Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Affirm Holdings Fiscal Year 2022 Third Quarter Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded and a replay of the call will be available on our Investor Relations website for a reasonable period of time after the call. I’d now like to turn the call over to Rob O’Hare, Senior Vice President of Finance. Thank you. You may begin. Rob O’Hare: Thanks, operator. Before we begin, I would like to remind everyone listening that today’s call may contain forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including those set forth in our filings with the SEC, which are available on our Investor Relations website. Actual results may differ materially from any forward-looking statements we make today. These forward-looking statements speak only as of today, and the company does not assume any obligation or intend to update them, except as required by law. In addition, today’s call may include non-GAAP financial measures. These measures should be considered as a supplement to and not a substitute for GAAP financial measures. For historical non-GAAP financial measures, reconciliations to the most directly comparable GAAP measures can be found in today’s earnings press release, which is available on our Investor Relations website. Hosting today’s call are Max Levchin, Affirm’s Founder and Chief Executive Officer and Michael Linford, Affirm’s Chief Financial Officer. With that, I’d like to turn the call over to Max to begin.

Thanks, Rob and thank you everyone for listening in. We delivered excellent results in fiscal Q3. Active merchants grew by more than 16-fold year-over-year. Active consumers grew by 137% year-over-year, with greater frequency and engagement. Our total transactions increased by 162% year-over-year. Highlighting the trust we are building with consumers, 81% of all transactions were from repeat Affirm users. This is the highest repeat rate that we have ever reported. We accomplished this while another 1.5 million consumers joined our movement to replace confusing outdated financial products with new honest ones. Our GMV was up to $3.9 billion, growing 73% year-over-year and almost doubling, excluding Peloton. Total revenue was $355 million, a 54% increase year-over-year. In revenue less transaction costs, a key measure of our unit economics was $182 million or 4.7% of GMV. We continue to grow with our existing partners and add new ones. Just a couple of operating highlights since the beginning of Q3. The travel and ticketing segment has been outperforming expectations and volume more than doubled year-over-year. Our long-term partners, Expedia, Vrbo and Priceline were all in the top 10 by volume in Q3. The quarter also marked the general availability of Affirm on American Airlines and the launch of our very first Canadian travel merchant. We are excited to continue growing our network of relationships in this segment. Affirm continues to be the strategic partner of choice for enterprises and platforms. Adding to existing collaborations with Verifone and Adient, we partnered with Fiserv and Global Payments to make signing and launching new merchants frictionless. We are also excited to announce a new agreement with Stripe, unlocking streamlined distribution of Affirm’s honest financial products to millions of merchants. Since the launch of our partnership with Shopify just a year ago, we have seen significant uptake…

Thanks, Max and good afternoon everyone. Our Q3 results and really our performance over the last several quarters demonstrate our ability to deliver impressive growth and attractive unit economics despite a volatile market environment. Once again, we outperformed our outlook for both growth and profitability and our unit economics were strong. We continue to grow both sides of our network. Active consumers increased 137% year-over-year, while active merchants increased to nearly 210,000. Total transactions grew 162% year-over-year and more than 80% from repeat users. Transactions per user, our key frequency metric, increased 19% year-over-year or more than doubling our active user base. And along with that growth, we achieved profitability on a non-GAAP basis, delivering $4 million in adjusted operating income. We grew GMV 73% and nearly doubled GMV when excluding Peloton. Our revenue increased by 54% and our measure of unit economics, revenue less transaction costs, reached 4.7% of GMV. This was a particularly strong result and well above our long-term targeted range of 3% to 4% of GMV. Our outperformance was driven by strong revenue growth, excellent capital markets execution, and better than expected credit performance. While the provision for credit losses increased year-over-year, as a reminder, last year’s provision was net negative given the release of excess COVID-related loan allowance. We also continue to drive greater capital efficiency gains across our funding program as equity capital we used to fund our loans decreased to 2.4% of our platform portfolio versus 4.9% last year. With the strong growth of our business and continued momentum, we are raising our outlook for fiscal year ‘22, which I will discuss more in a moment. Before I do that, let me walk you through our third quarter results in greater detail. Unless stated otherwise, all comparisons refer to our third fiscal quarter…

