Adam Frisch

Adam Frisch asked about the future of operating leverage, specifically identifying the biggest cost levers beyond top-line growth and whether the benefits from Chime Core have been fully realized. He also inquired if MyPay's 100 basis point loss rate is the optimal level or if there's room for further improvement, balancing growth and loss.

Answer

Chris Britt, Co-Founder and CEO, confirmed expectations for continued strong operating leverage across all OpEx categories, driven by Chime Core and ongoing AI initiatives, allowing for increased output without headcount growth. Mark Troughton, President, explained that MyPay loss rates could naturally decrease further with more efficient lending and tenured members. However, Chime plans to reinvest some of these efficiencies into MyPay growth to expand attach and adoption rates and limits, optimizing for overall transaction profit rather than strictly maintaining the 1% loss rate. He suggested future loss rates might fluctuate slightly above or below 1% but would be more than compensated by increased revenue.

Adam Frisch inquired about the sustainability of operating leverage, identifying the biggest cost levers for the next few years, and whether Chime Core's impact has been fully realized. He also asked if there's further room to improve MyPay loss rates or if the current 1% level represents the optimal balance between growth and loss.

Answer

Chris Britt, Co-Founder and CEO, confirmed expectations for continued strong operating leverage across all OpEx categories, driven by Chime Core and AI initiatives, enabling more innovation without headcount growth. Mark Troughton, President, explained that MyPay loss rates would naturally decrease over time, but the company plans to reinvest some of these gains into MyPay growth to optimize overall transaction profit, potentially leading to slightly higher loss rates in the future, compensated by increased revenue.

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 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 inquired about the competitive landscape and pricing rationality within the SMB point-of-sale market, particularly concerning Genius, and sought an update on the multi-year renewal with Toast.

Answer

Cameron Bready, CEO, acknowledged the competitive POS market but affirmed Genius's momentum and growth, noting a rational pricing environment. He confirmed a multi-year renewal with Toast. Bob Cortopassi, COO, added that signed annual revenue per deal for POS sales was up nearly 50% year-over-year, reflecting constructive pricing and the value of Genius's combined solution.

Adam Frisch inquired about the competitive landscape and pricing rationality in the SMB point-of-sale (POS) market, and also asked for an update on the speculated renewal with Toast.

Answer

CEO Cameron Bready confirmed the SMB POS market remains very competitive but pricing is fairly rational, without irrational behavior. He highlighted Global Payments' scale allows for price competitiveness, but their strategy focuses on distribution diversity, feature-rich solutions, and distinctive service. He also confirmed that Global Payments has renewed with Toast on a multi-year deal. COO Bob Cortopassi added that the signed annual revenue per deal for their POS sales team is up nearly 50% year-over-year, reflecting constructive pricing and the value of the combined Genius solution.

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 asked if 2026 is considered a peak investment year in the current cycle and about the initial 2026 recurring gross profit (RGP) guidance, which implies a back-half deceleration, questioning if it could prove conservative.

Answer

CFO Elena Gomez stated that Toast is taking a long-term view, aiming to build a generational business, and 2026 reflects conviction in new TAMs. She reiterated the unchanged long-term margin profile of 40% and the path to sub-20-month paybacks, emphasizing that the timing of margin expansion is controlled. Regarding the RGP guidance, she noted that initial guidance is balanced, but Toast always aims to outperform and will provide updates as the year progresses.

Adam Frisch asked if 2026 is anticipated to be a peak investment year for Toast within the current cycle, considering the company's strong growth and heavy investments. He also inquired about the implied back-half deceleration in recurring gross profit (RGP) growth based on the initial 2026 guidance, asking for any specific drivers or reasons why the guidance might be conservative.

Answer

CFO Elena Gomez stated that Toast is focused on building a generational business over the long term, with 2026 investments reflecting conviction in new TAMs and a path to sub-20-month paybacks. She reiterated that the long-term margin profile remains unchanged, and the timing of margin expansion is within Toast's control, emphasizing durable growth. Regarding the RGP guidance, she explained that the initial guidance for the year takes a balanced view, aiming to do better as the year progresses, implying a conservative approach without specifying drivers for deceleration.

Adam Frisch questioned the potential to raise pricing for 0% offers, given the value generated for merchants, and the mix between long-term and short-term 0% loans. He also asked about the slight tick-up in loss provisions and its relation to the stock's after-hours movement.

