SEC Filing | Affirm Holdings, Inc.

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afrm-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission File Number: 001-39888

Affirm Holdings, Inc.

(Exact name of registrant as specified in its charter)


Delaware									84-2224323
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

650 California Street
San Francisco, California									94108
(Address of principal executive offices)									(Zip Code)

(415) 960-1518

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Class A common stock, par value $0.00001 per share

AFRM

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 3, 2024, the number of shares of the registrant’s Class A common stock outstanding was 263,837,691 and the number of shares of the registrant’s Class B common stock outstanding was 45,286,948.

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TABLE OF CONTENTS


						Page
Cover						1
Table of Contents						2
Part I - Financial Information						5
Item 1. Financial Statements						5
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)						5
CONDENSED CONSOLIDATED BALANCE SHEETS, CONT. (Unaudited)						6
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)						7
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)						8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)						10
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT. (Unaudited)						11
1. Business Description						12
2. Summary of Significant Accounting Policies						12
3. Revenue						13
4. Loans Held for Investment and Allowance for Credit Losses						16
5. Acquisitions						20
6. Balance Sheet Components						22
7. Leases						25
8. Commitments and Contingencies						26
9. Debt						27
10. Securitization and Variable Interest Entities						31
11. Investments						33
12. Derivative Financial Instruments						37
13. Fair Value of Financial Assets and Liabilities						39
14. Stockholders’ Equity						49
15. Equity Incentive Plans						50
16. Restructuring						53
17. Income Taxes						53
18. Net Loss per Share Attributable to Common Stockholders						54
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations						56
Item 3. Quantitative and Qualitative Disclosures About Market Risk						73
Item 4. Controls and Procedures						75
Part II - Other Information						76
Item 1. Legal Proceedings						76
Item 1A. Risk Factors						76
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds						76
Item 3. Defaults Upon Senior Securities						76
Item 4. Mine Safety Disclosures						76
Item 5. Other Information						76
Item 6. Exhibits						77
Signatures						78

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”), as well as information included in oral statements or other written statements made or to be made by us, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Report, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management regarding future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

•our expectations regarding our future revenue, expenses, and other operating results and key operating metrics;

•our ability to attract new merchants and commerce partners and retain and grow our relationships with existing merchants and commerce partners;

•our ability to compete successfully in a highly competitive and evolving industry;

•our ability to attract new consumers and retain and grow our relationships with our existing consumers;

•our expectations regarding the development, innovation, introduction of, and demand for, our products;

•our ability to successfully maintain our relationship with existing originating bank partners and engage additional originating bank partners;

•our ability to maintain, renew or replace our existing funding arrangements and build and grow new funding relationships;

•the impact of any of our funding sources becoming unwilling or unable to provide funding to us on terms acceptable to us, or at all;

•our ability to effectively price and score credit risk using our proprietary risk model;

•the performance of loans facilitated and originated through our platform;

•the future growth rate of our revenue and related key operating metrics;

•our ability to achieve sustained profitability in the future;

•our ability, and the ability of our originating bank and other partners, to comply, and remain in compliance with, laws and regulations that currently apply or become applicable to our business or the businesses of such partners;

•our ability to protect our confidential, proprietary, or sensitive information;

•past and future acquisitions, investments, and other strategic investments;

•our ability to maintain, protect, and enhance our brand and intellectual property;

•litigation, investigations, regulatory inquiries, and proceedings;

•developments in our regulatory environment;

•the impact of macroeconomic conditions on our business, including the impacts of inflation, an elevated interest rate environment and corresponding increases in negotiated interest rate spreads, ongoing recessionary concerns and the potential for more instability of financial institutions; and

•the size and growth rates of the markets in which we compete.

Forward-looking statements, including statements such as “we believe” and similar statements, are based on our management’s current beliefs, opinions and assumptions and on information currently available as of the date

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of this Report. Such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this Form 10-Q and in our most recently filed Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “Annual Report”). Other sections of this Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive, heavily regulated and rapidly changing environment. New risks emerge from time to time, and it is not possible for our management to predict all risks that we may face, nor can we assess the impact of all risks on our business or the extent to which any risk, or combination of risks, may cause our actual results to differ from those contained in, or implied by, any forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable as of the date of this Report, we cannot guarantee future results, levels of activity, performance, achievements, events, outcomes, timing of results or circumstances. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Report or to conform these statements to actual results or to changes in our expectations. You should read this Form 10-Q and the documents that we have filed as exhibits to this Report with the understanding that our actual future results, levels of activity, performance, outcomes, achievements and timing of results or outcomes may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (investors.affirm.com), our filings with the Securities and Exchange Commission (“SEC”), webcasts, press releases, conference calls, and social media. We use these mediums, including our website, to communicate with investors and the general public about our company, our products, and other issues. It is possible that the information that we make available on our website may be deemed to be material information. We therefore encourage investors and others interested in our Company to review the information that we make available on our website. The contents of our website are not incorporated into this filing. We have included our investor relations website address only as an inactive textual reference for convenience and do not intend it to be an active link to our website.