Before we open for Q&A, I thought it would be helpful to quickly recap the state of play and our plans for Affirm. First, we are laser-focused on scaling the network, increasing our consumer reach and frequency, going deeper with our existing partners and adding new ones. Our opportunities remain fast with significant underpenetrated markets to reach. Second, we will continue investing in our technology, people and brand and doing so is disciplined. We have roughly $3 billion in dry powder, and we firmly believe that we are among the most efficient allocators of capital in the industry. Third, as I already mentioned, with excellent unit economics, consistent focus on risk management and a diversified capital access strategy, our plan is to achieve a sustained profitability run rate on an adjusted basis by the end of the next fiscal year. And finally, at our core, we are builders, excited by the prospect of solving problems and improving lives. We will leverage our scale and reach to introduce brand-new concepts to our merchants and consumers, like Debit Plus, as we continuously expand our product and revenue lines. While the macro environment is uncertain at Affirm, the picture has never been clearer. We are a category leader with massive growth and rapidly expanding market opportunities as the secular trend towards honest, transparent financial products continues. Affirm is in an enviable position given the depth and breadth of our partner network and our unwavering commitment to financial responsibility. As the category begins to go mainstream, the opportunities we can capture are only expanding. We have an incredible team and an inspiring mission. We will continue to scale, drive attractive unit economics and deliver on our mission to improve lives and focus on results. We will now open the line for questions.

[Operator Instructions] Our first question comes from the line of Moshe Orenbuch with Credit Suisse. You may proceed with your question.

Great. Thanks. And I think that the – Max, the comments that you made about the success with respect to – with respect to the large merchants and the impact that that’s had. Maybe you could kind of expand on that? Because obviously, you’ve got things that are going on that would potentially be able to add others. And yet, you’ve also got things like what you mentioned with respect to the Chrome browser that could allow for situations where Affirm is not – it doesn’t have a kind of dedicated relationship with the merchant. And so I guess as we look out over the next several years, how should we think about the biggest areas for growth for the company?

So the – about building a network. First of all, thank you for the question, sorry who’ve been listening to us on stuff for a while. So great question. So the thing about building a network is you have to continuously balance the consumer side and the merchant side. So if we are signing on more and more consumers, we are implicitly adding more places where they might want to go shopping. So it’s essential for us to continue launching direct-to-consumer payment products. Because if someone says, hey, I’m a big fan of brand X and I came from a store in Peloton, where I’m not likely to repeat over and over, we have to offer them coverage. Otherwise, they will turn the active consumer. And so the browser extension and the app, which has a marketplace feature in it and the card itself, all things we’re building consumer sites were all fundamentally about retaining consumers and meeting them where they want to go where they want to shop. And so that will continue happening and we see that as both an engagement driver and a revenue driver. Obviously, the products are a little bit different, where we don’t have a direct integration with the merchant. But it does not, in any way, reduce our commitment and just attention to innovation on the merchant side. We have a whole bunch of stuff. I purposely kept my remarks a little bit shorter this time around, but there’s a long list of things that we shipped that have to do with merchants. And I really did not give any credit to those teams just because I wanted to keep it quick. But we’re continuously rolling out really interesting stuff like the active checkout is a really good example of – it’s just a very, very fundamental piece of tech that we put together. It is the future of the industry. Consumers do not need to go through many different funnels. They just need to pick the right product for them, better yet, we should be there, helping them pick the right product. That’s what I have to check on us. It literally figures out what is the best way of paying for something. So that will continue happening. And part of why we need to continue hiring engineers, you only maintain strong unit economics, if you’re able to offer something that no one else can sell. Competition on price sucks if you have a commodity that everybody else has. If you’re building stuff that no one else got, you can actually sell it at a good price and not worry about someone hiring you.

Got it. And as a follow-up question, Michael. One of the questions that we get most often from investors is in the face of a rising rate environments, obviously, you have some products where the consumer is the primary one that’s been charged and the other that’s merchants charged to the merchant, particularly the 0% category. Could you talk a little bit about your plans as to how to kind of manage the rising interest rate environment for each of those products? And maybe what you’ve also done to date, if anything?

