Adam Frisch

Adam Frisch from Evercore ISI asked about potential consumer stress from factors like student loan repayments and requested details on the credit quality of Affirm's user base, such as FICO score distribution.

Answer

Founder & CEO Max Levchin reiterated that credit is 'job number one' and performance is a direct output of their disciplined underwriting models. CFO Rob O'Hare added that the short duration of loans and a high repeat borrower rate (95% of transactions) allow them to effectively underwrite consumers based on their current financial health.

Adam Frisch of Evercore ISI asked what the Revenue Less Transaction Costs (RLTC) might have been without the high mix of 0% APR loans and inquired about initiatives to encourage Affirm Card usage for everyday transactions.

Answer

CFO Robert O'Hare declined to quantify the RLTC impact. CEO Max Levchin addressed card usage, stating that achieving top-of-wallet status is a gradual process. He highlighted reliability improvements like enabling foreign transactions and reiterated that APR reductions, especially 0% deals, remain the most powerful consumer incentive across all Affirm products.

An analyst on for Adam Frisch asked for the hypothetical Revenue Less Transaction Costs (RLTC) if 0% APR mix were lower, and inquired about initiatives to drive more debit-like 'Pay Now' usage on the Affirm Card.

Answer

CFO Robert O'Hare declined to quantify the RLTC impact due to funding complexities but confirmed 0% loans are profitable, just less so than interest-bearing ones. CEO Max Levchin stated that driving 'Pay Now' volume is a gradual process focused on improving the user experience, such as enabling foreign transactions. He emphasized that APR reductions remain the most powerful incentive to drive usage across all Affirm products.

Adam Frisch from Evercore ISI asked for more details on the encouraging direct deposit levels from Chime's enterprise partnerships, including insights into the sales pipeline and initial revenue/profit indications from this channel. He also congratulated Chime on the early completion of Chime Core migration and asked about its margin impact and future product development unlocks.

Answer

Mark Troughton, COO, expressed excitement about the enterprise channel's progress, noting adoption rates exceeding expectations due to Chime's broad financial wellness value proposition. He highlighted strategic partnerships with Workday and UKG, a strong pipeline, and expectations for material direct deposit growth at significantly lower CACs in the medium to long term. Matt Newcomb, CFO, confirmed that Chime Core's completion is expected to increase gross profit margin to nearly 90% starting in Q4. Chris Britt, Co-founder and CEO, emphasized Chime Core's role in enabling rapid product innovation, such as the new Chime Card, and future premium membership tiers, joint accounts, custodial accounts, and investment services.

Adam Frisch with Evercore ISI asked for details on the early success of Chime Enterprise, including direct deposit levels, sales pipeline, and initial revenue/profit indications from new partnerships. He also requested color on ChimeCore's margin impact and its role in future product development.

Answer

Mark Troughton, COO, reported strong adoption rates exceeding expectations for the Enterprise channel, launched in April/May, citing a broader financial wellness value proposition. He highlighted strategic partnerships with Workday and UKG, noting a robust pipeline and expectations for lower CACs for direct deposit originations in the medium to long term. Matt Newcomb, CFO, reiterated that ChimeCore migration is expected to increase gross profit margin to nearly 90% starting in Q4. Chris Britt, Co-founder and CEO, emphasized ChimeCore's differentiation, enabling rapid innovation for products like the new Chime Card, premium membership tiers, joint accounts, custodial accounts, and investment services.

Adam Frisch asked for color on the primary components of Global Payments' organic growth, specifically mentioning pricing increases to the back-book, and sought details on the salesforce expansion, including sourcing and opportunity areas.

Answer

Cameron Bready (CEO, Global Payments) attributed organic growth to new sales productivity and stable same-store sales trends, noting consistent pricing philosophy focused on value and harmonization. Bob Cortopassi (President and COO, Global Payments) explained that sales talent is sourced broadly, targeting experienced software salespeople for a more consultative sales process.

Adam Frisch asked for details on the primary components of Global Payments' organic growth, specifically mentioning channel checks suggesting significant back-book pricing increases, and sought information on the sourcing and opportunities related to the Salesforce expansion.

Answer

CEO Cameron Bready stated that organic growth is primarily driven by new sales productivity and stable same-store sales trends, with no unusual pricing actions in the quarter beyond ongoing harmonization of pricing structures across portfolios. President and COO Bob Cortopassi explained that sales talent is sourced broadly, including from Fintech and other business management software, focusing on consultative sales professionals to support both SMB and enterprise clients.

Adam Frisch asked for an update on the Genius platform rebrand, the status of the original integration initiative, and progress on the 'Salesforce of the Future' program, including plans for Worldpay's sales team. He followed up by asking about the components of revenue growth, specifically the mix between organic volume and pricing.

Answer

CEO Cameron Bready confirmed the rebrand is progressing, aiming for a common brand identity before the Worldpay closing. COO Bob Cortopassi reported that the sales force alignment and compensation structures are complete, with capability-building initiatives well underway. He expressed confidence in retaining Worldpay's sales team due to the strong product suite and earning potential. On revenue, Bready stated growth is driven by strong organic new sales and stable same-store sales, with pricing being a modest and consistent component.

Adam Frisch of Evercore ISI posed two questions: one on the potential financial impact of the Capital One debit portfolio loss following the Discover acquisition, and another on China's near-term revenue contribution.

Answer

CFO Sachin Mehra stated the full-year guidance already incorporates their best estimate of the Capital One debit migration, though timing remains uncertain. CEO Michael Miebach added that they expect to maintain a strong relationship in other areas. Regarding China, Mehra explained its revenue contribution is primarily from cross-border flows, with the domestic JV still in investment mode and having a minimal revenue impact.

Adam Frisch of Evercore ISI asked for a reminder of the key revenue and cost levers Visa can utilize to protect margins if macroeconomic conditions were to deteriorate rapidly.

Answer

CFO Chris Suh emphasized the business's resilience due to its diversification into everyday spend, debit, and e-commerce. He identified key levers: on the revenue side, client incentives are largely variable and would decline with volumes; on the expense side, the company has demonstrated its ability to flex spending while balancing long-term priorities, and the management team is prepared to act decisively.

Adam Frisch of Evercore ISI requested the organic versus inorganic revenue growth breakdown for the quarter and sought clarity on the go-to-market strategy for newly acquired brands.

Answer

Taylor Lauber, President and incoming CEO, stated that while the company does not provide quarterly organic growth breakdowns due to M&A noise, they remain on track for over 20% organic revenue growth for the full year. He clarified that the primary strategy is to bundle Shift4 payments into the acquired customer base, with new sales being conducted exclusively under Shift4's product brands.