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What changed in Affirm Holdings, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Affirm Holdings, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+440 added−427 removedSource: 10-K (2025-08-28) vs 10-K (2024-08-28)

Top changes in Affirm Holdings, Inc.'s 2025 10-K

440 paragraphs added · 427 removed · 369 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

87 edited+10 added−15 removed112 unchanged
Biggest changeThis website has been provided for convenience only, and the contents of the report and information found on, or accessible through, our website are not a part of, and are not incorporated into, this Annual Report on Form 10-K. 13 Table of Contents Our board of directors’ role in human capital resource management Our board of directors believes that human capital management is an important component of our continued growth and success, and is helpful to our ability to attract, retain, and develop talented and skilled employees.
Biggest changeOur board of directors’ role in human capital resource management Our board of directors believes that human capital management is an important component of our continued growth and success, and is helpful to our ability to attract, retain, and develop talented and skilled employees. We pride ourselves on a culture that respects co-workers and values concern for others.
Further, the variables used in the model must be supported by documented, legitimate business justifications where the model results in a disproportionate effect on applicants or consumers of certain demographic groups; • the Fair Credit Reporting Act (the “FCRA”), as amended by the Fair and Accurate Credit Transactions Act, and Regulation V promulgated thereunder, which promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies; • the Fair Debt Collection Practices Act, Regulation F promulgated thereunder, and the Telephone Consumer Protection Act, each of which provide guidelines and limitations concerning the conduct of certain creditors and third-party debt collectors in connection with the collection of consumer debts; • the Gramm-Leach-Bliley Act (the “GLBA”), which includes limitations on use and disclosure of nonpublic personal information about a consumer by a financial institution; • the Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; • the Holder Rule, and equivalent state laws, which make Affirm or any other holder of a consumer credit contract include the required notice and become subject to all claims and defenses that a borrower could assert against the seller of goods or services; • the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines, and restrictions on the electronic transfer of funds from consumers’ bank accounts; • the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures; • the Military Lending Act and similar state laws, which provide disclosure requirements, interest rate limitations, substantive conduct obligations, and prohibitions on certain behavior relating to loans made to covered borrowers, which include both servicemembers and their dependents; • the Servicemembers Civil Relief Act and similar state laws, which allows active duty military members to suspend or postpone certain civil obligations so that the military member can devote his or her full attention to military duties; and • requirements pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted in response to the COVID-19 pandemic, including requirements relating to debt collection and credit reporting.
Further, the variables used in the model must be supported by documented, legitimate business justifications where the model results in a disproportionate effect on applicants or consumers of certain demographic groups; • the Fair Credit Reporting Act (the “FCRA”), as amended by the Fair and Accurate Credit Transactions Act, and Regulation V promulgated thereunder, which promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies; • the Fair Debt Collection Practices Act, Regulation F promulgated thereunder, and the Telephone Consumer Protection Act, each of which provide guidelines and limitations concerning the conduct of certain creditors and third-party debt collectors in connection with the collection of consumer debts; • the Gramm-Leach-Bliley Act (the “GLBA”), which includes limitations on use and disclosure of nonpublic personal information about a consumer by a financial institution; • the Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; • the Holder Rule, and equivalent state laws, which make Affirm or any other holder of a consumer credit contract include the required notice and become subject to all claims and defenses that a borrower could assert against the seller of goods or services; 17 Table of Contents • the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide disclosure requirements, guidelines, and restrictions on the electronic transfer of funds from consumers’ bank accounts; • the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures; • the Military Lending Act and similar state laws, which provide disclosure requirements, interest rate limitations, substantive conduct obligations, and prohibitions on certain behavior relating to loans made to covered borrowers, which include both servicemembers and their dependents; • the Servicemembers Civil Relief Act and similar state laws, which allows active duty military members to suspend or postpone certain civil obligations so that the military member can devote his or her full attention to military duties; and • requirements pursuant to the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) enacted in response to the COVID-19 pandemic, including requirements relating to debt collection and credit reporting.
Similarly, we also facilitate the issuance of the Affirm Card, a debit card that can be used physically or virtually and which allows consumers to link a bank account to pay in full, or apply to pay over time for their purchase through the Affirm App.
We also facilitate the issuance of the Affirm Card, a debit card that can be used physically or virtually and which allows consumers to link a bank account to pay in full, or apply to pay over time for their purchase through the Affirm App.
Merchants and consumers anywhere can benefit from a more transparent, fair, and honest way to engage in commerce, and we see an opportunity to generate value in many new markets around the world through our platform.
We believe merchants and consumers anywhere can benefit from a more transparent, fair, and honest way to engage in commerce, and we see an opportunity to generate value in many new markets around the world through our platform.
Our solutions, which are built on trust and transparency, are designed to make it easier for consumers to spend responsibly and with confidence, easier for merchants and commerce platforms to convert sales and grow, and easier for commerce to thrive.
Our solutions, which are built on trust and transparency, are designed to make it easier for consumers to spend and save responsibly and with confidence, easier for merchants and commerce platforms to convert sales and grow, and easier for commerce to thrive.
Meanwhile, the GDPR provides data subjects with greater control over the collection and use of their personal information (such as the “right to be forgotten”) and has specific requirements relating to cross-border transfers of personal information to certain jurisdictions, including to the U.S., 20 Table of Contents with fines for noncompliance of up to the greater of 20 million euros or up to 4% of the annual global revenue of the noncompliant company.
Meanwhile, the GDPR provides data subjects with greater control over the collection and use of their personal information (such as the “right to be forgotten”) and has specific requirements relating to cross-border transfers of personal information to certain jurisdictions, including to the U.S., with fines for noncompliance of up to the greater of 20 million euros or up to 4% of the annual global revenue of the noncompliant company.
Our merchants span a diverse range of industries, including sporting goods and outdoors, home and lifestyle, travel and ticketing, electronics, fashion and beauty, equipment and auto, and general merchandise. We have three main loan product offerings: Pay-in-4, 0% annual percentage rate (“APR”) monthly installment loans and interest-bearing monthly installment loans.
Our merchants span a diverse range of industries, including electronics, equipment and auto, fashion and beauty, general merchandise, home and lifestyle, sporting goods and outdoors, and travel and ticketing. We have three main loan product offerings: Pay-in-X, 0% annual percentage rate (“APR”) monthly installment loans and interest-bearing monthly installment loans.
The consumer is then evaluated by our fraud model, and we will then either move forward in the approval flow, or request additional data from the consumer. Our sophisticated fraud models utilize approximately 80 other data points in order to make a near-instantaneous decision on whether to block a transaction.
The consumer is then evaluated by our fraud model, and we will then either move forward in the approval flow, or request additional data from the consumer. Our sophisticated fraud models utilize approximately 200 other data points in order to make a near-instantaneous decision on whether to block a transaction.
Our approach to risk management is core to our business model and has led to lower fraud rates, higher approval rates compared to traditional credit underwriting models, and lower credit losses. Our models have been built on extensive data points, including data from approximately 215 million loans.
Our approach to risk management is core to our business model and has led to lower fraud rates, higher approval rates compared to traditional credit underwriting models, and lower credit losses. Our models have been built on extensive data points, including data from approximately 343 million loans.
By maintaining access to a diversified array of long-term funding sources and leveraging our proprietary underwriting process at the point-of-sale, we are able to monetize high-quality financial assets at scale. 9 Table of Contents Our Competition Our primary competition consists of: legacy payment methods, such as credit and debit cards, including those provided by card issuing banks such as Synchrony, J.P.
By maintaining access to a diversified array of long-term funding sources and leveraging our proprietary underwriting process at the point-of-sale, we are able to monetize high-quality financial assets at scale. Our Competition Our primary competition consists of: legacy payment methods, such as credit and debit cards, including those provided by card issuing banks such as Synchrony, J.P.
Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished 21 Table of Contents pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our website as soon as reasonably practicable after we file such material electronically with, or furnish it to, the SEC.
Copies of our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our website as soon as reasonably practicable after we file such material electronically with, or furnish it to, the SEC.
State attorneys general of the states of California, New York and Illinois have filed a lawsuit against the OCC alleging that the OCC had no statutory authority to issue its May 29, 2020 rule regarding the permissibility of interest rates on loans purchased from a national bank and failed to follow required procedures in promulgating the rule.
State attorneys general of the states of California, New York and Illinois have filed a lawsuit against the OCC alleging that the OCC had no statutory authority to issue its May 29, 2020 rule regarding 15 Table of Contents the permissibility of interest rates on loans purchased from a national bank and failed to follow required procedures in promulgating the rule.
We rely on a combination of patent, copyright, trademark, and trade secret laws in the United States and other jurisdictions, as well as license agreements, confidentiality procedures, non-disclosure agreements, and other contractual protections, to establish and protect our intellectual property and proprietary rights, including our proprietary technology, software, know-how, and brand.
We rely on a combination of patent, copyright, trademark, and trade secret laws in the United States and other jurisdictions, as 20 Table of Contents well as license agreements, confidentiality procedures, non-disclosure agreements, and other contractual protections, to establish and protect our intellectual property and proprietary rights, including our proprietary technology, software, know-how, and brand.
On May 22, 2024, the CFPB issued an Interpretive Rule, “Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans,” under the Truth in Lending Act (the “Interpretive Rule”) that extended to Buy Now, Pay Later (BNPL) providers certain dispute and refund requirements applicable to credit card providers.
On May 22, 2024, the CFPB issued an Interpretive Rule, “Truth in Lending (Regulation Z); Use of Digital User Accounts to Access Buy Now, Pay Later Loans,” under the Truth in Lending Act (the “Interpretive Rule”) that extended to Buy Now, Pay Later (BNPL) providers certain requirements applicable to credit card providers.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective or will be adequate as laws change or are applied in a new manner. 19 Table of Contents Other requirements We have policies and procedures designed to prevent the financing of illegal products.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective or will be adequate as laws change or are applied in a new manner. Other requirements We have policies and procedures designed to prevent the financing of illegal products.
This aspect of our business, including the collection, storage, use, disclosure, transfer, processing, and protection of the information, including personal information, we acquire in connection with our consumers’ and merchants’ use of our services, is subject to numerous privacy, cybersecurity, and other laws and regulations in the U.S. and foreign jurisdictions, including the GLBA and its implementing regulations.
This aspect of our business, including the collection, storage, use, disclosure, transfer, processing, and protection of the information, including personal information, we acquire in connection with our consumers’ and merchants’ use of our services, is subject to 19 Table of Contents numerous privacy, cybersecurity, and other laws and regulations in the U.S. and foreign jurisdictions, including the GLBA and its implementing regulations.
Additionally, the 18 Table of Contents CFPB’s supervision of us enables it, among other things, to conduct comprehensive and rigorous examinations to assess our compliance with consumer financial protection laws, which could result in investigations, enforcement actions, regulatory fines and mandated changes to our business products, policies and procedures.
Additionally, the CFPB’s supervision of us enables it, among other things, to conduct comprehensive and rigorous examinations to assess our compliance with consumer financial protection laws, which could result in investigations, enforcement actions, regulatory fines and mandated changes to our business products, policies and procedures.
In addition to acts of intentional discrimination, the ECOA has been interpreted by federal regulators and courts to prohibit creditors from maintaining policies 17 Table of Contents and practices that, while facially neutral, result in a disproportionate, adverse impact on applicants or consumers in protected groups.
In addition to acts of intentional discrimination, the ECOA has been interpreted by federal regulators and courts to prohibit creditors from maintaining policies and practices that, while facially neutral, result in a disproportionate, adverse impact on applicants or consumers in protected groups.
Affirm Card allows consumers to link a bank account to pay in full, or apply to pay over time through the Affirm App. Users can take advantage of an in-app post-purchase feature that allows them to instantly apply to convert any eligible debit transaction into an installment loan.
Affirm Card allows consumers to link a bank account to pay in full, or apply to pay over time through the Affirm App. Users can take advantage of an in-app post-purchase feature that allows them to instantly apply for an installment loan for any eligible debit transaction.
The FCA’s operational objectives are (a) securing an appropriate degree of protection for consumers, (b) protecting and enhancing the integrity of the U.K. financial system, and (c) promoting effective competition in the interests of consumers. The FCA regulates and supervises some or all of Affirm U.K. Limited’s consumer credit activities.
The FCA’s operational objectives are (a) securing an appropriate degree of protection for consumers, (b) protecting and enhancing the integrity of the U.K. financial system, and (c) promoting effective competition in the interests of consumers. The FCA regulates and supervises Affirm U.K. Limited’s consumer credit activities.
Our potential competitors may also have longer operating histories, more extensive and broader consumer and merchant relationships, and greater brand recognition and brand loyalty than we have. In addition, other established companies that possess large, existing consumer and merchant bases, substantial financial resources, or established distribution channels could also enter the market.
Our potential competitors may also have longer operating histories, more extensive and broader consumer and merchant relationships, and greater brand recognition and brand loyalty than we have. 9 Table of Contents In addition, other established companies that possess large, existing consumer and merchant bases, substantial financial resources, or established distribution channels could also enter the market.
As such, we have established a business model pursuant to which we may originate loans directly through our platform under our lending, servicing, and brokering licenses across various 14 Table of Contents jurisdictions in the U.S., Canada, and U.K., and we may also purchase loans originated by our originating bank partners through our platform.
As such, we have established a business model pursuant to which we may originate loans directly through our platform under our lending, servicing, and brokering licenses across various jurisdictions in the U.S., Canada, and U.K., and we may also purchase loans originated by our originating bank partners through our platform.
While most enforcement and litigation has 16 Table of Contents historically targeted high-interest rate programs (i.e. > 100% APR), which we consider to be inconsistent with our company mission and values, we nonetheless could be subject to litigation, whether private or governmental, or administrative action regarding the above claims.
While most enforcement and litigation has historically targeted high-interest rate programs (i.e. > 100% APR), which we consider to be inconsistent with our company mission and values, we nonetheless could be subject to litigation, whether private or governmental, or administrative action regarding the above claims.
As of June 30, 2024, we had approximately 303 thousand active merchants, ranging from small businesses to large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. As used herein, “merchants” may reference merchants and/or e-commerce platforms.
As of June 30, 2025, we had approximately 377 thousand active merchants, ranging from small businesses to large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. As used herein, “merchants” may reference merchants and/or e-commerce platforms.
Because consumers are not charged deferred or compounding interest or late fees, we are not incentivized to profit from our consumers’ mistakes or misfortunes. For the fiscal years ended June 30, 2024 and 2023 , interest-bearing monthly installment loans represented 74% and 68% , respectively, of total GMV.
Because consumers are not charged deferred or compounding interest or late fees, we are not incentivized to profit from our consumers’ mistakes or misfortunes. For the fiscal years ended June 30, 2025 and 2024 , interest-bearing monthly installment loans represented 72% and 74% , respectively, of total GMV.
For the fiscal years ended June 30, 2024 and 2023, 92% and 88%, respectively, of the transactions facilitated through our platform were driven by repeat consumers. • Improved expense efficiency enables us to create even more compelling offers for consumers and merchants, in turn attracting more consumers and merchants to our network.
For the fiscal years ended June 30, 2025 and 2024, 94% and 92%, respectively, of the transactions facilitated through our platform were driven by repeat consumers. • Improved expense efficiency enables us to create even more compelling offers for consumers and merchants, in turn attracting more consumers and merchants to our network.
The SEC also maintains a website that contains our SEC filings. The address of the site is www.sec.gov. 22 Table of Contents
The SEC also maintains a website that contains our SEC filings. The address of the site is www.sec.gov. 21 Table of Contents
In the vast majority of cases, we can complete these checks and calculations in a matter of seconds, automating the underwriting process pursuant to our originating bank partners’ underwriting policies. We use application and transaction data to train our model, including data from approximately 215 million loans. 11 Table of Contents • Modeling improvements.
In the vast majority of cases, we can complete these checks and calculations in a matter of seconds, automating the underwriting process pursuant to our originating bank partners’ underwriting policies. We use application and transaction data to train our model, including data from approximately 343 million loans. • Modeling improvements.
These regulators may augment requirements that apply to loans facilitated by our platform, or impose new programs and restrictions and could otherwise revise or create new regulatory requirements that apply to us (or our bank partners), impacting our business, operations, and profitability.
These regulators may augment requirements that apply to loans facilitated by our platform, or impose new programs and restrictions and could 18 Table of Contents otherwise revise or create new regulatory requirements that apply to us (or our bank partners), impacting our business, operations, and profitability.
We are focused on the effectiveness of sales and marketing spending. We also utilize dedicated sales teams to grow our merchant base in the United States and Canada, and leverage strategic partnerships with other platforms to expand our merchant and consumer base.
We are focused on the effectiveness of sales and marketing spending. We also utilize dedicated sales teams to grow our merchant base and leverage strategic partnerships with other platforms to expand our merchant and consumer base.
Our Affirm App and website provide tailored and exclusive offers from merchants based on consumers’ preferences. Consumers can apply at affirm.com or via the Affirm App and, upon approval, receive a single-use virtual card to use online or in-store. During the fiscal year ended June 30, 2024, 23% of our transactions occurred on the Affirm marketplace. • Affirm Card.
Our Affirm App and website provide tailored and exclusive offers from merchants based on consumers’ preferences. Consumers can apply at affirm.com or via the Affirm App and, upon approval, receive a one-time-use virtual card to use online or in-store. During the fiscal year ended June 30, 2025, 24% of our transactions occurred on the Affirm marketplace. • Affirm Card.
Adverse events that occur during our second fiscal quarter could have a disproportionate effect on our financial results for the fiscal year. 12 Table of Contents Human Capital Resources Our employees As of June 30, 2024, we had a total of 2,006 employees, primarily located in the United States. None of our employees are represented by a labor union.