Yes. We really haven’t had to take any action to date. If you look at the merchant fee rate slide in our supplement, you’ll see, again, relatively constant merchant fees. We view that as a real market of success in the face of pretty heavy competition, we’re able to maintain and even grow in some cases, the merchant side. And of course, as we talk a lot about on the APR side and the consumer side. Those rates are strong enough to allow us to deliver really compelling unit economics. And that’s the lens through which we look at this question. And it is true that as rates go up, there is pressure on the funding side of our business. But it is a mistake to think about that as a flow-through on a linear basis. We have many different funding channels with staggered maturities and very different structures. And as I mentioned, for example, we just onboarded a new fourth flow partner who’s an insurance company has a very different view of rates and how they think about that versus, say, access to quality assets over time. That allows us to manage it in the nearer term. I think in the very long run, so going out more than a year, you would expect us to need to start to take action, but that’s more of a long-term thing than anything we deal with tactically in the near term.

Thanks, so much.

Our next question comes from the line of Dan Perlin with RBC Capital Markets. You may proceed with your question.

Good evening. And lots of good stuff here. I wanted to just touch on – and I suspect you’re going to kind of shed lightly in a little bit, but I wanted to touch on this path to profitability on an adjusted operating income basis. My question is when you think about it or when you kind of laid this plan out, how much of this is really a function of some of the scale-driven benefits that you’ve been able to accrue over the past several years versus really management’s desire to kind of reach profitability sooner? And then the second piece of that is, is there anything in the macro environment that’s compelling you to want to pull that forward? Or is this really in line with your long-term plan that we may or may not have been really aware of? Thanks.

Good question. So first of all, the most important thing to take away is that it really is the scale that’s allowing us to get there. I mean if you look back a few quarters, you’ll see that we’re sort of flirting with profitability without ever seeing it out lapped. I think it was a useful and intelligent thing to do to tell the market, hey, we know exactly when it’s going to happen. Here’s a date. But it’s not the same thing as saying, we got to get there fast. So let’s pull some tricks and doing natural things, not at all. And so in that sense, it really is the function. The difficult thing was to build a product that commands a price and maintains a good margin and to be disciplined about credit. You can grow faster if you just approve everyone and some of our competitors do that. And it’s a lot easier, but you then have to deal with bad losses. We are not okay with bad losses or losses that we can control. And so those are all things that we’ve always done, and that’s the scale advantage that we have today is the variable revenue or adjusted. I’m going to trip up on my accounting terms, Michael will correct me later. But at a certain scale, your fixed costs get overwhelmed by our variable revenue is basically what’s happening here. So yes, the statement about profitability is fundamentally about telling the market. We’ve always had a plan. We know where we’re going. Here’s the save of dates. We’ll continue to invest. We are not doing unnatural things to get there.

Yes. No, that’s fantastic. Just a quick follow-up on the engagement here again, very impressive you said 2.7% in the current quarter. Last quarter it was 2.5%. So that’s all happening at the time you’ve got this massive active customer increase. The question I have here is, are you finding that in that repeat usage, the 81% versus kind of 75% last quarter, are the consumers using the same product again as they come in at a Split Pay user and they’re always a Split Pay user? Or are they finding that within that 81%, there’s some diversification and they may even mature into other products? And are you able to not steer them but incentivize them, I guess, or maybe educate them into other options that may even be better for them? Thank you.