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Part I - Financial Information

Item 1. Financial Statements

AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except shares and per share amounts)


	March 31, 2024		June 30, 2023
Assets
Cash and cash equivalents	$	1,272,760	$	892,027
Restricted cash	346,931		367,917
Securities available for sale at fair value	781,402		1,174,653
Loans held for sale	127		76
Loans held for investment	5,461,407		4,402,962
Allowance for credit losses	(289,088)		(204,531)
Loans held for investment, net	5,172,319		4,198,431
Accounts receivable, net	293,388		199,085
Property, equipment and software, net	401,535		290,135
Goodwill	535,818		542,571
Intangible assets	15,288		34,434
Commercial agreement assets	118,703		177,672
Other assets	263,155		278,614
Total assets	$	9,201,426	$	8,155,615
Liabilities and stockholders’ equity
Liabilities:
Accounts payable	$	35,224	$	28,602
Payable to third-party loan owners	129,730		53,852
Accrued interest payable	22,816		13,498
Accrued expenses and other liabilities	150,162		180,883
Convertible senior notes, net	1,385,891		1,414,208
Notes issued by securitization trusts	3,240,871		2,165,577
Funding debt	1,613,272		1,764,812
Total Liabilities	6,577,966		5,621,432
Commitments and contingencies (Note 8)
Stockholders’ equity:
Class A common stock, par value $0.00001 per share: 3,030,000,000 shares authorized, 263,249,743 shares issued and outstanding as of March 31, 2024; 3,030,000,000 shares authorized, 237,230,381 shares issued and outstanding as of June 30, 2023	2		2
Class B common stock, par value $0.00001 per share: 140,000,000 shares authorized, 45,288,458 shares issued and outstanding as of March 31, 2024; 140,000,000 authorized, 59,615,836 shares issued and outstanding as of June 30, 2023	1		1
Additional paid in capital	5,704,626		5,140,850
Accumulated deficit	(3,063,868)		(2,591,247)
Accumulated other comprehensive loss	(17,301)		(15,423)
Total stockholders’ equity	2,623,460		2,534,183
Total liabilities and stockholders’ equity	$	9,201,426	$	8,155,615

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS, CONT.

(Unaudited)

(in thousands)

The following table presents the assets and liabilities of consolidated variable interest entities (“VIEs”), which are included in the interim condensed consolidated balance sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. The liabilities in the table below include liabilities for which creditors do not have recourse to the general credit of the Company. Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs only and exclude intercompany balances that eliminate upon consolidation.


	March 31, 2024		June 30, 2023
Assets of consolidated VIEs, included in total assets above
Restricted cash	$	156,736	$	203,872
Loans held for investment	5,269,390		4,151,606
Allowance for credit losses	(243,167)		(178,252)
Loans held for investment, net	5,026,223		3,973,354
Accounts receivable, net	2,960		8,196
Other assets	11,791		18,210
Total assets of consolidated VIEs	$	5,197,710	$	4,203,632
Liabilities of consolidated VIEs, included in total liabilities above
Accounts payable	$	2,856	$	2,894
Accrued interest payable	22,710		13,498
Accrued expenses and other liabilities	11,989		17,825
Notes issued by securitization trusts	3,240,871		2,165,577
Funding debt	1,601,516		1,656,400
Total liabilities of consolidated VIEs	4,879,942		3,856,194
Total net assets of consolidated VIEs	$	317,768	$	347,438