Adverse events that occur during our second fiscal quarter could have a disproportionate effect on our financial results for the fiscal year. Human Capital Resources Our employees As of June 30, 2025, we had a total of 2,206 employees, primarily located in the United States. None of our employees are represented by a labor union.
Our platform is explicitly designed and engineered to integrate with a wide range of merchants. This is a point of differentiation for us, as we can accommodate and partner with merchants to serve their payment needs across a wide variety of industries, size, average order value (“AOV”), or consumer profile.
Our platform is explicitly designed and engineered to integrate with a wide range of merchants. This is a point of differentiation for us, as we can accommodate and partner with merchants to serve their payment needs across a wide variety of industries, transactions, average order values (“AOV”), and consumer profiles.
The CFPB monetary penalty amounts are adjusted annually for inflation. Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations under Title X, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB (but not for civil penalties).
Also, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations under Title X, the Dodd-Frank Act empowers state attorneys general and state regulators to bring civil actions for the kind of cease and desist orders available to the CFPB (but not for civil penalties).
Pay-in-4 is a short-term payment plan with four biweekly 0% APR installments. Our business model is designed to align with the interests of both consumers and merchants. 5 Table of Contents From merchants, we typically earn a fee when we help them convert a sale and facilitate a transaction.
Pay-in-X primarily consists of short-term payment plans with one to four 0% APR installments. Our business model is designed to align with the interests of both consumers and merchants. 5 Table of Contents From merchants, we typically earn a fee when we help them convert a sale and facilitate a transaction.
For fiscal year ended June 30, 2024 , Pay-in-4 and 0% APR installment loans represented 15% and 11% , respectively, of total gross merchandise volume (“GMV”) facilitated through our platform. For fiscal year ended June 30, 2023, Pay-in-4 and 0% APR installment loans represented 19% and 13%, respectively, of total GMV facilitated through our platform.
For fiscal year ended June 30, 2025 , Pay-in-X and 0% APR installment loans represented 14% and 13%, respectively, of total gross merchandise volume (“GMV”) facilitated through our platform. For fiscal year ended June 30, 2024, Pay-in-X and 0% APR installment loans represented 15% and 11%, respectively, of total GMV facilitated through our platform.
Our models are designed to enable us to adjust our models quickly and efficiently in response to changes in the environment. • Designed for continued innovation and flexibility.
Our models are designed to enable us to adjust our models quickly and efficiently in response to changes in the environment. 11 Table of Contents • Designed for continued innovation and flexibility.
Our risk model is designed to comply with our originating bank partners’ credit policies and underwriting procedures and has been proven to lead to lower fraud rates and higher approval rates compared to traditional credit underwriting models.
Our risk model is designed to comply with our originating bank partners’ credit policies and underwriting procedures and is designed to support lower fraud rates and higher approval rates compared to traditional credit underwriting models.
As such, the CFPB has in the past requested reports concerning our organization, business conduct, markets, and activities, and we expect that the CFPB will continue to do so from time to time in the future.
As such, the CFPB has in the past requested reports concerning our organization, business conduct, markets, and activities, and the CFPB may continue to do so from time to time in the future.
We monitor merchants’ creditworthiness, consumer complaints and dispute rates, changes in consumer repayment behavior, and other data to give consumers the confidence that merchants integrated with Affirm are committed to delivering honest and delightful experiences. • Consumer first borrowing. Our products make it easy for consumers to apply for a loan and be approved instantaneously.
We monitor merchants’ creditworthiness, consumer complaints and dispute rates, changes in consumer repayment behavior, and other data to give consumers the confidence that merchants integrated with Affirm are committed to delivering honest and delightful experiences. • Consumer-first borrowing. Our products make it easy for consumers to apply for a loan and complete a quick, real-time eligibility check.
Consumers receive either 0% APR bi-weekly or monthly installments, where they pay no interest, or interest-bearing monthly installment loans, where they pay fixed amounts of interest that do not compound. We underwrite each transaction individually and do not charge late fees.
If approved, consumers receive either monthly or one to four 0% APR installments, where they pay no interest, or interest-bearing monthly installment loans, where they pay fixed amounts of interest that do not compound. We underwrite each transaction individually and do not charge late fees.
Additionally, some merchants are increasingly offering proprietary pay-over-time options to customers, and in some cases, these are presented parallel to our offerings at checkout. We believe that we compete favorably based on our competitive advantages and are well-positioned to succeed in the market.
Additionally, some merchants are increasingly offering proprietary pay-over-time options to customers, and in some cases, these are presented parallel to our offerings at checkout. We believe that our competitive advantages position us favorably to succeed in the market.
This means that we do not and will not take advantage of our consumers. Unlike much of the industry, we do not capitalize on consumer misfortunes through practices such as late fees and deferred or compounding interest. Our success is aligned with our consumers’ success. In fact, we depend on it. • No fine print.
This means that we do not and will not take advantage of our consumers. Unlike much of the consumer lending industry, we do not capitalize on consumer misfortunes through practices such as late fees and deferred or compounding interest. Our success is aligned with our consumers’ success.
The laws and regulations applicable to the industry are subject to interpretation and change and we continue to monitor this on an ongoing basis.
The laws and regulations applicable to consumer credit activities are subject to interpretation and change and we continue to monitor this on an ongoing basis.
Interest rates charged to our consumers vary depending on several factors including transaction risk, creditworthiness of the consumer, the repayment term selected by the consumer, the amount of the loan, and the individual arrangement with a merchant.
Interest rates charged to our consumers vary depending on several factors including transaction risk, creditworthiness of the consumer, the repayment term selected by the consumer, the amount of the loan, and the individual arrangement with a merchant. The interest-bearing transactions we facilitate only include simple interest.
If successful, we believe that this strategy will lead to increased transaction volume on our platform, as well as the expansion of our consumer and merchant network. As of June 30, 2024, we had approximately 4.9 transactions per active consumer, an increase of approximately 26% compared to June 30, 2023 and an increase of 64% compared to June 30, 2022.
If successful, we believe that this strategy will lead to increased transaction volume on our platform, as well as the expansion of our consumer and merchant network. As of June 30, 2025, we had approximately 5.8 transactions per active consumer, an increase of approximately 20% compared to June 30, 2024 and an increase of 52% compared to June 30, 2023.
Furthermore, our risk management models are designed to continuously improve over time, becoming more precise and efficient with each transaction powered by our platform. What this means for consumers is increased purchasing power with more control and flexibility.
Furthermore, our risk management models are designed to continuously improve over time, becoming more precise and efficient with each transaction. This translates into increased purchasing power with more control and flexibility for consumers.
In May 2022, the CFPB issued an Interpretive Rule to clarify the authority of states to enforce federal consumer financial protections laws under the Consumer Financial Protection Act of 2010 (“CFPA”).
In May 2022, the CFPB issued an Interpretive Rule to clarify the authority of states to enforce federal consumer financial protections laws under the Consumer Financial Protection Act of 2010. However, on May 15, 2025, the CFPB rescinded this interpretive rule.
Any of the aforementioned scenarios could impose substantial costs and or harm our business. United Kingdom regulatory oversight In addition to the U.S. and Canada, we intend to provide a similar service in the U.K. through our U.K. subsidiary, Affirm U.K. Limited (f.k.a. Skytech Capital Ltd). Affirm U.K. Limited is authorized and regulated by the U.K.
Any of the aforementioned scenarios could impose substantial costs and or harm our business. 16 Table of Contents U.K. regulatory oversight In addition to the U.S. and Canada, we provide a similar lending service in the U.K. through our U.K. subsidiary, Affirm U.K. Limited. Affirm U.K. Limited is authorized and regulated by the U.K.
However, these laws, agreements, and procedures provide only limited protection. As of June 30, 2024, we owned 23 registered trademarks and 2 trademark applications in the United States, 99 registered trademarks and 19 trademark applications in various foreign jurisdictions, and 22 issued patents, 39 pending patent applications in the United States, and 60 pending patent applications in various foreign jurisdictions.
However, these laws, agreements, and procedures provide only limited protection. As of June 30, 2025, we owned 23 registered trademarks and 1 trademark applications in the United States, 101 registered trademarks and 19 trademark applications in various foreign jurisdictions, and 27 issued patents, 36 pending patent applications in the United States, and 64 pending patent applications in various foreign jurisdictions.
Our Growth Strategy Our multi-pronged growth strategy is designed to build upon our momentum and unlock opportunities to create even greater value for consumers and merchants. Expand solutions for merchants and consumers • Innovate on new consumer product solutions . We plan to continue to innovate and bring new financial products to market for consumers. • Increase merchant feature functionality.
Our Growth Strategy Our multi-pronged growth strategy is designed to build upon our momentum and unlock opportunities to create even greater value for consumers and merchants. Expand solutions for merchants and consumers • Innovate on new consumer product solutions .
Our machine learning-based risk models are currently calibrated and validated on an extensive amount of data points, based on a complex set of variables, and are custom built to effectively detect fraud, price risk, and provide customized recommendations.
Our machine learning-based risk models are calibrated and validated on an extensive amount of data from over 343 million loans, and are custom built to effectively detect fraud, price risk, and provide customized recommendations.
As we add more consumers to our network, we expect our models to become more efficient and robust, allowing us to provide our platform (and the loans it facilitates) to a growing spectrum of consumers.
As we add more consumers to our network, we expect our models to become more efficient and robust, allowing us to provide our platform (and the loans it facilitates) to a growing spectrum of consumers. The more consumers that we serve, the better our systems understand how to identify responsible consumers, and the more consumers we can acquire and approve.
As we continue to generate results for merchants, we believe more will join our platform in order to offer Affirm as an option to their customers. Expand to new markets Our platform is broadly available to merchants and eligible consumers in the United States and Canada.
As we continue to generate results for merchants, we believe more will join our platform in order to offer Affirm as an option to their customers. 10 Table of Contents Expand to new markets Our platform is broadly available to merchants and eligible consumers in the United States, Canada and the United Kingdom (“U.K.”), and we expect to continue expanding internationally in both western Europe and Australia.
The application of state and provincial licensing requirements to our business model is not always clear, and while we believe we are in material compliance as of June 30, 2024 with applicable licensing requirements, regulators may request or require that we obtain additional licenses or other authorizations in the future, which may subject our business to additional restrictions or requirements.
The application of state and provincial licensing requirements to our business model is not always clear, and while we believe we are in material compliance as of June 30, 2025 with applicable licensing requirements, regulators may request or require that we obtain additional licenses or other authorizations in the future, which may subject our business to additional restrictions or requirements. 14 Table of Contents State interest rate treatment We and our originating bank partners may also be subject to state law interest rate limitations on personal consumer loans.
State interest rate treatment We and our originating bank partners may also be subject to state law interest rate limitations on personal consumer loans. Certain states have no such limitations, while other jurisdictions impose a maximum rate on such loans. In some jurisdictions, the maximum rate may be less than the rates applicable to the loans facilitated through our platform.
Certain states have no such limitations, while other jurisdictions impose a maximum rate on such loans. In some jurisdictions, the maximum rate may be less than the rates applicable to the loans facilitated through our platform.
As we continue to help merchants increase conversion rates, AOVs, and customer satisfaction, we plan to build new tools to help them optimize their customer acquisition strategies and achieve even greater results. Increase Consumer Transaction Frequency and In-store Usage We have demonstrated how our solutions can successfully enable and accelerate commerce for larger and considered purchases.
To help merchants improve their conversion rates, AOVs, and customer satisfaction, we are delivering new tools, experiences, and channels designed to strengthen their customer acquisition strategies. Increase Consumer Transaction Frequency and In-store Usage We have demonstrated how our solutions can successfully enable and accelerate commerce for larger and considered purchases.
The CFPB has not provided any additional guidance since the Interpretive Rule was issued. The federal regulatory framework applicable to online marketplaces such as our platform is evolving and uncertain, and additional requirements may apply to our business in the future.
The federal regulatory framework applicable to online marketplaces such as our platform is evolving and uncertain, and additional requirements may apply to our business in the future.
We pride ourselves on a culture that respects co-workers and values concern for others. Management regularly reports to our board of directors on human capital management topics, including corporate culture, safety, diversity and inclusion, employee development, and compensation and benefits. Our board of directors provides input on important decisions, including with respect to safety, talent retention and development.
Management regularly reports to our board of directors on human capital management topics, including corporate culture, safety, employee development, and compensation and benefits. Our board of directors provides input on important decisions, including with respect to safety, talent retention and development.
The current suite of solutions we provide to our consumers and merchants is outlined below: Consumer features • Affirm at Checkout. When purchasing from one of our partner merchants, consumers can choose Affirm as a payment method, giving them the option to pay over time with terms ranging from weeks to months.
When purchasing from one of our partner merchants, consumers can choose Affirm as a payment method, giving them the option to pay over time with terms ranging from weeks to years.
Our durable funding model consists of three primary channels — warehouse credit facilities, programmatic issuance of term and revolving securitization transactions, and forward flow commitments. Within each channel, we endeavor to maximize our financial flexibility by partnering with a broad spectrum of counterparty profiles including depository institutions, investment banks, strategic investment funds, pension funds, asset managers, and insurance companies.
Within each channel, we endeavor to maximize our financial flexibility by partnering with a broad spectrum of counterparty profiles including depository institutions, investment banks, strategic investment funds, pension funds, asset managers, and insurance companies.
Cross River Bank generally allows a consumer loan borrower to agree to any annual rate of interest up to 30%, and our other originating bank partners, including Celtic Bank, generally allow a consumer loan borrower to agree to any annual rate of interest up to 36%, in each case calculated in accordance with the FDIC Federal Interest Rate Authority rule discussed above and other applicable law. 15 Table of Contents However, if the legal structure underlying our relationship with our originating bank partners was successfully challenged, we may be found to be in violation of state licensing requirements and state laws regulating interest rates and other aspects of consumer lending.
Cross River Bank generally allows a consumer loan borrower to agree to any annual rate of interest up to 30%, and our other originating bank partners, including Celtic Bank, generally allow a consumer loan borrower to agree to any annual rate of interest up to 36%, in each case calculated in accordance with the FDIC Federal Interest Rate Authority rule discussed above and other applicable law.
We are transparent and honest — with our consumers and with each other. That is why there are no hidden fees or tricks associated with the loans facilitated through our platform. What you see is what you get. • It’s on us. We take full accountability for our actions, never shirking responsibility or passing the buck.
In fact, we depend on it. 12 Table of Contents • No fine print. We are transparent and honest — with our consumers and with each other. That is why there are no hidden fees or tricks associated with the loans facilitated through our platform. What you see is what you get. • It’s on us.
We started our business with our foundational pay-over-time solution at checkout, and have since continued to innovate and expand our product suite by building and acquiring solutions that address the evolving needs of both consumers and merchants. Our platform comprises three core elements: point-of-sale payment solutions for consumers, merchant commerce solutions, and a consumer-focused app.
Our Platform Our business transforms the way consumers and merchants transact by creating a powerful platform built upon honest financial products. We started our business with our foundational pay-over-time solution at checkout, and have since continued to innovate and expand our product suite by building and acquiring solutions that address the evolving needs of both consumers and merchants.
We have the ability to work with manufacturers on brand-specific promotional financing offers. These promotions are funded by suppliers and then made available through our merchants. The suppliers cover the costs of the lowered APR for their products, with no added costs to our merchants.
Merchants have the ability to subsidize and determine the range of interest rates to be paid by their customers. • Brand-sponsored and other promotional strategies. We have the ability to work with manufacturers on brand-specific promotional financing offers. These promotions are funded by suppliers and then made available through our merchants.
We prioritize building our own technology and investing in engineering talent, as we believe these are enduring competitive advantages that are difficult to replicate. 8 Table of Contents Our direct API also allows merchant partners to easily integrate Affirm.
We prioritize building our own technology and investing in engineering talent, as we believe these are enduring competitive advantages that are difficult to replicate. Our direct API also allows merchant partners to easily integrate Affirm. From the smallest direct-to-consumer online brand to the largest merchants running on mainframe computers, the technical aspects of integrating with Affirm are quick and painless.
This gives our merchants a powerful alternative to markdowns as they can increase sales with no impact to their margins. At the same time, suppliers can sell through additional volume. We also partner with merchants to reach consumers with other promotional strategies and offers. • Merchant dashboard.
The suppliers cover the costs of the lowered APR for their products, with no added costs to our merchants. This gives our merchants a powerful alternative to markdowns as they can increase sales with no impact to their margins. At the same time, suppliers can sell through additional volume.
In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties which, for 2022, range from $6,323 per day for minor violations of federal consumer financial laws (including the CFPB’s own rules) to $31,616 per day for reckless violations and $1,264,622 per day for knowing violations.
The CFPB is authorized to pursue administrative proceedings or litigation for violations of federal consumer financial laws. In these proceedings, the CFPB can obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief) and monetary penalties.
We also facilitate the issuance of virtual cards directly to consumers through our App, allowing them to shop with merchants that are not integrated with Affirm.
Similarly, we also facilitate the issuance of one-time-use virtual cards directly to consumers through our App, allowing them to shop with merchants that are not integrated with Affirm. Merchants may also elect to use the virtual card as a method to facilitate the offering of installment loans to allow their customers to pay over time.
We never stop innovating, taking smart risks, and raising the bar. Talented people are attracted to Affirm because we empower them to innovate, create robust systems, and take smart risks. This momentum keeps our consumer and merchant network growing and thriving. These values have helped us to attract, inspire, and harness the collective talent of exceptional technologists and business people.
