Affirm CFO on Q2 earnings
Michael Linford, Affirm's CFO, joined Yahoo Finance Live to discuss the company's first earnings report since going public.
Video Transcript
ADAM SHAPIRO: Let's talk about a company that IPOed just last month-- this would be Affirm-- and then had their first earnings report today. And want to read to you what they said when that report came out. We grew our active consumers 52% and our merchant base 90% year over year. Quarterly gross merchandise volume was at a record $2.1 billion.
I'm talking about Affirm. This is the platform where you can buy something, but you choose how you pay for it, whether you do a kind of layaway or if you pay for it all at once. Let's bring in the CFO from Affirm to talk about this, Michael Linford. And congratulations on the earnings report. You're taking a beating today. The stock is down about 10%. I imagine it has to do with the fact that no projection for actual profits in the next quarter for the next year, right?
MICHAEL LINFORD: Look, we're not too focused on how the stock trades in any given day. We're really focused on building our network out and creating long-term shareholder value. If you look at where we're trading today versus where we IPOed last month, we think we're at pretty healthy levels. And that's why we don't really look at the price at any given day. I feel like we had a great quarter.
As you shared, we grew our merchant count by 90%. Consumers were up 52%. The GMV on the platform grew considerably and as did the revenue. And the thing we're most excited about is what this means for the future. So our quarterly results included the signing of some key merchants. We talked about Alice and Olivia and Tom Ford, Neiman Marcus, Williams-Sonoma. We mentioned yesterday that we signed a deal with American Airlines, which we think is going to be a big part of what happens when the economy reopens.
And also, what we think happens for our partnerships-- we obviously have talked a lot about our partnership with Shopify. We also have partnerships now with [INAUDIBLE] and Wix. And we are excited for what these additional distribution points will be for Affirm. And anyway, that's where our focus is right now.
SEANA SMITH: Michael, I want to ask you a little bit more about that because you mentioned the fact that you're interested in, obviously, long-term shareholder growth, what this means for the future. You mentioned some of those key partnerships that you've reached over the last several months. I guess, what does the roadmap look like when you talk about this next phase of growth? Are you expanding your current strategy at all?
MICHAEL LINFORD: Yeah, I think the road map is, continue to grow our merchant and consumer networks. What that means for us is building products that put the consumer first. We don't charge late fees. We don't charge deferred interest. Our product is built in a way where the consumer only wins. We only win when the consumer wins. And that is a unique and differentiated thing in our space.
We think that's an important thing to build a long-term brand and relationship with the consumer, and ultimately, help merchants drive and convert sales that they otherwise wouldn't be able to convert. So the path to building a great network is great distribution with great merchant partners and have a pro-consumer message in our product and treat the consumer the right way.
ADAM SHAPIRO: But how long are the investors-- should they be planning for the adjusted operating loss? In the next quarter, you're projecting anywhere from $47.5 to $52.5 million. Although you're shrinking it overall, how long should they be willing to hold out for the losses to turn to the positive side?
MICHAEL LINFORD: I think most investors I talked to, the thing they tell me is, they're thinking about where a firm will be in five and 10 and even 15 years. We're extremely well capitalized. The IPO gave us a lot of capital that we need to fund the business, where we don't have any sort of pressure there. The business is growing really fast. And it's certainly growing a lot faster than our fixed costs.
And so, we're doing what we need to do to scale the business and to scale it responsibly. But I think the investors I talked to are really looking pretty far out, five plus years, before they expect us to be trying to attempt to turn any sort of short-term profitability.
SEANA SMITH: Hey, Michael, on the earnings call, a couple of times, data came up. You mentioned the value of the data that you have. I guess, talk to us just about the advantage that you think that gives Affirm, and then also what's in it for the retailers or the consumer-- or the brands that you partner with.
MICHAEL LINFORD: Yeah, so, you know, one of the things about our underwriting advantage is, we're able to take the same data that's widely available and apply it to the transaction. But we're also able to help the consumer and merchant meet in commerce. And we learn a lot about the transaction when we underwrite a specific transaction.
And that's a thing that's very unique to us and something that, you know, if you're not positioned like we are at the intersection between a merchant and a consumer, you can't get. What it means for the merchant is higher average order values, stronger conversion, and really, a growth accelerant to their business. For the consumer, it means-- go ahead.
ADAM SHAPIRO: No, you finish your thought because I wanted to ask you about American Airlines.
MICHAEL LINFORD: Yeah, so for the consumer, it's a-- all that efficiency that we get with the data advantage that we have allows us to offer a product that's completely stripped away all of the things that we think are toxic in the industry, like deferred interest and late fees. And, you know, you can't do that unless you have an advantage at the transaction like we do.
ADAM SHAPIRO: You know, you're a disruptor, in some respects, to the traditional credit card system. And I'm curious, this deal with American Airlines, a lot of the airlines have the deal where, like, you get the American Express via Delta and you get Delta points. Is this disruptive to that model? And if not, how do they get in on that?
MICHAEL LINFORD: Yeah, we think about ourselves as being complementary, too, not disruptive to those models. If you think about our role in any of our merchants, it's not just travel. There's a wide set of co-bran and private label cards out there. And we think we actually help drive results for the merchant, which ultimately is in the interest of the co-brand cards, as well as the merchant, and that's what matters in the end.
ADAM SHAPIRO: And we wish you the best because it's not the end. You are up, up, and away, and growing. Michael Linford, CFO from Affirm, all the best to you. And again, we wish you the best.
