Levchin Says Affirm ‘Firing on All Pistons’ as Active Card Users Surge 97%

Affirm notched new highs across several business lines in the June quarter, as buy now, pay later (BNPL) momentum continued online and in-store, underpinned by 0% APR monthly installment loans.

The company’s materials, released Thursday (Aug. 28) showed that gross merchandise volumes soared 34% to $10.4 billion.

Revenues gained 33% to $876 million.

In detailing growth with the Affirm Card , the company said that card gross merchandise volume (GMV) grew 132% to $1.2 billion. Active cardholders gathered 97% to 2.3 million. In-store spending on those cards grew 187% year on year. The Card 0% APR GMV more than tripled was tied to 14% of Card GMV, according to company materials.

Active consumers, excluding the discontinued Returnly business, increased 24% to 23 million as of the end of the June quarter. Active merchant count increased 24% to 377,000.

Shares popped 14% in after-hours trading on Thursday after earnings were announced.

Accelerating Growth

During the conference call with analysts, CEO Max Levchin said that “growth is accelerating, and we are firing on all pistons.”

In his words, “we didn’t just crush this quarter. We actually set a new record most of our metrics.”

The growth in transactions and the aforementioned metrics, said Levchin, serve as “commentary on how strong the momentum is in the U.S. and to at least a similar degree, the Canadian consumer.”

Levchin’s comments came against a backdrop where general merchandise, electronics, travel and ticketing, and fashion and beauty were significant contributors to overall growth. General merchandise, by way of example, saw volume growth of 45%. While a relatively small portion of overall GMV, the services category grew 39% in part driven by strength within legal services. Services, per the earnings presentation , represented 3% of the mix).

“On the demand for our service, you see the acceleration in GMV and the new record in that sense,” said Levchin. “It is also a reflection of the fact that folks are using Affirm for more and more things.”

There was discussion on the call whether consumers embracing the 0% APR offerings shift to repeat usage, and to interest bearing products.

Levchin said: “They do … that’s a really, really important indicator. Obviously, 0% transactions are somewhat less profitable for us. They’re still profitable … but the interest income that comes in interest-bearing loans is obviously more profitable … the experience using Affirm is so positive, they do convert to interest-bearing users just fine, and come back to us for many other things than just ‘zeroes.’”

Ninety-five percent of transactions came from repeat borrowers in the quarter, according to the earnings materials.

Levchin also said on the call that credit performance remains strong.

“We underwrite every single transaction, and we reserve the right to decline transactions we feel are too risky for the end borrower for Affirm—and we do,” he said.

Asked on the call about the company’s funding capacity, which was up 55%, and the rise of alternative credit in the market that serves as competition for Affirm, CFO Michael Linford said on the call that “we are really mindful of the health of the capital markets when we think about picking our partners.”

Affirm Card’s Potential

In remarks on Affirm Card, Levchin noted that the attach rate in the customer roster stands at about 10%, and that the Affirm Card “is an extremely active area of investment for us … We are learning how to offer it in the right way to the consumer so that they remember to take it with them to places where they haven’t used it, [such as][ a gas station, which is just not a thing you can integrate online.”

The company still envisions a future with 10 million active card users, with a GMV of $7,500. The trailing 12-month GMV stands at about $4,700, Levchin said.