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Revenue
Merchant network revenue	$	159,292	$	119,013	$	493,599	$	366,181
Card network revenue	35,676		29,469		108,421		85,294
Total network revenue	194,968		148,482		602,020		451,475
Interest income	315,712		178,270		866,737		470,393
Gain on sales of loans	40,183		32,813		127,170		156,015
Servicing income	25,294		21,413		67,887		64,277
Total revenue, net	576,157		380,978		1,663,814		1,142,160
Operating expenses
Loss on loan purchase commitment	44,143		31,224		132,639		105,256
Provision for credit losses	122,443		66,438		343,019		237,377
Funding costs	90,449		51,188		248,997		120,005
Processing and servicing	88,209		65,229		254,083		186,096
Technology and data analytics	124,828		161,792		377,626		463,500
Sales and marketing	132,950		140,942		441,081		493,149
General and administrative	128,721		139,266		401,832		458,877
Restructuring and other	5,203		34,934		6,924		34,934
Total operating expenses	736,946		691,013		2,206,201		2,099,194
Operating loss	$	(160,789)	$	(310,035)	$	(542,387)	$	(957,034)
Other income, net	27,743		103,522		70,999		175,067
Loss before income taxes	$	(133,046)	$	(206,513)	$	(471,388)	$	(781,967)
Income tax (benefit) expense	890		(836)		1,233		(2,584)
Net loss	$	(133,936)	$	(205,677)	$	(472,621)	$	(779,383)
Other comprehensive income (loss)
Foreign currency translation adjustments	$	(10,879)	$	31	$	(8,953)	$	(16,993)
Unrealized gain (loss) on securities available for sale, net	(30)		4,520		6,176		2,061
Gain (loss) on cash flow hedges	750		(257)		899		(257)
Net other comprehensive income (loss)	(10,159)		4,294		(1,878)		(15,189)
Comprehensive loss	$	(144,095)	$	(201,383)	$	(474,499)	$	(794,572)
Per share data:
Net loss per share attributable to common stockholders for Class A and Class B
Basic	$	(0.43)	$	(0.69)	$	(1.53)	$	(2.65)
Diluted	$	(0.43)	$	(0.69)	$	(1.53)	$	(2.65)
Weighted average common shares outstanding
Basic	312,626,728		297,204,715		307,995,889		293,915,268
Diluted	312,626,728		297,204,715		307,995,889		293,915,268

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares (1)	Amount
Balance as of June 30, 2023	296,846,217	$	3	$	5,140,850	$	(2,591,247)	$	(15,423)	$	2,534,183
Issuance of common stock upon exercise of stock options	495,350	—		3,625		—		—		3,625
Vesting of restricted stock units	3,740,320	—		—		—		—		—
Vesting of warrants for common stock	—	—		95,910		—		—		95,910
Stock-based compensation	—	—		151,162		—		—		151,162
Tax withholding on stock-based compensation	—	—		(36,515)		—		—		(36,515)
Foreign currency translation adjustments	—	—		—		—		(11,898)		(11,898)
Unrealized gain on securities available for sale	—	—		—		—		1,353		1,353
Gain on cash flow hedges	—	—		—		—		763		763
Net loss	—	—		—		(171,783)		—		(171,783)
Balance as of September 30, 2023	301,081,887	$	3	$	5,355,032	$	(2,763,030)	$	(25,205)	$	2,566,800
Issuance of common stock upon exercise of stock options	1,922,621	—		17,419		—		—		17,419
Issuance of common stock, employee share purchase plan	333,847	—		4,137		—		—		4,137
Vesting of restricted stock units	2,195,991	—		—		—		—		—
Vesting of warrants for common stock	—	—		114,705		—		—		114,705
Stock-based compensation	—	—		119,821		—		—		119,821
Tax withholding on stock-based compensation	—	—		(39,159)		—		—		(39,159)
Foreign currency translation adjustments	—	—		—		—		13,824		13,824
Unrealized gain on securities available for sale	—	—		—		—		4,853		4,853
Loss on cash flow hedges	—	—		—		—		(614)		(614)
Net loss	—	—		—		(166,902)		—		(166,902)
Balance as of December 31, 2023	305,534,346	$	3	$	5,571,955	$	(2,929,932)	$	(7,142)	$	2,634,884
Issuance of common stock upon exercise of stock options	233,328	—		1,154		—		—		1,154
Vesting of restricted stock units	2,770,527	—		—		—		—		—
Vesting of warrants for common stock	—	—		95,974		—		—		95,974
Stock-based compensation	—	—		108,056		—		—		108,056
Tax withholding on stock-based compensation	—	—		(72,513)		—		—		(72,513)
Foreign currency translation adjustments	—	—		—		—		(10,879)		(10,879)
Unrealized loss on securities available for sale	—	—		—		—		(30)		(30)
Gain on cash flow hedges	—	—		—		—		750		750
Net loss	—	—		—		(133,936)		—		(133,936)
Balance as of March 31, 2024	308,538,201	$	3	$	5,704,626	$	(3,063,868)	$	(17,301)	$	2,623,460

