Andrew Jeffrey

Andrew Jeffrey inquired about the sustainability of SoFi's accelerated KPI growth, particularly brand awareness and refinancing opportunities, and whether the company has reached a tipping point where consumers prefer SoFi over traditional banks.

Answer

Anthony Noto, CEO, highlighted the significant increase in unaided brand awareness from 2% to 9.6% and the effectiveness of marketing strategies, including celebrity partnerships. He noted strong returns on marketing spend, consistent member growth over 30%, and a 40% cross-buy rate. Noto expressed confidence in the current marketing formula but aims for greater efficiency through product quality, virality, and reduced customer acquisition costs, even before fully leveraging AI.

Andrew Jeffrey inquired about SoFi's funding strategy as non-personal loan businesses grow faster, specifically asking if this shifts the approach to funding (deposit-driven vs. Loan Platform Business) and if there are opportunities for non-personal loans within the Loan Platform Business.

Answer

CEO Anthony Noto confirmed significant opportunities for non-personal loans within the Loan Platform Business, with the capital markets team actively working on this. He noted that while deposits remain crucial for durability, the dependency on them will likely decrease over time as capital-light revenue streams, now 56% of total revenue, continue to grow.

Andrew Jeffrey questioned how the faster growth in non-personal loan businesses might alter SoFi's funding strategy, specifically regarding the mix between deposit-driven funding and the loan platform business, and if there are opportunities for non-personal loans within the Loan Platform Business (LPB).

Answer

CEO Anthony Noto confirmed opportunities for non-personal loans in the LPB, with the capital markets team actively working on this. He noted that while deposit funding is crucial for durability, its dependency and cost of funds will likely decrease over time. He also highlighted the increasing contribution of capital-light revenue streams (56% from tech platform and financial services) to profitability and tangible book value growth.

Andrew Jeffrey of William Blair & Company questioned SoFi's strategy for its future funding mix, asking how the company will balance the capital-light Loan Platform Business against on-balance-sheet loan growth funded by deposits.

Answer

CEO Anthony Noto explained the strategy is to optimize return on equity by balancing both business models. The capital-light LPB offers high returns, especially with new originations outside SoFi's traditional credit box. CFO Chris Lapointe added that deposits, targeted at 85-90% of funding, will grow in line with the balance sheet, and that the LPB model can be expanded to other asset classes, ensuring growth is not constrained.

Andrew Jeffrey from Truist Securities asked about the long-term potential of the Loan Platform Business and whether SoFi could evolve into a predominantly fee-based company, and what the implications would be for its deposit and lending strategy.

Answer

CEO Anthony Noto explained that while the mix of fee-based revenue will meaningfully increase beyond 50%, SoFi will not become entirely fee-based. He highlighted that growth will come from the Loan Platform Business (especially if it expands to near-prime), interchange fees, and potential crypto offerings. However, Noto stressed the strategic importance of holding loans on the balance sheet to achieve a target ROE of 20-30%, requiring a balanced business model.

Andrew Jeffrey from William Blair & Company, L.L.C. asked about SoFi's long-term target for fee-based revenue as a percentage of total revenue and its potential composition, in the context of its ROE goals.

Answer

CEO Anthony Noto stated that while there isn't a specific target number, they want fee revenue to be 'very significant' due to its capital-light, high-ROE nature. He noted they have even considered moving all lending to the fee-based LPB model over time. He emphasized that growing the $970 million annual fee business is a key strategy to drive high ROE.

Andrew Jeffrey inquired about the growth trajectory of the Visa Flex credential, recognizing its current small scale, and asked if it could significantly impact Visa's revenue growth over the next 3-7 years.

Answer

Ryan McInerney, Visa's Chief Executive Officer, noted that the Flex credential is still in early development but clients are very excited about its potential as a 'Swiss Army knife of payments' with multiple funding options. He highlighted wins with traditional banks and BNPL players like Block, enabling them to offer BNPL anywhere Visa is accepted. Mr. McInerney compared its growth strategy to successful innovations like tokenization and Visa Direct, aiming for long-term business growth.