It’s a great question. There’s definitely a lot more to unpack there than I suspect the time allows. Here’s just like bullet points that are sort of easy to rattle off. So the probability of repeating at the same store is, generally speaking, highest for a majority of stores. There are some unique stores where you’re just not going to come back because you already have a fragment. But vast majority of time, especially for some of the largest partnerships, it is highly likely that you will repeat at the store where you came from. Two, there is definitely propensity to repeat on the same product initially. But as each cohort matures and we have more opportunities to teach them what else Affirm can do for them, it widens. Three, there’s a fundamental difference between the behavior of people that have our app and the ones that don’t, like that is just a profoundly different behavioral pattern, and I could write a small science paper on that one. But once you’re using the app, you’re basically starting to think of Affirm as a replacement for your purchasing device. Let’s use that – let’s see what else can I say very quickly. The last thing that’s worth knowing – so I’d have to check out, which I sort of bragged about a little bit earlier is basically – you can think of it as a router for financial tools. We have sort of unpacked the credit card. The idea of like hey, just like your card, we’ll figure it out later, it actually recover interface, it’s terrible for you as they are a financial position, personally, but it’s a really, really nice user interface. And the big thing that we have to accomplish here was to continue offering you but we kind of have to guide you to a good decision because they’re – already we have a lot of choices and you are used to be no choice at all credit card. So that to checkout is that idea. It’s just where you say, hey, here’s three choices. This one is no interest at all. This one is a little bit longer term, but has some interest, etcetera. As we deploy that across more and more services, you will see more product cross-pollination and we’re right in the middle of just pushing that very, very hard. Like literally, I’m watching the first numbers coming in from some of the deployments outside of our own products. And probably next quarter, we’ll start talking about what that cross pollination really looks like.

That’s great. Thank you so much.

Our next question comes from the line of James Faucette with Morgan Stanley. You may proceed with your question.

Thanks very much. Thanks for all the details to day, guys. I wanted to ask about on your credit performance, you said it had been a little bit better than you thought, Michael. And can you talk a little bit about how you’re managing that right now, especially with the changing environment? Are you being more restrictive at different points? Or are you finding that, that isn’t necessary yet? Just wondering how you’re – just wondering if you can give a little color in terms of how you’re managing the credit applications and going out of credit right now?

I’ll start, and Michael will probably give a more precise answer. So we always manage it exactly the same way, like we have not at all changed our approach. We look at both vertical and horizontal slices. We asked the question, how is this in American Society is doing, Canadian, Australian., How are the overall in terms of their job security and sort of the policy set sort of this horizontal slice? And then vertically, we asked the question how is this – how are the sales in this version category? We know what folks are selling. We know if it’s selling better or worse, which means that the advertising campaigns that drive consumer demand can reach audiences that are potentially overextended already and maybe shouldn’t be borrowing. So, all of that feeds into the policy setting. And then we tune it, but we tend it all the time. It’s not a thing that we sort of get together and say, all right, it’s been a quarter, let’s talk about it. Like we talk about it literally every Monday morning. There is a triage conversation about credits with our head of risk in the room with the executive team and we review all of our numbers. And say, hey, how do we feel about the American consumer at the highest level? And then we dive deep into here’s this product, it’s old split, how is it doing on Shopify? And so that’s what we’re doing. And it’s performing a little bit better typically means that the precautionary steps we took were slightly less necessary than we expected – at least 1 or 2 degrees to the right or to the left. It’s a number – let’s put a hand break and we over tighten or something like that. We really do not run it like a banquet. And it was very, very. Michael probably have better numerical answers.

No. I think the other thing, guys, is we look at the unit economics in the business whether you measure that to the financial statements like we do in the revenue less transaction costs or you look at on a horizontal basis, and we make sure that there’s enough economic content, and we make sure that we make credit decisions consistent with that. The things we’re always looking at is based upon prior originations, how are they trending against the forecasted numbers. And given the very short duration of our asset, we’re able to get that signal very quickly to feed it back into decisioning. And if you just look at where we’re at right now, we did better on the revenue less transaction cost line in large part because we performed better. This is a bit of a counter signal to what you’re seeing in a lot of other companies right now, and we attribute that mostly to the fact that we’re pretty careful on the front end, and we’re very diligent about managing it as Max alluded to.

Got it. I appreciate that. And then when we look at you’re adding additional capital partners and commitments, etcetera. How are you feeling about where you’re positioned now with kind of those commitments versus your growth targets? Is there a lot of cushion there? I know you haven’t given guidance for next year. But obviously, I would assume that those carry into next year, etcetera. So just wondering if you can give a little bit of nuance and color of where you’re at versus where you want to be on both capital commitment and how that relates to your growth ambitions generally?