(1)The share amounts listed above combine Class A and Class B stock.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share amounts)


	Common Stock			Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Shares (1)	Amount
Balance as of June 30, 2022	287,365,373	$	3	$	4,231,303	$	(1,605,902)	$	(7,149)	$	2,618,255
Issuance of common stock upon exercise of stock options	215,949	—		1,192		—		—		1,192
Forfeiture of common stock related to acquisitions	(243,384)	—		—		—		—		—
Repurchases of common stock	(12,437)	—		(109)		—		—		(109)
Vesting of restricted stock units	2,166,715	—		—		—		—		—
Vesting of warrants for common stock	—	—		108,742		—		—		108,742
Stock-based compensation	—	—		141,012		—		—		141,012
Tax withholding on stock-based compensation	—	—		(27,311)		—		—		(27,311)
Foreign currency translation adjustments	—	—		—		—		(21,546)		(21,546)
Unrealized loss on securities available for sale	—	—		—		—		(5,528)		(5,528)
Net loss	—	—		—		(251,269)		—		(251,269)
Balance as of September 30, 2022	289,492,216	$	3	$	4,454,829	$	(1,857,171)	$	(34,223)	$	2,563,438
Issuance of common stock upon exercise of stock options	300,903	—		1,372		—		—		1,372
Issuance of common stock, employee share purchase plan	500,443	—		5,921		—		—		5,921
Vesting of restricted stock units	1,798,218	—		—		—		—		—
Vesting of warrants for common stock	—	—		128,054		—		—		128,054
Stock-based compensation	—	—		144,218		—		—		144,218
Tax withholding on stock-based compensation	—	—		(18,009)		—		—		(18,009)
Foreign currency translation adjustments	—	—		—		—		4,522		4,522
Unrealized loss on securities available for sale	—	—		—		—		3,069		3,069
Net loss	—	—		—		(322,437)		—		(322,437)
Balance as of December 31, 2022	292,091,780	$	3	$	4,716,385	$	(2,179,608)	$	(26,632)	$	2,510,148
Issuance of common stock upon exercise of stock options	185,225	—		716		—		—		716
Vesting of restricted stock units	2,373,583	—		—		—		—		—
Vesting of warrants for common stock	—	—		93,922		—		—		93,922
Stock-based compensation	—	—		125,902		—		—		125,902
Tax withholding on stock-based compensation	—	—		(18,169)		—		—		(18,169)
Foreign currency translation adjustments	—	—		—		—		31		31
Unrealized gain on securities available for sale	—	—		—		—		4,520		4,520
Loss on cash flow hedges	—	—		—		—		(257)		(257)
Net loss	—	—		—		(205,677)		—		(205,677)
Balance as of March 31, 2023	294,650,588	$	3	$	4,918,756	$	(2,385,285)	$	(22,338)	$	2,511,136

(1)The share amounts listed above combine Class A and Class B stock.

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)


	Nine Months Ended March 31,
	2024		2023
Cash flows from operating activities
Net loss	$	(472,621)	$	(779,383)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses	343,019		237,377
Amortization of premiums and discounts on loans, net	(137,683)		(103,468)
Gain on sales of loans	(127,170)		(156,015)
Gain on extinguishment of debt	(5,359)		(89,841)
Changes in fair value of assets and liabilities	(3,645)		(10,017)
Amortization of commercial agreement assets	58,969		64,202
Amortization of debt issuance costs	18,888		13,198
Amortization of discount on securities available for sale	(32,280)		(23,711)
Commercial agreement warrant expense	306,588		330,718
Stock-based compensation	279,598		348,372
Depreciation and amortization	103,655		91,355
Other	22,174		294
Change in operating assets and liabilities:
Purchases of loans held for sale	(3,136,368)		(4,719,789)
Proceeds from the sale of loans held for sale	3,163,048		4,838,250
Accounts receivable, net	(105,766)		(1,784)
Other assets	58,181		(3,292)
Accounts payable	6,622		(3,618)
Payable to third-party loan owners	75,878		(27,196)
Accrued interest payable	9,613		8,028
Accrued expenses and other liabilities	(43,966)		(45,288)
Net cash provided by operating activities	381,375		(31,608)
Cash flows from investing activities
Purchases and origination of loans held for investment	(15,557,208)		(9,622,289)
Proceeds from the sale of loans held for investment	4,180,019		1,093,894
Principal repayments and other loan servicing activity	10,314,290		7,199,568
Acquisition, net of cash and restricted cash acquired	—		(16,051)
Additions to property, equipment and software	(121,040)		(95,917)
Purchases of securities available for sale	(461,242)		(566,261)
Proceeds from maturities and repayments of securities available for sale	891,875		1,127,785
Other investing cash inflows/(outflows)	(34,210)		3,375
Net cash used in investing activities	(787,516)		(875,896)
Cash flows from financing activities