This momentum keeps our consumer and merchant network growing and thriving. These values have helped us to attract, inspire, and harness the collective talent of exceptional technologists and business people.
Regulatory Environmen t We operate in a rapidly evolving regulatory environment and are subject to extensive regulation, both directly and indirectly, by way of our partnership with our originating bank partners, under U.S. federal law, the laws of Canada, and the United Kingdom, and the laws of the states and provinces in which we operate, among others.
In addition, we offer perks, such as employer-sponsored digital spending wallets, mental health benefits, family & fertility benefits and generous leave and time-off policies, which we believe enhance employee productivity, satisfaction and loyalty. 13 Table of Contents Regulatory Environmen t We operate in a rapidly evolving regulatory environment and are subject to extensive regulation, both directly and indirectly, by way of our partnership with our originating bank partners, under U.S. federal law, the laws of Canada and the U.K., and the laws of the states and provinces in which we operate, among others.
Better outcomes generated by our proprietary risk models We believe our risk model informs our ability to better assess risk. Unlike legacy payment and credit systems, we can assess and price risk at a transaction level, rather than relying solely on a static consumer credit score.
Unlike legacy payment and credit systems, we can assess and price risk at a transaction level, rather than relying solely on a static consumer credit score. We believe our proprietary risk model has translated this advantage into the ability to facilitate a greater volume of transactions from a wider and more diverse segment of consumers.
Through the Affirm app and in partnership with Cross River Bank, we offer an FDIC-insured, high-yield savings account, with no minimum deposit requirements or fees. Merchant features • Affirm at Checkout .
Through the Affirm App and in partnership with Cross River Bank, we offer an FDIC-insured, high-yield savings account, with no minimum deposit requirements or fees. Merchant features • Affirm at Checkout . Our direct Application Programming Interface (API) provides a simple and compliant solution that allows merchants to easily incorporate Affirm into their payment and product pages with minimal investment.
The more consumers that we serve, the better our systems understand how to identify responsible consumers, and the more consumers we can acquire and approve. 10 Table of Contents Expand merchant reach • Deepen penetration with existing merchants. Today, Affirm transactions represent a small percentage of the total transaction volume for our merchants.
Expand merchant reach • Deepen penetration with existing merchants. Today, Affirm transactions represent a small percentage of the total transaction volume for our merchants.
We believe our proprietary risk model has translated this advantage into the ability to facilitate a greater volume of transactions from a wider and more diverse segment of consumers. The greater accuracy of our risk model also generally benefits our provision for credit losses on loans we retain. Our continuously learning risk model benefits from increasing scale.
The greater accuracy of our risk model also generally benefits our provision for credit losses on loans we retain. Our continuously-learning risk model benefits from increasing scale. As data from new transactions are incorporated into our risk algorithms, we are able to more effectively assess a given credit profile.
Affirmers own problems and solutions, and we hold each other accountable. • Simpler is better. We make complex things simple and clear. Financial products and payments have traditionally been fraught with complexity. We found a better way, a way that brings consumers the simplicity they need and merchants the results they want. • Push the envelope.
We take full accountability for our actions, never shirking responsibility or passing the buck. Affirmers own problems and solutions, and we hold each other accountable. • Simpler is better. We make complex things simple and clear. Financial products and payments have traditionally been fraught with complexity.
Diversity, equity, and inclusion We believe that diversity, equity, and inclusion (“DEI”) are important as we scale and build our high-performing team. Our Diversity and Inclusion Steering Committee (“DISC”) is an internal committee made up of senior leaders from across Affirm. DISC’s overarching purpose is to partner with the DEI team, to advance the DEI mission and strengthen Affirm’s culture.
In service of our high performance culture, we strive to attract and retain employees with a broad range of backgrounds, experiences, and skills, which we believe are important as we scale our business and strengthen Affirm's culture. Our Diversity and Inclusion Steering Committee (“DISC”) is an internal committee made up of senior leaders from across Affirm.
In addition, the Biden Administration has brought an increased focus on enforcement of federal consumer protection laws and appointed consumer-oriented regulators at federal agencies such as the CFPB, the OCC and the FDIC. It is possible that such regulators could promulgate rulemakings and bring enforcement actions that materially impact our business and the business of our originating bank partners.
It is possible that federal regulators could promulgate rulemakings and bring enforcement actions that materially impact our business and the business of our originating bank partners.
Data advantages that compound over time Our expertise in sourcing, aggregating, protecting, and analyzing data has been what we believe to be a core competitive advantage of our platform since our founding. We use data to inform our analysis and decision-making, including risk assessment, in a way that empowers consumers and generates value for our merchants and funding sources.
Full integration can be completed very quickly, often within days after signing our merchant agreement. Data advantages that compound over time Our expertise in sourcing, aggregating, protecting, and analyzing data has been what we believe to be a core competitive advantage of our platform since our founding.
Offering 0% APR financing to their customers is a compelling revenue accelerator for merchants, who are able to solve affordability for their customers without resorting to discounts. Merchants have the ability to subsidize and determine the range of interest rates to be paid by their customers. • Brand-sponsored and other promotional strategies.
Merchants can offer either one or a combination of 0% APR and interest-bearing pay-over-time offerings. Offering 0% APR financing to their customers is a compelling revenue accelerator for merchants, who are able to solve affordability for their customers without resorting to discounts.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAny acquisitions, strategic investments, alliances, divestitures and other transactions could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations. In pursuing our business strategy, we routinely conduct discussions and evaluate opportunities for possible acquisitions, strategic investments, joint ventures and other transactions.
Biggest changeAlthough we have taken, and continue to take, steps designed to mitigate the risks associated with the use of AI in our business, including, among other things, engaging with regulatory bodies, investing in AI governance, and fostering transparent and ethical use of AI in our products, solutions and services, our use of AI may present ethical, reputational, technical, operational, legal, competitive and regulatory risks, any of which could adversely affect our business, financial condition, results of operations and future prospects. 31 Table of Contents Any acquisitions, strategic investments, alliances, divestitures and other transactions could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations.
In addition to transaction and opportunity costs, these transactions involve large challenges and risks, whether or not such transactions are completed, any of which could harm our business and negatively impact our results of operations, including risks that: • the transaction may not advance our business strategy or may harm our growth (or profitability); • we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for a proposed transaction in a timely manner, or at all; • the transaction may subject us to additional regulatory burdens that affect our business in potentially unanticipated and significantly negative ways; • we may not realize a satisfactory return or increase our revenue; • we may experience difficulty, and may not be successful in, integrating technologies, IT or business enterprise systems, culture, or management or other personnel of the acquired business; • we may incur significant acquisition costs and transition costs, including in connection with the assumption of ongoing expenses of the acquired business; • we may not realize the expected benefits or synergies from the transaction in the expected time period, or at all; • we may be unable to retain key personnel; 32 Table of Contents • acquired businesses or businesses that we invest in may not have adequate controls, processes, and procedures to ensure compliance with laws and regulations, including with respect to data privacy, data protection, and data security, and our due diligence process may not identify compliance issues or other liabilities; • we may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring or investing in a business, which could result in additional financial, legal, regulatory, or tax exposure and may subject us to additional controls, policies, procedures, liabilities, litigation, costs of compliance or remediation, or other adverse effects on our business, operating results, or financial condition; • we may have difficulty entering into new geographic territories; • we may be unable to retain the consumers, vendors, and partners of acquired businesses; • there may be lawsuits or regulatory actions resulting from the transaction; • there may be risks associated with undetected security weaknesses, cyberattacks, or security breaches or incidents at companies that we acquire or with which we may combine or partner; • there may be local and foreign regulations applicable to the international activities of our business and the businesses we acquire; and • acquisitions could result in dilutive issuances of equity securities or the incurrence of debt.
In addition to transaction and opportunity costs, these transactions involve large challenges and risks, whether or not such transactions are completed, any of which could harm our business and negatively impact our results of operations, including risks that: • the transaction may not advance our business strategy or may harm our growth (or profitability); • we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for a proposed transaction in a timely manner, or at all; • the transaction may subject us to additional regulatory burdens that affect our business in potentially unanticipated and significantly negative ways; • we may not realize a satisfactory return or increase our revenue; • we may experience difficulty, and may not be successful in, integrating technologies, IT or business enterprise systems, culture, or management or other personnel of the acquired business; • we may incur significant acquisition costs and transition costs, including in connection with the assumption of ongoing expenses of the acquired business; • we may not realize the expected benefits or synergies from the transaction in the expected time period, or at all; • we may be unable to retain key personnel; • acquired businesses or businesses that we invest in may not have adequate controls, processes, and procedures to ensure compliance with laws and regulations, including with respect to data privacy, data protection, and data security, and our due diligence process may not identify compliance issues or other liabilities; • we may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances prior to acquiring or investing in a business, which could result in additional financial, legal, regulatory, or tax exposure and may subject us to additional controls, policies, procedures, liabilities, litigation, costs of compliance or remediation, or other adverse effects on our business, operating results, or financial condition; • we may have difficulty entering into new geographic territories; • we may be unable to retain the consumers, vendors, and partners of acquired businesses; • there may be lawsuits or regulatory actions resulting from the transaction; 32 Table of Contents • there may be risks associated with undetected security weaknesses, cyberattacks, or security breaches or incidents at companies that we acquire or with which we may combine or partner; • there may be local and foreign regulations applicable to the international activities of our business and the businesses we acquire; and • acquisitions could result in dilutive issuances of equity securities or the incurrence of debt.
If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, it could have a material adverse effect on our business, results of operations, financial condition, cash flows, and future prospects. • If loans facilitated through our platform do not perform, or significantly underperform, we may incur financial losses on the loans we purchase, we hold on our balance sheet, or that are subject to certain risk sharing agreements, which may adversely impact our financial condition and results of operations as well as result in the loss of confidence of our funding sources. 23 Table of Contents • To the extent we seek to execute acquisitions, strategic investments, alliances, divestitures or other transactions, we may be unable to achieve the strategic objectives of these transactions, and such transactions may be disruptive to our ongoing operations. • Expansion into new international geographies, including the U.K., presents a variety of challenges and risks. • The loss of the services of our Founder and Chief Executive Officer, as well as our inability to attract and retain highly skilled employees, could materially and adversely affect our business, results of operations, financial condition, and future prospects. • We have a history of operating losses and may not achieve sustained profitability. • Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. • Litigation, regulatory actions and compliance issues could subject us to fines, penalties, judgments, remediation costs, requirements resulting in increased expenses, and reputational harm. • Further increases in market interest rates and/or prolonged periods of elevated interest rates could have an adverse effect on our business. • Our revenue is impacted, to a significant extent, by the general economy, the creditworthiness of the U.S. consumer and the financial performance of our commercial partners. • If our collection efforts on delinquent loans are ineffective or unsuccessful, the performance of the loans would be adversely affected. • Any significant disruption in, or errors in, service on our platform or relating to vendors, including events beyond our control, could prevent us from processing transactions on our platform or posting payments and have a material and adverse effect on our business, results of operations, financial condition, and future prospects. • Our ability to protect our confidential, proprietary or sensitive information, including the confidential information of consumers on our platform, may be adversely affected by cyber-attacks, employee or other internal misconduct, computer viruses, physical or electronic break-ins or similar disruptions. • Our business is subject to extensive regulation, examination, oversight, and supervision in a variety of areas, all of which are subject to change and uncertain interpretation.
If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, it could have a material adverse effect on our business, results of operations, financial condition, cash flows, and future prospects. • If loans facilitated through our platform do not perform, or significantly underperform, we may incur financial losses on the loans we purchase, we hold on our balance sheet, or that are subject to certain risk sharing agreements, which may adversely impact our financial condition and results of operations as well as result in the loss of confidence of our funding sources. 22 Table of Contents • To the extent we seek to execute acquisitions, strategic investments, alliances, divestitures or other transactions, we may be unable to achieve the strategic objectives of these transactions, and such transactions may be disruptive to our ongoing operations. • Expansion into new international geographies presents a variety of challenges and risks. • The loss of the services of our Founder and Chief Executive Officer, as well as our inability to attract and retain highly skilled employees, could materially and adversely affect our business, results of operations, financial condition, and future prospects. • We have a history of operating losses and may not achieve sustained profitability. • Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. • Litigation, regulatory actions and compliance issues could subject us to fines, penalties, judgments, remediation costs, requirements resulting in increased expenses, and reputational harm. • Further increases in market interest rates and/or prolonged periods of elevated interest rates could have an adverse effect on our business. • Our revenue is impacted, to a significant extent, by the general economy, the creditworthiness of the U.S. consumer and the financial performance of our commercial partners. • If our collection efforts on delinquent loans are ineffective or unsuccessful, the performance of the loans would be adversely affected. • Any significant disruption in, or errors in, service on our platform or relating to vendors, including events beyond our control, could prevent us from processing transactions on our platform or posting payments and have a material and adverse effect on our business, results of operations, financial condition, and future prospects. • Our ability to protect our confidential, proprietary or sensitive information, including the confidential information of consumers on our platform, may be adversely affected by cyber-attacks, employee or other internal misconduct, computer viruses, physical or electronic break-ins or similar disruptions. • Our business is subject to extensive regulation, examination, oversight, and supervision in a variety of areas, all of which are subject to change and uncertain interpretation.
Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to products and services and led to the expansion of competition in digital payment options such as pay-over-time solutions. Our pay-over-time offerings are increasingly be presented alongside competitor options, including merchants’ proprietary pay-over-time options, at checkout, and we expect this trend to continue.
Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to products and services and led to the expansion of competition in digital payment options such as pay-over-time solutions. Our pay-over-time offerings are increasingly presented alongside competitor options, including merchants’ proprietary pay-over-time options, at checkout, and we expect this trend to continue.
Our continued success also is dependent on our ability to successfully grow and develop relationships with our commercial partners, particularly early-stage relationships with large e-commerce retailers and platforms such as Amazon and Apple Pay. The pace of development, integration and rollout of these early-stage relationships is often unpredictable and is generally not within our control.
Our continued success also is dependent on our ability to successfully grow and develop relationships with our commercial partners, particularly early-stage relationships with large e-commerce retailers and platforms such as Apple Pay. The pace of development, integration and rollout of these early-stage relationships is often unpredictable and is generally not within our control.
We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes, to repay the 2026 Notes at maturity or to repurchase the 2026 Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2026 Notes.
We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes and/or the 2029 Notes, to repay the 2026 Notes and/or the 2029 Notes at maturity or to repurchase the 2026 Notes and/or the 2029 Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2026 Notes and/or the 2029 Notes.
For a more complete discussion of the material risks facing our business, see below. 24 Table of Contents Risks Related to Our Business and Industry If we are unable to attract additional merchant partners, e-commerce platforms and payment platforms (collectively, our “commercial partners”), retain our existing commercial partners, and grow and develop our relationships with new and existing commercial partners, our business, results of operations, financial condition, and future prospects would be materially and adversely affected, as could the market price of our Class A common stock.
For a more complete discussion of the material risks facing our business, see below. 23 Table of Contents Risks Related to Our Business and Industry If we are unable to attract additional merchant partners, e-commerce platforms and payment platforms (collectively, our “commercial partners”), retain our existing commercial partners, and grow and develop our relationships with new and existing commercial partners, our business, results of operations, financial condition, and future prospects would be materially and adversely affected, as could the market price of our Class A common stock.
In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including: variations in our quarterly or annual results of operations; additions or departures of key management personnel; the loss of an originating bank partner or key funding sources or commercial partner; adverse economic conditions resulting in decreased consumer demand; the growth and development of key commercial partner relationships, including our relationship with Amazon; material cybersecurity incidents; and changes in our earnings estimates (if provided).
In addition, our results of operations could be below the expectations of public market analysts and investors due to a number of potential factors, including: variations in our quarterly or annual results of operations; additions or departures of key management personnel; the loss of an originating bank partner or key funding sources or commercial partner; adverse economic conditions resulting in decreased consumer demand; the growth and development of key commercial partner relationships, including our relationship with Amazon and Apple Pay; material cybersecurity incidents; and changes in our earnings estimates (if provided).
The attractiveness of our platform to commercial partners depends upon, among other things and as applicable: the size of our consumer base; our brand and reputation; the amount of fees that we charge; our ability to sustain our value proposition to commercial partners for consumer acquisition by demonstrating higher conversion at checkout and increased AOV; the attractiveness to commercial partners of our technology and data-driven platform; services and products offered by competitors; and our ability to perform under, and maintain, our commercial agreements.
The attractiveness of our platform to commercial partners depends upon, among other things and as applicable: the size of our consumer base; our brand and reputation; the amount of fees that we charge; our ability to sustain our value proposition to commercial partners for consumer acquisition by demonstrating higher conversion at checkout and increased AOV; the attractiveness to commercial partners of our technology and data-driven platform; services, products and financial terms offered by competitors; and our ability to perform under, and maintain, our commercial agreements.
Despite these higher GMV levels, in fiscal 2024, 2023 and 2022, we generated less in period revenue as a percentage of GMV during our second fiscal quarter due to the comparatively higher proportion of interest bearing loans originated in the latter half of the period, which typically results in lower merchant network revenue, which is recognized in period, and higher levels of interest income, which is recognized over a longer time horizon.
Despite these higher GMV levels, in fiscal 2025, 2024 and 2023, we generated less in period revenue as a percentage of GMV during our second fiscal quarter due to the comparatively higher proportion of interest bearing loans originated in the latter half of the period, which typically results in lower merchant network revenue, which is recognized in period, and higher levels of interest income, which is recognized over a longer time horizon.
