Affirm Holdings, Inc.AFRM
Affirm Holdings, Inc. Fair Value Disclosure
Fair Value of Financial Assets and Liabilities
Financial Assets and Liabilities Recorded at Fair Value
The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2025 and June 30, 2024 (in thousands):
| June 30, 2025 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | 70,920 | $ | — | $ | — | $ | 70,920 | ||||||||||||||||||
| Agency Bonds | — | 3,493 | — | 3,493 | ||||||||||||||||||||||
| Commercial paper | — | 12,564 | — | 12,564 | ||||||||||||||||||||||
| Government bonds- US | — | 4,995 | — | 4,995 | ||||||||||||||||||||||
| Securities, available for sale: | ||||||||||||||||||||||||||
| Certificates of deposit | — | 39,008 | — | 39,008 | ||||||||||||||||||||||
| Corporate bonds | — | 264,199 | — | 264,199 | ||||||||||||||||||||||
| Commercial paper | — | 126,761 | — | 126,761 | ||||||||||||||||||||||
| Agency bonds | — | 7,854 | — | 7,854 | ||||||||||||||||||||||
| Municipal bonds | — | 6,076 | — | 6,076 | ||||||||||||||||||||||
| Government bonds: | ||||||||||||||||||||||||||
| Non-US | — | 5,340 | — | 5,340 | ||||||||||||||||||||||
| US | — | 344,434 | — | 344,434 | ||||||||||||||||||||||
| Securitization notes receivable and residual trust certificates | — | — | 75,469 | 75,469 | ||||||||||||||||||||||
| Residual interests in structured transactions | — | — | 2,284 | 2,284 | ||||||||||||||||||||||
| Servicing assets | — | — | 906 | 906 | ||||||||||||||||||||||
| Interest rate derivatives | — | 2,644 | — | 2,644 | ||||||||||||||||||||||
| Risk sharing asset | — | — | 43,179 | 43,179 | ||||||||||||||||||||||
| Total assets | $ | 70,920 | $ | 817,368 | $ | 121,838 | $ | 1,010,126 | ||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Servicing liabilities | $ | — | $ | — | $ | 41 | $ | 41 | ||||||||||||||||||
| Performance fee liability | — | — | 1,870 | 1,870 | ||||||||||||||||||||||
| Profit share liability | — | — | 9,323 | 9,323 | ||||||||||||||||||||||
| Risk sharing liability | — | — | 90 | 90 | ||||||||||||||||||||||
| Interest rate derivatives | — | 15 | — | 15 | ||||||||||||||||||||||
| Total liabilities | $ | — | $ | 15 | $ | 11,324 | $ | 11,339 | ||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||
| Cash and cash equivalents: | ||||||||||||||||||||||||||
| Money market funds | $ | 63,389 | $ | — | $ | — | $ | 63,389 | ||||||||||||||||||
| Commercial paper | — | 57,964 | — | 57,964 | ||||||||||||||||||||||
| Government bonds- US | — | 3,492 | — | 3,492 | ||||||||||||||||||||||
| Securities, available for sale: | ||||||||||||||||||||||||||
| Certificates of deposit | — | 34,473 | — | 34,473 | ||||||||||||||||||||||
| Corporate bonds | — | 242,660 | — | 242,660 | ||||||||||||||||||||||
| Commercial paper | — | 239,882 | — | 239,882 | ||||||||||||||||||||||
| Agency bonds | — | 15,159 | — | 15,159 | ||||||||||||||||||||||
| Municipal bonds | — | 3,953 | — | 3,953 | ||||||||||||||||||||||
| Government bonds: | ||||||||||||||||||||||||||
| Non-US | — | 5,275 | — | 5,275 | ||||||||||||||||||||||
| US | — | 538,556 | — | 538,556 | ||||||||||||||||||||||
| Securitization notes receivable and residual trust certificates | — | — | 51,670 | 51,670 | ||||||||||||||||||||||
| Servicing assets | — | — | 574 | 574 | ||||||||||||||||||||||
| Interest rate derivatives | — | 17,207 | — | 17,207 | ||||||||||||||||||||||
| Risk sharing asset | $ | 33,884 | $ | 33,884 | ||||||||||||||||||||||
| Total assets | $ | 63,389 | $ | 1,158,621 | $ | 86,128 | $ | 1,308,138 | ||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||
| Servicing liabilities | $ | — | $ | — | $ | 743 | $ | 743 | ||||||||||||||||||
| Performance fee liability | — | — | 1,503 | 1,503 | ||||||||||||||||||||||
| Profit share liability | — | — | 1,974 | 1,974 | ||||||||||||||||||||||
| Risk sharing liability | — | — | 918 | 918 | ||||||||||||||||||||||
| Interest rate derivatives | — | 38 | — | 38 | ||||||||||||||||||||||
| Total liabilities | $ | — | $ | 38 | $ | 5,138 | $ | 5,176 | ||||||||||||||||||
As of June 30, 2025 and June 30, 2024, there were no transfers between levels.
Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 2)
Cash and Cash Equivalents and Securities Available for Sale
As of June 30, 2025, we held level 2 debt securities classified as cash and cash equivalents and securities available for sale. Management obtains pricing from one or more third-party pricing services for the purpose of determining fair value. Whenever available, the fair value is based on quoted bid prices as of the end of the trading day. When quoted prices are not available, other methods may be utilized including evaluated prices provided by third-party pricing services.
Derivative Instruments
As of June 30, 2025 and June 30, 2024, we used a combination of interest rate cap agreements and interest rate swaps to manage interest costs and the risks associated with variable interest rates. These derivative instruments are classified as Level 2 within the fair value hierarchy, and the fair value is estimated by using third-party pricing
models, which contain certain assumptions based on readily observable market-based inputs. We validate the valuation output on a monthly basis. Refer to Note 12. Derivative Financial Instruments in the notes to the consolidated financial statements for further details on our derivative instruments.
Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Unobservable Inputs (Level 3)
We evaluate our assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. Since our servicing assets and liabilities, performance fee liability, securitization notes and residual trust certificates, residual interests in structured transactions, profit share liability, and risk sharing arrangements do not trade in an active market with readily observable prices, we use significant unobservable inputs to measure fair value and have classified as level 3 within the fair value hierarchy. This determination requires significant judgments to be made.
The following significant unobservable inputs, as applicable, were used in the fair value measurement of the Company’s Level 3 assets and liabilities:
•Adequate Compensation - The compensation rate is expressed as a percentage of the outstanding loan balance that a willing market participant would require for servicing loans with similar characteristics.
•Discount Rate - The rate used to discount estimated future cash flows to present value in determining fair value. It reflects the rate of return market participants would require to compensate for time value of money plus a premium based on relative risk, liquidity and other market based factors.
•Default Rate - The estimated annualized rate of charge-offs affecting the projected unpaid principal balance and expected term of the loan portfolio.
•Loss Rate - The estimated lifetime rate of loan charge-offs as a percentage of the initial settled principal balance.
•Prepayment Rate - The estimated annualized excess loan payment received in a given month as a percentage of the outstanding principal balance at the beginning of the month minus the scheduled principal payment.
•Refund Rate - The rate of refunded transactions as a percentage of the outstanding loan balance over the remaining life of the loan portfolio.
•Program Profitability - The estimated future profit to be shared with enterprise partners as a percentage of total loans outstanding, based on the terms of the respective commercial agreements.
Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.
Servicing Assets and Liabilities
We sold loans with an unpaid principal balance of $15.8 billion, $10.2 billion, and $7.5 billion for the years ended June 30, 2025, 2024, and 2023, respectively, for which we retained servicing rights. As of June 30, 2025 and June 30, 2024, we serviced loans which we sold with a remaining unpaid principal balance of $7.8 billion and $5.1 billion, respectively. We earned $120.6 million, $95.5 million, and $87.5 million of servicing income for the years ended June 30, 2025, 2024, and 2023, respectively.
