T H I R D F I S C A L Q U A R T E R 2 0 2 4

Affirm Shareholder Letter

Max Levchin


Fellow Affirm shareholders,

We delivered another set of excellent results in our third fiscal quarter. In the parlance of our times, we slayed.

Gross Merchandise


Revenue Less

Operating Income

Adj. Operating Income1

Volume ("GMV")

Transaction Costs1











All comparisons on a year-over-year basis

Our mission remains as important to us - and as relevant to our merchant partners and our consumers - as it has been since day zero, and we feel quite comfortable executing in the current economic and interest rate environment.

This is the fourth consecutive quarter of accelerating GMV growth for Affirm. Credit performance was stable and yield outperformed our expectations, which we see as an opportunity to modestly increase risk exposure by offering credit to more consumers, but as always, we remain firmly in control of credit outcomes. Funding capacity increased slightly quarter over quarter.

We focused on improving our core products this quarter; just a few highlights:

  • Purchasing Power is a popular feature of our app that helps shoppers plan considered purchases with the knowledge of what they can responsibly spend with Affirm at various merchants and on what terms. We created an embeddable version of Purchasing Power for our point-of-sale integrations, and brought it to a group of our enterprise partners this quarter, driving meaningful GMV growth via improved end-to-end checkout conversion. We are excited to bring embedded Purchasing Power to more integrated points of sale.
  • Affirm-builtAI assistant has been in the works for a while, and this quarter we tested it out in our customer support chat. Although consumers can always speak with a human customer service rep, over 60% of customers served by the AI assistant did not require further human assistance: wave of the future, 100% electronic. We are encouraged by these early results, and we do not expect a material increase in expenses as we train this and other AI models.
  • Information about Affirm's use of non-GAAP financial measures is provided under "Key Operating Metrics, Non-GAAP Financial Measures and Supplemental Performance Indicators" and "Use of Non-GAAP Financial Measures" below, and reconciliations of GAAP results to non-GAAP results are provided in the tables at the end of this letter.

FQ3'24 Shareholder Letter


  • Adaptive Checkout, the primary consumer interface to Affirm, generates an extraordinary amount of unique data about consumers' financial preferences. Together with repayment trends, it is predominantly used to improve our underwriting: indeed, the latest point-of-sale model update rolled out in the quarter. But another, subtler use case is to predict and recommend the terms optimal for the consumers' financial needs and abilities within Adaptive Checkout, a benefit for both Affirm and our borrowers.
  • Affirm Card is a key area, and its metrics continue to look very strong. Shortly after the end of the fiscal third quarter, active cardholders crossed one million, and the most recent user cohorts are transacting consistently as we continue to capture more average annual spend and unlock new usage categories and spending modalities. Financial product mix remained relatively constant on the card, and key categories that Affirm has historically not addressed (restaurants, home improvement, groceries, fuel, etc.) are about 20% of all of Card spend.

This is the part of this note where I thank the team for the great work they do... but something happened a few days ago that changed this tried and true approach.

Several members of our team visited a partner's retail location, to use our product, observe shoppers, and speak with employees, who are often called upon to explain Affirm to would-befirst-time users.

The young store associate we chatted up gushed about the simplicity and sense of control of our product, as she told us that she (and her mother!) are frequent Affirm users, both in-store and online. "Recommend it to everyone" - she said - "I love Affirm! It's so much better than any of those other ones! Thank you, thank you guys for inventing it!" As we walked out, one of the Affirmers present, turned to the entire exec team beaming with pride, and said, "...And this is why we do what we do!"

She is right, and that is the gratitude that matters far more than mine. I am not aware of many financial products that elicit this kind of emotional response, and as someone who chats up many of our consumers, I can report that this is a very, very common reaction.

Our consumers love Affirm. We are deeply grateful for and are energized by their support, and cannot wait to deliver a few more amazing products and services in the coming weeks and months for them - and for the merchants where they shop.



FQ3'24 Shareholder Letter


FQ3'24 Operating Highlights

Gross Merchandise Volume (GMV) grew 36% year over year to $6.3 billion, accelerating for a fourth consecutive quarter. GMV from our top five merchants and platform partners collectively grew faster than the business overall.

GMV growth was diversified across categories and products, with all categories except sporting goods and outdoor growing year over year. The general merchandise category grew 49% year over year and was both the largest category and most substantial contributor to our overall growth rate. Travel and ticketing was also an important driver, growing 35% year over year. Finally, categories such as electronics and home/lifestyle that underperformed as the pandemic receded were growth contributors during the quarter.

Direct-to-Consumer GMV (D2C GMV)

grew 49% year over year to $1.6 billion. Within D2C, Affirm Card generated $374 million in GMV, up from $18 million during FQ3'23, and down slightly from $397 million during FQ2'24, which was consistent with expectations given the seasonally strong holiday shopping season in the December quarter.

Active cardholder count grew more than 30% quarter over quarter in FQ3'24. Additionally, recent cohorts of Affirm Card users are trending towards slightly higher annual spend than user cohorts from FY'23, demonstrating improved customer engagement as we expanded access to the product.