Andrew Jeffrey, a Research Analyst at William Blair, asked about the Visa Flex credential, acknowledging its current small scale but expressing intrigue about its potential growth trajectory. He sought to understand if Flex could significantly impact Visa's overall revenue growth over the next 3, 5, or 7 years.

Answer

Ryan McInerney, Visa's Chief Executive Officer, explained that it's still early for the Flex credential, which he described as the 'Swiss Army knife of payments' due to its multiple funding options. He highlighted its appeal to traditional banks (e.g., SMCC in Japan for bundling credit, debit, rewards) and BNPL players (e.g., Affirm, Klarna, Block) for expanding offerings globally without merchant-by-merchant integration. McInerney noted that while current numbers are small, Visa follows a similar strategy to successful innovations like tokenization and Visa Direct: build, deploy, and expand year after year.

Andrew Jeffrey asked if the recent acquisitions of Pismo and Featurespace signal a philosophical change or a shift in emphasis within Visa's value-added services strategy, such as prioritizing security over processing.

Answer

Ryan McInerney, Chief Executive Officer, stated there has been no change in emphasis and that Visa remains focused on all areas of value-added services. He explained that acquisitions like Pismo and Featurespace are part of a strategy to unbundle Visa's core capabilities (fraud, processing, network) and deliver them to a broader set of clients, often for non-Visa transactions.

Andrew Jeffrey from William Blair inquired about the target transaction margin for MyPay at a 1% loss rate, potential adjustments to underwriting criteria, and the future trajectory of the MyPay product. He also sought an update on Chime's short-term loan product.

Answer

Chris Britt, Co-founder and CEO, attributed MyPay's improving loss rates to cohort seasoning and continuous iteration on underwriting models, emphasizing no plans to compromise gross margins by broadening access. Matt Newcomb, CFO, confirmed expectations for continued transaction margin expansion for MyPay, which is already a $350 million run-rate product. Chris Britt added that the instant loan product, rolled out conservatively, has an 80% NPS and will continue to expand, though no separate guidance is provided yet.

Andrew Jeffrey from William Blair focused on the progress of MyPay, asking about the expected transaction margin at a 1% loss rate and whether achieving this quickly would prompt a review of underwriting criteria. He also requested an update on the short-term loan product.

Answer

Chris Britt, Co-founder and CEO, noted that MyPay's loss rates are naturally reducing as cohorts season and underwriting models improve, with expectations to expand gross margins over time without compromising them. Matt Newcomb, CFO, stated that MyPay is a $350 million run-rate product with strong margins and is the lowest-cost offering in the market. Chris Britt added that the instant loan product, rolled out conservatively, has an impressive 80% NPS and will continue to expand, though no separate guidance is provided yet.

Andrew Jeffrey asked two housekeeping questions regarding the outlook for interchange rates for the remainder of the year and the company's current fully diluted share count.

Answer

CFO Matt Newcomb responded that interchange rates are expected to remain stable, with a key opportunity being the continued adoption of the higher-rate secured credit card. He also provided the issued share count as of the end of Q2, which was approximately 370 million.

Andrew Jeffrey inquired about the potential for Corporate Payments' organic growth to accelerate beyond current high-teens levels in 2026-2027, driven by recent acquisitions. He also asked for details on the reciprocal nature of the Circle partnership, questioning if Corpay would use USDC and also provide on/off-ramp services.

Answer

President, Chairman & CEO, Ronald Clarke, stated that accelerating Corporate Payments growth is possible and depends on investment levels, highlighting the diversity of new client segments as a key attraction. He confirmed the Circle partnership is reciprocal, with Corpay planning to use Circle's technology for certain use cases and providing on/off-ramp services in return.