We use discounted cash flow models to arrive at an estimate of fair value. As of June 30, 2025 and June 30, 2024, the aggregate fair value of the servicing assets was measured at $0.9 million and $0.6 million, respectively, and presented within other assets in the consolidated balance sheets. As of June 30, 2025 and June 30, 2024, the aggregate fair value of the servicing liabilities was $0.04 million and $0.7 million, respectively, and presented within accrued expenses and other liabilities in the consolidated balance sheets.
The following table summarizes the activity related to the aggregate fair value of our servicing assets (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 574 | $ | 880 | ||||||||||
| Initial transfers of financial assets | 484 | — | ||||||||||||
| Subsequent changes in fair value | (152) | (306) | ||||||||||||
| Fair value at end of period | $ | 906 | $ | 574 | ||||||||||
The following table summarizes the activity related to the aggregate fair value of our servicing liabilities (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 743 | $ | 1,392 | ||||||||||
| Initial transfers of financial liabilities | — | 5,485 | ||||||||||||
| Subsequent changes in fair value | (702) | (6,134) | ||||||||||||
| Fair value at end of period | $ | 41 | $ | 743 | ||||||||||
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of servicing assets and liabilities as of June 30, 2025 and June 30, 2024:
| June 30, 2025 | ||||||||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||||||||
| Servicing assets | Discount Rate | 30.00 | % | 30.00 | % | 30.00 | % | |||||||||||||||||||
| Adequate Compensation | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||||||||||
| Default Rate | 10.24 | % | 15.68 | % | 12.04 | % | ||||||||||||||||||||
| Servicing liabilities | Discount Rate | 30.00 | % | 30.00 | % | 30.00 | % | |||||||||||||||||||
| Adequate Compensation | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||||||||||
| Default Rate | 3.71 | % | 7.89 | % | 5.26 | % | ||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||||||||
| Servicing assets | Discount Rate | 30.00 | % | 30.00 | % | 30.00 | % | |||||||||||||||||||
| Adequate Compensation | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||||||||||
| Default Rate | 9.89 | % | 22.72 | % | 10.84 | % | ||||||||||||||||||||
| Servicing liabilities | Discount Rate | 30.00 | % | 30.00 | % | 30.00 | % | |||||||||||||||||||
| Adequate Compensation | 2.00 | % | 2.00 | % | 2.00 | % | ||||||||||||||||||||
| Default Rate | 2.58 | % | 4.12 | % | 3.00 | % | ||||||||||||||||||||
(1)Unobservable inputs were weighted by relative fair value
The following table summarizes the effect that adverse changes in estimates would have on the fair value of the servicing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Servicing assets | ||||||||||||||
| Default Rate assumption: | ||||||||||||||
| Default Rate increase of 25% | $ | 1 | $ | 1 | ||||||||||
| Default Rate increase of 50% | $ | 2 | $ | 1 | ||||||||||
| Adequate Compensation assumption: | ||||||||||||||
| Adequate Compensation increase of 10% | $ | (1,439) | $ | (980) | ||||||||||
| Adequate Compensation increase of 20% | $ | (2,879) | $ | (1,961) | ||||||||||
| Discount Rate assumption: | ||||||||||||||
| Discount Rate increase of 25% | $ | (35) | $ | (23) | ||||||||||
| Discount Rate increase of 50% | $ | (66) | $ | (44) | ||||||||||
| Servicing liabilities | ||||||||||||||
| Default Rate assumption: | ||||||||||||||
| Default Rate increase of 25% | $ | — | $ | (1) | ||||||||||
| Default Rate increase of 50% | $ | — | $ | (1) | ||||||||||
| Adequate Compensation assumption: | ||||||||||||||
| Adequate Compensation increase of 10% | $ | 4,593 | $ | 3,153 | ||||||||||
| Adequate Compensation increase of 20% | $ | 9,186 | $ | 6,305 | ||||||||||
| Discount Rate assumption: | ||||||||||||||
| Discount Rate increase of 25% | $ | (1) | $ | (19) | ||||||||||
| Discount Rate increase of 50% | $ | (1) | $ | (37) | ||||||||||
Performance Fee Liability
In accordance with our agreements with our originating bank partners, we pay a fee for each loan that is fully repaid by the consumer, due at the end of the period in which the loan is fully repaid. We recognize a liability upon the purchase of a loan for the expected future payment of the performance fee. This liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the consolidated balance sheets. Any changes in the fair value of the liability are reflected in other income, net, in the consolidated statements of operations and comprehensive income (loss).
