afrm-20221231FALSEQ2202306/300001820953P1MP1MP4Dhttp://fasb.org/us-gaap/2022#OtherNonoperatingIncomeExpense0.0046371http://fasb.org/us-gaap/2022#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2022#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2022#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2022#OtherNonoperatingIncomeExpensehttp://fasb.org/us-gaap/2022#OtherNonoperatingIncomeExpenseP1Y00018209532022-07-012022-12-310001820953us-gaap:CommonClassAMember2023-02-03xbrli:shares0001820953us-gaap:CommonClassBMember2023-02-0300018209532022-12-31iso4217:USD00018209532022-06-300001820953us-gaap:CommonClassAMember2022-12-31iso4217:USDxbrli:shares0001820953us-gaap:CommonClassAMember2022-06-300001820953us-gaap:CommonClassBMember2022-06-300001820953us-gaap:CommonClassBMember2022-12-310001820953us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-12-310001820953us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-06-300001820953afrm:MerchantNetworkMember2022-10-012022-12-310001820953afrm:MerchantNetworkMember2021-10-012021-12-310001820953afrm:MerchantNetworkMember2022-07-012022-12-310001820953afrm:MerchantNetworkMember2021-07-012021-12-310001820953afrm:VirtualCardNetworkMember2022-10-012022-12-310001820953afrm:VirtualCardNetworkMember2021-10-012021-12-310001820953afrm:VirtualCardNetworkMember2022-07-012022-12-310001820953afrm:VirtualCardNetworkMember2021-07-012021-12-3100018209532022-10-012022-12-3100018209532021-10-012021-12-3100018209532021-07-012021-12-310001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-06-300001820953us-gaap:AdditionalPaidInCapitalMember2022-06-300001820953us-gaap:RetainedEarningsMember2022-06-300001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-06-300001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-07-012022-09-300001820953us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-3000018209532022-07-012022-09-300001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-07-012022-09-300001820953us-gaap:RetainedEarningsMember2022-07-012022-09-300001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-09-300001820953us-gaap:AdditionalPaidInCapitalMember2022-09-300001820953us-gaap:RetainedEarningsMember2022-09-300001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-09-3000018209532022-09-300001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-10-012022-12-310001820953us-gaap:AdditionalPaidInCapitalMember2022-10-012022-12-310001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-10-012022-12-310001820953us-gaap:RetainedEarningsMember2022-10-012022-12-310001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2022-12-310001820953us-gaap:AdditionalPaidInCapitalMember2022-12-310001820953us-gaap:RetainedEarningsMember2022-12-310001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2021-06-300001820953us-gaap:AdditionalPaidInCapitalMember2021-06-300001820953us-gaap:RetainedEarningsMember2021-06-300001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-06-3000018209532021-06-300001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2021-07-012021-09-300001820953us-gaap:AdditionalPaidInCapitalMember2021-07-012021-09-3000018209532021-07-012021-09-300001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-07-012021-09-300001820953us-gaap:RetainedEarningsMember2021-07-012021-09-300001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2021-09-300001820953us-gaap:AdditionalPaidInCapitalMember2021-09-300001820953us-gaap:RetainedEarningsMember2021-09-300001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-09-3000018209532021-09-300001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2021-10-012021-12-310001820953us-gaap:AdditionalPaidInCapitalMember2021-10-012021-12-310001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-10-012021-12-310001820953us-gaap:RetainedEarningsMember2021-10-012021-12-310001820953us-gaap:CommonStockMemberus-gaap:CommonStockMember2021-12-310001820953us-gaap:AdditionalPaidInCapitalMember2021-12-310001820953us-gaap:RetainedEarningsMember2021-12-310001820953us-gaap:AccumulatedOtherComprehensiveIncomeMember2021-12-3100018209532021-12-310001820953srt:MinimumMember2022-07-012022-12-310001820953srt:MaximumMember2022-07-012022-12-310001820953afrm:LargestMerchantPartnerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2021-10-012021-12-31xbrli:pure0001820953afrm:LargestMerchantPartnerMemberus-gaap:CustomerConcentrationRiskMemberus-gaap:SalesRevenueNetMember2021-07-012021-12-310001820953srt:MinimumMember2022-12-310001820953srt:MaximumMember2022-12-310001820953afrm:ITACScoreGreaterThan96Member2022-12-310001820953afrm:ITACScore94To96Member2022-12-310001820953afrm:ITACScore90To94Member2022-12-310001820953afrm:ITACScoreLessThan90Member2022-12-310001820953afrm:ITACScoreNoScoreMember2022-12-310001820953afrm:ITACScoreGreaterThan96Member2022-06-300001820953afrm:ITACScore94To96Member2022-06-300001820953afrm:ITACScore90To94Member2022-06-300001820953afrm:ITACScoreLessThan90Member2022-06-300001820953afrm:ITACScoreNoScoreMember2022-06-300001820953us-gaap:FinancialAssetNotPastDueMember2022-12-310001820953us-gaap:FinancialAssetNotPastDueMember2022-06-300001820953afrm:FinancialAsset4To29DaysPastDueMember2022-12-310001820953afrm:FinancialAsset4To29DaysPastDueMember2022-06-300001820953us-gaap:FinancingReceivables30To59DaysPastDueMember2022-12-310001820953us-gaap:FinancingReceivables30To59DaysPastDueMember2022-06-300001820953us-gaap:FinancingReceivables60To89DaysPastDueMember2022-12-310001820953us-gaap:FinancingReceivables60To89DaysPastDueMember2022-06-300001820953us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-12-310001820953us-gaap:FinancingReceivablesEqualToGreaterThan90DaysPastDueMember2022-06-300001820953afrm:ShopBrainMember2021-07-012021-07-010001820953us-gaap:CommonClassAMemberafrm:ShopBrainMember2021-07-012021-07-010001820953afrm:ShopBrainMember2021-07-010001820953us-gaap:DevelopedTechnologyRightsMemberafrm:ShopBrainMember2021-07-012021-07-010001820953afrm:ShopBrainMember2021-10-012021-12-310001820953afrm:ShopBrainMember2021-07-012021-12-310001820953afrm:FastAFIncMember2022-04-192022-04-190001820953afrm:FastAFIncMemberafrm:SeniorSecuredNoteIssuedToFastAFIncMemberus-gaap:SeniorNotesMember2022-04-192022-04-190001820953afrm:FastAFIncMember2022-04-190001820953afrm:FastAFIncMemberafrm:AssembledWorkforceMember2022-04-192022-04-190001820953afrm:FastAFIncMemberus-gaap:DevelopedTechnologyRightsMember2022-04-192022-04-190001820953us-gaap:SoftwareDevelopmentMember2022-12-310001820953us-gaap:SoftwareDevelopmentMember2022-06-300001820953us-gaap:LeaseholdImprovementsMember2022-12-310001820953us-gaap:LeaseholdImprovementsMember2022-06-300001820953us-gaap:ComputerEquipmentMember2022-12-310001820953us-gaap:ComputerEquipmentMember2022-06-300001820953afrm:FurnitureAndEquipmentMember2022-12-310001820953afrm:FurnitureAndEquipmentMember2022-06-300001820953afrm:MerchantRelationshipsMember2022-12-310001820953afrm:MerchantRelationshipsMember2022-07-012022-12-310001820953us-gaap:DevelopedTechnologyRightsMember2022-12-310001820953us-gaap:DevelopedTechnologyRightsMember2022-07-012022-12-310001820953afrm:AssembledWorkforceMember2022-12-310001820953afrm:AssembledWorkforceMember2022-07-012022-12-310001820953afrm:TrademarksAndDomainsMember2022-12-310001820953afrm:TrademarksAndDomainsMember2022-07-012022-12-310001820953afrm:TrademarksAndDomainsMember2022-12-310001820953us-gaap:OtherIntangibleAssetsMember2022-12-310001820953afrm:MerchantRelationshipsMember2022-06-300001820953afrm:MerchantRelationshipsMember2022-07-012022-09-300001820953us-gaap:DevelopedTechnologyRightsMember2022-06-300001820953us-gaap:DevelopedTechnologyRightsMember2022-07-012022-09-300001820953afrm:AssembledWorkforceMember2022-06-300001820953afrm:AssembledWorkforceMember2022-07-012022-09-300001820953afrm:TrademarksAndDomainsMember2022-06-300001820953afrm:TrademarksAndDomainsMember2022-07-012022-09-300001820953afrm:TrademarksAndDomainsMember2022-06-300001820953us-gaap:OtherIntangibleAssetsMember2022-06-3000