As of the end of fiscal 2024, we relied on two Primary Originating Banks to originate a majority of the loans facilitated through our platform and to comply with various federal, state, and other laws, with the balance of the loans facilitated on our platform being originated directly under our lending, servicing, and brokering licenses in Canada and across various states in the United States through our consolidated subsidiaries.
As of the end of fiscal 2025, we relied on two Primary Originating Banks to originate a majority of the loans facilitated through our platform and to comply with various federal, state, and other laws, with the balance of the loans facilitated on our platform being originated directly under our lending, servicing, and brokering licenses in Canada and across various states in the United States through our consolidated subsidiaries.
The process of developing new technologies and products, such as the Affirm Card, which offers pay-over-time functionality in the Affirm App, is complex, and we seek to build our own technology using the latest in artificial intelligence and machine learning (“AI/ML”), cloud-based technologies, and other tools to differentiate our products and technologies.
The process of developing new technologies and products, such as the Affirm Card, which offers pay-over-time functionality in the Affirm App, is complex, and we seek to build our own technology using the latest in artificial intelligence (“AI”) and machine learning (together, “AI/ML”), cloud-based technologies, and other tools to differentiate our products and technologies.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
As of June 30, 2024, based on the countries in which we do business that have enacted legislation, we do not currently expect Pillar Two to have a material impact on our financial statements. However, this may change as other countries enact similar legislation and further guidance is released.
As of June 30, 2025, based on the countries in which we do business that have enacted legislation, we do not currently expect Pillar Two to have a material impact on our financial statements. However, this may change as other countries enact similar legislation and further guidance is released.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2026 Notes or make cash payments upon conversions thereof. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2026 Notes or the 2029 Notes, as applicable, or make cash payments upon conversions thereof. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
If we fail to retain our relationship with existing consumers, if we do not attract new consumers to our platform and products, or if we do 25 Table of Contents not continually expand usage and volume from consumers on our platform, our business, results of operations, financial condition, and prospects would be materially and adversely affected.
If we fail to retain our relationship with existing consumers, if we do not attract new consumers to our platform and products, or if we do 24 Table of Contents not continually expand usage and volume from consumers on our platform, our business, results of operations, financial condition, and prospects would be materially and adversely affected.
The measures we have put in place may not prevent misappropriation, infringement, or other violation of our intellectual property or other proprietary rights or information and any resulting loss of competitive advantage, and we may be required to litigate to protect our intellectual property or other proprietary rights or information from misappropriation, infringement, or other violation by others, which is expensive, could cause a diversion of resources, and may not be successful, even when 45 Table of Contents our rights have been infringed, misappropriated, or otherwise violated.
The measures we have put in place may not prevent misappropriation, infringement, or other violation of our intellectual property or other proprietary rights or information and any resulting loss of competitive advantage, and we may be required to litigate to protect our intellectual property or other proprietary rights or information from misappropriation, infringement, or other violation by others, which is expensive, could cause a diversion of resources, and may not be successful, even when our rights have been infringed, misappropriated, or otherwise violated.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our 55 Table of Contents Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
Any change in the nature or amount of personal information that we are required to collect from consumers may cause some consumers to choose not to complete their purchases — or purchase less frequently — with us, which may adversely impact our conversion rates, and, as a result, adversely impact our revenue, GMV, and other of our key operating metrics.
Any change in the nature or amount of personal information that we are required to collect from consumers may cause some consumers to choose not to complete their purchases — or purchase less frequently — with us, which 49 Table of Contents may adversely impact our conversion rates, and, as a result, adversely impact our revenue, GMV, and other of our key operating metrics.
In addition, our ability to enable the effective underwriting of the loans we originate directly or purchase from our originating bank partners and accurately price credit risk (and, as a result, the performance of such loans) is significantly dependent on the 30 Table of Contents ability of our proprietary, learning-based scoring system, and the underlying data, to quickly and accurately evaluate a consumer’s credit profile and risk of default.
In addition, our ability to enable the effective underwriting of the loans we originate directly or purchase from our originating bank partners and accurately price credit risk (and, as a result, the performance of such loans) is significantly dependent on the ability of our proprietary, learning-based scoring system, and the underlying data, to quickly and accurately evaluate a consumer’s credit profile and risk of default.
Any significant underperformance of the loans facilitated through our platform may adversely impact our relationship with such funding sources and result in their loss of confidence in us, which could lead to the termination of our existing funding arrangements, which would have a material adverse effect on our business, results of operations, financial condition, and future prospects.
Any significant underperformance of the loans facilitated through our platform may adversely impact our relationship with such funding sources and result in their loss of confidence in us, which could lead to the 30 Table of Contents termination of our existing funding arrangements, which would have a material adverse effect on our business, results of operations, financial condition, and future prospects.
Further, we may incur significant costs to resolve any such disruptions in service, which could adversely affect our business. For example, certain installment loans are originated by our originating bank partners and then disbursed to merchants via single-use virtual cards facilitated through our partnership with an issuer processor.
Further, we may incur significant costs to resolve any such disruptions in service, which could adversely affect our business. For example, certain installment loans are originated by our originating bank partners and then disbursed to merchants via one-time-use virtual cards facilitated through our partnership with an issuer processor.
The failure by our commercial partners to effectively present, integrate, and support our platform would have a material and adverse effect on our business, results of operations, financial condition, and future prospects. If our commercial partners fail to fulfill their obligations to consumers or comply with applicable law, we may incur remediation costs.
The failure by our commercial partners to effectively present, integrate, and support our platform would have a material and adverse effect on our business, results of operations, financial condition, and future prospects. 41 Table of Contents If our commercial partners fail to fulfill their obligations to consumers or comply with applicable law, we may incur remediation costs.
We maintain an allowance for credit losses at a level sufficient to estimate expected credit losses based on evaluating known and inherent risks in our loan portfolio. This estimate is highly dependent upon the reasonableness 37 Table of Contents of our assumptions and the predictability of the relationships that drive the results of our valuation methodologies.
We maintain an allowance for credit losses at a level sufficient to estimate expected credit losses based on evaluating known and inherent risks in our loan portfolio. This estimate is highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of our valuation methodologies.
The information we use in developing the risk model and price risk may be inaccurate or incomplete as a result of error or fraud, both of which may be difficult to detect and avoid. Numerous factors, many of which can be unexpected or beyond our control, can adversely affect a consumer’s credit risk and our risks.
The information we use in developing the risk model and price risk may be inaccurate or incomplete as a result of error or fraud, both of which may be difficult to detect and avoid. 29 Table of Contents Numerous factors, many of which can be unexpected or beyond our control, can adversely affect a consumer’s credit risk and our risks.
In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • our dual class common stock structure, which provides holders of our Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock; • our board of directors is classified into three classes of directors with staggered three-year terms and directors may only able to be removed from office for cause; • certain amendments to our amended and restated certificate of incorporation require the approval of 66 2/3% of the then-outstanding voting power of our capital stock; • our amended and restated bylaws provide that the affirmative vote of 66 2∕3% of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws; • our stockholders may only take action at a meeting of stockholders and not by written consent; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • no provision in our amended and restated certificate of incorporation or amended and restated bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates; • only our chairman of the board of directors, our lead independent director, our chief executive officer, or a majority of the board of directors are authorized to call a special meeting of stockholders; • our amended and restated bylaws provide that certain litigation against us can only be brought in Delaware; • nothing in our amended and restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our Class A common stock; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; and • the number of director nominees a stockholder may nominate is limited to the number of directors to be elected at the annual meeting of stockholders.
In addition, our articles of incorporation and bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • our dual class common stock structure, which provides holders of our Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock; • our board of directors is classified into three classes of directors with staggered three-year terms and directors may only able to be removed from office for cause; • certain amendments to our articles of incorporation require the approval of 66 2/3% of the then-outstanding voting power of our capital stock; • our bylaws provide that the affirmative vote of 66 2∕3% of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws; • our stockholders may only take action at a meeting of stockholders and not by written consent; • vacancies on our board of directors may be filled only by our board of directors and not by stockholders; • no provision in our articles of incorporation or bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates; • only our chairman of the board of directors, our chief executive officer, or a majority of the board of directors are authorized to call a special meeting of stockholders; • our bylaws provide that certain litigation against us can only be brought in Nevada; 54 Table of Contents • nothing in our articles of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our Class A common stock; • our articles of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock; • advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; and • the number of director nominees a stockholder may nominate is limited to the number of directors to be elected at the annual meeting of stockholders.
Further, in some cases, regardless of fault, it may be less time-consuming or costly to settle these matters, which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body.
Further, in some cases, regardless of fault, it may be less time-consuming or costly to settle these matters, 48 Table of Contents which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body.
Our business is subject to increased risks of litigation and regulatory actions as a result of a number of factors and from various sources, including as a result of the highly regulated nature of the financial services 36 Table of Contents industry and the focus of state and federal enforcement agencies on the financial services industry in general and consumer financial services in particular.
Our business is subject to increased risks of litigation and regulatory actions as a result of a number of factors and from various sources, including as a result of the highly regulated nature of the financial services industry and the focus of state and federal enforcement agencies on the financial services industry in general and consumer financial services in particular.
High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity, and the erosion of trust from our consumers and commercial partners, and could 40 Table of Contents materially and adversely affect our business, results of operations, financial condition, future prospects, and cash flows.
High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity, and the erosion of trust from our consumers and commercial partners, and could materially and adversely affect our business, results of operations, financial condition, future prospects, and cash flows.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 0% convertible senior notes due 2026 (the “2026 Notes”), depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 0% convertible senior notes due 2026 (the “2026 Notes”) and our 0.75% convertible senior notes due 2029 (the “2029 Notes”), depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
For a further discussion of our relationship with our Primary Originating Banks, particularly the regulations applicable to this relationship, see “ Business — Regulatory Environment .” If any of our Primary Originating Banks or our Card Issuing Bank were to suspend, limit, or cease its operations or loan origination activities, as applicable, for any reason, or if our relationship with any Primary Originating Bank or our Card Issuing Bank were to otherwise terminate for any reason (including, but not limited to, its failure to comply with regulatory actions), we may need to implement an additional substantially similar arrangement with another bank, obtain additional state licenses, or curtail our operations.
For a further discussion of our relationship with our Primary Originating Banks, particularly the regulations applicable to this relationshi p, see “ Business — Regulatory Environment .” 26 Table of Contents If any of our Primary Originating Banks or our Card Issuing Bank were to suspend, limit, or cease its operations or loan origination activities, as applicable, for any reason, or if our relationship with any Primary Originating Bank or our Card Issuing Bank were to otherwise terminate for any reason (including, but not limited to, its failure to comply with regulatory actions), we may need to implement an additional substantially similar arrangement with another bank, obtain additional state licenses, or curtail our operations.
Moreover, the profile of potential consumers using our new products and technologies also may not be as attractive as the profile of the consumers that we currently serve or have served in the past, which may lead to higher levels of delinquencies or defaults than we have historically experienced.
Moreover, the profile of potential consumers 27 Table of Contents using our new products and technologies also may not be as attractive as the profile of the consumers that we currently serve or have served in the past, which may lead to higher levels of delinquencies or defaults than we have historically experienced.
Such conditions are also likely to affect the ability and willingness of consumers to pay amounts owed under the loans facilitated through our platform, each of which would have an adverse effect on our business, results of operations, financial condition, and future prospects.
Such conditions are also likely to 38 Table of Contents affect the ability and willingness of consumers to pay amounts owed under the loans facilitated through our platform, each of which would have an adverse effect on our business, results of operations, financial condition, and future prospects.
We offer an FDIC-insured, interest-bearing savings account, which is provided by Cross River Bank, on the Affirm app. Under the terms of our program agreement with Cross River Bank as well as the deposit account 51 Table of Contents agreements between participating consumers and Cross River Bank, the savings account is opened and maintained by Cross River Bank.
We offer an FDIC-insured, interest-bearing savings account, which is provided by Cross River Bank, on the Affirm App. Under the terms of our program agreement with Cross River Bank as well as the deposit account agreements between participating consumers and Cross River Bank, the savings account is opened and maintained by Cross River Bank.
Increased scrutiny from regulators, investors and other stakeholders regarding our environmental, social, governance, or sustainability responsibilities, strategy and related disclosures could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of consumers and merchants to do business with us.
Increased scrutiny from regulators, investors and other stakeholders regarding our sustainability responsibilities, strategy and related disclosures could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of consumers and merchants to do business with us.
In the event that our issuer processor becomes unable or unwilling to facilitate the disbursements to merchants and we are unable to reach an agreement with another third-party partner, such loans would no longer be able to be facilitated through our platform. For certain transactions, we partially rely on card issuers, payment processors, or third-party payment networks.
In the event that our issuer processor becomes unable or unwilling to facilitate the disbursements to merchants and we are unable to reach an agreement with another third-party partner, such loans would no longer be able to be facilitated through our platform. 42 Table of Contents For certain transactions, we partially rely on card issuers, payment processors, or third-party payment networks.
In addition, as we add new commercial partners, it could take a significant amount of time for these commercial partners, particularly larger platforms such as Apple Pay, to fully integrate our platform and for these commercial partners’ consumers to accept our pay-over-time 41 Table of Contents solution.
In addition, as we add new commercial partners, it could take a significant amount of time for these commercial partners, particularly larger platforms such as Apple Pay, to fully integrate our platform and for these commercial partners’ consumers to accept our pay-over-time solution.
In addition, upon conversion of the 2026 Notes, we will be required to make cash payments for each $1,000 in principal amount of 2026 Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the indenture governing the 2026 Notes.
In addition, upon conversion of the 2026 Notes or the 2029 Notes, as applicable, we will be required to make cash payments for each $1,000 in principal amount of 2026 Notes or 2029 Notes, as applicable, converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the indenture governing the 2026 Notes or the indenture governing the 2029 Notes, as applicable.
A breach of such covenants or other events of default under our funding agreements could result in the reduction or termination of our access to such funding, could increase our cost of such funding or, in some cases, could give our lenders the right to require repayment of the loans prior to their scheduled maturity.
A breach of such covenants or other events of default under our funding agreements could result in the reduction or termination of our access to such funding, could increase our cost of such funding or, in some cases, could give our lenders the right to require repayment of such funding prior to its scheduled maturity.
If any of our agreements with Celtic Bank, Lead Bank and/or Evolve Bank & Trust are terminated, and we are unable to replace such agreements, our business, results of operations, financial condition, and future prospects would be materially and adversely affected. • We may not be able to sustain our revenue and GMV growth rates, or our growth rate of related key operating metrics, in the future. • We rely on a variety of funding sources to support our business model.
If any of our agreements with Celtic Bank, Lead Bank and/or our card issuing bank partners are terminated, and we are unable to replace such agreements, our business, results of operations, financial condition, and future prospects would be materially and adversely affected. • We may not be able to sustain our revenue and GMV growth rates, or our growth rate of related key operating metrics, in the future. • We rely on a variety of funding sources to support our business model.
Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation of licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business.
Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation 47 Table of Contents of licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business.
If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, we would need to secure additional 29 Table of Contents sources of funding or reduce our operations significantly.
If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, we would need to secure additional sources of funding or reduce our operations significantly.
In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our Class A common stock or securities convertible into shares of our Class A common stock or offering debt or other securities.
In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our Class A common stock or securities convertible into shares of our Class A common stock or 53 Table of Contents offering debt or other securities.
The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control. The agreements governing our funding arrangements require us to comply with certain covenants.
The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control. 28 Table of Contents The agreements governing our funding arrangements require us to comply with certain covenants.
Failure to retain Mr. Levchin would have a material adverse effect on our business, results of operations, financial condition, and future prospects. Our business benefits from our ability to attract and retain highly skilled employees.
Failure to retain Mr. Levchin would have a material adverse effect on our business, results of operations, financial condition, and future prospects. 34 Table of Contents Our business benefits from our ability to attract and retain highly skilled employees.
It is possible that a higher percentage of consumers will seek protection under bankruptcy or debtor relief laws as a result of the current inflationary environment, the possibility of a recession and market volatility.
It is possible that a higher percentage of consumers will seek protection under bankruptcy or debtor relief laws as a result of macroeconomic factors, including the current inflationary environment, the possibility of a recession and market volatility.
Holders of our Class B common stock may have interests that differ from those of the holders of our Class A common stock and may vote in a way with which the Class A holders 52 Table of Contents disagree or which may be adverse to the Class A holders' interests.
Holders of our Class B common stock may have interests that differ from those of the holders of our Class A common stock and may vote in a way with which the Class A holders disagree or which may be adverse to the Class A holders' interests.
Our failure to repurchase 2026 Notes at a time when the repurchase is required or to pay any cash payable on future conversions of the 2026 Notes would constitute a default under the indenture governing the 2026 Notes.
Our failure to repurchase 2026 Notes or the 2029 Notes, as applicable, at a time when the repurchase is required or to pay any cash payable on future conversions of the 2026 Notes or the 2029 Notes, as applicable, would constitute a default under the indenture governing the 2026 Notes or the indenture governing the 2029 Notes, as applicable.
We must comply with various international, federal and state regulatory regimes, including those applicable to consumer credit transactions, such as, but not limited to, those described in “ Business — Regulatory Environment — U.S. federal consumer protection requirements .” In addition, the U.S., Canadian and other international governments (including the U.K. upon our commencement of facilitating loans in that jurisdiction), states, and provinces may pass new laws, or may amend 47 Table of Contents existing laws, to further regulate the consumer finance industry or loans of the type provided through our platform, or to reduce the finance charges or other fees that may be imposed with respect to consumer loans.