Answer

Michael Linford, COO of Affirm, noted traction with go-to-market packages for smaller merchants, seeing an uptick in merchants moving to higher-converting 0% offerings. He added that flat pricing in a declining rate environment is effectively taking price. Max Levchin, Founder and CEO of Affirm Holdings, stated that the consumer is healthy, and loss provisions are managed to a consistent NICO number, indicating no credit disturbances, and could not interpret stock movement.

Adam Frisch asked about the potential to raise pricing for 0% offers given their merchant value, the mix of short-term vs. long-term 0% loans, and reasons for a slight tick-up in loss provisions.

Answer

Max Levchin, Founder and CEO, stated pricing varies by merchant size, with traction in go-to-market packages leading to merchant upgrades. Michael Linford, COO, added that flat pricing in a declining rate environment is effectively a price increase. Max Levchin reiterated consumer health and tight NCO management, unable to interpret stock movement.

Adam Frisch asked about the evolving mix of GMV growth from direct point-of-sale merchant integrations versus direct-to-consumer channels, especially with scaling wallet partners.

Answer

Max Levchin reiterated Affirm's goal to be available everywhere, integrating with various wallets and direct channels. He highlighted significant investment in direct-to-consumer products like the Affirm Card and the app, which serves as a promotional service for merchants, citing the recent '0% Days' event as an example.

Adam Frisch inquired about the evolving mix of GMV growth, specifically the contributions from direct point-of-sale merchant integrations versus direct-to-consumer channels, and how this mix might change with wallet partner scale.

Answer

Max Levchin, Founder and CEO, reiterated Affirm's strategy to be available everywhere, integrating with various wallets and focusing on direct-to-consumer products like the Affirm Card and app. He mentioned investing in consumer engagement through promotional events like 'Zero Days' and new products, without providing a specific future breakdown.

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 requested more detail on the better-than-expected growth in commercial solutions, asking if it was a one-off strong quarter or indicative of a market unlock. He also sought insights into global spending trends, including regional performance and affluent versus mass market segments.

Answer

Ryan McInerney, Visa's Chief Executive Officer, attributed the commercial success to a consistent strategy, strong product development, and client wins across small/medium businesses, large/middle-market card and virtual payables, and underpenetrated spend. Chris Suh, Visa's Chief Financial Officer, noted international volume stability, with Europe consistent, CEMEA impacted by promotional campaign timing, and Asia Pacific by tax payment timing, indicating relative stability when normalizing for these factors.

Adam Frisch from Evercore ISI asked for more detail on the better-than-expected growth in Visa's commercial solutions, questioning if it was a one-off strong quarter or indicative of a broader unlocking of potential in this market. He also requested insights into global spending trends, particularly across major regions and between affluent and mass consumer segments.

Answer

Ryan McInerney, Visa's Chief Executive Officer, attributed the commercial growth to the successful execution of their multi-year strategy, including converting small and medium business spending (e.g., Chase Sapphire Reserve for Business), scaling large and middle-market card and virtual payables (e.g., Trip.com), and delivering product innovation for underpenetrated spend (e.g., BMO in Canada). Chris Suh, Visa's Chief Financial Officer, added that international payments volume showed relative stability when normalizing for idiosyncratic factors, with Europe consistent, CEMEA strong despite promotional timing shifts, and Asia Pacific slower due to tax payment timing.

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 asked for Mastercard's views on the status of the CCCA and the topic of a 10% rate cap on credit. He also sought insight into ongoing conversations between the industry and the administration regarding affordability issues and discussions with issuers on addressing presidential concerns without creating a broader industry crisis.

Answer

Michael Miebach (CEO) indicated the CCCA is 'all but dead for now' and discussed the proposed 10% rate cap, highlighting potential negative consequences for credit access, especially for vulnerable individuals. He explained that Mastercard, as an industry custodian, is actively engaged in constructive dialogue with banks and issuers, sharing data and exploring options like 0% introductory rates and low-interest products to address affordability concerns.

Adam Frisch from Evercore ISI inquired about the status of the Credit Card Competition Act (CCCA) and Mastercard's views on a potential 10% rate cap on credit. He also asked about ongoing conversations between the industry and the administration regarding affordability issues and discussions with issuers on alternative solutions.

Answer

Michael Miebach, CEO of Mastercard, acknowledged the importance of the affordability conversation but highlighted the potential negative consequences of a rate cap, particularly for credit access for vulnerable populations. He noted Mastercard's active engagement with bank partners, sharing data and discussing existing low-interest products and 0% introductory rates as part of a constructive dialogue with the administration.

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 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.