Proceeds from funding debt	8,825,076		5,048,803
Payment of debt issuance costs	(19,188)		(17,407)
Principal repayments of funding debt	(8,964,832)		(4,195,110)
Extinguishment of convertible debt	(25,560)		(206,567)
Proceeds from issuance of notes and residual trust certificates by securitization trusts	1,601,828		750,000
Principal repayments of notes issued by securitization trusts	(528,279)		(584,634)
Proceeds from exercise of common stock options and warrants and contributions to ESPP	26,321		8,909
Repurchases of common stock	—		(109)
Payments of tax withholding for stock-based compensation	(148,186)		(63,489)
Net cash provided by financing activities	767,180		740,396
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,292)		(2,207)
Net increase in cash, cash equivalents and restricted cash	359,747		(169,315)
Cash, cash equivalents and restricted cash, beginning of period	1,259,944		1,550,807
Cash, cash equivalents and restricted cash, end of period	$	1,619,691	$	1,381,492

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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AFFIRM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT.

(Unaudited)

(in thousands)


	Nine Months Ended March 31,
	2024		2023
Reconciliation to amounts on consolidated balance sheets (as of period end)
Cash and cash equivalents	1,272,760		972,477
Restricted cash	346,931		409,015
Total cash, cash equivalents and restricted cash	$	1,619,691	$	1,381,492


	Nine Months Ended March 31,
	2024		2023
Supplemental disclosures of cash flow information
Cash payments for interest expense	$	228,496	$	104,923
Cash paid for operating leases	11,947		8,328
Cash paid for income taxes	588		378
Supplemental disclosures of non-cash investing and financing activities
Stock-based compensation included in capitalized internal-use software	99,441		62,760



Right of use assets obtained in exchange for operating lease liabilities	—		494

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

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1. Business Description

Affirm Holdings, Inc. (“Affirm,” the “Company,” “we,” “us,” or “our”), headquartered in San Francisco, California, provides consumers with a simpler, more transparent, and flexible alternative to traditional payment options. Our mission is to deliver honest financial products that improve lives. Through our next-generation commerce platform, agreements with originating banks, and capital markets partners, we enable consumers to confidently pay for a purchase over time. When a consumer applies for a loan through our platform, the loan is underwritten using our proprietary risk model, and once approved, the consumer selects their preferred repayment option. Loans are directly originated or funded and issued by our originating bank partners.

Merchants partner with us to transform the consumer shopping experience and to acquire and convert customers more effectively through our frictionless point-of-sale payment solutions. Consumers get the flexibility to buy now and make simple regular payments for their purchases and merchants see increased average order value, repeat purchase rates, and an overall more satisfied customer base. Unlike legacy payment options and our competitors’ product offerings, which charge deferred or compounding interest and unexpected costs, we disclose up-front to consumers exactly what they will owe — no hidden fees, no deferred interest, no penalties.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying interim condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”), as contained in the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”), disclosure requirements for interim financial information, and the requirements of Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the fiscal year ended June 30, 2023. The balance sheet as of June 30, 2023 has been derived from the audited financial statements at that date. Management believes these interim condensed consolidated financial statements reflect all adjustments, including those of a normal and recurring nature, which are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

Our interim condensed financial statements have been prepared on a consolidated basis. Under this basis of presentation, our financial statements consolidate all wholly owned subsidiaries and variable interest entities (“VIEs”), in which we have a controlling financial interest. These include various business trust entities and limited partnerships established to enter into warehouse credit agreements with certain lenders for funding debt facilities and certain asset-backed securitization transactions. All intercompany accounts and transactions have been eliminated in consolidation.

Our variable interest arises from contractual, ownership, or other monetary interests in the entity, which changes with fluctuations in the fair value of the entity’s net assets. We consolidate a VIE when we are deemed to be the primary beneficiary. We assess whether or not we are the primary beneficiary of a VIE on an ongoing basis.