Andrew Jeffrey inquired about the potential for Corpay's Corporate Payments organic growth to accelerate beyond the current high-teens rate, given recent acquisitions like GPS and Alpha. He also asked for details on the new partnership with Circle, specifically if it would be a reciprocal relationship.

Answer

President, Chairman & CEO Ronald Clarke stated that while accelerating Corporate Payments growth is possible with continued investment, the company avoids overspending. He emphasized that the main attraction is the diversity of new client segments (FIs, asset managers, digital asset providers). Clarke confirmed the Circle partnership is reciprocal, with Corpay providing on/off-ramp services and utilizing Circle's stablecoin, rails, and wallet for certain use cases.

Andrew Jeffrey from William Blair inquired about secular trends in Mobility, such as fuel efficiency and the EV mix. He also asked about the competitive environment and WEX's right to win in the virtual card space for fintechs.

Answer

Chair, CEO & President Melissa Smith noted that while the EV market is moving slower than anticipated, WEX is well-positioned with its mixed-fleet offering. Regarding virtual cards, she explained that WEX's right to win in this new TAM expansion area is based on its strong technology, deep integration experience, and its ability to provide end-to-end processing as a bank, which is resonating strongly in the market.

Andrew Jeffrey asked about secular trends in the Mobility segment, specifically fuel efficiency and the EV mix, and whether EV could be a material driver soon. He also inquired about the competitive environment and WEX's right to win in the embedded finance space for fintechs.

Answer

CEO Melissa Smith explained that while the EV market is moving slower than anticipated, WEX is well-positioned with its mixed-fleet offering, and that fuel efficiency is a long-standing, baked-in headwind. For embedded finance, she highlighted that WEX's right to win stems from its deep experience in complex B2B payments, strong virtual card technology, and its ability to provide an end-to-end solution as a bank owner, which is expanding its TAM and driving a strong pipeline.

Andrew Jeffrey questioned WEX's confidence in a travel volume rebound amid competition and asked how the Benefits segment can outgrow a maturing market, probing if it should remain part of the company.

Answer

CEO Melissa Smith expressed confidence in travel, noting that customer multi-sourcing is a long-standing practice and that volumes should grow with the market. She asserted that the Benefits segment can outgrow the market through various revenue levers beyond account growth and that its long-term growth profile aligns with the company's overall targets.

Andrew Jeffrey requested a detailed breakdown of the full-year earnings guidance reduction, seeking to understand the drivers beyond the fuel price impact. He also asked about the cause of the higher credit loss assumption for Q4 and questioned the timing of these issues emerging late in the year.

Answer

CFO Jagtar Narula broke down the Q4 revenue reduction into three parts: macro factors (fuel/rates), Mobility softness (same-store sales/late fees), and a Benefits revenue timing issue. CEO Melissa Smith addressed the visibility question by explaining that the negative drivers—a sharp fuel price drop, sudden volume softness in August/September, and last-minute contract deferrals—were all recent and unusual developments that were not apparent earlier.

Andrew Jeffrey of William Blair & Company inquired about Clover's value-added services (VAS), asking if international expansion into less mature markets could temporarily dilute the VAS attach rate, and also requested commentary on the U.S. competitive landscape.

Answer

President, CEO & Director Mike Lyons stated the strategy is to actively build out the VAS portfolio internationally, not just expand geographically, as it's a hallmark of the Clover platform. He described the competitive landscape as less of a race and more of an opportunity to serve a vast, underpenetrated market. CFO Robert Hau added that while the U.S. VAS market is more mature, Fiserv sees a significant opportunity to introduce these capabilities to new global markets, with working capital being a particularly strong global offering.

Andrew Jeffrey from William Blair & Company asked about Clover's value-added services (VAS), questioning if the attach rate might dip during international expansion where VAS is less mature. He also inquired about the competitive environment for software-integrated payments in the U.S.