The following table summarizes the activity related to the fair value of the performance fee liability (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 1,503 | $ | 1,581 | ||||||||||
| Purchases of loans | 2,367 | 1,775 | ||||||||||||
| Settlements paid | (2,111) | (1,969) | ||||||||||||
| Subsequent changes in fair value | 111 | 116 | ||||||||||||
| Fair value at end of period | $ | 1,870 | $ | 1,503 | ||||||||||
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the performance fee liability as of June 30, 2025 and June 30, 2024:
| June 30, 2025 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (2) | |||||||||||||||||
| Discount Rate | 7.25% | 10.00% | 9.23% | |||||||||||||||||
| Refund Rate | 1.50% | 1.50% | 1.50% | |||||||||||||||||
Default Rate(1) | 0.87% | 4.65% | 3.07% | |||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (2) | |||||||||||||||||
| Discount Rate | 8.50% | 10.00% | 9.81% | |||||||||||||||||
| Refund Rate | 1.50% | 1.50% | 1.50% | |||||||||||||||||
Default Rate(1) | 1.38% | 4.65% | 2.94% | |||||||||||||||||
(1)The Default Rate is net of recoveries
(2)Unobservable inputs were weighted by remaining principal balances
Securitization Notes Receivable and Residual Trust Certificates
As of June 30, 2025, we held notes receivable and residual trust certificates with an aggregate fair value of $75.5 million in connection with unconsolidated securitizations. The balances correspond to the 5% economic risk retention we are required to maintain as the securitization sponsor.
These assets are measured at fair value using a discounted cash flow model, and presented within securities available for sale at fair value in the consolidated balance sheets. Changes in the fair value, other than declines in fair value due to credit recognized as an allowance, are reflected in in the consolidated statements of operations and comprehensive income (loss). Declines in fair value due to credit are reflected in other income, net in the consolidated statements of operations and comprehensive income (loss).
The following table summarizes the activity related to the fair value of the notes receivable and residual trust certificates (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 51,670 | $ | 18,913 | ||||||||||
| Additions | 84,718 | 58,508 | ||||||||||||
| Cash received (due to payments) | (65,560) | (28,738) | ||||||||||||
| Change in unrealized gain (loss) | (447) | 1,083 | ||||||||||||
| Accrued interest | 5,368 | 2,115 | ||||||||||||
| Reversal of (impairment on) securities available for sale | (280) | (211) | ||||||||||||
| Fair value at end of period | $ | 75,469 | $ | 51,670 | ||||||||||
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the notes receivable and residual trust certificates as of June 30, 2025 and June 30, 2024:
| June 30, 2025 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||
| Discount Rate | 2.86% | 30.29% | 6.89% | |||||||||||||||||
| Default Rate | 0.94% | 8.40% | 7.65% | |||||||||||||||||
| Prepayment Rate | 21.46% | 24.85% | 23.14% | |||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||
| Discount Rate | 5.73% | 41.41% | 8.93% | |||||||||||||||||
| Default Rate | 0.95% | 6.98% | 6.17% | |||||||||||||||||
| Prepayment Rate | 12.40% | 27.70% | 23.33% | |||||||||||||||||
(1)Unobservable inputs were weighted by relative fair value
The following table summarizes the effect that adverse changes in estimates would have on the fair value of the notes receivable and residual trust certificates given hypothetical changes in significant unobservable inputs (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Discount Rate assumption: | ||||||||||||||
| Discount Rate increase of 25% | $ | (727) | $ | (623) | ||||||||||
| Discount Rate increase of 50% | $ | (1,427) | $ | (1,223) | ||||||||||
| Default Rate assumption: | ||||||||||||||
| Default Rate increase of 25% | $ | (2,688) | $ | (705) | ||||||||||
| Default Rate increase of 50% | $ | (3,698) | $ | (1,321) | ||||||||||
| Prepayment Rate assumption: | ||||||||||||||
| Prepayment Rate change of 25% | $ | (130) | $ | — | ||||||||||
| Prepayment Rate change of 50% | $ | (259) | $ | — | ||||||||||
| Prepayment Rate decrease of 25% | $ | — | $ | 58 | ||||||||||
| Prepayment Rate decrease of 50% | $ | — | $ | 116 | ||||||||||
Residual Interests in Structured Transactions
As of June 30, 2025, we held residual interests in structured transactions with an aggregate fair value of $2.3 million in connection with certain forward flow loan sale transactions.