Yes. I think the easiest way is we feel really, really good. We ended the quarter with $9 billion of capacity. We actually have over $10.1 billion as we sit here today, additional capital that we talked about on the call, the 22A deal and the ABS market as well as the onboarding of the new flow partner. Both of those two are just, we think, massive endorsement of the product. I think it’s just – it’s a good time to remind everybody that there is widespread support for the asset we generate in the capital markets. And we have not seen that be a real difficulty. We have seen the overall macro market change. So that changes rates, it changes spread. But the asset underneath it, the asset we create continues to be something that all of our capital partners, both understand and value and even the rating agent sees value, as I talked about, the AAA rating on the senior tranche in our last ABS deal. That suggests we’re producing really quality assets and it’s linked back to the credit question. So if we keep our eye on the ball, and produce good assets like we have been and will continue to do, we feel really good about it. We’re not giving guidance like you said, for fiscal ‘23, but we feel very good about where we stand. If anything, I think you’re going to see us continue to be slightly larger on capacity or lower in utilization because of the macro concerns, even though we actually don’t have those as a management team.

Alright. Thanks for that input, Michael.

Our next question comes from the line of Jason Kupferberg with Bank of America. You may proceed with you question.

Thanks for the call, guys. So yes, just a couple of things. Maybe I’ll come back to the sustained profitability messaging. Just wondering if you can quantify that at all? I’m just thinking back to the Analyst Day last year, when I think you guys had said that adjusted operating margin would get to the 0% to 10% range. Once revenue growth had slowed to 20% to 30%, GMV to 30% to 40%. So is that the right way to think about where you may exit fiscal ‘23? Just wondering how we should view that in light of the Analyst Day? Or do you feel like this is a little bit of a kind of updated messaging just given how much the macro environment has changed?

Yes. Thanks for the question, and I appreciate the way you were it. This is definitely, as we say, in and this does not replace our prior nor is it meant to suggest that we think growth will slow. Quite the opposite, as Max talked about. And to be really clear, we do not think that the decisions will take in order to get us to that breakeven or better adjusted operating income will result in any sort of slowdown in growth period. In fact, the growth will allow us to achieve it and the focus on unit economics will get us there inevitably. So don’t – please don’t read into us suggesting that the growth rates will slow. Quite the opposite, we feel very good about the growth into next year. While we’re not giving any guidance today, I think there are a few trends that are worth highlighting. The first is that, remember, we were experiencing the full year for both Shopify and Amazon. And that’s just the full year with those deals, but the full year with expanded product rollouts, we talked about the expansion on Shopify to new products, including adaptive checkout, but also all the optimizations that Max talks so often about whether it’s the sum of a lot of little things that we’re doing with these large partners. That’s going to be a key avenue for growth for us. And as always, we talk about that plus is the thing that will continue to be very incremental to any of the current run rate in the business. And so we feel really good about growth in the next year. We’re not giving any guidance, but please don’t hear our profitability target as any indication that we expect to slow down quite the opposite.

Very helpful. And then just on gross profit on rev less transaction expense. You’re going to exit this year, I mean, based on your Q4 guide, just at or maybe a hair above the top end of the 3% to 4% longer-term range. And I know we’ll have to wait until next quarter to get kind of a full complement of guidance. But is there any reason to believe sitting here today that you won’t be able to comfortably stay in that range next fiscal year?

Absolutely not. We feel very strong about our ability to deliver that in any market environment, and we’ll continue to use that as the range talked about in the business. This quarter saw us pretty materially above that range. And again, I would characterize that as being a little bit warmer than we want it to be, 3%, 4% is a very good range for us. This is the 5th straight time we’ve hit our commitments and we would expect to continue to do that, and we’re committed to do 3% to 4%.

Good to hear. Thanks for the comments.

Our next question comes from the line of Ramsey El-Assal with Barclays. You may proceed with your question.

Hi, thanks for taking my question. I want to follow-up on Jason’s last question. In terms of the timing of the ramp of the Shopify expansion and also of the Stripe deal. Will that – should we think of that as just hitting 2023 rather than having an impact later this year? And in addition, how long is the shop renewal for? I think I saw in the press release multiyear. I’m not sure if you can tell us exactly how long it was for?