Use of Estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP requires the use of estimates, judgments and assumptions that affect the reported amounts in the interim condensed consolidated financial statements and the accompanying notes. Material estimates that are particularly susceptible to significant change relate to determination of the allowance for credit losses, capitalized internal-use software development costs, valuation allowance for deferred tax assets, loss on loan purchase commitment, the fair value of servicing assets and liabilities, discount on self-originated loans, the evaluation for impairment of intangible assets

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and goodwill, the fair value of available for sale debt securities including retained interests in our securitization trusts, the fair value of residual certificates issued by our securitization trusts held by third parties, the fair value of risk sharing arrangements, and stock-based compensation, including the fair value of warrants issued to nonemployees. We base our estimates on historical experience, current events, and other factors we believe to be reasonable under the circumstances. To the extent that there are material differences between these estimates and actual results, our financial condition or operating results will be materially affected.

These estimates are based on information available as of the date of the interim condensed consolidated financial statements; therefore, actual results could differ materially from those estimates.

Significant Accounting Policies

There were no material changes to our significant accounting policies as disclosed in Note 2. Summary of Significant Accounting Policies of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, which was filed with the SEC on August 25, 2023.

Recent Accounting Pronouncements Not Yet Adopted

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The new guidance modifies the existing annual and interim segment reporting disclosures. The purpose of the update is to enable investors to better understand an entity’s overall performance and assess potential future cash flows, primarily through enhanced disclosure requirements on significant segment expenses. The ASU is effective for annual reporting periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, and should be applied retrospectively to all prior periods presented in the financial statements. Early adoption is permitted. We are in the process of evaluating the impact of adopting this accounting standard update on our consolidated financial statements and disclosures.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments require disclosure of specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold and further disaggregation of income taxes paid for individually significant jurisdictions. The ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. We are in the process of evaluating the impact of adopting this accounting standard update on our consolidated financial statements and disclosures.

3. Revenue

The following table presents our revenue disaggregated by revenue source (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Merchant network revenue	$	159,292	$	119,013	$	493,599	$	366,181
Card network revenue	35,676		29,469		108,421		85,294
Interest income	315,712		178,270		866,737		470,393
Gain on sales of loans	40,183		32,813		127,170		156,015
Servicing income	25,294		21,413		67,887		64,277
Total revenue, net	$	576,157	$	380,978	$	1,663,814	$	1,142,160

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Merchant Network Revenue — Revenue from Contracts with Customers

Merchant network revenue primarily consists of merchant fees. Merchant partners (or integrated merchants) are generally charged a fee based on gross merchandise volume (“GMV”) processed through the Affirm platform. The fees vary depending on the individual arrangement between us and each merchant and on the terms of the product offering. The fee is recognized at the point in time the merchant successfully confirms the transaction, which is when the terms of the executed merchant agreement are fulfilled.

Our contracts with merchants are defined at the transaction level and do not extend beyond the service already provided (i.e., each transaction represents a separate contract). The fees collected from merchants for each transaction are determined as a percentage of the value of the goods purchased by the consumer from merchants and consider a number of factors including the end consumer’s credit risk and financing term. We do not have any capitalized contract costs, and do not carry any material contract balances.

Our service comprises a single performance obligation to merchants to facilitate transactions with consumers. From time to time, we offer merchants incentives to promote our platform to their customers, such as fee reductions or rebates. These amounts are recorded as a reduction to merchant network revenue.

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 on loan origination, which we record as a reduction to network revenue. In certain cases, the losses incurred on loans originated for a merchant may exceed the total network revenue earned on those loans. We record the excess loss amounts as a sales and marketing expense.

A portion of merchant network revenue relates to affiliate network revenue, which is generated when a user makes a purchase on a merchant’s website after being directed from an advertisement on Affirm’s website or mobile application. We earn a fixed placement fee and/or commission as a percentage of the associated sale. Revenue is recognized at the point in time when the performance obligation has been fulfilled, which is when the sale occurs.

For the three and nine months ended March 31, 2024 and 2023, there were no merchants that exceeded 10% of total revenue.

Card Network Revenue — Revenue from Contracts with Customers

We have agreements with card-issuing partners to facilitate the issuance of physical and virtual debit cards to be used by consumers at checkout. Prior to purchase, consumers can apply at Affirm.com or via the Affirm app and, upon approval, use a physical or virtual card to complete their purchase online or in-store. The card is funded at the time a transaction is authorized using cash held by the card-issuing partner in a reserve fund. Eligible consumers can also use the Affirm Card, a debit card issued by a card-issuing partner to pay in full, via their linked bank account, or pay later, by using a unique post-purchase feature that allows them to instantly convert any eligible debit transaction into an installment loan. Where applicable, our originating bank partner, or wholly-owned subsidiaries, then originates a loan to the consumer after the transaction is confirmed by the merchant. The merchant is charged interchange fees for each successful debit card transaction, and a portion of this revenue is shared with us by our card-issuing partners.