These assets are measured at fair value using a discounted cash flow model, and presented within securities available for sale at fair value in the consolidated balance sheets. Changes in the fair value, except for credit impairments, are reflected in other comprehensive income (loss) in the consolidated statements of operations and comprehensive income (loss).
The following table summarizes the activity related to the fair value of the assets (in thousands):
| June 30, 2025 | ||||||||
| Fair value at beginning of period | $ | — | ||||||
| Capital contribution | 2,173 | |||||||
| Subsequent changes in fair value | 111 | |||||||
| Fair value at the end of period | 2,284 | |||||||
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the residual interests in structured transactions as of June 30, 2025.
| June 30, 2025 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||
| Discount Rate | 20.00% | 20.00% | 20.00% | |||||||||||||||||
| Default Rate | 8.88% | 8.88% | 8.88% | |||||||||||||||||
| Prepayment Rate | 48.85% | 48.85% | 48.85% | |||||||||||||||||
(1)Unobservable inputs were weighted by relative fair value
The following table summarizes the effect that adverse changes in estimates would have on the fair value of the residual interests in structured transactions given hypothetical changes in significant unobservable inputs (in thousands):
| June 30, 2025 | ||||||||
| Discount Rate assumption: | ||||||||
| Discount Rate increase of 20% | $ | (181) | ||||||
| Discount Rate increase of 40% | $ | (343) | ||||||
| Default Rate assumption: | ||||||||
| Default Rate increase of 20% | $ | (28) | ||||||
| Default Rate increase of 40% | $ | (50) | ||||||
| Prepayment Rate assumption: | ||||||||
| Prepayment Rate increase of 20% | $ | (35) | ||||||
| Prepayment Rate increase of 40% | $ | (64) | ||||||
Profit Share Liability
We have commercial agreements with certain enterprise partners, in which we are obligated to share in the profitability of transactions facilitated by our platform. Upon capture of a loan under these programs, we record a liability associated with the estimated future profit to be shared over the life of the loan based on estimated profitability levels of each program. The liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the consolidated balance sheets.
The following table summarizes the activity related to the fair value of the profit share liability (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 1,974 | $ | 1,832 | ||||||||||
| Facilitation of loans | 12,967 | 3,326 | ||||||||||||
| Actual performance | (13,649) | (5,363) | ||||||||||||
| Subsequent changes in fair value | 8,031 | 2,179 | ||||||||||||
| Fair value at end of period | $ | 9,323 | $ | 1,974 | ||||||||||
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the profit sharing liability as of June 30, 2025 and June 30, 2024:
| June 30, 2025 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||
| Discount Rate | 30.00% | 30.00% | 30.00% | |||||||||||||||||
| Program Profitability | 0.23% | 3.28% | 2.86% | |||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||
| Discount Rate | 30.00% | 30.00% | 30.00% | |||||||||||||||||
| Program Profitability | 0.32% | 1.01% | 0.96% | |||||||||||||||||
(1)Unobservable inputs were weighted by relative fair value.