Underlying Card product mix remained similar to prior quarters, though Pay Now became an increasingly important product and accounted for nearly 10% of Card GMV during FQ3'24, up from 5% during FQ1'24, as consumers have increasingly used the Card for smaller-ticket, everyday purchases.

Active consumers increased 13% year over year to 18.1 million as of March 31, 2024. Excluding the discontinued Returnly business, active consumer count grew 18% year over year. Active merchant count increased 19% year over year to 292,000 as of March 31, 2024.

FQ3'24 Shareholder Letter


FQ3'24 Financial Highlights

Total Revenue


Operating Income

Adj. Operating Income

As a percentage of GMV

As a percentage of Revenue

9.2% 3.7%

+100 basis points

+10 basis points

All comparisons on a year-over-year basis

Revenue & RLTC

Total Revenue grew 51% year over year to $576 million, with Revenue as a percentage of GMV increasing to 9.2%, compared to 8.2% in FQ3'23.

The increase in Revenue as a percentage of GMV was entirely driven by a 120 basis point increase in interest income as a percentage of GMV. This higher interest income contribution reflected a higher loans held for investment balance and the success of pricing initiatives that we implemented in FY'23 and FH1'24.

Due to a combination of product and merchant mix shifts, network revenue, gain on sales of loans, and servicing income were minor headwinds to Revenue as a percentage of GMV.

Revenue Less Transaction Costs ("RLTC") grew 38% year over year to $231 million, with RLTC as a percentage of GMV increasing slightly to 3.7% compared to 3.6% in FQ3'23.

The aforementioned increase in Revenue as a percentage of GMV enabled us to offset transaction costs, which increased by approximately 90 basis points as a percentage of GMV. As a result, we continue to expect that our RLTC as a percentage of GMV will remain within our 3 to 4% long-term target range, even in the current interest rate environment.

(28%) 14%

+53 percentage points

+15 percentage points

Year-over-Year Change in Revenue as a % of GMV

*Other revenue includes gain on sales of loans and servicing income

Year-over-Year Change in RLTC as a % of GMV

*Other transaction costs include processing and servicing expense and loss on loan purchase commitment

FQ3'24 Shareholder Letter


Increasing funding costs and provision for credit losses contributed approximately 30 and 50 basis points, respectively, to transaction costs as a percentage of GMV. These higher transaction costs were attributable to a higher benchmark interest rate environment, as well as the growth in loans held for investment and increase in allowance rate.

Although average cost of funds increased on a year-over-year basis, they remained stable in FQ3 as compared to FQ2'24. We believe the majority of our funding debt has absorbed the year-over-yearincrease in the federal funds rate, which gives us further confidence in our 3 to 4% long-term RLTC as a percentage of GMV target range.

Average Cost of Funds

Cost of funds defined as annualized funding costs divided by the average of funding debt and notes issued by securitization trusts during the period

Operating Income

Improved $149 million to a ($161) million operating loss, compared to a ($310) million loss in FQ3'23. Operating Income as a percentage of revenue, or Operating Margin, was (28%) in the period, compared to (81%) during FQ3'23. Of the $161 million loss, $112 million was attributable to enterprise warrant and share-based expenses associated with warrants granted to two enterprise partners.

The $149 million improvement in Operating Income was driven by an $85 million year-over-year reduction in operating expenses excluding transaction costs and a $64 million increase in RLTC.

Operating expenses declined in part due to the restructuring program announced in February 2023 and the realization of savings from several operational efficiency efforts. The largest decline was in technology and data analytics expense, which declined $37 million year over year as we reduced infrastructure expenses in absolute terms while growing GMV. Additionally, sales and marketing and general and administrative expenses collectively declined by $19 million year over year, with the reduction split almost evenly between the two expense categories.

Adjusted Operating Income

Increased $85 million year over year to $79 million, compared to a ($6) million Adjusted Operating Loss in FQ3'23. Adjusted Operating Income as a percentage of Revenue, or Adjusted Operating Margin, was 14% during the period compared to (2%) during FQ3'23. Adjusted Operating Income excludes the impact of enterprise warrant and share-based expenses, stock-based compensation expense, and other items.

Approximately 75% of the year-over-year increase in adjusted operating income was due to the increase in RLTC. Non-GAAP other operating expenses also declined $22 million, or 13%, driven primarily by a decline in non-GAAP technology and data analytics expenses.

FQ3'24 Shareholder Letter


Credit Quality

Year-over-Year Comparison: Monthly

Installment Loan 30+ Day Delinquency

Rate (Ex-Peloton)

30+ day delinquencies excluding Pay in 4 and Peloton loans declined slightly both year over year and compared to FQ2'24. In line with normal seasonal behavior, delinquencies may increase in the coming two quarters due to the end of the U.S. tax return season.

Cumulative Net Charge-offs by Origination Vintage: Monthly Installment Loans (Ex-Peloton)

Recent monthly installment loan cohorts are continuing to perform in-line with, or better than, historical cohorts that originated prior to the Covid pandemic on the basis of cumulative charge-offs as a percentage of GMV.

