Robert Wildhack

Rob Wildhack from Autonomous Research asked for details on Global-e's approach and timeframe for executing its $200 million share repurchase program. He also sought clarification on the bridge between adjusted EBITDA and free cash flow, both for current guidance and longer-term targets.

Answer

Amir Schlachet, Co-founder and CEO, Global-e, stated plans to begin executing the share buyback soon, with pace dependent on market conditions. Nir Debbi, Co-founder and President, Global-e, explained that free cash flow typically correlates with but is higher than adjusted EBITDA on a full-year basis, supported by working capital and expected to improve with scale, aligning with long-term targets.

Rob Wildhack asked for additional details on Global-e's approach and time frame for executing the $200 million share repurchase program. He also inquired about the bridge between adjusted EBITDA and free cash flow, both in relation to current guidance and the longer-term target of mid-to-high 20% margins, seeking specific numbers for free cash generation.

Answer

Amir Schlachet, Co-founder and CEO, Global-e, stated plans to begin executing the share repurchase program soon, with the pace dependent on market conditions. Nir Debbi, Co-founder and President, Global-e, explained that for the full year, free cash flow typically correlates with but is higher than adjusted EBITDA, primarily supported by working capital. He expects this trend to continue, with efficiencies of scale driving improvements in both EBITDA and free cash flow.

Rob Wildhack asked about the expected quarter-over-quarter cadence in 2025 and 2026, reflecting seasonality compared to 2024. He also inquired about the sources of Figure's advantage in lower origination costs and faster closing times, specifically how much stems from blockchain-based infrastructure versus traditional tech improvements, for defensibility against other fintechs expanding HELOC businesses.

Answer

Macrina Kgil (CFO) acknowledged expected seasonality in Q4 and Q1 but balanced it with Figure's strong Q3 growth and partner interest, suggesting a more balanced approach. Michael Tannenbaum (CEO) emphasized that Figure has built an alternative capital market with deep liquidity, ratings, and tokenization, using blockchain for transparency and data immutability. He stated Figure's differentiation lies in the integration of its capital market and technology, where automation works synergistically, unlocking high margins and growth.

Rob Wildhack asked if Figure Technology Solutions expects the quarter-over-quarter cadence in 2025 to reflect 2024 seasonality, and any differences heading into 2026. He also questioned the sources of Figure's competitive advantage in lower origination costs and faster time to close, particularly how much stems from blockchain infrastructure versus traditional tech improvements, and its impact on defensibility.

Answer

CFO Macrina Kgil acknowledged Q3's outsized growth and expects some seasonality in Q4 and Q1, but noted it would be balanced by strong partner success. CEO Michael Tannenbaum explained Figure's advantage comes from building an alternative capital market with deep liquidity, ratings, and tokenization, using blockchain for data transparency and immutability (e.g., lien perfection). He stressed that the integration of Figure's capital market and technology, rather than just traditional tech improvements, unlocks high margins and growth, making HELOCs a 'primitive' to this broader marketplace.

Rob Wildhack requested more details on the extended Amazon agreement, including the conversation progression and any new or interesting aspects. He also asked about the trend of lower merchant fee rates for core 0% longer-term loans.

Answer

Max Levchin stated the five-year extension signifies a long-term commitment and satisfaction with the service provided to consumers. Rob O'Hare explained that the lower trend in 0% longer-term merchant fee rates was due to a one-off adjustment with a single, significant merchant that had a high proportion of such loans.

Rob Wildhack asked for more details on the Amazon agreement extension, including the conversation's progression and any new aspects, and also about the core 0% longer-term merchant fee rate trending lower.

Answer

Max Levchin, Founder and CEO, highlighted the five-year extension with Amazon as a significant long-term commitment, reflecting satisfaction with their service. Regarding merchant fee rates, he explained that a one-off adjustment to a single, significant merchant's program, which had a high proportion of long-dated 0% loans, caused the trend.

