Reggie Smith

Reggie Smith questioned the marketplace GMV growth guidance versus year-to-date performance, asking about Q4 assumptions, seasonality, and the scope of the smartphone issue (iPhone vs. Android mix). He also asked if the e-grocery business is self-sustainably profitable or primarily an engagement tool, and about the potential payout level for the reinstated dividend.

Answer

David Ferguson, Head of Investor Relations, confirmed marketplace growth will moderate in Q4, influenced by high-end smartphone seasonality, particularly iPhone 17 models. CEO Mikheil Lomtadze added that the issue is primarily with high-value iPhones due to new model supply constraints, emphasizing strong underlying engagement shown by 36% growth in marketplace purchases and 86% in e-commerce transactions. Mikheil Lomtadze confirmed the e-grocery business is self-sustainable and profitable, with significant investments in dark stores to meet high demand. David Ferguson stated that while cash returns are important, future international expansion is a priority, and the company will balance growth investments with shareholder returns via buybacks and dividends, but declined to provide specific payout ratios for next year.

Reggie Smith from JPMorgan Chase & Co. inquired about the marketplace GMV growth, noting a discrepancy between the 16% year-to-date growth and the 12-14% full-year guidance, asking if this implies low single-digit Q4 growth and if seasonality around cell phone purchases is a factor. He also asked about the issue's scope (iPhone vs. Android) and the mix of sales. Additionally, he questioned the long-term profitability of the e-grocery and delivery businesses and the expected level of dividend reinstatement next year.

Answer

David Ferguson (Head of Investor Relations, Kaspi.kz) confirmed marketplace growth would moderate in Q4, primarily due to high-end smartphones like the iPhone 17, which represent significant missed GMV. Mikheil Lomtadze (CEO and Co-founder, Kaspi.kz) added that the demand for iPhones is still high, and the issue is supply-related, emphasizing the healthy engagement shown by a 36% increase in marketplace transactions and 86% in e-Commerce transactions. Mr. Lomtadze stated that the e-grocery business is self-sustainable and profitable, with ongoing investments in dark stores to meet demand. Mr. Ferguson addressed the dividend, stating that while international expansion is a priority, Kaspi aims to balance investments with cash returns via buybacks and dividends, but specific payout ratios for next year are not yet determined.

Reggie Smith from JPMorgan Chase & Co. sought clarification on the capital return policy for 2026, asking if a similar payout ratio to 2024 should be expected. He also asked if the Turkish banking license would create a competitive advantage and inquired about the nature of future investments in Turkey.

Answer

Mikheil Lomtadze, Co-Founder, Director, Chairman & CEO, responded that while investments for long-term growth remain a priority, the company expects to find a balance with capital distributions in 2026, though it is too early to commit to specific payout ratios. He described the banking license as a critical enabler for offering a full suite of world-class fintech products. David Ferguson, MD & Head of IR, added that the company has a history of making significant investments, like in e-grocery, while simultaneously returning capital to shareholders.

Reggie Smith from JPMorgan Chase & Co. sought clarification on the capital return policy for 2026, the competitive advantage conferred by the Turkish banking license, and the nature of planned investments in Turkey.

Answer

CEO Mikheil Lomtadze and MD & Head of IR David Ferguson responded. They clarified that while it's too early to commit to a specific payout ratio for 2026, the company will balance significant investments for growth with capital returns. Lomtadze emphasized the Turkish banking license is a critical enabler for offering a full suite of fintech products, with Kaspi's competitive advantage stemming from its world-class, tech-driven service model. Investments will focus on building the operational and compliance framework to launch these services.

Reggie Smith asked how Affirm's underwriting changes when moving into new verticals like automotive repair or services, considering potential risks related to the service provider in addition to the consumer.

Answer

Max Levchin confirmed that underwriting does change, highlighting Affirm's 'defensible moat' in its robust process for building and modifying lending models. He explained that Affirm quickly incorporates new data and descriptors (e.g., for services vs. merchandise) into its models, allowing it to confidently enter new verticals without overwhelming its delinquency rates, marking it as an infrastructure maturity indicator.

Reggie Smith inquired about how Affirm's underwriting changes when moving into new verticals like automotive repair and Service Titan, specifically regarding risk related to the service provider.