Merchants may also elect to utilize our agreement with card-issuing partners as a means of integrating Affirm services. Similarly, for these arrangements with integrated merchants, the merchant is charged interchange fees for each successful debit card transaction and a portion of this revenue is shared with us. From time to time, we offer certain integrated merchants promotional incentives to promote our platform to their customers, such as rebates of interchange fees incurred by the merchant. These amounts are recorded as a reduction of card network revenue.

Our contracts with our card-issuing partners are defined at the transaction level and do not extend beyond the service already provided. The revenue collected from card-issuing partners for each transaction are determined

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as a percentage of the interchange fees charged on transactions facilitated on the payment processor network, and revenue is recognized at the point in time the transaction is completed successfully. The amounts collected are presented in revenue, net of associated transaction-related processing fees paid to our card-issuing partners. We have concluded that the revenue collected does not give rise to a future material right because the pricing of each transaction does not depend on the volume of prior successful transactions. We do not have any capitalized contract costs, and do not carry any material contract balances.

Our service comprises a single performance obligation to the card-issuing partner to facilitate transactions with consumers.

A portion of card network revenue relates to incentive payments from card network partners, which we are eligible to receive for reaching certain cumulative volume targets on program cards issued by the issuer processors. We earn incentive revenue as a percentage of each associated transaction and estimate the applicable percentage based on observed cumulative volume on program cards. Revenue is recognized at the point in time when the performance obligation has been fulfilled, which is when the transaction is completed successfully.

Interest Income

Interest income consisted of the following components (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,
	2024		2023		2024		2023
Contractual interest income on unpaid principal balance	$	273,581	$	147,759	$	747,955	$	379,755
Amortization of discount on loans	53,960		39,130		150,102		116,937
Amortization of premiums on loans	(4,256)		(4,515)		(12,419)		(13,469)
Interest receivable charged-off, net of recoveries	(7,573)		(4,104)		(18,901)		(12,830)
Total interest income	$	315,712	$	178,270	$	866,737	$	470,393

We accrue interest income using the effective interest method, which includes the amortization of any discounts or premiums on loan receivables created upon the purchase of a loan from our originating bank partners or upon the origination of a loan. Interest income on a loan is accrued daily, based on the finance charge disclosed to the consumer, over the term of the loan based upon the principal outstanding. The accrual of interest on a loan is suspended if a formal dispute with the consumer involving either Affirm or the merchant of record is opened, or a loan is 120 days past due. Upon the resolution of a dispute with the consumer, the accrual of interest is resumed, and any interest that would have been earned during the disputed period is retroactively accrued. As of March 31, 2024 and June 30, 2023, the balance of loans held for investment on non-accrual status was $1.1 million and $1.8 million, respectively.

The account is charged-off in the period if the account becomes 120 days past due or meets other charge-off policy requirements. Past due status is based on the contractual terms of the loans. Previously recognized interest receivable from charged-off loans that is accrued but not collected from the consumer is reversed.

Gain on Sales of Loans

We sell certain loans we originate or purchase from our originating bank partners directly to third-party investors or to securitizations. We recognize a gain or loss on sale of loans sold to third parties or to unconsolidated securitizations as the difference between the proceeds received and the carrying value of the loan, adjusted for the initial recognition of any assets or liabilities incurred upon sale, which generally include a net servicing asset or liability in connection with our ongoing obligation to continue to service the loans and a recourse liability based on our estimate of future losses in connection with our obligation to repurchase loans that do not meet certain contractual requirements and such information about the loan was unknown at the time of sale.

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Servicing Income

Servicing income includes contractual fees specified in our servicing agreements with third-party loan owners and unconsolidated securitizations that are earned from providing professional services to manage loan portfolios on their behalf. The servicing fee is calculated on a daily basis by multiplying a set fee percentage (as outlined in the executed agreements with third-party loan owners) by the outstanding loan principal balance. Servicing income also includes fair value adjustments for servicing assets and servicing liabilities.