We must comply with various international, federal and state regulatory regimes, including those applicable to consumer credit transactions, such as, but not limited to, those described in “ Business — Regulatory Environment — U.S. federal consumer protection requirements .” In addition, the U.S., Canadian, U.K. and other international governments, states, and provinces may pass new laws, or may amend existing laws, to further regulate the consumer finance industry or loans of the type provided through our platform, or to reduce the finance charges or other fees that may be imposed with respect to consumer loans.
We have in the past, and may in the future, receive complaints or notifications from third parties alleging that we have violated applicable privacy and data protection laws and regulations. Non-compliance could result in proceedings against us by governmental entities, consumers, data subjects, or others.
We have in the past, and may in the future, receive complaints or notifications from third parties alleging that we have violated applicable privacy and data protection laws and regulations. Non-compliance could result in proceedings against us by governmental 50 Table of Contents entities, consumers, data subjects, or others.
Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, except certain transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and certain other transfers described in our amended and restated certificate of incorporation.
Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, except certain transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and certain other transfers described in our articles of incorporation.
In other cases, our insurance may not cover 46 Table of Contents potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.
In other cases, our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.
Such loans facilitated through our platform can be used at merchants where we are not integrated at checkout, allowing consumers to complete purchases with 42 Table of Contents virtual cards just as they would with a standard credit or debit card.
Such loans facilitated through our platform can be used at merchants where we are not integrated at checkout, allowing consumers to complete purchases with virtual cards just as they would with a standard credit or debit card.
The CFPB, through its supervision and enforcement authority, could increase our compliance costs, potentially hinder our ability to respond to marketplace changes, impose requirements to alter products and services that would make them less attractive to consumers and impair our ability 48 Table of Contents to offer products and services profitably.
The CFPB, through its supervision and enforcement authority, could increase our compliance costs, potentially hinder our ability to respond to marketplace changes, impose requirements to alter products and services that would make them less attractive to consumers and impair our ability to offer products and services profitably.
Our amended and restated bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
Our bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
In addition, our ability to repurchase the 2026 Notes or to pay cash upon conversions of the 2026 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
In addition, our ability to repurchase the 2026 Notes or the 2029 Notes, as applicable, or to pay cash upon conversions of the 2026 Notes or the 2029 Notes, as applicable, may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
Our high-velocity, capital efficient funding model is integral to the success of our commerce platform. To support this model and the growth of our business, we must maintain a variety of funding arrangements, including warehouse credit facilities, securities repurchase agreements, securitization trusts, and forward flow arrangements with a diverse set of funding sources.
Our high-velocity, capital efficient funding model is integral to the success of our commerce platform. To support this model and the growth of our business, we must maintain a variety of funding arrangements, including warehouse credit facilities, securities repurchase agreements, securitization trusts, pass-through securitizations, master trust facilities, and forward flow arrangements with a diverse set of funding sources.
In addition, non-performance, or even significant underperformance, of the loan receivables that we own could have an adverse effect on our business. 31 Table of Contents Additionally, our funding model relies on a variety of funding arrangements, including warehouse credit facilities, securitization trusts, and forward flow arrangements with a variety of funding sources.
In addition, non-performance, or even significant underperformance, of the loan receivables that we own could have an adverse effect on our business. Additionally, our funding model relies on a variety of funding arrangements, including warehouse credit facilities, securitization trusts, master trust facilities, and forward flow arrangements with a variety of funding sources.
In particular, legal proceedings brought under state consumer protection statutes or under several of the various federal consumer financial services statutes subject to the jurisdiction of the CFPB and FTC may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages in excess of the amounts we earned from the underlying activities.
In particular, legal proceedings brought under state consumer protection statutes enforceable by state regulatory agencies or attorneys general or under several of the various federal consumer financial services statutes subject to the jurisdiction of the CFPB and FTC may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages in excess of the amounts we earned from the underlying activities.
Some aspects of our platform include open source software, and our use of open source software could negatively affect our business, results of operations, financial condition, and future prospects. Aspects of our platform include software covered by open source licenses.
Some aspects of our platform include open source software, and our use of open source software could negatively affect our business, results of operations, financial condition, and future prospects. 46 Table of Contents Aspects of our platform include software covered by open source licenses.
A consumer’s ability to repay their loans can be negatively impacted by increases in their payment obligations to other lenders under mortgage, credit card, and other loans resulting from 39 Table of Contents increases in base lending rates or structured increases in payment obligations.
A consumer’s ability to repay their loans can be negatively impacted by increases in their payment obligations to other lenders under mortgage, credit card, and other loans resulting from increases in base lending rates or structured increases in payment obligations.
International expansion subjects our business to risks associated with international operations, including: • adjusting the proprietary risk algorithms that we use to account for the differences in information available in different jurisdictions on consumers; • conformity of our platform with applicable business customs, including translation into foreign languages and associated expenses; • potential changes to our established business model; • the need to support and integrate with local vendors and service providers; • competition with vendors and service providers that have greater experience in the local markets than we do or that have pre-existing relationships with potential consumers and investors in those markets; • difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and consumers and merchants, and the increased travel, infrastructure, and legal and compliance costs associated with international operations; • compliance with multiple, potentially conflicting, and changing governmental laws and regulations, including banking, anti-money laundering, securities, employment, tax, privacy, data protection laws and regulations, such as the EU General Data Protection Regulation (GDPR), and climate disclosure frameworks, such as the Corporate Sustainability Reporting Directive (CSRD); • compliance with financial system regulations, including the U.K.
International expansion subjects our business to risks associated with international operations, including: • adjusting the proprietary risk algorithms that we use to account for the differences in information available in different jurisdictions on consumers; • conformity of our platform with applicable business customs, including translation into foreign languages and associated expenses; • potential changes to our established business model; • the need to support and integrate with local vendors and service providers; • competition with vendors and service providers that have greater experience in the local markets than we do or that have pre-existing relationships with potential consumers and investors in those markets; 33 Table of Contents • difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and consumers and merchants, and the increased travel, infrastructure, and legal and compliance costs associated with international operations; • difficulties in obtaining required licenses and/or authorizations to do business in new countries and territories; • compliance with multiple, potentially conflicting, and changing governmental laws and regulations, including those relating to banking, anti-money laundering, securities, employment, tax, privacy, data protection, such as the EU General Data Protection Regulation (GDPR), artificial intelligence, such as the EU Artificial Intelligence Act, and climate disclosure, such as the Corporate Sustainability Reporting Directive (CSRD); • compliance with financial system regulations, including the U.K.
In addition, a material modification in the production levels (including supply chain issues impacting component parts of products sold by our commercial partners) and/or financial operations of any significant commercial partner could affect the results of our operations, financial condition, and future prospects.
In addition, a material modification in the production levels (including supply chain issues impacting component parts of products sold by our commercial partners), the imposition of tariffs on global trade and/or financial operations of any significant commercial partner could affect the results of our operations, financial condition, and future prospects.
The Lead Bank loan program agreement has an initial three-year term which will expire in calendar year 2026. The term will automatically renew for additional one-year terms thereafter unless either party provides notice of its intent not to renew. The Evolve Bank loan program agreement has an initial two-year term that expired in calendar year 2023.
The term will automatically renew for additional one-year terms thereafter unless either party provides notice of its intent not to renew. The Evolve Bank loan program agreement has an initial two-year term that expired in calendar year 2023.
If we need to enter into alternative arrangements with a different bank to replace our existing arrangement, we may not be able to negotiate a 27 Table of Contents comparable alternative arrangement in a timely manner or at all.
If we need to enter into alternative arrangements with a different bank to replace our existing arrangement, we may not be able to negotiate a comparable alternative arrangement in a timely manner or at all.
We believe our savings account program, including applicable records maintained by us and Cross River Bank, complies with all applicable requirements for each participating consumer’s deposits to be covered by FDIC insurance, up to the applicable maximum deposit insurance amount.
We are not an FDIC-insured bank; however, we believe our savings account program, including applicable records maintained by us and Cross River Bank, complies with all applicable requirements for each participating consumer’s deposits to be covered by FDIC insurance, up to the applicable maximum deposit insurance amount.
We experience seasonal fluctuations in our business as a result of consumer spending and savings patterns. Historically, our GMV has been the strongest during the second quarter of our fiscal year due to increases in retail commerce during the holiday season.
We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our business. We experience seasonal fluctuations in our business as a result of consumer spending and savings patterns. Historically, our GMV has been the strongest during the second quarter of our fiscal year due to increases in retail commerce during the holiday season.
A default under the indenture governing the 2026 Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
A default under the indenture governing the 2026 Notes or the indenture governing the 2029 Notes, as applicable, or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
Management has processes in place to monitor these judgments and assumptions, including review by our credit committee and our asset-liability committee, but these processes may not ensure that our judgments and assumptions are correct.
Management has processes in place to monitor these judgments and assumptions, including review by our credit committee and our asset-liability committee, but these processes may not ensure that our judgments and assumptions 37 Table of Contents are correct.
The CFPB has issued guidance stating that institutions under its supervision may be held responsible for the actions of the companies with which they contract. Accordingly, we could be adversely impacted to the extent our third-party partners fail to comply with the legal requirements applicable to the particular products or services being offered.
The CFPB and prudential regulators have issued guidance stating that institutions under their supervision may be held responsible for the actions of the companies with which they contract. Accordingly, we could be adversely impacted to the extent our third-party partners fail to comply with the legal requirements applicable to the particular products or services being offered.
Financial Conduct Authority; • compliance with U.S. and foreign anti-bribery laws, including the Foreign Corrupt Practices Act; • difficulties in collecting payments in multiple foreign currencies and associated foreign currency exposure; • potential restrictions on repatriation of earnings; • expanded compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and applicable U.S. tax laws as they relate to international operations, the complexity and adverse consequences of such tax laws, and potentially adverse tax consequences due to changes in such tax laws; and • regional economic and political conditions.
Financial Conduct Authority; • compliance with U.S. and foreign anti-bribery laws, including the Foreign Corrupt Practices Act; • difficulties in collecting payments in multiple foreign currencies and associated foreign currency exposure; • challenges in obtaining capital in international markets on the same or similar terms as with our U.S. capital markets facilities; • potential restrictions on repatriation of earnings; • expanded compliance with potentially conflicting and changing laws of taxing jurisdictions where we conduct business and applicable U.S. tax laws as they relate to international operations, the complexity and adverse consequences of such tax laws, and potentially adverse tax consequences due to changes in such tax laws; and • regional economic and political conditions.
Our amended and restated certificate of incorporation authorizes us to issue additional shares of Class A common stock and rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise.
Our articles of incorporation authorize us to issue additional shares of Class A common stock and rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise.
Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
Our business may not continue to generate cash flow 55 Table of Contents from operations in the future sufficient to service our debt and make necessary capital expenditures.
Economic factors such as interest rates, changes in monetary and related policies, market volatility, inflationary conditions, student loan obligations, consumer confidence, and unemployment rates are among the most significant factors that impact consumer spending behavior.
Economic factors such as interest rates, changes in monetary and related policies, market volatility, inflationary conditions, the imposition of tariffs on global trade, student loan obligations, consumer confidence, and unemployment rates are among the most significant factors that impact consumer spending behavior.
However, we may not have enough available cash or be able to obtain financing at the time we are 56 Table of Contents required to make repurchases of notes surrendered therefore or pay cash with respect to the 2026 Notes being converted.
However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefore or pay cash with respect to the 2026 Notes or the 2029 Notes, as applicable, being converted.
In our asset-backed securitizations, warehouse credit facilities, and forward flow agreements, we make numerous representations and warranties concerning the characteristics of the loans we pledge and/or sell (depending on the type of facility), including representations and warranties that the loans meet certain eligibility requirements of those facilities and investors.
Across our diverse funding sources, including our asset-backed securitizations, warehouse credit facilities, master trust facilities, and forward flow agreements, we make numerous representations and warranties concerning the characteristics of the loans we pledge and/or sell (depending on the type of facility), including representations and warranties that the loans meet certain eligibility requirements of those facilities and investors.
Holders will have the right to require us to repurchase their 2026 Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest, if any.
Holders will have the right to require us to repurchase their 2026 Notes or 2029 Notes, as applicable, upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes or the 2029 Notes, as applicable, to be repurchased, plus accrued and unpaid special interest in the case of the 2026 Notes, or accrued and unpaid interest in the case of the 2029 Notes, in each case, if any.
Compliance with current or future privacy and data protection laws (including those regarding security breach notification) affecting consumer and/or employee data to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services (such as products or services that involve us sharing information with third parties or storing sensitive information), which could materially and adversely affect our profitability and could reduce income from certain business initiatives. 50 Table of Contents We publicly post policies and documentation regarding our practices concerning the processing of data.
Compliance with current or future privacy and data protection laws (including those regarding security breach notification) affecting consumer and/or employee data to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services (such as products or services that involve us sharing information with third parties or storing sensitive information), which could materially and adversely affect our profitability and could reduce income from certain business initiatives.
In addition, if we were found to be in violation of applicable state or provincial interest rate or licensing requirements by a regulating entity, a court or a state, federal, or local enforcement agency, or agree to resolve such concerns by voluntary agreement, we could be subject to or agree to pay fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties, and other penalties or consequences, and the loans facilitated through our platform could be rendered void or unenforceable in whole or in part, any of which could have an adverse effect on the enforceability or collectability of the loans facilitated through our platform. 49 Table of Contents The highly regulated environment in which our originating bank partners operate could have an adverse effect on our business, results of operations, financial condition, and future prospects.
In addition, if we were found to be in violation of applicable state or provincial interest rate or licensing requirements by a regulating entity, a court or a state, federal, or local enforcement agency, or agree to resolve such concerns by voluntary agreement, we could be subject to or agree to pay fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties, and other penalties or consequences, and the loans facilitated through our platform could be rendered void or unenforceable in whole or in part, any of which could have an adverse effect on the enforceability or collectability of the loans facilitated through our platform.
In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock upon the occurrence of certain events described in our amended and restated certificate of incorporation.
In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock upon the occurrence of certain events described in our articles of incorporation.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe also maintain a risk-based approach to identifying and overseeing risks from cybersecurity threats associated with our use of third-party service providers. In addition, we require Affirm employees to participate in cybersecurity awareness training. These training sessions are designed to enhance our employees’ awareness of cybersecurity threats and provide information about best practices to protect Affirm’s information systems.
Biggest changeWe also maintain a risk-based approach to identifying and overseeing risks from cybersecurity threats associated with our use of third-party service providers. 56 Table of Contents In addition, we require Affirm employees to participate in cybersecurity awareness training.
These updates include, among other topics, reviews of existing and newly identified 57 Table of Contents cybersecurity risks, status updates on how management is addressing and/or mitigating those risks, information about cybersecurity incidents (if any), as well as updates regarding the status of key cybersecurity initiatives.
These updates include, among other topics, reviews of existing and newly identified cybersecurity risks, status updates on how management is addressing and/or mitigating those risks, information about cybersecurity incidents (if any), as well as updates regarding the status of key cybersecurity initiatives.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy We have established a cybersecurity program, informed by the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF), that is designed to safeguard our information systems against cybersecurity threats. This program incorporates a variety of processes and cybersecurity tools designed to assess, identify and manage material risks from cybersecurity threats.
ITEM 1C. CYBERSECURITY Cybersecurity Risk Management and Strategy We have established a cybersecurity program, informed by the National Institute of Standards and Technology Cybersecurity Framework (“NIST CSF”), that is designed to safeguard our information systems against cybersecurity threats. This program incorporates a variety of processes and cybersecurity tools designed to assess, identify and manage material risks from cybersecurity threats.
We require additional tailored cybersecurity training for certain employees based on their specific job responsibilities.
These training sessions are designed to enhance our employees’ awareness of cybersecurity threats and provide information about best practices to protect Affirm’s information systems. We require additional tailored cybersecurity training for certain employees based on their specific job responsibilities.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES. We lease facilities under operating leases with various expiration dates through 2030. Our corporate headquarters are located in San Francisco, California. We also lease office space in New York, New York; Pittsburgh, Pennsylvania; Chicago, Illinois; and Toronto, Ontario. We do not own any real property. We believe that our facilities are adequate to meet our current needs.
Biggest changeITEM 2. PROPERTIES. We lease office space under operating leases with various expiration dates through 2032. We do not own any real property. Our corporate headquarters are located in San Francisco, California. We also have leased office space in other locations, including New York, New York; Pittsburgh, Pennsylvania; Chicago, Illinois; and Toronto, Ontario. We do not own any real property.
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We believe that our facilities are adequate to meet our current needs.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. 58 Table of Contents PART II
Biggest changeThe results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of August 23, 2024 , there wer e 252 stockholders of record of our Class A common stock. Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
Biggest changeHolders of Record As of August 22, 2025 , there wer e 205 stockholders of record of our Class A common stock. Because many of our shares of Class A common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.
We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends for the foreseeable future. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the fourth quarter of 2024.
We currently intend to retain any future earnings to finance the operation and expansion of our business, and we do not expect to declare or pay any dividends for the foreseeable future. Purchases of Equity Securities by the Issuer and Affiliated Purchasers We did not repurchase any of our equity securities during the fourth quarter of 2025.
As of August 23, 2024, there were 174 stockholders of record of our Cl ass B common stock. Dividend Policy We have never declared or paid cash dividends on our capital stock.