Robert Wildhack of Autonomous Research asked why competitors have not adopted the 0% APR product as vigorously as Affirm. He also sought clarification on the timing of an enterprise merchant's transition off the platform.

Answer

Founder & CEO Max Levchin attributed Affirm's lead in 0% APR to their superior and complex underwriting capabilities, which are difficult to replicate. He noted it's a multivariate problem involving real-time pricing, merchant subsidies, and compliance. CFO Rob O'Hare clarified that the guidance assumes the enterprise partner will be wound down by the end of fiscal Q1.

Robert Wildhack of Autonomous Research asked for the underlying assumptions in Affirm's recession sensitivity analysis and inquired about the strategic importance and technical difficulty of its credit bureau reporting initiatives.

Answer

CEO Max Levchin explained the recession analysis is based on empirical data from past stress events, focusing on necessary credit adjustments. CFO Robert O'Hare added they focus more on internal loan book signals than external macro indicators. On credit reporting, Levchin stated it's a core mission to help consumers build credit responsibly, despite the complexity, and called on competitors to follow suit.

Robert Wildhack asked about the drivers behind the accelerating growth in active customers, the impact of 0% APR offers on this growth, and the drivers of the sequential increase in non-GAAP sales and marketing expenses.

Answer

CEO Max Levchin attributed the active consumer growth to a deliberate, multi-quarter focus on direct-to-consumer initiatives like the Affirm Card and expanded e-commerce coverage, not a loosening of credit standards. CFO Robert O'Hare explained that the marketing spend increase was to support new program launches but did not represent a change in strategy away from point-of-sale user acquisition. He noted that overall OpEx is expected to remain relatively flat for the next two quarters.

Robert Wildhack asked for early insights on the U.K. launch, including merchant reception and Affirm's competitive advantage, and also inquired about the broader competitive landscape and sustaining growth.

Answer

CEO Max Levchin described a very strong reception in the U.K., driven by high merchant demand for longer-term financing, which he views as an underserved market. He stated Affirm's competitive moat is its sophisticated underwriting technology and data infrastructure, which has proven successful in the U.S. and is now being deployed in Europe.

Robert Wildhack asked how the current interest rate curve and market expectations for rate cuts are factored into Affirm's fiscal 2025 approval and growth outlook.

Answer

CEO Max Levchin clarified that future rate expectations are not explicitly used in real-time underwriting; the effect is lagged as it gets priced into new capital deals. CFO Michael Linford added a key caveat: if rates are cut due to economic weakness and a loosening labor market, they would need to adjust approval models for increased credit risk, potentially offsetting the benefit of lower funding costs.

Robert Wildhack asked for the underlying assumptions in Affirm's recession sensitivity analysis and questioned the strategic importance and technical challenges of reporting loan data to credit bureaus.

Answer

CEO Max Levchin explained the recession analysis is based on empirical data from past stress events, not specific macroeconomic forecasts. Regarding credit bureaus, he stressed its importance for helping consumers build credit, a process that required years of work with partners like TransUnion and Experian to ensure data was incorporated accurately and beneficially. CFO Robert O'Hare added that for recession planning, they focus more on their own loan book's performance due to its fast turnover.

Robert Wildhack questioned the dichotomy between Upstart's UMI data (lower for subprime, higher for prime) and broader K-shaped economy headlines, and asked for drivers behind lower-than-expected Engineering and G&A operating expenses.

Answer

CTO Paul Gu explained Upstart's direct data shows a U-shaped economy: sub-660 FICO (low end) and 800+ FICO (very high end) are in good shape, while the 720-750 FICO segment (prime unsecured) shows elevated default rates. Paul Gu attributed lower OpEx to ongoing fixed expense discipline and mechanical adjustments from a reduced business outlook, impacting bonus payouts and compensation accruals.

Robert Wildhack questioned the discrepancy between UMI suggestions (lower for subprime, higher for prime) and broader market headlines about a K-shaped economy, and asked about the drivers for lower sequential Engineering and G&A expenses.