4. Loans Held for Investment and Allowance for Credit Losses

Loans held for investment consisted of the following (in thousands):


	March 31, 2024		June 30, 2023
Unpaid principal balance	$	5,496,615	$	4,451,324
Accrued interest receivable	60,459		41,079
Premiums on loans held for investment	7,546		7,135
Less: Discount due to loss on loan purchase commitment	(63,416)		(51,190)
Less: Discount due to loss on directly originated loans	(39,777)		(45,145)
Less: Fair value adjustment on loans acquired through business combination	(20)		(241)
Total loans held for investment	$	5,461,407	$	4,402,962

Loans held for investment includes loans originated through our originating bank partners and directly originated loans. The majority of the loans that are underwritten using our technology platform and originated by our originating bank partners are later purchased by us. We purchased loans from our originating bank partners in the amount of $5.1 billion and $15.6 billion during the three and nine months ended March 31, 2024 and $3.7 billion and $11.7 billion during the three and nine months ended March 31, 2023, respectively.

Our portfolio consists of interest bearing and non interest bearing consumer loans with original term lengths of up to sixty months. Given that our loan portfolio focuses on one product segment, unsecured consumer installment loans, we generally evaluate the entire portfolio as a single homogeneous loan portfolio and make merchant or program specific adjustments as necessary.

We closely monitor credit quality for our loan receivables to manage and evaluate our related exposure to credit risk. Credit risk management begins with initial underwriting, where loan applications are assessed against the credit underwriting policy and procedures for our directly originated loans and originating bank partner loans, and continues through to full repayment of a loan. To assess a consumer who requests a loan, we use, among other indicators, internally developed risk models using detailed information from external sources, such as credit bureaus where available, and internal historical experience, including the consumer’s prior repayment history on our platform as well as other measures. We combine these factors to establish a proprietary score as a credit quality indicator.

Our proprietary score (“ITACs”) is assigned to most loans facilitated through our technology platform, ranging from zero to 100, with 100 representing the highest credit quality and therefore the lowest likelihood of loss. The ITACs model analyzes the characteristics of a consumer's attributes that are shown to be predictive of both willingness and ability to repay including, but not limited to: basic features of a consumer's credit profile, a consumer's prior repayment performance with other creditors, current credit utilization, and legal and policy changes. When a consumer passes both fraud and credit policy checks, the application is assigned an ITACs score. ITACs is also used for portfolio performance monitoring. Our credit risk team closely tracks the distribution of ITACs at the portfolio level, as well as ITACs at the individual loan level to monitor for signs of a changing credit profile within the portfolio. Repayment performance within each ITACs band is also monitored to support both the

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integrity of the risk scoring models and to measure possible changes in consumer behavior amongst various credit tiers.

The following table presents an analysis of the credit quality, by ITACs score, of the amortized cost basis excluding accrued interest receivable, by fiscal year of origination on loans held for investment and loans held for sale (in thousands) as of March 31, 2024:


	March 31, 2024
	Amortized Costs Basis by Fiscal Year of Origination
	2024		2023		2022		2021		2020		Prior		Total
96+	$	2,846,025	$	335,055	$	13,557	$	310	$	10	$	5	$	3,194,962
94 – 96	1,350,713		101,257		776		12		2		4		1,452,764
90 – 94	233,729		11,630		424		3		1		1		245,788
<90	13,614		197		459		2		1		—		14,273
No score (1)	356,211		116,349		19,539		931		124		134		493,288
Total amortized cost basis	$	4,800,292	$	564,488	$	34,755	$	1,258	$	138	$	144	$	5,401,075

(1)This balance represents loan receivables in markets without sufficient data currently available for use by the Affirm scoring methodology including loan receivables originated in Canada.

The following table presents net charge-offs by fiscal year of origination (in thousands) as of March 31, 2024:


	March 31, 2024
	Net Charge-offs by Fiscal Year of Origination
	2024	2023	2022	2021	2020	Prior	Total
Current period charge-offs	(63,706)	(191,087)	(6,192)	(508)	(101)	(63)	(261,657)
Current period recoveries	2,235	11,057	6,159	833	46	76	20,406
Current period net charge-offs	(61,471)	(180,030)	(33)	325	(55)	13	(241,251)

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	June 30, 2023
	Amortized Costs Basis by Fiscal Year of Origination
	2023		2022		2021		2020		2019		Prior		Total
96+	$	2,628,060	$	39,428	$	18,910	$	3,439	$	9	$	1	$	2,689,847
94 – 96	1,104,553		7,755		439		77		6		2		1,112,832
90 – 94	133,940		3,116		26		2		4		—		137,088
<90	13,363		1,623		4		2