As of August 22, 2025, there were 124 stockholders of record of our Cl ass B common stock. Dividend Policy We have never declared or paid cash dividends on our capital stock.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeAs of June 30, 2024, Affirm Card represented approximately 8% of the total number of transactions compared to approximately 2% as of June 30, 2023. 66 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations and comprehensive loss data for each of the periods presented: Year ended June 30, 2024 vs 2023 2023 vs 2022 2024 2023 2022 $ Change % Change $ Change % Change (in thousands) Revenue Merchant network revenue $ 674,607 $ 507,600 $ 458,511 $ 167,007 33 % $ 49,089 11 % Card network revenue 151,401 119,338 100,696 32,063 27 % 18,642 19 % Total network revenue 826,008 626,938 559,207 199,070 32 % 67,731 12 % Interest income (1) 1,204,355 685,217 527,880 519,138 76 % 157,337 30 % Gain on sales of loans (1) 197,153 188,341 196,435 8,812 5 % (8,094) (4) % Servicing income 95,483 87,489 65,770 7,994 9 % 21,719 33 % Total revenue, net $ 2,322,999 $ 1,587,985 $ 1,349,292 $ 735,014 46 % $ 238,693 18 % Operating expenses (2) Loss on loan purchase commitment $ 180,395 $ 140,265 $ 204,081 $ 40,130 29 % $ (63,816) (31) % Provision for credit losses 460,628 331,860 255,272 128,768 39 % 76,588 30 % Funding costs 344,253 183,013 69,694 161,240 88 % 113,319 163 % Processing and servicing 343,249 257,343 157,814 85,906 33 % 99,529 63 % Technology and data analytics 501,857 615,818 418,643 (113,961) (19) % 197,175 47 % Sales and marketing 576,405 638,280 532,343 (61,875) (10) % 105,937 20 % General and administrative 525,291 586,398 577,493 (61,107) (10) % 8,905 2 % Restructuring and other 6,768 35,870 — (29,102) (81) % 35,870 NM * Total operating expenses 2,938,846 2,788,847 2,215,340 149,999 5 % 573,507 26 % Operating loss $ (615,847) $ (1,200,862) $ (866,048) $ 585,015 (49) % $ (334,814) 39 % Other income, net 100,320 211,617 141,217 (111,297) (53) % 70,400 50 % Loss before income taxes $ (515,527) $ (989,245) $ (724,831) $ 473,718 (48) % $ (264,414) 36 % Income tax expense (benefit) 2,230 (3,900) (17,414) 6,130 (157) % 13,514 (78) % Net loss $ (517,757) $ (985,345) $ (707,417) $ 467,588 (47) % $ (277,928) 39 % * Not meaningful (1) Upon purchase of a loan from our originating bank partners at a price above the fair market value of the loan or upon the origination of a loan with a par value in excess of the fair market value of the loan, a discount is included in the amortized cost basis of the loan.
Biggest changeAs of June 30, 2025, Affirm Card represented approximately 10% of the total number of transactions compared to approximately 8% and 2% as of June 30, 2024 and 2023, respectively. 66 Table of Contents Results of Operations The following tables set forth selected consolidated statements of operations and comprehensive income (loss) data for each of the periods presented: Year ended June 30, 2025 vs 2024 2024 vs 2023 2025 2024 2023 $ Change % Change $ Change % Change (in thousands) Revenue Merchant network revenue $ 882,658 $ 674,607 $ 507,600 $ 208,051 31 % $ 167,007 33 % Card network revenue 231,308 151,401 119,338 79,907 53 % 32,063 27 % Total network revenue 1,113,966 826,008 626,938 287,958 35 % 199,070 32 % Interest income (1) 1,608,221 1,204,355 685,217 403,866 34 % 519,138 76 % Gain on sales of loans (1) 381,622 197,153 188,341 184,469 94 % 8,812 5 % Servicing income 120,602 95,483 87,489 25,119 26 % 7,994 9 % Total revenue, net 3,224,412 2,322,999 1,587,985 901,413 39 % 735,014 46 % Operating expenses (2) Loss on loan purchase commitment 242,264 180,395 140,265 61,869 34 % 40,130 29 % Provision for credit losses 616,683 460,628 331,860 156,055 34 % 128,768 39 % Funding costs 425,451 344,253 183,013 81,198 24 % 161,240 88 % Processing and servicing 457,849 343,249 257,343 114,600 33 % 85,906 33 % Technology and data analytics 589,723 501,857 615,818 87,866 18 % (113,961) (19) % Sales and marketing 434,847 576,405 638,280 (141,558) (25) % (61,875) (10) % General and administrative 545,053 525,291 586,398 19,762 4 % (61,107) (10) % Restructuring and other (184) 6,768 35,870 (6,952) (103) % (29,102) (81) % Total operating expenses 3,311,685 2,938,846 2,788,847 372,839 13 % 149,999 5 % Operating loss $ (87,273) $ (615,847) $ (1,200,862) $ 528,574 86 % $ 585,015 49 % Other income, net 148,737 100,320 211,617 48,417 48 % (111,297) (53) % Income (loss) before income taxes $ 61,464 $ (515,527) $ (989,245) $ 576,991 112 % $ 473,718 (48) % Income tax expense (benefit) 9,279 2,230 (3,900) 7,049 316 % 6,130 (157) % Net income (loss) $ 52,186 $ (517,757) $ (985,345) $ 569,943 110 % $ 467,588 (47) % (1) Upon purchase of a loan from our originating bank partners at a price above the fair market value of the loan or upon the origination of a loan with a par value in excess of the fair market value of the loan, a discount is included in the amortized cost basis of the loan.
Additionally, consumers can manage the pre and post purchase split of Affirm Card transactions into loan, manage payments, open a high-yield savings account, and access a personalized marketplace. Our Company is predicated on the principles of simplicity, transparency, and putting people first.
Additionally, consumers can manage the pre and post purchase split of Affirm Card transactions into a loan, manage payments, open a high-yield savings account, and access a personalized marketplace. Our Company is predicated on the principles of simplicity, transparency, and putting people first.
Investing Activities Net cash used in investing activities was $1.3 billion for the year ended June 30, 2024, which consisted of outflows related to $21.5 billion of purchases and origination of loans held for investment, including originated and purchased loans of $4.3 billion and $17.2 billion, respectively, during the period, $1.0 billion of purchases of securities available for sale, and $159.3 million of property, equipment and software additions.
Net cash used in investing activities was $1.3 billion for the year ended June 30, 2024, which consisted of outflows related to $21.5 billion of purchases and origination of loans held for investment, including originated and purchased loans of $4.3 billion and $17.2 billion, respectively, during the period, $1.0 billion of purchases of securities available for sale, and $159.3 million of property, equipment and software additions.
Similarly, we also facilitate the issuance of the Affirm Card, a debit card that can be used physically or virtually and which allows consumers to link a bank account to pay in full, or pay later by accessing credit through the Affirm App.
Similarly, we also facilitate the issuance of the Affirm Card, a card that can be used physically or virtually and which allows consumers to link a bank account to pay in full, or pay later by accessing credit through the Affirm App.
Other Income, net Other income, net includes interest earned on our money market funds included in cash and cash equivalents and restricted cash, interest earned on securities available for sale, impairment or other adjustments to the cost basis of non-marketable equity securities held as cost, gains and losses on derivative agreements not designated within a hedging relationship, amortization of convertible debt issuance cost as well as gains (losses) on extinguishment, revolving credit facility issuance costs, fair value adjustments related to contingent liabilities, and other income or expense arising from activities that are unrelated to our primary business.
Other Income, net Other income, net includes interest earned on our money market funds included in cash and cash equivalents and restricted cash, interest earned on securities available for sale, impairment or other adjustments to the cost basis of equity securities held as cost, gains and losses on derivative agreements not designated within a hedging relationship, amortization of convertible debt issuance cost as well as gains (losses) on extinguishment, revolving credit facility issuance costs, fair value adjustments related to contingent liabilities, and other income or expense arising from activities that are unrelated to our primary business.
Unless the context otherwise requires, all references in this Report to “Affirm,” the “Company,” “we,” “our,” “us,” or similar terms refer to Affirm Holdings, Inc. and its subsidiaries. A discussion regarding our financial condition and results of operations for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 is presented below.
Unless the context otherwise requires, all references in this Report to “Affirm,” the “Company,” “we,” “our,” “us,” or similar terms refer to Affirm Holdings, Inc. and its subsidiaries. A discussion regarding our financial condition and results of operations for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 is presented below.
In addition, we are supervised by the CFPB, which enables it, among other things, to conduct comprehensive and rigorous examinations to assess our compliance with consumer financial protection laws, which in turn could result in matters requiring attention, enforcement investigations and actions, regulatory fines and mandated changes to our business products, policies and procedures.
In addition, we are supervised by the CFPB, which enables it, among other things, to conduct comprehensive and rigorous examinations to assess our compliance with consumer financial protection laws, which in turn could result in matters requiring attention, enforcement investigations and actions, regulatory fines and mandated changes to our business products, policies and procedures. U.S.
A discussion regarding our financial condition and results of operations for the fiscal year ended June 30, 2023 compared to the fiscal year ended June 30, 2022 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023.
A discussion regarding our financial condition and results of operations for the fiscal year ended June 30, 2024 compared to the fiscal year ended June 30, 2023 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024.
As a result, while we expect that transactions per active consumer may increase, revenue as a percentage of GMV may decline in the medium term to the extent that a greater portion of our GMV comes from Pay-in-4, Affirm Card and other low-AOV offerings.
As a result, while we expect that transactions per active consumer may increase, revenue as a percentage of GMV may decline in the medium term to the extent that a greater portion of our GMV comes from Affirm Card and other low-AOV offerings.
As we scale the number of transactions on our network and grow GMV, we maintain a variety of funding relationships in order to support our network. Our diversified funding relationships include warehouse facilities, securitization trusts, forward flow arrangements, and partnerships with banks.
As we scale the number of transactions on our network and grow GMV, we maintain a variety of funding relationships in order to support our network. Our diversified funding relationships include warehouse facilities, securitization trusts, variable funding notes, forward flow arrangements, and partnerships with banks.
Financing Activities Net cash provided by financing activities was $0.9 billion for the year ended June 30, 2024, primarily consisted of net cash inflows of $1.1 billion from the new issuance and repayment of notes and residual trust certificates issued by securitization trusts as well as net cash inflows of $59.2 million related to borrowing and repayment of funding debt.
Net cash provided by financing activities was $913.1 million for the year ended June 30, 2024, primarily consisted of net cash inflows of $1.1 billion from the new issuance and repayment of notes and residual trust certificates issued by securitization trusts as well as net cash inflows of $59.2 million related to borrowing and repayment of funding debt.
Fair Value of Financial Assets and Liabilities of the accompanying notes to our consolidated financial statements for more information on the performance fee liability. We are also able to originate loans directly under our lending, servicing, and brokering licenses in Canada and across several states in the U.S. through our consolidated subsidiaries.
Fair Value of Financial Assets and Liabilities of the accompanying notes to our consolidated financial statements for more information on the performance fee liability. We are also able to originate loans directly under our lending, servicing, and brokering licenses in Canada, the U.K., and across most states in the U.S. through our consolidated subsidiaries.
In the unlikely event principal payments on the loans backing any off-balance sheet securitization are insufficient to pay holders of senior notes and residual trust certificates, including any retained interests held by Affirm, then any amounts we contributed to the securitization reserve accounts may be depleted. See Note 10.
In the unlikely event principal payments on the loans backing any off-balance sheet securitization are insufficient to pay holders of senior notes and residual trust certificates, including any retained interests held by Affirm, then any amounts we contributed to the securitization reserve accounts may be depleted.
We immediately recognize an allowance for expected credit losses upon origination of a loan. Adjustments to the allowance each period for changes in our estimate of lifetime expected credit losses are recognized in earnings through the provision for credit losses presented on our consolidated statements of operations and comprehensive loss.
We immediately recognize an allowance for expected credit losses upon origination of a loan. Adjustments to the allowance each period for changes in our estimate of lifetime expected credit losses are recognized in earnings through the provision for credit losses presented within our consolidated statements of operations and comprehensive income (loss).
Provision for Credit Losses Provision for credit losses generally represents the amount of expense required to maintain the allowance for credit losses on our consolidated balance sheet, which represents management’s estimate of future losses.
Provision for Credit Losses Provision for credit losses generally represents the amount of expense required to maintain the allowance for credit losses within our consolidated balance sheet, which represents management’s estimate of future losses.
The originating bank partner also retains an interest in the loans purchased by us through a loan performance fee that is payable by us on the aggregate principal amount of a loan that is paid by a consumer. See Note 13.
The originating bank partner also retains an interest in the loans purchased by us through a loan performance fee that is payable by us on the aggregate principal amount of a loan that is paid by a consumer. Refer to Note 13.
A payment deferral extends the next payment due date, and while a consumer may receive more than one deferral, the total deferral period may not exceed three months. A loan re-amortization lowers the monthly payments by extending the term, which may not exceed twenty-four months.
A payment deferral extends the next payment due date, and while a consumer may receive 64 Table of Contents more than one deferral, the total deferral period may not exceed three months. A loan re-amortization lowers the monthly payments by extending the term, which may not exceed twenty-four months.
We define an active consumer as a consumer who engages in at least one transaction on our platform during the 12 months prior to the measurement date.
We define an active consumer as a consumer who completes at least one transaction on our platform during the 12 months prior to the measurement date.
Forward Flow Loan Sale Arrangements We have forward flow loan sale arrangements that facilitate the sale of whole loans across a diverse third-party investor base.
Other Funding Sources Forward Flow Loan Sale Arrangements We have forward flow loan sale arrangements that facilitate the sale of whole loans across a diverse third-party investor base.
For the years ended June 30, 2024, 2023, and 2022, Pay-in-4 represented 15%, 19%, and 22%, respectively, of total GMV facilitated through our platform while 0% APR installment loans represented 11%, 13%, and 21%, respectively. From consumers, we earn interest income on the simple interest loans that we originate or purchase from our originating bank partners.
For the years ended June 30, 2025, 2024, and 2023, Pay-in-X represented 14%, 15%, and 19%, respectively, of total GMV facilitated through our platform while 0% APR installment loans represented 13%, 11%, and 13%, respectively. From consumers, we earn interest income on the simple interest loans that we originate or purchase from our originating bank partners.
These partnerships allow us to benefit from our partners’ ability to originate loans under their banking licenses while complying with various federal, state, and other laws.
These partnerships allow us to benefit from our partners’ ability to originate loans under their banking licenses while complying with various federal, state, and 62 Table of Contents other laws.
The average total of funding debt from warehouses and securitizations for the year ended June 30, 2024 was $4.5 billion compared to $2.5 billion during the same period in 2023, an increase of $2.0 billion, or 81%. The increase was also attributable to a larger volume of on-balance sheet loans being retained during the period.
The average total of funding debt from warehouses and securitizations for the year ended June 30, 2025 was $5.9 billion compared to $4.5 billion during the same period in 2024, an increase of $1.4 billion, or 30%. The increase was also attributable to a larger volume of on-balance sheet loans being retained during the period.
Recent Accounting Pronouncements Refer to Note 2. Summary of Significant Accounting Policies within the notes to the consolidated financial statements.
Recent Accounting Pronouncements Refer to Note 2. Summary of Significant Accounting Policies within the notes to the consolidated financial statements. 78 Table of Contents
Card network revenue is also impacted by the mix of merchants as different merchants can have different interchange rates depending on their industry or size, among other factors. Interest Income Interest income for the year ended June 30, 2024 increased by $519.1 million, or 76%, compared to the same period in 2023.
Card network revenue is also impacted by the mix of merchants as different merchants can have different interchange rates depending on their industry or size, among other factors. Interest Income Interest income for the year ended June 30, 2025 increased by $403.9 million, or 34%, compared to the same period in 2024.
We discuss our valuation methodology and significant Level 3 inputs for servicing assets and liabilities within Note 13. Fair Value of Financial Assets and Liabilities of the accompanying notes to our consolidated financial statements. Servicing income for the year ended June 30, 2024 increased by $8.0 million, or 9%, compared to the same period in 2023.
We discuss our valuation methodology and significant Level 3 inputs for servicing assets and liabilities within Note 13. Fair Value of Financial Assets and Liabilities of the accompanying notes to our consolidated financial statements. Servicing income for the year ended June 30, 2025 increased by $25.1 million, or 26%, compared to the same period in 2024.
In particular, merchant network revenue as a percentage of GMV typically increases with longer-term, non interest-bearing loans with higher AOVs, and decreases with shorter-term, interest-bearing loans with lower AOVs. Merchant network revenue for the year ended June 30, 2024 increased by $167.0 million, or 33%, compared to the same period in 2023.
In particular, merchant network revenue as a percentage of GMV typically increases with longer-term, non interest-bearing loans with higher AOVs, and decreases with shorter-term, interest-bearing loans with lower AOVs. Merchant network revenue for the year ended June 30, 2025 increased by $208.1 million, or 31%, compared to the same period in 2024.
As of June 30, 2024, we had $2.1 billion in cash and cash equivalents and available for sale securities, $3.8 billion in available funding debt capacity, excluding our purchase commitments from third-party loan buyers, and $330 million in borrowing capacity available under our revolving credit facility.
As of June 30, 2025, we had $2.2 billion in cash and cash equivalents and available for sale securities, $5.2 billion in available funding debt capacity, excluding our purchase commitments from third-party loan buyers, and $330.0 million in borrowing capacity available under our revolving credit facility.
For loans held for investment, this discount is amortized over the life of the loan into interest income. When a loan is sold to a third-party loan buyer or off-balance sheet securitization trust, the unamortized discount is released in full at the time of sale and recognized as part of the gain or loss on sales of loans.
For loans held for sale, when a loan is sold to a third-party loan buyer or off-balance sheet securitization trust, the unamortized discount is released in full at the time of sale and recognized as part of the gain or loss on sales of loans.