Risk Sharing Arrangements
In connection with certain capital funding arrangements with third-party loan buyers, we have entered into risk sharing agreements where we may be required to make a payment to the loan buyer or are entitled to receive a payment from the loan buyer, depending on the actual versus expected loan performance as contractually agreed to with the counterparty, and subject to a cap based on a percentage of the principal balance of loans sold. Loan performance is evaluated at a cohort level based on the month loans were sold.
We account for these arrangements as derivatives measured at fair value with gains and losses recognized in gain on sales of loans in our consolidated statements of operations and comprehensive income (loss). For each counterparty, we have recognized a net asset or net liability based on the estimated fair value of future payments we expect to receive from or make to the counterparty. As of June 30, 2025, we estimated the fair value of future settlements using a discounted cash flow model.
The following table summarizes the activity related to the fair value of the risk sharing assets (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 33,884 | $ | — | ||||||||||
| Initial transfers of financial assets | 27,658 | 41,669 | ||||||||||||
| Cash settlements | (21,134) | — | ||||||||||||
| Subsequent changes in fair value | 2,771 | (7,785) | ||||||||||||
| Fair value at end of period | $ | 43,179 | $ | 33,884 | ||||||||||
The following table summarizes the activity related to the fair value of the risk sharing liabilities (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Fair value at beginning of period | $ | 918 | $ | — | ||||||||||
| Cash settlements | (1,599) | — | ||||||||||||
| Subsequent changes in fair value | 771 | 918 | ||||||||||||
| Fair value at end of period | $ | 90 | $ | 918 | ||||||||||
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the risk sharing arrangements as of June 30, 2025 and June 30, 2024:
| June 30, 2025 | ||||||||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||||||||
| Risk sharing assets | Discount Rate | 20.00% | 20.00% | 20.00% | ||||||||||||||||||||||
| Loss Rate | 3.32% | 4.91% | 4.13% | |||||||||||||||||||||||
| Prepayment Rate | 19.84% | 22.89% | 21.34% | |||||||||||||||||||||||
| Risk sharing liabilities | Discount Rate | 20.00% | 20.00% | 20.00% | ||||||||||||||||||||||
| Loss Rate | 3.47% | 5.35% | 4.42% | |||||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||
| Unobservable Input | Minimum | Maximum | Weighted Average (1) | |||||||||||||||||||||||
| Risk sharing assets | Discount Rate | 20.00% | 20.00% | 20.00% | ||||||||||||||||||||||
| Loss Rate | 3.00% | 4.69% | 3.66% | |||||||||||||||||||||||
| Prepayment Rate | 23.36% | 33.29% | 28.48% | |||||||||||||||||||||||
| Risk sharing liabilities | Discount Rate | 20.00% | 20.00% | 20.00% | ||||||||||||||||||||||
| Loss Rate | 3.25% | 5.29% | 4.28% | |||||||||||||||||||||||
(1)Unobservable inputs were weighted by principal balance of loans sold under each cohort
The following table summarizes the effect that adverse changes in estimates would have on the fair value of the risk sharing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):
| June 30, 2025 | June 30, 2024 | |||||||||||||
| Risk sharing assets | ||||||||||||||
| Prepayment Rate assumption: | ||||||||||||||
| Prepayment Rate decrease of 25% | $ | (1,896) | $ | — | ||||||||||
| Prepayment Rate decrease of 50% | $ | (3,923) | $ | — | ||||||||||
| Prepayment Rate increase of 25% | $ | — | $ | 572 | ||||||||||
| Prepayment Rate increase of 50% | $ | — | $ | 1,131 | ||||||||||
| Loss Rate assumption: | ||||||||||||||
| Loss Rate increase of 25% | $ | (15,150) | $ | (7,315) | ||||||||||
| Loss Rate increase of 50% | $ | (30,277) | $ | (14,528) | ||||||||||
| Discount Rate assumption: | ||||||||||||||
