Affirm (NASDAQ:AFRM) Chief Operating Officer Michael Linford outlined the company’s product strategy, underwriting model, funding approach and growth plans during a presentation at the William Blair Growth Stock Conference, emphasizing the buy now, pay later provider’s focus on “honest financial products” and transaction-level credit decisions.
Linford said Affirm’s mission remains “to deliver honest financial products that improve lives,” adding that the company’s model is designed to align its interests with consumers. He contrasted Affirm’s installment loans with traditional credit cards, noting that Affirm does not charge late fees, deferred interest or compounding interest. He said interest is fixed and capped at checkout, and consumers know the full cost of a purchase before agreeing to financing.
Product Mix and Consumer Offerings
Linford described Affirm’s core products as interest-bearing installment loans, 0% APR monthly loans and shorter-duration “Pay in X” products, including pay-in-four and pay-in-weeks options. He said annual percentage rates for monthly loans range from 0% to 36%, while Pay in X products are always 0% APR.
About one-third of Affirm’s gross merchandise volume in its third quarter came from 0% APR offers, which Linford described as “true zero” loans because consumers cannot pay more than the purchase amount. He said roughly 45% of originations in a typical quarter are fully repaid by the time the company reports earnings, reflecting the short duration of its loan book.
Linford also highlighted the Affirm Card, which allows consumers to use Affirm’s installment-loan features through a physical card or online card number. He said the product does not create revolving balances and instead continues to generate closed-end installment loans. According to Linford, Affirm has more than 4 million active cardholders, and spending per user on the card is about three times the average spend elsewhere across Affirm.
Merchant Network and Distribution
Affirm’s merchant network remains central to its customer acquisition strategy, Linford said. The company does not pay to acquire users in the traditional sense, he said, instead meeting consumers at merchant points of sale.
Linford said Affirm’s app receives 15 million visitors each month, including 1 million new monthly visitors, and that 10,000 merchants advertise in the app in some form. He also said more than 4 million checkouts occur inside Affirm’s app surface.
The company has added 157,000 merchants over the past 12 months, according to Linford, helped by partnerships with software platforms that serve smaller businesses, including Shopify and Intuit QuickBooks. He said Affirm’s reach spans large merchants as well as smaller sellers across categories such as travel, lifestyle, fashion, beauty and medical spas.
Underwriting and Funding
Linford said Affirm’s transaction-level underwriting is a key structural advantage. Unlike credit card issuers that may review a borrower’s line periodically, Affirm makes a credit decision each time a consumer seeks financing, he said. That approach, combined with its data and modeling capabilities, allows the company to manage risk and price credit more precisely, according to Linford.
He also discussed Affirm’s capital markets funding strategy, saying the company benefits from its ability to “dial in” expected credit losses. Linford said Affirm funds its business through a mix of forward-flow loan sales, asset-backed securitizations and warehouse facilities. From a capacity standpoint, he said funding is about 45% forward flow, roughly one-quarter ABS and about one-third warehouse funding.
Linford said Affirm sells whole loans with no recourse to the company and seeks long-term funding partners capable of scaling relationships beyond $1 billion. He noted that Affirm announced an extension of its relationship with CPPIB the same morning as the presentation and also cited Sixth Street Partners as an example of a long-term credit investor.
Financial Performance and Growth Outlook
Linford said Affirm generated around $4 billion in trailing 12-month revenue, with revenue compounding at 38% since 2021. The company earns revenue from merchants, consumer interest, servicing loans and loan sales, he said, adding that loan sales are a recurring part of the company’s funding model rather than episodic transactions.
He said Affirm’s revenue less transaction costs has remained near 4% of gross merchandise volume over the past several quarters. The company recently updated its medium-term framework to target that metric between 3.75% and 4% as it scales toward $100 billion in GMV, Linford said.
Linford said Affirm has also improved profitability, noting that the company turned GAAP profitable on a quarterly basis entering the current fiscal year and has generated close to 30% adjusted operating margins. He said the company sees continued opportunity for operating leverage while still growing revenue.
Looking ahead, Linford said Affirm expects more than 25% compounded growth as it works toward doubling the business to $100 billion in GMV. He said that growth is expected to come from merchant point-of-sale activity, direct-to-consumer channels and a smaller contribution from international expansion.
Linford identified international markets as a significant opportunity, noting that Affirm recently launched in the U.K. and has “basically no presence out of North America today.” He said the rest of Europe and Australia represent an additional $1.7 trillion addressable market, while emphasizing that the U.S. will remain Affirm’s core market for the foreseeable future.
He also pointed to newer initiatives including Affirm Edge, which aims to bring Affirm’s pay-over-time features to bank debit cards, and agentic commerce, though he said those opportunities remain early and were not included in the company’s core growth framework.
About Affirm (NASDAQ:AFRM)
Affirm Holdings, Inc is a financial technology company that provides point-of-sale consumer lending and payments solutions for online and in-store purchases. Its core product is a buy-now-pay-later (BNPL) platform that enables consumers to split purchases into fixed, transparent installment loans with no hidden fees. Affirm offers a range of financing options through merchant integrations, a consumer-facing mobile app and virtual card capabilities, and tools for merchants to offer alternative payment methods at checkout.