Yes. Last question first, it’s all the way through June of 2025. The timing – we are in the midst of rolling out additional products Shopify right now, as Max mentioned. It’s uncertain if it will have any material impact in the next 6 weeks of the quarter, but feel good about it. I think that and the Stripe deal are much bigger going into fiscal ‘23. And then Max maybe you can provide some color on the Stripe deal?

Stripe is super cool. Basically, one of the common delayed, if you will, when we sign a merchant to launch them the cost always, hey, how long it’s going to be before we can go live and say, hey, we’ve got to put $200 script to your checkout and on your product page and off you go. And then we have to integrate with your payment system and plum, if you will, the settlement and money transfer and everything. And if you have a deal with an existing payment provider for that merchant, EG, FIS or Global Payments or Adyen or Stripe, which is the latest one, you can literally replace that whole back-end integration with, yes, we’ll just route a firm transactions on the that has already been put in there by Stripe. And that’s literally flipping a switch to an enormous number of merchants that have partnered with Stripe, it’s really millions in their case. We also have a bunch of really interesting projects planned with them that probably be on the scope. Again, I would want you to not think of them as an immediately accretive thing, but it is a vast market opportunity that we’re very, very excited. And as a longtime friend and fan of Stripe and full disclosure investor in the company, we’re very happy with the partnership there.

Great. It sounds like a pretty...

All creating these avenues for more growth for many years forward, that’s what this is all about.

Perfect. A follow-up for me, sales and marketing expense was down quarter-over-quarter quite a bit. And I guess, first, how should we think about that line going forward in terms of where it might stand as a percentage of revenue. But in addition, as you ramp with the larger platforms and brands like Amazon, Shopify, etcetera, can you – will that have a positive impact on your marketing spend? Can you rely on their brand and their marketing spend effectively to kind of take some of the pressure off your P&L?

So, first, on a non-GAAP basis, you did see sales and marketing come down quite a bit sequentially and really even on a year-on-year basis. That is mostly due to the timing of some marketing campaigns that we run. We talk a lot about this, but our marketing activity isn’t tied to in-quarter revenue or GMV generation. The kind of investments that we have been making over the past year have really been around building a brand and building awareness in the consumer, which has a less direct and less tied to in-quarter performance measure. And that’s why you are able to see in this quarter, really strong growth despite pretty substantially less amount of sales and marketing on a non-GAAP basis. I think going forward, we are not prepared to give you any indication about the shape of the P&L or where we expect those lines to be. But obviously, as we work ourselves towards breakeven or better on adjusted operating income line, we would expect leverage across all of our fixed cost lines.

Great. Thanks.

Our next question comes from the line of Andrew Jeffrey with Truist Securities. You may proceed with your question.

Hi. Good afternoon, certainly appreciate you taking the question and appreciate the conviction Max as usual. Michael, we get a lot of questions about the fin side of the business, not as much the tech side of the business. And a couple of things stand out to me and I wanted to ask first about just the platform portfolio and funding mix, Slide 19. The fact that equity capital required is actually down to 2%. There was a lot of talk about a securitization that didn’t get done intra-quarter, for example. Is that a sustainable level to me, that’s super impressive, given – especially given all the concerns about liquidity that seem to be swirling around the market and around a firm in particular?

Yes. I appreciate the question. Yes. I think we have said that we would like to be below 5% on a sustainable basis and feel like that’s a good range to be at. You will see an ebb and flow quarter-to-quarter based upon how much forward flow or one-time deals might happen in this last quarter saw a securitization happened early in the quarter, which I guess folks weren’t really attending to that actually allowed us to move quite a bit or 0% paper off the balance sheet. And you can see that as the top bar on that chart, there you see on that slide. That will continue to be the way we want to operate. We want to be both durable and the quantum of capital that we have access to. We want to deliver the economics that we have signed up for and be very efficient with the shareholders’ capital. We definitely never want to let growth be impacted by our capital program. So, we are always going to be overfunded with excess capacity, and you have seen us do that this past quarter and we will do that into the future while still delivering the strong units. So, I would say that it would be below 5%. I don’t know that would stay in the 2% range sustainably. And again, I would just reiterate that I think our team is doing a very good job executing in these pretty volatile markets. And we are pretty proud of the access to capital that we enjoy right now because we generate a high-quality asset.