The average unpaid principal balance of loans owned by third-party loan owners increased from $4.5 billion during the year ended June 30, 2023 to $4.9 billion during the year ended June 30, 2024, an increase of 7%.
The average unpaid principal balance of loans owned by third-party loan owners increased from $4.9 billion during the year ended June 30, 2024 to $6.6 billion during the year ended June 30, 2025, an increase of 36%.
The increase was partially offset by a $7.6 million, or 34%, decrease in personnel-related costs, for the year ended June 30, 2024 compared to the same period in 2023 as a result of our reduction in force and cost management plans.
The increase was partially offset by a $8.9 million, or 60%, decrease in personnel-related costs, for the year ended June 30, 2025, compared to the same period in 2024, as a result of our reduction in force and cost management plans.
June 30, 2024 June 30, 2023 June 30, 2022 (in thousands, except per consumer data) Active consumers 18,713 16,469 13,980 Transactions per active consumer 4.9 3.9 3.0 Active Consumers We assess consumer adoption and engagement by the number of active consumers across our platform. Active consumers are the primary measure of the size of our network.
June 30, 2025 June 30, 2024 June 30, 2023 (in thousands, except per consumer data) Active consumers 23,003 18,713 16,469 Transactions per active consumer 5.8 4.9 3.9 Active Consumers We assess consumer adoption and engagement by the number of active consumers across our platform. Active consumers are the primary measure of the size of our network.
As of June 30, 2024, we had approximately 18.7 million active consumers, which represented an increase of 14% compared to approximately 16.5 million as of June 30, 2023, and 34% compared to approximately 14.0 million as of June 30, 2022.
As of June 30, 2025, we had approximately 23.0 million active consumers, which represented an increase of 23% compared to approximately 18.7 million as of June 30, 2024, and 40% compared to approximately 16.5 million as of June 30, 2023.
As of June 30, 2024, we were in compliance with all applicable covenants in the agreements. 73 Table of Contents International We use various credit facilities to finance the origination of loan receivables in Canada.
As of June 30, 2025, we were in compliance with all applicable covenants in the agreements. We use various credit facilities to finance the origination of loan receivables in Canada.
The facility contains certain covenants and restrictions, including certain financial maintenance covenants. As of June 30, 2024, we were in compliance with all applicable covenants in the agreements. Refer to Note 9. Debt in the notes to the consolidated financial statements for further details on our revolving credit facility.
As of June 30, 2025, we were in compliance with all applicable covenants in the agreements. Refer to Note 9. Debt in the notes to the consolidated financial statements for further details on our revolving credit facility.
Sale and Repurchase Agreements We entered into various sale and repurchase agreements pursuant to our retained interests in our off-balance sheet securitizations where we have sold these securities to a counterparty with an obligation to repurchase at a future date and price.
Sale and Repurchase Agreements We entered into various sale and repurchase agreements pursuant to our retained interests in our off-balance sheet securitizations where we have sold these securities to a counterparty with an obligation to repurchase at a future date and price. These repurchase agreements have a term equaling the contractual life of the securitization notes pledged.
Net loss of $517.8 million was adjusted for the add back of net non-cash items increasing operating cash flows by $1.0 billion, offset by a net decrease in operating cash flows from net changes in our operating assets and liabilities of $63.0 million.
Net cash provided by operating activities was $450.1 million for the year ended June 30, 2024. Net loss of $517.8 million was adjusted for the add back of net non-cash items by $1.0 billion, offset by a net decrease in operating cash flows from net changes in our operating assets and liabilities of $63.0 million.
Our solutions empower merchants to more efficiently promote and sell their products, optimize their consumer acquisition strategies, and drive incremental sales. We also provide valuable product-level data and insights — information that merchants cannot easily get elsewhere — to better inform their strategies.
On the merchant side, we offer commerce enablement, demand generation, and consumer acquisition tools. Our solutions empower merchants to more efficiently promote and sell their products, optimize their consumer acquisition strategies, and drive incremental sales. We also provide valuable product-level data and insights — information that merchants cannot easily get elsewhere — to better inform their strategies.
As of June 30, 2024, we had approximately 4.9 transactions per active consumer, an increase of 26% compared to June 30, 2023 and an increase of 64% compared to June 30, 2022. The increase was primarily due to platform growth, a higher frequency of repeat users driven by consumer engagement and growth of Affirm Card active consumers.
As of June 30, 2025, we had approximately 5.8 transactions per active consumer, an increase of 20% compared to June 30, 2024 and an increase of 52% compared to June 30, 2023. The increase was primarily due to platform growth, a higher frequency of repeat users driven by consumer engagement, and growth of Affirm Card active consumers.
Mix of Business on Our Platform The shifts in merchant volumes and products offered in any period affect our operating results. These shifts impact GMV, revenue, our financial results, and our key operating metric performance for that period. Differences in loan product mix result in varying loan durations, APR, and mix of 0% APR and interest-bearing financings.
Mix of Business on Our Platform The shifts in merchant volumes and products offered in any period affect our operating results. These shifts impact GMV, revenue, our financial results, and our key operating metric performance for that period. Differences in loan product mix result in varying loan terms, APRs, and payment frequencies.
Given the short duration and strong performance of our assets, funding can be recycled quickly, resulting in a high-velocity, capital efficient funding model. As of June 30, 2024 and June 30, 2023, our equity capital as a percentage of our total platform portfolio has remained relatively unchanged at 5%.
Given the short duration and strong performance of our assets, funding can be recycled quickly, resulting in a high-velocity, capital efficient funding model. As of June 30, 2025 and June 30, 2024, our equity capital as a percentage of our total platform portfolio was 4% and 5%, respectively.
Funding costs for the year ended June 30, 2024 increased by $161.2 million or 88%, compared to the same period in 2023. The increase was primarily due to higher benchmark interest rates and an increase of funding debt and notes issued by securitization trusts during the year ended June 30, 2024.
Funding costs for the year ended June 30, 2025 increased by $81.2 million or 24%, compared to the same period in 2024. The increase was primarily due to an increase of funding debt and notes issued by securitization trusts during the year ended June 30, 2025.
Funding Debt Funding debt as of June 30, 2024 primarily includes our warehouse credit facilities and sale and repurchase agreements. A detailed description of each of our borrowing arrangements is included in Note 9. Debt in the notes to the consolidated financial statements. The following table summarizes our funding debt facilities as of June 30, 2024.
A detailed description of each of our borrowing arrangements is included in Note 9. Debt in the notes to the consolidated financial statements. The following table summarizes the future maturities of our warehouse credit facilities, variable funding notes, sale and repurchase agreements, and notes issued by securitizations trusts as of June 30, 2025.
Generally, interest income is correlated with the changes in the average balance of loans held for investment, which increased by 49% to $5.1 billion for the year ended June 30, 2024, compared to the same period in 2023. As a result, interest income from interest-bearing loans increased $481.8 million, or 86%, compared to the same period in 2023.
Generally, interest income is correlated with the changes in the average balance of loans held for investment, which increased by 28% to $6.5 billion for the year ended June 30, 2025, compared to the same period in 2024. As a result, interest income from interest-bearing loans increased $380.4 million, or 36%, compared to the same period in 2024.
However, despite these improvements, uncertainties remain in the macroeconomic environment, especially with regard to persistent inflation and the potential for increased unemployment rates. To address these uncertainties, we leverage our diverse funding channels and counterparties, which contribute to our resilience across various macroeconomic conditions and economic cycles.
However, despite these improvements, uncertainties remain in the macroeconomic environment, especially with regard to inflation, the prospect of recession, the magnitude, duration and impact of tariffs on global trade, and the potential for increased unemployment. To address these uncertainties, we leverage our diverse funding channels and counterparties, which contribute to our resilience across various macroeconomic conditions and economic cycles.
The following table details activity for the discount, included in loans held for investment, for the periods indicated: 67 Table of Contents Year ended June 30, 2024 2023 2022 (in thousands) Balance at the beginning of the period $ 96,576 $ 42,780 $ 53,177 Additions from loans purchased or originated, net of refunds 268,441 259,720 366,900 Amortization of discount (204,654) (158,703) (185,050) Unamortized discount released on loans sold (60,580) (46,885) (191,612) Impact of foreign currency translation (1,256) (336) (635) Balance at the end of the period $ 98,527 $ 96,576 $ 42,780 (2) Amounts include stock-based compensation as follows: Year ended June 30, 2024 2023 2022 (in thousands) General and administrative $ 228,334 $ 239,923 $ 248,797 Technology and data analytics 96,596 181,396 116,531 Sales and marketing 16,374 25,914 23,224 Processing and servicing 3,207 4,476 2,431 Total stock-based compensation in operating expenses 344,511 451,709 390,983 Capitalized into property, equipment and software, net 126,510 80,108 54,542 Total stock-based compensation $ 471,021 $ 531,817 $ 445,525 Comparison of the Years Ended June 30, 2024 and 2023 Merchant Network Revenue Merchant network revenue is impacted by both GMV and the mix of loans originated on our platform as merchant fees vary based on loan characteristics.
The following table details activity for the discount, included in loans held for investment, for the periods indicated: 67 Table of Contents June 30, 2025 June 30, 2024 June 30, 2023 (in thousands) Balance at the beginning of the period $ 98,527 $ 96,576 $ 42,780 Additions from loans purchased or originated, net of refunds 356,398 268,441 259,720 Amortization of discount (254,964) (204,654) (158,703) Unamortized discount released on loans sold (97,044) (60,580) (46,885) Impact of foreign currency translation (233) (1,256) (336) Balance at the end of the period $ 102,684 $ 98,527 $ 96,576 (2) Amounts include stock-based compensation as follows: June 30, 2025 June 30, 2024 June 30, 2023 (in thousands) General and administrative $ 216,323 $ 228,334 $ 239,923 Technology and data analytics 87,707 96,596 181,396 Sales and marketing 16,535 16,374 25,914 Processing and servicing 868 3,207 4,476 Total stock-based compensation in operating expenses 321,433 344,511 451,709 Capitalized into property, equipment and software, net 178,461 126,510 80,108 Total stock-based compensation $ 499,894 $ 471,021 $ 531,817 Comparison of the Years Ended June 30, 2025 and 2024 Merchant Network Revenue Merchant network revenue is impacted by both GMV and the mix of loans originated on our platform as merchant fees vary based on loan characteristics.
Provision for credit losses increased by $128.8 million, or 39%, for the year ended June 30, 2024 compared to the same period in 2023, driven by growth in the volume of loans held for investment.
Provision for credit losses increased by $156.1 million, or 34%, for the year ended June 30, 2025 compared to the same period in 2024, primarily driven by growth in the volume of loans held for investment.
Income Tax Expense (Benefit) The income tax expense / (benefit) for the year ended June 30, 2024 of $2.2 million changed from $(3.9) million for the same period in 2023, an overall increase to income tax expense (or decrease to income tax benefit) of $6.1 million, or 157%.
Income Tax Expense (Benefit) The income tax expense/(benefit) for the year ended June 30, 2025 of $9.3 million changed from $2.2 million for the same period in 2024, an overall increase to income tax expense of $7.0 million, or 316%.
We directly originated approximatel y $4.5 billion, or 17%, $3.7 billion, or 18%, and $3.3 billion, or 16% of loans for the years ended June 30, 2024, 2023 and 2022, respectively.
We directly originated approximate ly $6.3 billion, or 17%, $4.5 billion, or 17%, and $3.7 billion, or 18% of loans for the years ended June 30, 2025, 2024 and 2023, respectively.
Should the interest rate environment remain elevated, we may continue to experience higher transaction costs. • Volatile capital markets: During fiscal 2024, capital markets have shown improvement against recent periods, which has been evidenced by substantial additions across our funding channels due to our strong loan performance.
As a result, we may continue to experience higher transaction costs. • Volatile capital markets: Since fiscal 2024, capital markets have shown improvement against recent periods, which has been evidenced by substantial additions across our funding channels due to our strong loan performance.
Other Funding Sources Securitizations In connection with asset-backed securitizations, we sponsor and establish trusts (deemed to be VIEs) to ultimately purchase loans facilitated by our platform. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class.
In connection with our program, we sponsor and establish trusts (deemed to be VIEs) which issue securities collateralized by the loans we sell to the trust. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class.
Adverse events that occur during our second fiscal quarter could have a disproportionate effect on our financial results for the fiscal year. Macroeconomic Environment We regularly monitor the direct and indirect impacts of the current macroeconomic conditions on our business, financial condition, and results of operations.
Adverse events that occur during our second fiscal quarter could have a disproportionate effect on our financial results for the fiscal year. Macroeconomic Environment We regularly monitor the direct and indirect impacts of the current macroeconomic conditions on our business, financial condition, and results of operations. Since 2022, the U.S. Federal Reserve has maintained an elevated federal funds interest rate.
Loans Held for Investment and Allowance for Credit Losses of the accompanying notes to our consolidated financial statements during the year ended June 30, 2024, we expanded the eligibility of our loan 64 Table of Contents modification programs, which resulted in a modest benefit to delinquency rates for loans held for investment as of June 30, 2024.
Loans Held for Investment and Allowance for Credit Losses in the notes to the consolidated financial statements, in fiscal 2024, we expanded the eligibility of our loan modification programs, which resulted in a modest benefit to delinquency rates for loans held for investment during that period.
We sold loans with an unpaid principal balance of $10.2 billion for the year ended June 30, 2024, compared to $7.5 billion for the year ended June 30, 2023.
We sold loans with an unpaid principal balance of $15.8 billion for the year ended June 30, 2025, compared to $10.2 billion for the year ended June 30, 2024, an increase of 54%.
The non-cash item adjustments are primarily attributable to $331.9 million provision for credit losses, $421.9 million commercial agreement warrant expense, $451.7 million stock-based compensation expense, and $134.6 million depreciation and amortization expense, which were partially offset by $188.3 million gain on sale of loans and $141.1 million amortization of premiums and discounts on loans.
The non-cash item adjustments are primarily attributable to $616.7 million provision for credit losses, $271.6 million commercial agreement warrant expense, $321.4 million stock-based compensation expense, and $225.1 million depreciation and amortization expense, which were partially offset by $381.6 million gain on sale of loans, and $233.8 million amortization of premiums and discounts on loans.
Securitization and Variable Interest Entities of the accompanying notes to our consolidated financial statements for more information. As of June 30, 2024, the aggregate outstanding balance of loans held by third-party investors and off balance sheet securitizations was $5.1 billion.
As of June 30, 2025, the aggregate outstanding balance of loans held by third-party investors and off-balance sheet securitizations was $7.8 billion. Refer to Note 10. Securitization and Variable Interest Entities and Note 13. Fair Value of Financial Assets and Liabilities of the accompanying notes to our consolidated financial statements for more information.
The decrease is partially offset by amortization of internally-developed software which increased by $44.0 million, or 40%, for the year ended June 30, 2024 compared to the same period in 2023, as a result of an increase in the number of capitalized projects.
The increase is primarily driven by amortization of internally-developed software which increased by $64.3 million, or 42%, for the year ended June 30, 2025, compared to the same period in 2024, as a result of an increase in the number of capitalized projects.
This was 68 Table of Contents driven by increased card activity through Affirm Card and our single use virtual debit cards, as well as growth in existing and new merchants utilizing our agreement with card-issuing partners as a means of integrating Affirm services, which grew from approximately 1,300 merchants as of June 30, 2023 to 1,900 merchants as of June 30, 2024.
This was driven by increased card activity through Affirm Card and our one-time-use virtual debit cards, as well as growth in 68 Table of Contents existing and new merchants utilizing our agreement with card-issuing partners as a means of integrating Affirm services.
This increase to income tax expense (decrease of income tax benefit) was primarily attributable to the increase in pretax book income in certain foreign jurisdictions for the year ended June 30, 2024 and its related income tax effects, whereas the income tax benefit recognized for the year ended June 30, 2023 was primarily attributable to the income tax effects of pretax book losses for that period in the same foreign jurisdictions.
This increase to income tax expense was primarily attributable to the increase in pretax book income in certain foreign jurisdictions for the year ended June 30, 2025 and its related income tax effects when compared with the same period in 2024.
Pay-in-4 is a short-term payment plan with four biweekly 0% APR installments. From merchants, we typically earn a fee when we help them convert a sale and facilitate a transaction.
Pay-in-X primarily consists of short-term payment plans with one to four 0% APR installments. From merchants, we typically earn a fee when we help them convert a sale and facilitate a transaction.
Additionally, the average transactions per active consumer increased from 3.9 as of June 30, 2023 to 4.9 as of June 30, 2024. The increase in consumers and average transactions per active consumer is partially offset by a decrease in AOVs. For the year ended June 30, 2024 AOV was $292 down from $318 for the same period in fiscal 2023.
With respect to the frequency and mix of transactions, the transactions per active consumer increased from 4.9 as of June 30, 2024 to 5.8 as of June 30, 2025. The increase is partially offset by a decrease in AOV. For the year ended June 30, 2025 AOV was $273, down from $292 for the same period in fiscal 2024.
To allow for flexible staffing to support overflow and seasonal traffic, we partner with several sub-servicers to manage consumer care, first priority collections, and third-party collections in accordance with our policies and procedures.
In the normal course of business, we do not sell the servicing rights on any of the loans. To allow for flexible staffing to support overflow and seasonal traffic, we partner with several sub-servicers to manage consumer care, first priority collections, and third-party collections in accordance with our policies and procedures.
The increase is primarily attributed to an increase of $6.4 billion or 32% in GMV for the year ended June 30, 2024. GMV increased from $20.2 billion as of June 30, 2023 to $26.6 billion as of June 30, 2024.