Answer

Paul Gu, CTO of Upstart, explained that Upstart's data shows a U-shaped trend: mid-600s FICO population is in good shape, 720-750 segment has elevated default rates, and 800+ segment is doing very well but may not borrow unsecured. He attributed lower OpEx to ongoing fixed expense discipline and mechanical adjustments to lower business outlook, reducing bonus payouts and comp accruals.

Robert Wildhack from Autonomous Research asked about the drivers behind the quarterly fair value adjustment, the NII guidance, how Upstart manages adverse selection, and how it competes with deposit-funded lenders.

Answer

CFO Sanjay Datta cited UMI fluctuations, risk capital deal timing, and loan seasoning as drivers of fair value volatility. CEO Dave Girouard explained that adverse selection is managed through competitive capital costs and advanced models like 'APR as a feature.' He noted that ~25% of loans are already funded by partner deposits, and non-depository capital is becoming more competitive.

Robert Wildhack asked about the drivers behind the quarterly fair value adjustment and NII guidance, how Upstart manages adverse selection in a competitive market, and how it competes with deposit-funded lenders.

Answer

CFO Sanjay Datta explained that fair value is complex, impacted by UMI trends, risk-capital deal timing, and loan seasoning. CEO Dave Girouard stated that adverse selection is managed through competitive capital costs and sophisticated models like 'APR as a feature.' He added that ~25% of loans are already funded by partner deposits, and non-depository capital is becoming more competitive.

Robert Wildhack asked why the full-year guidance was not raised more significantly given the new Fortress funding agreement. He also inquired about the specifics of the OnePay/Walmart deal, including underwriting control and economics.

Answer

CEO David Girouard explained that Upstart's growth is gated by the economic acquisition of borrowers, not by a shortage of funding, so the Fortress deal doesn't directly translate to higher guidance. Regarding the OnePay partnership, he confirmed it uses Upstart's models for underwriting and involves a revenue-sharing agreement that is a 'win-win' for both parties.

Robert Wildhack of Autonomous Research US LP questioned why contribution margins wouldn't decline with significant volume growth, which typically requires more marketing spend. He also asked if at-will ABS buyers are returning meaningfully and if the 2025 outlook assumes a rebound in that channel.

Answer

CFO Sanjay Datta explained that contribution margins are not expected to fall because the company can scale efficiently; any reduction would be a conscious strategic decision to lower take rates for future growth, not a result of rising unit costs. He added that while conversations with at-will buyers are positive, it's too soon to call a trend, and the 2025 guidance does not rely on a specific rebound in the ABS market.

Robert Wildhack from Autonomous Research inquired about the T-Prime program's economics, specifically its fee structure and contribution margins, and asked for thoughts on the broader competitive landscape.

Answer

CEO Dave Girouard explained that T-Prime loans have thinner but positive margins, allowing Upstart to capture contribution dollars from a new, highly-competed market segment. He noted that overall contribution margins are currently high and will likely normalize. On competition, he expressed confidence in Upstart's proprietary underwriting and integrated platform model.

Robert Wildhack with Autonomous Research asked for an update on Ally Financial's flow-to-loss trends, specifically whether they remain as favorable as earlier in the year. He also questioned if the Q1 2020 CET1 ratio of 8.5% (fully marked for CECL) could serve as a reasonable benchmark for future capital return potential, considering it was a period of stock buybacks.

Answer

CFO Russ Hutchinson confirmed that flow-to-loss rates continue to be favorable, even as overall delinquency levels have started to decline. On capital, CFO Russ Hutchinson reiterated that share repurchases remain a key priority, emphasizing that continued improvement in the fully phased-in CET1 ratio and organic capital generation are the primary factors for determining the appropriate timing to resume repurchases, acknowledging the factors raised by the analyst as important benchmarks.

Robert Wildhack asked if Ally's willingness to unwind credit underwriting curtailments has changed and how that might affect originated yield. He also inquired about the used car price outlook embedded in the company's guidance and the sensitivity to potential price increases.