Answer

Mike Lyons, President, CEO & Director, stated the strategy is to build out the VAS portfolio in new international markets concurrently with expansion, with the goal of growing both. He described the competitive landscape as robust but emphasized Fiserv's focus on the vast, underpenetrated TAM. Robert Hau, CFO, added that VAS maturity varies globally, with markets like Australia being more advanced, presenting a future growth opportunity as Fiserv introduces more capabilities worldwide.

Andrew Jeffrey asked for a comparison of Fiserv's current bank distribution channel for merchant services against its historical joint ventures, questioning if the partnerships have improved along with the products.

Answer

Chairman and CEO Frank Bisignano described the current model as completely different from 5-7 years ago, built on the premise of the First Data merger to bundle core processing, bill pay, and Clover. President and incoming CEO Michael Lyons added that success is now driven less by the partnership structure and more by the quality of the product and Fiserv's ability to help banks serve their clients with integrated, value-added solutions.

Andrew Jeffrey of Truist Securities inquired about the economic balance of 0% APR loans versus interest-bearing loans and the potential for increased merchant contributions to the 0% APR product.

Answer

CEO Max Levchin explained that Affirm aggressively pursues 0% APR opportunities from merchants due to the significant brand halo, conversion lift, and incremental volume. While acknowledging a lighter revenue take, he highlighted the superior credit quality of these loans and their long-term value in acquiring prime candidates for the Affirm Card, calling it a "lifetime value booster."

Andrew Jeffrey asked about the durability of Affirm's funding cost improvements, questioning how much is structural versus cyclical, and inquired about the penetration of direct deposit among Affirm Card holders.

Answer

COO Michael Linford acknowledged that favorable market conditions are a benefit but asserted that Affirm's demonstrated credit performance has created a durable advantage with capital partners. CEO Max Levchin stated that while not many cardholders currently use direct deposit, it represents a significant opportunity. He explained that customers who do use it benefit from an increased ability to borrow as it gives Affirm a better understanding of their financial state.

Andrew Jeffrey asked about the economics of 0% APR loans versus interest-bearing loans, the potential for increased merchant contributions, and the implications for loan mix and lifetime customer value.

Answer

CEO Max Levchin explained that Affirm aggressively pursues 0% APR opportunities from merchants due to the significant brand halo and high conversion rates. He noted that while these loans have lighter revenue, they attract prime and super-prime borrowers, making them a powerful customer acquisition channel for the Affirm Card and boosting long-term value.

Andrew Jeffrey of William Blair asked about the economics of tokenization, questioning how high the 35% tokenization rate could go and what the financial implications are for Mastercard.

Answer

CEO Michael Miebach detailed a strategy of first scaling tokenization globally, then building and pricing value-added solutions on top, such as lifecycle management. He highlighted that the next phase of digital commerce, like agentic AI, is centered on token technology, which will create further value and future pricing opportunities. He also noted the development of a local tokenization solution for the China market.

Andrew Jeffrey of William Blair questioned the strategic fit of Global Blue and sought confidence in the $80 million synergy target, noting it implies a low conversion rate of the addressable volume.

Answer

Taylor Lauber, President and incoming CEO, emphasized that Global Blue is a phenomenal standalone business with rare capabilities. He described the $80 million synergy forecast as intentionally conservative, based on converting less than 10% of the largest customers, to provide a high-confidence floor. He stated the significant capital deployed reflects their true conviction in achieving a much better result.

Asked about the progression of Cash App monetization, specifically the composition of its drivers today and whether interchange is expected to become a greater contributor with increased direct deposit adoption.

Answer

Amrita Ahuja highlighted that growth is broad-based across multiple products. Cash App Card is the largest revenue stream and primary growth driver. Borrow, Buy Now Pay Later, and Cash App Pay are also showing strong momentum and growth. She concluded that they see multiple levers for continued growth and monetization from both existing and new products, implying a diversified approach rather than reliance on a single driver.