Cumulative Net Charge-offs by Origination Vintage: Pay in 4 Loans

Ongoing improvements in our underwriting process have enabled us to deliver substantial reductions in charge-off rates for Pay in 4 loans, with loss rates as a percentage of GMV tracking to less than 1% in fiscal 2024.

Monthly Installment Loans Ex-Peloton from FQ1'18 through FQ1'24; dotted gray lines indicate pandemic-era cohorts (FQ3'20 through FQ4'21), solid gray lines indicate all other cohorts

FQ3'24 Shareholder Letter


Capital and Funding Update

Funding Capacity increased to $15.6 billion at the end of FQ3'24, up slightly from $15.5 billion at the end of FQ2'24, marking the fifth consecutive quarter that funding capacity increased. Overall, we continue to have healthy discussions with both existing and prospective funders across all of our funding channels.

We continued to execute in the ABS market, issuing $500 million in our 2024-A revolving ABS transaction. Consistent with our other recent transactions, the issuance was upsized and significantly oversubscribed. Since FQ3'23, each of our ABS transactions were completed at lower overall cost of funds and higher advance rates than prior comparable transactions, a trend that continued subsequent to quarter end with the pricing of our $635M 2024-X1 transaction in April.

Following the expected close of the X1 transaction, our fiscal year to date issuance will be $2.6 billion. This represents our highest fiscal year issuance to date as our ABS program has continued to evolve and scale with more than 120 unique institutional buyers since the program's inception.




Year-over-year increase in

Fiscal year to date ABS

Unique ABS investors since

funding capacity

issuance upon closing of

program inception


Capital Allocation and Liquidity

At the end of March, we had $2.1 billion in total liquidity split between cash and securities available for sale, similar to our total liquidity at the end of December. Against this amount, we had $1.4 billion in convertible debt.

As previously announced, in December 2023 the Affirm board of directors authorized the repurchase of up to $800 million in aggregate principal amount of our outstanding convertible debt during calendar year 2024. As of May 1, 2024, we repurchased approximately $77 million in face value of our convertible debt for $63 million in cash, resulting in a gain on repurchase of $13 million under this authorization.

Following these repurchases, $723 million remains under the December repurchase authorization. Subject to market conditions, we will continue to evaluate opportunities to optimize the debt capital structure and proactively manage long-term liabilities. We may consider various approaches to execute any future convertible note repurchases. This could include open market purchases, privately negotiated purchases, purchase plans under Rule 10b5-1, or through a combination thereof.

FQ3'24 Shareholder Letter


Financial Outlook

Fiscal Q4 2024


$6.75 to $6.95 billion


$585 to $605 million

Transaction Costs

$335 to $345 million

Revenue Less Transaction Costs

$250 to $260 million

Adjusted Operating Margin2

15 to 17 percent

Weighted Average Shares Outstanding

316 million

Assumptions embedded within the outlook


  • Equity Capital Required ("ECR") as a percentage of Total Platform Portfolio ("ECR Ratio") is expected to remain near FQ3'24 levels.
  • Based upon the current forward interest rate curve which is embedded in our outlook, the year-over-year change from higher benchmark interest rates will diminish during the remainder of the fiscal year.

Revenue and transaction costs

  • The substantial majority of the benefit from our pricing initiatives will be realized by the end of fiscal year 2024.

Product and Go-to-Market Initiatives

  • Affirm Money Account, the business-to-business (B2B) product, and international growth outside of North America are not expected to be material contributors during fiscal year 2024.

2A reconciliation of adjusted operating margin to the comparable GAAP measure is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, expenses that may be incurred in the future.

FQ3'24 Shareholder Letter


Conference Call

Affirm will host a conference call and webcast to discuss third fiscal quarter 2024 financial results on May 8, 2024, at 8:30 am ET. Hosting the call will be Max Levchin, Founder and Chief Executive Officer, and Michael Linford, Chief Financial Officer. The conference call will be webcast live from the Company's investor relations website at https://investors.affirm.com/. A replay will be available on the investor relations website following the call.

Upcoming Investor Conferences

Affirm will be attending the following upcoming investment


May 15, 2024May 21, 2024June 6, 2024

Barclays Emerging Payments and

J.P. Morgan Global Technology,

Bank of America Global

FinTech Forum

Media, and Communications

Technology Conference


New York, NY

Boston, MA

San Francisco, CA

About Affirm


Affirm's mission is to deliver honest financial products that improve lives. By building a new kind of payment network - one based on trust, transparency and putting people first - we empower millions of consumers to spend and save responsibly, and give thousands of businesses the tools to fuel growth. Unlike most credit cards and other pay-over-time options, we show consumers exactly what they will pay up front, never increase that amount, and never charge any late or hidden fees.

Investor Relations: ir@affirm.com

Media: press@affirm.com

FQ3'24 Shareholder Letter



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Affirm Holdings Inc. published this content on 08 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 08 May 2024 11:06:13 UTC.