Yes. That’s clear. I appreciate that. And then, Max, maybe a question, I know it’s early on Affirm Debit Plus. But can you talk about any learnings or thoughts about inflows and the ability to drive direct deposit attach? And what you think the opportunity is for growth from more recurring spend on that product?

See, I promised myself and Michael that I will not jump out with a bunch of cool stats. And yet, as an engineer, I am prone to them. Here is a cool one. The number one most visited physical retail used by consumers right now is Walmart groceries, which I think it’s probably true for a lot of America, but it’s, to me, a super anecdotal, so just ignore it, if you will. But it tells you that a subset of consumers that we have given the card to have now used it to buy groceries, which I think that’s probably the sort of fuzziest news I have heard about the product so far. In very, very baby product. It has on the current UX revs, how do need something and it’s going to be in 1,000 before we are satisfied here. But the fact that people are using it to buy food is the best indicator I have heard like we want it to be top of wallet. We want it to be the thing that people take to go shopping for their family, to give them financial flexibility. I have a lot of miles and the commitment to this product to go. In terms of shareable statistics, it’s growing at ridiculous rates right now, but it’s also completely self stimulated in the sense that we are finally opening up to a bunch of users. So, of course, it’s going to grow at crazy rates. At some point, it’s going to even out and then we will know what the natural growth rate looks like. We will open it up to the entire Affirm base. Once the wait list is cleared out, you will just have a button in your Affirm app saying, “Hey, do you want your cared,” so we need a little bit more time to scale.

And my team is alerting me that I misspoke earlier in Q3 was an interest-bearing not as your present in any event it got off sheet and priority execution. I wanted to make sure they got written so they don’t get attacked.

Alright. Well, very cool. I appreciate it. Thank you.

Our next question comes from the line of Dan Dolev with Mizuho. You may proceed with your question.

Hey guys. Thanks for letting me ask my question. So, just really quick, can you give us a sense of sort of the interplay between the reserves and the charge-offs. Charge-offs of rising reserves are – seem to be coming down. Like how much of it is, Michael, like denominator/a difference – makes difference? And then I have a quick follow-up. Thank you.

Yes. I mean the allowance is always the current estimate as a percentage of loans held for sale, the current estimate of future allowances. And so that 6.4% where we ended up, that’s where we would expect it to be on a percentage basis. If you want more of a kind of backward-looking measure, that’s where we show the delinquency performance and you see that’s trending on, I guess, it’s Slide 21 of the supplement, you can see where that’s trending. Charge-offs are a bit difficult to get too much information out of given that we charge off at 120 days. So, it’s pretty difficult to really get a sense of how credit performance is reflected through the charge offline. And again, the short duration of our asset mix that double true.

Got it. And just one last data point, if I may. I don’t know if I missed it, but can you give us like some GPV estimates for Shopify and Amazon?

Yes. Unfortunately, I can’t. No. But what we did say in the…

No one is listening, okay?

Dan, you and I both do as not true. The thing we said in the call, the prepared remarks, which is true, is that no partner was more than 10% of GMV or revenue on a three-month and nine-month basis. So, you can get some sense there. We also showed you the general merchandise category, which is inclusive of some of the largest retailers in the world, grew to over $670 million. So, those are the stats we can share.

Okay. Great. Thank you, guys. Great quarter.

Our next question comes from the line of Rob Wildhack with Autonomous Research. You may proceed with your question.

Hi guys. Thanks for squeezing me in. Just as a percentage of funding debt, the funding costs in the quarter were quite a bit lower. Can you talk about what’s going on there?

Yes. I think that reflects a number of factors, which is execution. Remember, the – we talked about it a lot, but rates moving does impact us, but not in the near-term. Most of our is locked in and committed. Very little of it is truly floating. And if you look at our warehouse that limits the amount of funding rate exposure that we have. And then just generally, we have a lot of very well-executed capital markets activity over the past 18 months that reflects in really strong performance.