Answer

CFO Russ Hutchinson explained that Ally is taking a very cautious approach to unwinding curtailments due to macroeconomic uncertainty, particularly around trade policy. He noted that strong performance from 2024 vintages provides a cushion. For used car prices, Hutchinson said their models assume prices remain about 20% above pre-pandemic levels. He added that while it's too early to call, tariffs on new vehicles could intuitively have a positive impact on used vehicle values, which would benefit Ally's credit severity and lease gains.

Robert Wildhack asked for details on Ally's plan to unwind credit curtailment actions, including the potential benefit to origination yields and the rationale for this move given credit volatility. He also sought to quantify the 2025 NIM impact from the EV lease accounting change.

Answer

CFO Russ Hutchinson explained that unwinding curtailment actions will be a gradual, continuous process of tweaking underwriting at a micro-segment level, not a single event. This unwind is expected to offset the impact of falling benchmark rates, keeping origination yields in the high 9% to 10% range. Regarding the EV accounting change, Hutchinson and CEO Michael Rhodes declined to provide a pro-forma NIM without the change, stating the new deferral method better reflects the business economics and provides more transparency than the previous lumpy flow-through method.

Robert Wildhack questioned if underwriting curtailments would significantly reduce near-prime exposure and how that might affect dealer relationships and application flow. He also asked about the current competitive landscape and if re-entering competitors are impacting origination yields.

Answer

CFO Russ Hutchinson stated that dealer relationships remain strong because Ally is a consistent, full-spectrum partner, which maintains high application flow. CEO Michael Rhodes added that competitors are re-entering mostly in the prime space, where Ally has less volume, and that Ally's "through the cycle" presence is valued by dealers. He affirmed they feel good about the risk-adjusted margins on new business.

Rob Wildhack inquired about partner receptivity to co-funding credits and rewards, how this has changed over recent refresh cycles, and any unique differences between the Gold and Platinum refreshes on this theme.

Answer

Chairman and CEO Stephen Squeri noted that partners are eager to work with American Express due to its customer base, citing the Uber relationship as an example of successful co-funding. He emphasized the strategy of expanding value propositions from pure travel to lifestyle, wellness, retail, and digital, ensuring they appeal across generations. He also highlighted that different products like Gold and Platinum target specific audiences with tailored value propositions, such as Gold's emphasis on dining.

Robert Wildhack asked for more detail on the integration of SMB technology platforms like Kabbage and Center, and the timeline for a fully integrated product suite.

Answer

CEO Stephen Squeri explained that the Kabbage platform currently integrates card, loan, and checking account access for SME customers. The next step is to integrate the recently acquired Center platform. However, he did not provide a specific timeline, noting the deal had just closed and requires 'hardening' to meet bank holding company standards before full integration.

Rob Wildhack asked about the waypoints Synchrony is looking for to unwind credit tightening, focusing on whether it's more macro-related or driven by internal credit results. He followed up by asking for advice on the puts and takes for NII and NIM, extrapolating the Q4 exit rate beyond the current quarter.

Answer

Brian Wenzel (EVP and CFO) stated that reversing tightening is a combination of a clearer macro environment (despite mixed labor market signals) and consistent strong performance of Synchrony's portfolio. Brian Doubles (President and CEO) added that internal portfolio performance alone would suggest more opening, but macro signals cause pause. For NII and NIM, Brian Wenzel highlighted the increasing mix of loan receivables as a percentage of earning assets as the biggest Q4 driver, with PPPC lift on loan yield and benefits from earlier actions on interest expense contributing to an expected step-up in NIM.

Robert Wildhack from Autonomous Research questioned if the current macro uncertainty alters Synchrony's plan to maintain higher liquidity levels to prefund growth. He also asked for an analysis of the outperformance in Dual Card and co-brand products and the outlook for their growth versus private label cards.

Answer

CFO Brian Wenzel affirmed the strategy to maintain higher liquidity in the first half of the year, as it provides pricing flexibility on maturing CDs and is economically positive. He attributed Dual Card growth to the success of the CareCredit offering, which provides flexibility for out-of-network spending. CEO Brian Doubles added that the multiproduct strategy allows them to migrate customers from private label to dual cards as they demonstrate creditworthiness, which is a key value proposition for partners.