The increase is primarily attributed to an increase of $10.0 billion or 38% in GMV for the year ended June 30, 2025. GMV increased from $26.6 billion as of June 30, 2024 to $36.7 billion as of June 30, 2025.
In addition, cash used for the purchase and origination of loans held for sale was $4.2 billion, which was offset by cash proceeds generated from the sale of loans held for sale of $4.2 billion. Net cash provided by operating activities was $12.2 million for the year ended June 30, 2023.
In addition, cash used for the purchase and origination of loans held for sale was $4.2 billion, which was offset by cash proceeds generated from the sale of loans held for sale of $4.2 billion.
To date, we have purchased all of the loans facilitated through our platform and originated by our originating bank partners. When we purchase a loan from an originating bank partner, the purchase price is equal to the outstanding principal balance of the loan, plus a fee and any accrued interest.
When we purchase a loan from an originating bank partner, the purchase price is equal to the outstanding principal balance of the loan, plus a fee and any accrued interest.
Card network revenue growth is correlated with the growth of GMV processed by our issuer processors. As such, the increase is primarily driven by $8.2 billion of GMV processed through our issuer processors, an increase of 40% for the year ended June 30, 2024, as compared to the same period in 2023.
As such, the increase is primarily driven by $11.9 billion of GMV processed through our issuer processors, an increase of 45% for the year ended June 30, 2025, as compared to the same period in 2024.
Technology and data analytics expense for the year ended June 30, 2024 decreased by $114.0 million or 19%, compared to the same period in 2023.
Technology and data analytics expense for the year ended June 30, 2025 increased by $87.9 million or 18%, compared to the same period in 2024.
Inflows related to $10.0 billion of principal repayments of loans, $1.6 billion of proceeds from sale of loans, and $1.5 billion of proceeds from maturities and repayments of securities available for sale.
Inflows related to $18.7 billion of principal repayments of loans, $12.6 billion of proceeds from sale of loans held for investment, and $1.2 billion of proceeds from maturities of securities available for sale.
In these instances, we may be required to purchase the loan for a price in excess of the fair market value of such loans, which results in a loss. These losses are recognized as loss on loan purchase commitment in our consolidated statements of operations and comprehensive loss.
In these instances, we may be required to purchase the loan for a price in excess of the fair market value of such loans, which results in a loss.
Our solutions use the latest in machine learning, artificial intelligence, cloud-based technologies, and other modern tools to create differentiated and scalable products. 61 Table of Contents Year ended June 30, 2024 vs 2023 2023 vs 2022 2024 2023 2022 $ % $ % (in thousands, except percentages) Total revenue, net $ 2,322,999 $ 1,587,985 $ 1,349,292 $ 735,014 46 % $ 238,693 18 % Total operating expenses 2,938,846 2,788,847 2,215,340 149,999 5 % 573,507 26 % Operating loss $ (615,847) $ (1,200,862) $ (866,048) $ 585,015 (49) % $ (334,814) 39 % Other income, net 100,320 211,617 141,217 (111,297) (53) % 70,400 50 % Loss before income taxes $ (515,527) $ (989,245) $ (724,831) $ 473,718 (48) % $ (264,414) 36 % Income tax expense (benefit) 2,230 (3,900) (17,414) 6,130 (157) % 13,514 (78) % Net loss $ (517,757) $ (985,345) $ (707,417) $ 467,588 (47) % $ (277,928) 39 % Our Financial Model Our Revenue Model We have three main loan product offerings: Pay-in-4, 0% annual percentage rate (“APR”) monthly installment loans and interest-bearing monthly installment loans.
Our solutions use the latest in machine learning, artificial intelligence, cloud-based technologies, and other modern tools to create differentiated and scalable products. 61 Table of Contents Year ended June 30, 2025 vs 2024 2024 vs 2023 2025 2024 2023 $ % $ % (in thousands, except percentages) Total revenue, net $ 3,224,412 $ 2,322,999 $ 1,587,985 $ 901,413 39 % $ 735,014 46 % Total operating expenses 3,311,685 2,938,846 2,788,847 372,839 13 % 149,999 5 % Operating loss $ (87,273) $ (615,847) $ (1,200,862) $ 528,574 86 % $ 585,015 49 % Other income, net 148,737 100,320 211,617 48,417 48 % (111,297) (53) % Income (loss) before income taxes $ 61,464 $ (515,527) $ (989,245) $ 576,991 112 % $ 473,718 (48) % Income tax expense (benefit) 9,279 2,230 (3,900) 7,049 316 % 6,130 (157) % Net income (loss) $ 52,186 $ (517,757) $ (985,345) $ 569,943 110 % $ 467,588 (47) % Our Financial Model Our Revenue Model We have three main loan product offerings: Pay-in-X, 0% annual percentage rate (“APR”) monthly installment loans and interest-bearing monthly installment loans.
Off-Balance Sheet Arrangements In the ordinary course of business, we engage in activities that are not reflected on our consolidated balance sheets, generally referred to as off-balance sheet arrangements.
Off-Balance Sheet Arrangements In the ordinary course of business, we engage in activities that are not reflected within our consolidated balance sheets, generally referred to as off-balance sheet arrangements. These activities involve transactions with unconsolidated VIEs, including securitization and forward flow transactions.
Transactions per active consumer is defined as the average number of transactions that an active consumer has conducted on our platform during the 12 months prior to the measurement date.
Transactions per Active Consumer We believe the value of our network is amplified with greater consumer engagement and repeat usage, highlighted by increased transactions per active consumer. Transactions per active consumer is defined as the average number of transactions that an active consumer has conducted on our platform during the 12 months prior to the measurement date.
The following table summarizes our cash, cash equivalents and investments in debt securities (in thousands): June 30, 2024 June 30, 2023 Cash and cash equivalents (1) $ 1,013,106 $ 892,027 Investments in short-term debt securities (2) 865,766 915,003 Investments in long-term debt securities (2) 265,862 259,650 Cash, cash equivalent and investments in debt securities $ 2,144,734 $ 2,066,680 (1) Cash and cash equivalents consist of checking, money market and savings accounts held at financial institutions and short-term highly liquid marketable securities, including money market funds, government bonds, and other corporate securities purchased with an original maturity of three months or less.
The following table summarizes our cash, cash equivalents and investments in debt securities (in thousands): June 30, 2025 June 30, 2024 Cash and cash equivalents (1) $ 1,354,455 $ 1,013,106 Investments in short-term debt securities (2) 652,491 865,766 Investments in long-term debt securities (2) 218,934 265,862 Cash, cash equivalent and investments in debt securities $ 2,225,880 $ 2,144,734 (1) Cash and cash equivalents consist of checking, money market and savings accounts held at financial institutions and short-term highly liquid marketable securities, including money market funds, agency bonds, commercial paper, and government bonds purchased with an original maturity of three months or less. 72 Table of Contents (2) Securities available for sale at fair value primarily consist of certificates of deposits, corporate bonds, municipal bonds, commercial paper, agency bonds, and government bonds.
Similarly, we may originate certain loans via our wholly-owned subsidiaries, with zero or below market interest rates. In these instances, the par value of the loans originated is in excess of the fair market value of such loans, resulting in a loss, which we record as a reduction to network revenue.
In these instances, the par value of the loans originated is in excess of the fair market value of such loans, resulting in a loss, which we record as a reduction to network revenue.
While our estimate reflects assumptions we believe a market participant would use to calculate fair value, significant judgment is required. 77 Table of Contents Allowance for Credit Losses The allowance for credit losses on loans held for investment is determined based on management’s current estimate of expected credit losses over the remaining contractual term, historical credit losses, consumer payment trends, estimates of recoveries, and future expectations as of each balance sheet date.
Allowance for Credit Losses The allowance for credit losses on loans held for investment is determined based on management’s current estimate of expected credit losses over the remaining contractual term, historical credit losses, consumer payment trends, estimates of recoveries, and future expectations as of each balance sheet date.
Gain on Sale of Loans Gain on sales of loans for the year ended June 30, 2024 increased by $8.8 million, or 5%, compared to the same period in 2023. The increase was driven by an increase in loan sale volume to third-party loan buyers.
Gain on Sale of Loans Gain on sales of loans for the year ended June 30, 2025 increased by $184.5 million, or 94%, compared to the same period in 2024.
Overall, the increase in GMV was driven by an increase in volume at our top five merchants and platform partners as well as overall increases in our active merchant base, active consumers and average transactions per consumer.
Overall, the increase in GMV was driven by growth in several key areas including our top five merchants and platform partners, our direct to consumer products, including Affirm Card, and overall increases in our active merchant base, active consumers and average transactions per consumer.
Our solutions, which are built on trust and transparency, are designed to make it easier for consumers to spend responsibly and with confidence, easier for merchants and commerce platforms to convert sales and grow, and easier for commerce to thrive. Our point-of-sale solutions allow consumers to pay for purchases in fixed amounts without deferred interest, late fees, or penalties.
Our solutions, which are built on trust and transparency, are designed to make it easier for consumers to spend and save responsibly and with confidence, easier for merchants and commerce platforms to convert sales and grow, and easier for commerce to thrive.
Additionally, our platform fees increased by $37.5 million, or 91%, for the year ended June 30, 2024 due to an increase in our volume with a large enterprise partner.
During the year ended June 30, 2025, our platform fees increased by $29.3 million, or 37%, due to an increase in volume with a large enterprise partner. Additionally, our customer service and collection fee costs increased by $22.5 million, or 47%, compared to the same period in 2024.
These challenges have affected, and may continue to affect, our business and results of operations in the following ways: • Shifts in consumer demand: Since fiscal 2023, we have experienced varying levels of consumer demand across different categories of merchandise.
These challenges have affected, and may continue to affect, our business and results of operations in the following ways: • Shifts in consumer demand: Over the past two fiscal years, we have experienced varying levels of consumer demand across different categories of merchandise. This is due to economic uncertainty and unpredictability, recessionary concerns, inflationary pressures and elevated interest rates.
For the years ended June 30, 2024, 2023, and 2022, our top five merchants and platform partners represented approximately 47%, 42%, and 32%, respectively, of total GMV. For the year ended June 30, 2024, 65 Table of Contents GMV attributable to Amazon represented 21% of total GMV.
The top five merchants and platform partners as of June 30, 2023 represented approximated 42% of total GMV. For the years ended June 30, 2025, 2024, and 2023, GMV attributable to Amazon represented 22%, 21% and less than 20%, respectively, of total GMV.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are also exposed to credit risk in the event of nonperformance by the financial institutions holding our cash and the issuers of our cash equivalents and available for sale securities. We maintain our cash deposits and cash equivalents in highly-rated, federally-insured financial institutions in excess of federally insured limits.
Biggest changeThe fair value of residual interests in structured transactions was $2.3 million as of June 30, 2025, of which our maximum exposure to losses was $15.6 million. We are also exposed to credit risk in the event of nonperformance by the financial institutions holding our cash and the issuers of our cash equivalents and available for sale securities.
Higher interest rates may lead to higher payment obligations on our future credit products but also for consumers’ other financial commitments, including their mortgages, credit cards, and other types of loans. Therefore, higher interest rates may lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our operating results.
Elevated interest rates may lead to higher payment obligations on our future credit products but also for consumers’ other financial commitments, including their mortgages, credit cards, and other types of loans. Therefore, elevated interest rates may lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our operating results.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have operations within the United States and Canada, and we are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and interest rates.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have operations within the United States, Canada and U.K., and we are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and interest rates.
Factoring in the interest rate risk management program and the repricing of investment securities, as of June 30, 2024, we estimate that a hypothetical instantaneous 100 basis point upward parallel shock to interest rates would have a less than $50.0 million adverse impact on our cash flows associated with our market risk sensitive instruments over the next 12 months.
Factoring in the interest rate risk management program and the repricing of investment securities, as of June 30, 2025, we estimate that a hypothetical instantaneous 100 basis point upward parallel shock to interest rates would have a less than $65.0 million adverse impact on our cash flows associated with our market risk sensitive instruments over the next 12 months.
This measure projects the changes in cash flows associated with all assets and liabilities, including derivatives, based on contractual market rate-based repricing conditions over a twelve-month time horizon. It considers forecasted business growth and anticipated future funding mix. Credit Risk We have credit risk primarily related to our consumer loans held for investment.
This measure projects the changes in cash flows associated with all assets and liabilities, including derivatives, based on contractual market rate-based repricing conditions over a twelve-month time horizon. It considers forecasted business growth and anticipated future funding mix. 79 Table of Contents Credit Risk We have credit risk primarily related to our consumer loans held for investment.
To monitor portfolio performance, we utilize a wide range of internal and external metrics to review user and loan populations. Each week, management reviews performance for each consumer segment, typically split by ITACs model score, financial product originated, age of loan, and delinquency status.
To monitor portfolio performance, we utilize a wide range of internal and external metrics to review user and loan populations. Each week, management reviews performance for each consumer segment, typically split by ITACs model score at the time of origination, financial product originated, age of loan, and delinquency status.
Internal performance trendlines are measured against external factors such as unemployment, CPI, and consumer sentiment to determine what changes, if any, in risk strategy is warranted. As of June 30, 2024 and June 30, 2023, we were exposed to credit risk on $5.7 billion and $4.4 billion, respectively, of loans held on our consolidated balance sheet.
Internal performance trendlines are measured against external factors such as unemployment, CPI, and consumer sentiment to determine what changes, if any, in risk strategy is warranted. As of June 30, 2025 and June 30, 2024, we were exposed to credit risk on $7.0 billion and $5.7 billion, respectively, of loans held within our consolidated balance sheet.
Interest Rate Risk Our securities available for sale at fair value as of June 30, 2024 included $1.1 billion of marketable debt securities with maturities greater than three months.
Interest Rate Risk Our securities available for sale at fair value as of June 30, 2025 included $0.9 billion of marketable debt securities with maturities greater than three months.
As of June 30, 2024 and June 30, 2023, we have sold $4.2 billion and $0.4 billion, respectively, unpaid principal balance of loans which are subject to risk 79 Table of Contents sharing arrangements, of which our maximum exposure to losses was $81.2 million and $8.2 million, respectively.
As of June 30, 2025 and June 30, 2024, we have sold $8.6 billion and $4.2 billion, respectively, in unpaid principal balance loans which are subject to risk sharing arrangements, of which our maximum exposure to losses was $91.1 million and $81.2 million, respectively.
This amount includes our maximum potential loss with respect to risk sharing liabilities of $47.3 million and the fair value of risk sharing assets of $33.9 million, as of June 30, 2024.
This amount includes our maximum potential loss with respect to risk sharing liabilities of $24.5 million and the fair value of risk sharing assets of $66.6 million, as of June 30, 2025.
The fair value of notes receivable and residual trust certificate retained interests in unconsolidated securitization trusts was $51.7 million and $18.9 million as of June 30, 2024 and June 30, 2023, respectively.
The fair value of notes receivable and residual trust certificate retained interests in unconsolidated securitization trusts was $75.5 million and $51.7 million as of June 30, 2025 and June 30, 2024, respectively, of which our maximum exposure to losses was $76.9 million and $51.9 million, respectively.
We manage this risk by conducting business with well-established financial institutions, diversifying our counterparties and having guidelines regarding credit rating and investment maturities to safeguard liquidity.
We maintain our cash deposits and cash equivalents in highly-rated, federally-insured financial institutions in excess of federally insured limits. We manage this risk by conducting business with well-established financial institutions, diversifying our counterparties and having guidelines regarding credit rating and investment maturities to safeguard liquidity.
In addition, we have credit risk exposure in relation to certain off balance sheet loans sold to third parties where we have entered into risk sharing arrangements and through our retained interests in unconsolidated securitization trusts.
No other states or provinces exceeded 10%. In addition, we have credit risk exposure related to certain off-balance sheet loans sold to third parties where we have entered into risk sharing arrangements, retained interests in unconsolidated securitization trusts and our residual interests in structured transactions.
If multiple financing sources were to be unable to fulfill their funding obligations to us, it could have a material adverse effect on our financial condition, results of operations and cash flows. 80 Table of Contents
Although, we are not substantially dependent on a single financing source and have not historically experienced any credit losses related to these financial institutions, if multiple financing sources were to be unable to fulfill their funding obligations to us, it could have a material adverse effect on our financial condition, results of operations and cash flows. 80 Table of Contents
Loan receivables are diversified geographically. As of both June 30, 2024 and June 30, 2023, approximately 11% of loan receivables related to consumers residing in the state of California. No other states or provinces exceeded 10%.
Loan receivables are diversified geographically. As of both June 30, 2025 and June 30, 2024, approximately 11% of loan receivables related to consumers residing in the state of California. Approximately 10% of loan receivables related to customers residing in the state of Texas as of June 30, 2025 but did not exceed 10% as of June 30, 2024.
Because our investment policy is to invest in conservative liquid investments and because our business strategy does not rely on generating material returns from our investment portfolio, we do not expect our market risk exposure on marketable debt securities to be significant. 78 Table of Contents Continued volatility in interest rates and inflation, which may persist longer than previously expected, may adversely impact our consumers’ spending levels, and ability and willingness to pay outstanding amounts owed to us.
Because our investment policy is to invest in conservative liquid investments and because our business strategy does not rely on generating material returns from our investment portfolio, we do not expect our market risk exposure on marketable debt securities to be significant.
Removed
Although, we are not substantially dependent on a single financing source and have not historically experienced any credit losses related to these financial institutions, since the beginning of March 2023, there have been public reports of instability at certain financial institutions.
Added
Continued volatility in interest rates and inflation, which may persist longer than previously expected, may adversely impact our consumers’ spending levels, and ability and willingness to pay outstanding amounts owed to us.

Other AFRM 10-K year-over-year comparisons