Speaker 1: A firm delivering better than expected earning, sending shares upwards.
Speaker 1: The company's fourth quarter revenue and first quarter revenue forecast,
Speaker 1: both coming in ahead of estimate. CEO Max Levchin saying
Speaker 1: the company had quote a killer quarter. Max joins us
Speaker 1: now here in San Francisco. I spent enough time with
Speaker 1: you to know that when you say something like that,
Speaker 1: you mean it. I wouldn't say that you're prone to
Speaker 1: superlatives like that. Why why a killer quarter?
Speaker 2: Numbers speak for themselves, could go beyond that.
Speaker 1: Come on, tell me the story of what's happening behind
Speaker 1: your platform and your user base.
Speaker 2: I think there's a real momentum.
Speaker 3: You can tell by looking at our metrics and the
Speaker 3: qualitative measures that we take, and just the fact that
Speaker 3: we've outperformed the credit card industry, which is our direct
Speaker 3: competitor in terms of managing credit, and just the sheer
Speaker 3: number of launchers and merchant signings. Every metric that I
Speaker 3: could cast my eye on, say wow, that is it
Speaker 3: really good quarter?
Speaker 2: So you know, sometimes we got to take a bath.
Speaker 1: Let's say the buy now pay Lata space is let's
Speaker 1: say more competitive since last year on the program. Maybe
Speaker 1: in that time Caroline, and I spoke with the Klan,
Speaker 1: the CEO, for example. They seem very optimistic, particularly about
Speaker 1: the United States. Yet you continue to grow. I don't
Speaker 1: have the data for market share, but could you just
Speaker 1: contextualize your performance in that sense?
Speaker 3: Well, I think we are outpacing them reasonably well in
Speaker 3: terms of our growth relative to there is, at least
Speaker 3: according to the stated numbers. Not that I am too competitive,
Speaker 3: but I'm very competitive, let's be honest. But the reality
Speaker 3: is it's a giant market and all of us together
Speaker 3: add up to less than ten percent of e commerce,
Speaker 3: and all of us are now looking at offline and
Speaker 3: so just the real share taking that's taking place is
Speaker 3: happening against cash, against credit cards, against debit cards, all
Speaker 3: the other payment types, and so there's just an incredible
Speaker 3: amount of road.
Speaker 2: Available to all of us and firm in particular, What.
Speaker 4: Does that mean in terms of the macro context?
Speaker 1: Then?
Speaker 4: Max, how confident are you of the US consumer the
Speaker 4: global consumer right now?
Speaker 3: Well, we're about to launch in the UK, so we'll
Speaker 3: find out exactly how confident I should be about the
Speaker 3: UK consumer. But the US consumer again, look at our
Speaker 3: investor supplement. Credit card companies have built and built and
Speaker 3: built up their delinquencies and ours remained very firmly in control.
Speaker 3: Our consumer is borrowing and shopping and paying back, which
Speaker 3: is really important for our credit business.
Speaker 2: But so far, so good.
Speaker 3: We do not see a major slowdown. We do not
Speaker 3: see a significant pullback and demand.
Speaker 2: There's always new industries.
Speaker 3: A quarter or two ago, I was lamenting the loss
Speaker 3: of interest and electronics it came back roaring through the
Speaker 3: last quarter. Travel is a little bit softer. I think
Speaker 3: people got their COVID post COVID fix. But all in all,
Speaker 3: consumer is effectively shopping and buying and paying back and
Speaker 3: I don't see problems.
Speaker 4: Meanwhile, you're taking a bow and the market in particular
Speaker 4: likes the focus on profitability. Now I hate to bring
Speaker 4: them up again, but Karner actually did post a profit,
Speaker 4: even though they're still a private company that aying a
Speaker 4: twenty billion dollar valuation and they're cunning costs by leaning
Speaker 4: into AI. Is that something that you look at, Max,
Speaker 4: something that you feel you have to compete into.
Speaker 3: Well, good news is that we've been in the AI
Speaker 3: business since inception, so one hundred percent of our loans
Speaker 3: are underwritten individually, every single time, entirely buying machines, and
Speaker 3: so we've been on the machine learning and AI training
Speaker 3: since Baser. And we don't think of it as a
Speaker 3: way to replace.
Speaker 2: Humans or to get rid of humans.
Speaker 3: We think of it as a great tool for increasing productivity,
Speaker 3: to give us an edge in underwriting customer service, et cetera.
Speaker 2: And so, yes, we're very, very active in AI.
Speaker 3: We have lots of really fun things happening, both visible
Speaker 3: and not to the investor eye. But that it's a
Speaker 3: huge part of what we do in terms of profitability.
Speaker 3: You know, I said the last night on the Earning Skull,
Speaker 3: and I just want to make sure I repeated this
Speaker 3: was not a contortionist thing we just did when we said, hey,
Speaker 3: profitability is on the horizon.
Speaker 2: It is very much part of the plan. It's always
Speaker 2: been part of the plan.
Speaker 3: It's just now close enough where I can say, here's
Speaker 3: a date with history. We're going to get gap profitable
Speaker 3: and move right past it and do more.
Speaker 1: Max and Carol also bear with me that I am
Speaker 1: a firm customer in the sense that you know, I
Speaker 1: used the firm to finance a specific thing for what
Speaker 1: it's worth. It was the Peloton tread. But the reason
Speaker 1: I did. It is actually an emphsis on point of sale,
Speaker 1: so when you go through, the audience is fermitted. If
Speaker 1: you go and try buy something from peloton Is, it's
Speaker 1: a kind of a weird transaction, but you're presented with
Speaker 1: the firm as an option almost straight away. Do you
Speaker 1: negotiate that aggressively for those kind of bigger ticket items.
Speaker 3: I'm not sure individual deals are worth commenting on, but
Speaker 3: every deal where we are presented at the point of sale,
Speaker 3: and every deal where you see it up funnel as
Speaker 3: one might call it before you even get into the checkouts,
Speaker 3: are absolutely directly integrated. So we go to the merchant,
Speaker 3: we spend a lot of time with them making sure
Speaker 3: that we are as helpful as possible to their ability
Speaker 3: to sell, be it a pelt On tread or a
Speaker 3: mattress or anything in between.
Speaker 2: And that is what gives us a huge advantage.
Speaker 3: The consumer has the confidence and the clarity of what
Speaker 3: it might cost them to borrow money to buy something.
Speaker 2: Max.
Speaker 1: While you're here, could I please ask you, as a
Speaker 1: story out from Bloomberg Law about a firm facing a
Speaker 1: class action suit after the evolved bank breach situation, comment
Speaker 1: on that please.
Speaker 3: Probably a very bad ideas in comment on ongoing or
Speaker 3: potential future litigation.
Speaker 2: So I'm not sure I have anything to say on that.
Speaker 3: You know, I said it the day of evolved News,
Speaker 3: which is certainly unfortunate that the firm card numbers were
Speaker 3: all safe. We did not need to rotate them and
Speaker 3: give people a new car. That is now confirmed. No
Speaker 3: card numbers have been leaked and our consumers are safe.
Speaker 3: If you have your Affirm card, please continue using it.
Speaker 3: It works just fine.
Speaker 2: Thank you.
Speaker 4: Thanks lev Chin, It's always great to have you on
Speaker 4: the show.
Speaker 2: We appreciate it.
Speaker 4: It's taking about the CEO of Affirm