Got it. Thanks. And then bigger picture, I think the adaptive checkout seems to be a real linchpin of all the deals that you have announced recently, specifically from the enterprise partners. And Max, you talked about it a little bit, but anything to add on why that product kind of stands out as being particularly interesting to those partners?

Sure. A couple of different reasons, and we talked about this before, so I apologize if this is sort of old news. Vast majority of large enterprise partners that we have won picked us because we span the entire gamut of products possible. If you are just a split pay specialist, it’s great. But if you sell both bicycles and bicycle tires, you will need two providers. And if you are picking a technology partner, and you want to scale, you want to be good at underwriting, you want them to have a good capital markets. You don’t want to go out of business. We did all those criteria really well, but the one thing that we do have is we have excellent well-performing products that meet the price point as the consumer need. That doesn’t – products is great, but you still may have to integrate those products multiple clients. I have to check out was this idea that what if we gave you just one single integration, and we will guide the consumer to the right financial choice for them so that the consumer satisfaction actually accretes to both us and the brand that we are literally helping the person live a healthier financial life. And so it’s only resonated with our partners. It’s certainly really resonated with us because it’s extremely on mission. And it allows us to just continue driving savings in terms of paid interest to consumers and better conversion to the merchant. So, it’s a it’s almost a meta product. It’s infrastructure for multiple products that we have built in the past to live together in harmony in a single page. And it has been really well received by the market. You are right in that set. And some merchants, by the way, are not really appropriate. If you only sell apparel within sort of a very tight $30 to $50 price range, you might not care about the ability to pay for things over 12 months. But if you are Walmart or an Amazon or many, many, many other merchants that sell multiple SKUs in a fairly wide range of price points that have to check out is the ideal product is you only integrated one, it has old same properties of Affirm and it self-changes to meet the consumer need on the spot without the version having to configure anything. By the way, also supports things like 0% deals or all is something we are famous for it that we have done so well with the last 10 years. It’s all baked inside a set integration.

Very helpful. Thank you.

Our last question comes from the line of Bryan Keane with Deutsche Bank. You may proceed with your question.

Hi guys. Just a couple of quick ones. I guess just thinking about the tightening of the credit market. Has your guys’ transaction acceptance rate changed at all given kind of where we are in the market? And then secondly, when we look at delinquencies, is there a reason why it’s excluding split pay now on the slide on 21, maybe I missed that piece? And then where do you expect delinquencies to track at these levels kind of through the fiscal year? Thanks.

The first part of the question, questions in front of me, sorry. So, the transaction approval rate has not changed very much at all. And again, like we really manage this at a merchant-to-merchant, basket of risk level to basket of risk. There is multiple different acceptance rates. And they are really, really quite different, like it’s just really important to think of Affirm as a – if you need one number, it’s a weighted average and the weights are quite dramatically different from bucket-to-bucket. That said, the weighted average right now is roughly the same. The reason for it isn’t because there aren’t people paying more or less of their bills. But because the application rates that we have, the number of people asking us for loan vastly exceed the ones that we are actually going to approve. And vastly a little strong, but the approval rates have remained pretty good and remain the same. The point there is our job is to rank risks. We have been quite good historically and intend to remain in the future, very, very good at rank ordering applicants that come through. We have approved the ones we believe can pay their bills. And then after that, we stop. The number of people that ask that can’t pay their bills does not seem to be changing very much. And so the approval rates, therefore, have remained roughly or the acceptance rates have remained roughly the same. I will let Michael as my way through this one, I will let Michael take care of the other half.

Yes. So the DQ chart does not exclude Split Pay, the vast majority of our balances on total platform portfolio basis or no Split Pay. The Split Pay asset is a 50-day asset. We have $120 charge-off policy. So, as you can imagine, the way that actually works with respect to the delinquency calculation doesn’t really make sense to look at on a Q3 basis. I think it’s pretty misled to look at it that way. In terms of where it’s going, we would expect to continue to track at or below the ‘19 levels on a portfolio basis based upon our current projections.

Great. Thanks for taking the question.

Ladies and gentlemen, we have reached the end of today’s question-and-answer session. This does conclude today’s conference. You may disconnect your lines at this time. Thank you for your participation, enjoy the rest of your day.