Answer

Max Levchin, Founder and CEO, confirmed that underwriting models need to adapt for different SKUs or services. He highlighted Affirm's 'defensible moat' in its robust process for building and modifying models, quickly incorporating new data and learnings from each vertical. This infrastructure maturity allows them to confidently enter new businesses like services or elective medical.

Reggie Smith of JPMorgan Chase & Co. asked about Affirm's penetration and growth within the non-Shopify e-commerce PSP channel and sought clarification on the volume impact from a large merchant transitioning away.

Answer

Founder & CEO Max Levchin noted that while it's still 'pretty early' in non-Shopify PSP channels, they are an important and accretive growth driver. CFO Rob O'Hare clarified that the company's outlook conservatively assumes zero volume through the departing merchant's integration after the end of fiscal Q1.

Reggie Smith asked about the relative impact of approvals versus consumer acceptance on conversion rates, whether Upstart's application flow includes comparison pricing, and sought clarification on superprime declines and HELOC product economics.

Answer

Paul Gu, CTO of Upstart, stated that conversion changes were predominantly related to the model's conservatism, primarily impacting approvals. He clarified that superprime applicants typically see rate adjustments rather than declines. Sanjay Datta, CFO of Upstart, reiterated that HELOC take rates would be healthy but more modest than personal loans, on much larger loan sizes. Dave Girouard, CEO of Upstart, emphasized that the model's conservative stance is a feature, not a bug, and credit performance remains exceptional.

Reggie Smith asked about the outsized impact on conversion rates (approvals vs. consumer acceptance), potential share shifts due to competitor origination trends, the day-one economics and take rate of the HELOC product relative to the corporate average, and sought clarification on credit performance despite UMI signals.

Answer

CTO Paul Gu stated that conversion changes were predominantly due to the model's conservatism impacting approvals. CFO Sanjay Datta explained that HELOC take rates would be healthier but more modest than personal loans, on much larger loan sizes (roughly half the take rate, but more than double the loan size). Sanjay Datta confirmed exceptional credit performance, emphasizing that the model's conservative breather is a feature, not a bug.

Reggie Smith requested a breakdown of the conversion rate into approval and acceptance rates, asked about the profile of newly approved borrowers under the new model, and sought clarification on interpreting the co-investment slide in the investor deck.

Answer

CFO Sanjay Datta stated the company does not externally decompose conversion rates. CTO Paul Gu explained that model improvements find many subtle relationships rather than targeting one specific borrower profile. Sanjay Datta clarified the co-investment slide (slide 23) provides a holistic view of risk-sharing investments, which are expected to ramp before leveling off, with returns flowing to the P&L over time.

Reggie Smith from JPMorgan Chase & Co. asked for a breakdown of the conversion rate into approval and acceptance rates, the profile of newly approved borrowers under Model 22, and for help interpreting the co-invested risk capital slide.

Answer

CFO Sanjay Datta did not provide a breakdown of conversion rates. CTO Paul Gu explained that model improvements find many subtle relationships rather than targeting one borrower type. Sanjay Datta clarified the co-investing slide provides a holistic view of risk capital investments, which are expected to ramp before leveling off, with returns flowing to the P&L over time.

Reggie Smith followed up on the Loan Platform Business, asking about the number of buyers on the platform, the next four-quarter capacity, and the process for companies to upsize their commitments.

Answer

CFO Chris Lapointe declined to disclose the exact number of buyers but confirmed that the $3.4 billion in Q3 originations through LPB is expected to grow in Q4. He explained that partners typically request to upsize commitments intra-quarter if they have excess capacity or demand, which SoFi fulfills if possible. CEO Anthony Noto added that SoFi is benefiting from the observed consolidation of partners towards higher-quality platforms.

Reggie Smith requested details on the loan platform business, including the number of buyers, the projected capacity for the next four quarters, and the process by which companies upsize their commitments.

Answer

CFO Chris Lapointe stated that SoFi does not disclose the exact number of buyers but confirmed having multiple partners, including publicly known ones like Fortress and Blue Owl. He noted that Q3 LPB originations were $3.4 billion, with expected continued growth in Q4. He explained that partners typically request to upsize commitments intra-quarter if they have excess capacity or demand for incremental loans. CEO Anthony Noto added that SoFi is benefiting from the observed consolidation of buyers to higher-quality platforms.

Reggie Smith of JPMorgan Chase & Co. asked about the monetization progress of the SoFi Invest segment, its current unit economics, and the key performance indicators (KPIs) management uses to evaluate the business.