Rob Wildhack asked for insight into the expected progression of loan growth throughout 2025 and what waypoints to watch for a potential loosening of credit. He also sought clarification on the 2025 deposit beta assumption of 60% compared to prior commentary.

Answer

EVP and CFO Brian Wenzel projected that Q1 would be the most challenging for loan growth, with acceleration expected through the rest of the year. He clarified that loosening credit is not in the base plan but could be considered later, with a key waypoint being the successful delivery on the 2025 charge-off guidance. On deposit betas, he explained the 60% assumption reflects the typical lag for digital banks and the timing of the single rate cut assumed late in the year.

Rob Wildhack from Autonomous Research inquired about the new merchant acquisition pipeline for both SMB and enterprise, questioning if market uncertainty was causing hesitation among potential new customers.

Answer

President Harley Finkelstein countered that market uncertainty is actually accelerating the move to Shopify, especially for larger brands. He explained that legacy and custom-built platforms are being exposed as slow and restrictive, driving brands to seek Shopify's agility, lower total cost of ownership, and rapid feature deployment. He confirmed the new merchant pipeline has not slowed down.

Robert Wildhack asked about the potential for increased volatility in forecasted collections given the broader economic environment. He also questioned if the source of volatility (e.g., inflation vs. tariffs) makes a difference in its impact and inquired about the reasons for maintaining a high cash balance for several consecutive quarters.

Answer

Executive Jay Martin acknowledged that forecasting is challenging due to inflation, potential tariffs, and recession risks, but stated the current forecast is their best estimate. He also noted the 2022 vintage was impacted by multiple factors, including a competitive environment and peak vehicle valuations. SVP & Treasurer Jay Brinkley added that loans are priced with a large margin of safety to absorb volatility. Brinkley also explained the high cash balance reflects a conservative stance amid capital market uncertainty, and the company felt good about the timing of its recent debt issuances.

Robert Wildhack asked if the smaller negative revisions to forecasted collections for two consecutive quarters suggest the worst of the downward revisions is over. He also questioned whether the company might now hold excess capital, given recent capital raising activities followed by slowing origination growth.

Answer

CEO Kenneth Booth responded that while their forecast always reflects their best estimate, the recent smaller decline was notable and primarily driven by the 2022 vintage, which is becoming less material. He added that the 2023 and 2024 cohorts, which are more significant for future results, remained stable. SVP & Treasurer Jay Brinkley addressed the capital position, stating that the company prefers to be conservative and maintain a solid cash position heading into the busy tax season and potential market uncertainty, and feels comfortable with its current standing.

Robert Wildhack asked for clarification on the expected performance of the 2023 and 2024 vintages relative to the 2022 vintage, the potential collection impact from recent hurricanes, and for context on the economic profit of a strong vintage like 2019 versus the underperforming 2022 vintage.

Answer

CEO Kenneth Booth stated that the 2023 and 2024 vintages are expected to perform better than 2022 because their initial forecasts were more conservative. Chief Treasury Officer Douglas Busk added the underperformance trend is similar but less severe. Mr. Booth noted hurricane impact is not material to the overall portfolio. Regarding profitability, Mr. Busk confirmed a wide variance between vintages like 2019 (highly profitable) and 2022 (less profitable) but affirmed that all vintages are expected to generate positive economic profit.

Robert Wildhack asked for specifics on the investment strategies and levers Capital One plans to use to solve the 'chicken and egg' problem of building international network acceptance.

Answer

Richard Fairbank, Chairman and CEO, explained that the strategy is to expand on Discover's existing playbook. This involves a 'boots on the ground' effort combining partnerships with other networks, working through merchant acquirers, collaborating with local financial institutions, and direct-to-merchant engagement. He stated Capital One will lean into this proven approach more heavily, leveraging the combined company's scale.