Doesn't hurt that we don't charge late fees, don't screw our customers. Typically, do the right thing. So nothing sort of too exciting to report.

Rayna Kumar: Very helpful. Thank you.

Operator: The next question comes from Dan Perlin with RBC Capital Markets. You may proceed.

Dan Perlin: Thanks. Good evening, everyone. I just wanted to just wanted to jump in a little bit on the big nothing. And the question really is on the derivative benefits you called out the Affirm card sign up, so I kind of understand that. My bigger question is kind of the uplifting credit quality that comes with that consumer set. And then how do you apply those learnings to kind of everyday shopping for a firm? Because the clearly, the GMV uplift across the board was pretty significant for those three days.

Max Levchin: Yeah. And by the way, not to sort of I'll take the compliment, but I will point out this is our first rodeo with that particular one, and we expect to get better and smarter up nothing. And we're planning the next one and we're super excited about all the things we're gonna do differently and just smarter. So there's more money to be made.

Dan Perlin: That's great. Thank you so much.

Operator: Our next question comes from the line of Matthew Coad with Truist Securities. You may proceed with your question.

Matthew Coad: One more maybe on the other bucket in terms of new verticals that may enter that other bucket. There were some press releases over the quarter. About entering b2b through the partnership with Quick QuickBooks payments. And then maybe moving into the rent vertical as well. I know it's kinda, like, early days for both. But I just was hoping that you guys could talk about, you know, the growth opportunity there. And then kinda how you think about underwriting. Especially in the rent and how that may differ. From your current book of payments and underwriting.

Max Levchin: Yeah. So I'll take it in the first order but the rent test is a very, very small test. It is definitely not our MO take what is essentially a subscription product and turn it into a differently contoured subscription product. So, like, the product cannot be you wanna pay your twelve-month rent over eighteen months. What we're testing is if we allowed you to time shift. On the Intuit side, that's actually super exciting, and it's not b2b. What it is there is a whole facet of the services world that gets billed through QuickBooks. And until just now or whenever it launches, you would pay for these services with a credit card.

The service provider would tell you it's gonna cost you $5,000, and off you go. You decide if you want it. As soon as we launch, you'll see an option to use Affirm. We will be included in those invoices and the consumer will be educated that they can pay over time these services. And we feel like we've unlocked another side of transactions. So super excited about that.

Matthew Coad: Really helpful. Thanks, guys.

Operator: Our next question comes from the line of Adam Frisch with Evercore ISI. You may proceed with your question.

Adam Frisch: Thanks, guys. Given the value you generate for merchants with the 0% offers, are your thoughts around the potential to continue to raise pricing there? It seems like there is an excess buffer between your fees to the merchant and the lower revenues they avoid by not having to initiate a 25 or 30% off sale. So maybe some color there. On the mix between long-term and short-term and the potential to raise prices.

Rob O'Hare: I think it does vary a bit by merchant size. And we have had nice traction with a couple of our go to market packages that we use for some of the platforms that help us aggregate distribution into smaller merchants. We actually have seen nice uptick of merchants starting with a base package and then moving into a higher converting package that includes more 0% offerings in their financing program. So I think that is working for us in terms of the go to market motion. And then, honestly, I think with some of the larger merchants, it's really on us to prove that 0% offerings drive conversion.

And I think those conversations take time and, are gonna be a function of the success that we drive, and then it's on us to make sure that we're being compensated for what we're delivering to the merchant.

Adam Frisch: I think you guys are doing a great job. Thank you.

Operator: The next question comes from James Faucette with Morgan Stanley. You may proceed.

James Faucette: Actually, I have a follow-up with one answers you gave just a moment ago in terms of the behavior of those that are coming in for 0% promotions, versus maybe others. Can you give any more detail in terms of their frequency of engagement? What products they're tending to be attracted to?

Max Levchin: Everything you just said sort of answers your own question a little bit already. The very last thing you said is not what I said, and I don't want to imply that. In other words, I would not encourage you to think of short term zeros as a great feeder into something else. What I was trying to say is zeros, writ large, short, and long term. And, obviously, longer term zeros are a higher form of value. If you're getting it 10% loan or 1210% loan, for a large ticket purchase, that's an extraordinary deal.

James Faucette: That's really good color. Thanks, Max.

Operator: Our next question comes from the line of Reginald Smith with JPMorgan. Please proceed.

Reginald Smith: Hey, guys. Congrats on the quarter. Most of my questions have been answered. Did have one question I get a lot from investors is whether your expansion into some of these newer categories, home improvement, medical, auto repair signals anything about, I guess, your base your core retail BNPL business, whether it's competition or anything like that. Or maybe even a shrinking opportunity.

Max Levchin: Short answer to the last one is no. We are not figuring any sort of a short term reduction in cost of funds. We are building a network. We see ourselves sometimes as a twenty first century version of American Express, and the goal is to be on every convenience store door and all the all the doors, all the online doors, all the offline doors. Affirm wants to be the universal acceptance mark. And so it's not a matter of which one do we choose. It's which one do we choose next.

Reginald Smith: Makes a lot of sense. Great answer. Thank you.

Operator: Our next question comes from the line of Mihir Bhatia with Bank of America. You may proceed with your question.

Mihir Bhatia: Hi. Good afternoon. Thank you for taking my question. Just wondering if you could talk about the announcement with Fiserv earlier this quarter. Maybe just describe what you're trying to do there.