Answer

CEO Anthony Noto explained that Invest monetization is improving as assets grow and new revenue-generating products like options are introduced. While the segment is variable profit positive, it is not yet contribution profit positive. Key internal metrics include total products, product mix, AUM, and net flows, all of which are trending positively. Future monetization drivers include Level 1 options, margin lending, and the relaunch of cryptocurrency trading.

Reggie Smith inquired about the BlackRock program and the insurance sales channel, asking if it allows individual investors to gain exposure to these notes, the liquidity for consumers, and if LendingClub anticipates announcing committed numbers from the insurance channel similar to private credit.

Answer

CFO Drew LaBenne clarified that the BlackRock program is not direct-to-consumer sales, but rather BlackRock managing funds for other clients. He noted the insurance pool is deep and offers a generally low cost of capital, with potential for channel growth. CEO Scott Sanborn added that while individual capital does come through funds managed by RIAs, a direct-to-consumer retail model (like their original structure) would entail significant regulatory overhead and competitive disadvantages due to public disclosure requirements.

Reggie Smith asked about the impact of new marketing channels like direct mail on applicant mix and conversion, and also inquired about the demand from whole loan buyers.

Answer

CEO Scott Sanborn stated that new channels were a significant driver of growth and that they are still in the 'early innings' of optimizing them, deliberately managing for performance differentials. He reiterated that demand from loan buyers is very strong, and the company is balancing the immediate returns from sales against the higher lifetime value of holding loans on its balance sheet.

Reggie Smith of JPMorgan Chase & Co. requested details on the specific operational changes driving the sharp increase in gross margins, the status of the M&A pipeline, and the valuation drivers for the separate Resolute Holdings entity.

Answer

President & CEO Jonathan Wilk attributed margin gains to broad-based process improvements under the CompoSecure Operating System, noting significant opportunity for further efficiencies remains. Regarding M&A, he described the pipeline as 'robust' but declined to specify deal stages, emphasizing a selective and accretive strategy. For Resolute Holdings, Wilk explained its value is primarily driven by the management fee from CompoSecure, which is expected to grow with CompoSecure's EBITDA and create operational leverage.

Reggie Smith of JPMorgan Chase & Co. asked for specific details on the operational changes driving the sharp increase in gross margins and the potential for future efficiencies. He also inquired about the M&A pipeline and sought clarity on the valuation drivers for the separate Resolute Holdings entity.

Answer

CEO Jonathan Wilk attributed margin gains to the company-wide implementation of the CompoSecure Operating System, noting there is still significant opportunity for future improvements. He described the M&A pipeline as 'robust' but emphasized a selective approach based on strict criteria. Regarding Resolute Holdings, Wilk explained its value proposition is the potential for the management fee to grow with CompoSecure's EBITDA against relatively flat costs, but declined to comment further on its valuation.

Reggie Smith from JPMorgan Chase & Co. asked about Shopify's pricing strategy, questioning if the company might introduce a la carte pricing for new product enhancements rather than bundling them.

Answer

President Harley Finkelstein reaffirmed the company's commitment to its GMV-based business model, where Shopify's success is tied to its merchants' success. He highlighted Commerce Components as a modular approach that allows large merchants to adopt individual products like Checkout or Shop Pay, serving as an on-ramp to the full platform, rather than a shift toward a la carte pricing for all services.

Reggie Smith from JPMorgan Chase & Co. inquired about trends in gross application volumes, approval rates, new account engagement, and the company's wallet share and long-term penetration goals with its top 10 partners.

Answer

CEO Ralph Andretta stated that application flow is strong and approval rates are appropriate for the current economic conditions, highlighting the new crypto.com partnership as an example of modern engagement. Regarding top partners, he emphasized that with long-term renewals secured, the focus is now on execution and deepening relationships to drive growth, rather than on renegotiations.

On behalf of Reggie Smith, an analyst inquired whether Cipher has seen changes in the types of workloads, such as model training versus inference, that potential HPC counterparties want to run, and how workload type might impact negotiations or site development.

Answer

CEO Tyler Page stated that potential tenants are interested in capacity for a variety of use cases, and lease discussions have not been explicitly differentiated by workload type. However, he acknowledged that the low-latency requirements for inference applications do appear to drive higher interest in certain sites that are less remote, such as the '3M' sites, compared to Black Pearl. He noted that interest remains strong across the entire portfolio for multiple HPC applications.