| Discount Rate increase of 25% | $ | (903) | $ | (1,211) | ||||||||||
| Discount Rate increase of 50% | $ | (1,745) | $ | (2,323) | ||||||||||
| Risk sharing liabilities | ||||||||||||||
| Loss Rate assumption: | ||||||||||||||
| Loss Rate increase of 25% | $ | 16,946 | $ | 22,333 | ||||||||||
| Loss Rate increase of 50% | $ | 24,676 | $ | 41,677 | ||||||||||
| Discount Rate assumption: | ||||||||||||||
| Discount Rate increase of 25% | $ | — | $ | (19) | ||||||||||
| Discount Rate increase of 50% | $ | — | $ | (37) | ||||||||||
Financial Assets and Liabilities Not Recorded at Fair Value
The following table presents the fair value and our assessment of the classification of this measurement within the fair value hierarchy for financial assets and liabilities held at amortized cost as of June 30, 2025 and June 30, 2024 (in thousands):
| June 30, 2025 | ||||||||||||||||||||||||||||||||
| Carrying Amount | Level 1 | Level 2 | Level 3 | Balance at Fair Value | ||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
| Loans held for investment, net | $ | 6,628,606 | $ | — | $ | — | $ | 7,085,840 | $ | 7,085,840 | ||||||||||||||||||||||
| Total assets | $ | 6,628,606 | $ | — | $ | — | $ | 7,085,840 | $ | 7,085,840 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
Convertible senior notes, net (2) | 1,153,000 | — | 1,205,287 | — | 1,205,287 | |||||||||||||||||||||||||||
| Notes issued by securitization trusts | 4,833,855 | — | — | 4,868,980 | 4,868,980 | |||||||||||||||||||||||||||
Funding debt (3) | 1,640,514 | — | — | 1,640,765 | 1,640,765 | |||||||||||||||||||||||||||
| Total liabilities | $ | 7,627,369 | $ | — | $ | 1,205,287 | $ | 6,509,745 | $ | 7,715,032 | ||||||||||||||||||||||
| June 30, 2024 | ||||||||||||||||||||||||||||||||
| Carrying Amount | Level 1 | Level 2 | Level 3 | Balance at Fair Value | ||||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
Loans held for sale (1) | $ | 36 | $ | — | $ | 36 | $ | — | $ | 36 | ||||||||||||||||||||||
| Loans held for investment, net | 5,360,959 | — | — | 5,616,973 | 5,616,973 | |||||||||||||||||||||||||||
Other assets (1) | 43,212 | — | 43,212 | — | 43,212 | |||||||||||||||||||||||||||
| Total assets | $ | 5,404,207 | $ | — | $ | 43,248 | $ | 5,616,973 | $ | 5,660,221 | ||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
Convertible senior notes, net (2) | 1,341,430 | — | 1,124,773 | — | 1,124,773 | |||||||||||||||||||||||||||
| Notes issued by securitization trusts | 3,236,873 | — | — | 2,506,929 | 2,506,929 | |||||||||||||||||||||||||||
Funding debt (3) | 1,851,699 | — | — | 1,851,685 | 1,851,685 | |||||||||||||||||||||||||||
| Total liabilities | $ | 6,430,002 | $ | — | $ | 1,124,773 | $ | 4,358,614 | $ | 5,483,387 | ||||||||||||||||||||||
(1)Amortized cost approximates fair value for loans held for sale and other assets.
(2)As of June 30, 2025, includes convertible senior notes due 2026 with a carrying amount and fair value of $247.9 million and $232.7 million, respectively, and convertible senior notes due 2029 with a carrying amount and fair value of $905.1 million and $972.6 million, respectively. As of June 30, 2024, includes convertible senior notes due 2026 with a carrying amount and fair value of $1.3 billion and $1.1 billion, respectively. The estimated fair value of the convertible senior notes is determined based on a market approach, using the estimated or actual bids and offers of the notes in an over-the-counter market on the last business day of the period.
(3)As of June 30, 2025 and June 30, 2024, debt issuance costs in the amount of $17.7 million and $14.8 million was included within funding debt.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Aug 28, 2025 | Showing above |
| 2024 | Aug 28, 2024 | |
| 2023 | Aug 25, 2023 | |
| 2022 | Aug 29, 2022 | |
| 2021 | Sep 17, 2021 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.