Max Levchin: Definitely a little bit early to talk to the unit economics given we've just announced a partnership there. It follows our partnership with FIS, and we're certainly not stopping there. We are seeing excellent interest. We think that we should not be the only people issuing debit cards with now pay later capacity on them and there's already of a half a billion debit cards in America.

Mihir Bhatia: Got it. I understand. And if can I ask you just to follow-up on Affirm card? Just generally?

Max Levchin: We have 25,000,000 active users, and we still keep on talking externally. But also kind of internally. As if we have exactly one product that fits them all. And it is true, the card is used fairly differently by different consumer categories. We have a category of consumers who's absolutely using the card as a top of the wallet, every transaction, they're both power users. Majority of our consumers still use the card as a considered purchase when the transaction really matters to them.

Mihir Bhatia: Thank you.

Operator: Our next question comes from the line of Darrin Peller with Wolfe Research. You may proceed.

Darrin Peller: Hey, guys. Thanks. You know, last quarter, I know you mentioned you were in discussions with some key PSP partners to become a default payment method. And I think you're already live with one. So maybe just touch a little more on the benefits seeing from that PSP default method and how these conversations have evolved. Maybe just when you're in these conversations with PSPs, what's the pitch like?

Max Levchin: It goes right back to the thing I said earlier. Ten years ago, if you said a firm should be right next to Visa, Mastercard, American Express, Discover, your average payment processor would say what firm? Sorry. That's not the question anymore today. Fortunately, our name has now certain degree of weight.

Darrin Peller: Okay. Thanks, Max. Appreciate it.

Operator: Our next question comes from the line of Brian Keane with Citi. You may proceed with your question.

Brian Keane: Yeah. Hi, guys. Jumped on a little bit late, but the spike in the active merchant growth up to 42%, I know that was running in the low twenties for a while a few quarters and then moved up, last quarter and then again a significant move.

Max Levchin: Yeah. I would say, the inflection in growth is being driven by some wallet partnerships that we have. We're including merchants from those wallet partnerships in that merchant count. So that is that has been an accelerant from a growth perspective.

Brian Keane: Got it. And how long does it take to get to corresponding volumes you know, from those merchants from those wallets.

Rob O'Hare: We are only counting the merchant if they're active with us. We're not counting doors, you know, if the merchant isn't taking transactions from Affirm. So we're only counting active merchants whether it comes through a wallet or it comes through a more direct integration with Affirm.

Brian Keane: Okay. And then the other question just on that I had was on adjusted operating margins. Just thinking about the first half versus second half, obviously, strong margins in the first half. And then it looks like a slight deceleration in margin growth that you're just probably being a bit to think about in terms of the adjusted operating margins first half or second half?

Rob O'Hare: No. I mean, I think we did have a really nice trajectory over the course of last year. So to your point, you know, the margin expansion is a bit lower in Q4, for example, in the guy than it was in Q2. But you know, we are we are approaching we're quite happy with the margin profile, and we're signing up for more FY '26 margin expansion in this version of the guide than we had ninety days ago. So, yeah, I think it's just continued operating leverage and continuing to scale nicely, and most of that is driven by the strong growth that we're seeing in revenue less transaction costs.

Operator: The next question comes from the line of John Hecht with Jefferies. Please proceed with your question.

John Hecht: Afternoon. Thanks for all the color and details. Most of my questions have been asked. I guess, one thing I'm just curious about is you're now forward flow agreements with private credit counterparties are an increasing part of the funding sources. But I'm wondering, is the characteristic of what the private credit partners want in such a way that it changes the mix of what you end holding on balance sheet, or is it all the same?

Rob O'Hare: But still have an approach that says we allocate loans to partners on a vertical slice. Our partners generally want broad exposure to everything that we originate. The only exception to that or asterisk is there's certain concentration limits or certain even test products that may be don't get into our normal funding flows.

Operator: Due to time constraints, our final question will come from Timothy Chiodo with UBS. You may proceed.

Timothy Chiodo: Great. Thanks a lot, everybody. So in AgenTek commerce, I want to circle back on the topic Darren brought up. So broadly speaking, we can think about three types There's using ChatGPT to search and then clicking off. There's using ChatGPT to search and then staying within the interface and using an instant checkout button, if you will, And then, of course, there's the full agentic with which Max, I think, you were alluding to. If we can find this conversation to the instant checkout portion, when we go into ChatGPT today, we can see the Apple Pay button. We can see the Stripe link button, and we can see pay with card.

Is it possible that over time, we will see the Affirm button within that check GPT and other AgenTic platforms within that user interface for the let's call it, the instant checkout type of transaction?

Max Levchin: It's possible, but we're making no such announcements right now. I think it's really important to note that this is very, very early. The entire agenda commerce thing is still super early. But, yes, I think there's absolutely room

Timothy Chiodo: Thank you, Max. And also fully acknowledging that you can use a virtual card, firm card in that channel as well, I appreciate your answer there. Thank you.

Max Levchin: You can definitely I mean, last I checked, I actually haven't tried in a little bit, but I think you can find a firm on the Apple Pay in through the Apple Pay door.

Operator: This now concludes our questions and answers session. I would like to turn the floor back over to Zane for closing comments.

Zane Keller: Thank you for joining the call, everyone. We appreciate the wonderful list of questions you all submitted. Look forward to seeing many of you on the conference circuit, and talk to you again soon. Thank you.

Operator: Ladies and gentlemen, thank you for your participation. This concludes today's conference. You may disconnect your lines and have a wonderful day.

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