Research Analyst at Wells Fargo Securities
Kathy Chan is an Executive Director and Head of Planning and Control, Asia Operations at Wells Fargo, where she oversees strategic business planning and operational performance for the firm’s activities in the region. She manages oversight for operations covering areas such as client services, risk management, and planning, although details on specific public-company coverage and analyst performance metrics are not available from current records. Chan’s career spans senior leadership roles at Wells Fargo and prior experience with global financial services firms, bringing robust operational expertise to her current position in Hong Kong. Her professional credentials include leading Wells Fargo’s regional operations, but publicly available sources do not list securities licenses or specific industry recognition.
Kathy Chan sought clarification on the unchanged full-year 2026 guide for revenue-less transaction cost (RLTC) as a percentage of GMV, despite a strong 4.2% in the current quarter, and factors that might cause deceleration.
Max Levchin stated that Affirm targets 4% as an upper bound for RLTC to balance growth and profitability, aiming to expand the network. He noted that while there can be quarterly fluctuations, 3-4% is the long-term range.
Kathy Chan questioned the unchanged full-year 2026 guide for revenue-less transaction cost (RLTC) as a percentage of GMV, despite a strong 4.2% in the current quarter, asking if deceleration is expected and what factors might contribute.
Max Levchin, Founder and CEO, explained that 4% is a philosophical upper bound for RLTC, aiming to balance growth and profitability. He noted that while there are quarterly fluctuations, the long-term target range is 3-4%, with the current setup allowing them to run slightly above 4%.
Kathy Chan asked about the drivers behind the flat pays per control (PPC) in Q1 and the revised flat full-year guidance, seeking confidence that it won't decelerate further. She also inquired about the expected margin dynamic for the rest of the fiscal year, given flat Q1 margins and a maintained full-year expansion target.
CFO Peter Hadley explained that the flat PPC reflects small movements (tens of basis points) and a narrowing of the guidance range to the lower end (0-1% to flat), based on internal hiring data and a static macro environment. He expressed confidence in the revised guidance given the magnitudes involved. Regarding margins, Peter Hadley stated that Q1 margins beat expectations despite acquisition-related costs. He anticipates a similar net result in Q2, followed by a ramp in the back half of the year driven by business efficiencies and generative AI investments, as the drag from the Workforce Software acquisition anniversary is now behind them.
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