018209532021-11-012021-11-300001820953afrm:CommercialAgreementAssetShopifyIncWarrantsMember2022-12-310001820953afrm:CommercialAgreementAssetShopifyIncWarrantsMember2022-07-012022-12-3100018209532021-07-012022-06-300001820953afrm:CommercialAgreementAssetShopifyIncWarrantsMember2022-10-012022-12-310001820953afrm:CommercialAgreementAssetShopifyIncWarrantsMember2021-10-012021-12-310001820953afrm:CommercialAgreementAssetShopifyIncWarrantsMember2021-07-012021-12-310001820953afrm:CommercialAgreementAssetEnterprisePartnerStockAppreciationRightsMember2020-07-012021-06-300001820953afrm:CommercialAgreementAssetEnterprisePartnerStockAppreciationRightsMember2021-06-300001820953afrm:CommercialAgreementAssetEnterprisePartnerStockAppreciationRightsMember2022-10-012022-12-310001820953afrm:CommercialAgreementAssetEnterprisePartnerStockAppreciationRightsMember2022-07-012022-12-310001820953afrm:CommercialAgreementAssetEnterprisePartnerStockAppreciationRightsMember2021-10-012021-12-310001820953afrm:CommercialAgreementAssetEnterprisePartnerStockAppreciationRightsMember2021-07-012021-12-310001820953afrm:CashCollateralAndDepositsForLettersOfCreditMember2022-12-310001820953afrm:CashCollateralAndDepositsForLettersOfCreditMember2022-06-300001820953us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-12-310001820953us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMember2022-06-300001820953srt:MinimumMemberus-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberafrm:WarehouseCreditFacilitiesMember2022-07-012022-12-310001820953us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberafrm:WarehouseCreditFacilitiesMember2022-07-012022-12-310001820953us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberafrm:WarehouseCreditFacilitiesMember2022-07-012022-12-310001820953us-gaap:LineOfCreditMemberus-gaap:RevolvingCreditFacilityMemberafrm:WarehouseCreditFacilitiesMember2022-12-310001820953us-gaap:LineOfCreditMemberus-gaap:AssetPledgedAsCollateralMemberafrm:WarehouseCreditFacilitiesMember2022-12-310001820953us-gaap:LineOfCreditMemberus-gaap:AssetPledgedAsCollateralMemberafrm:WarehouseCreditFacilitiesMember2022-06-300001820953srt:MinimumMemberus-gaap:RevolvingCreditFacilityMemberafrm:WarehouseCreditFacilitiesMember2022-07-012022-12-310001820953us-gaap:RevolvingCreditFacilityMembersrt:MaximumMemberafrm:WarehouseCreditFacilitiesMember2022-07-012022-12-310001820953afrm:AffirmAssetSecuritizationTrust2022X1NotesMemberafrm:SeniorPledgedSecuritiesMember2022-12-310001820953afrm:AffirmAssetSecuritizationTrust2022X1NotesMemberafrm:ResidualCertificatePledgedSecuritiesMember2022-12-310001820953afrm:RepurchaseAgreementMember2022-12-310001820953afrm:RepurchaseAgreementMember2022-06-300001820953afrm:AffirmAssetSecuritizationTrust2021Z1And2021Z2NotesMemberafrm:OtherReceivablesMemberafrm:RepurchaseAgreementMember2022-12-310001820953afrm:AffirmAssetSecuritizationTrust2021Z1And2021Z2NotesMemberafrm:OtherReceivablesMemberafrm:RepurchaseAgreementMember2022-06-300001820953afrm:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-11-230001820953afrm:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2021-11-232021-11-230001820953afrm:ConversionPeriodOneMemberafrm:ConvertibleSeniorNotesMember2021-11-232021-11-23utr:Dafrm:segment0001820953afrm:ConversionPeriodTwoMemberafrm:ConvertibleSeniorNotesMember2021-11-232021-11-230001820953afrm:ConvertibleSeniorNotesMemberus-gaap:ConvertibleDebtMember2022-12-310001820953afrm:ConvertibleSeniorNotesMember2022-10-012022-12-310001820953afrm:ConvertibleSeniorNotesMember2022-07-012022-12-310001820953us-gaap:RevolvingCreditFacilityMember2022-02-040001820953us-gaap:RevolvingCreditFacilityMember2022-05-160001820953us-gaap:RevolvingCreditFacilityMemberafrm:SecuredOvernightFinancingRateSOFRMember2022-02-042022-02-040001820953us-gaap:RevolvingCreditFacilityMemberus-gaap:FederalFundsEffectiveSwapRateMember2022-02-042022-02-040001820953afrm:OneMonthLondonInterbankOfferedRateLIBORMemberus-gaap:RevolvingCreditFacilityMember2022-02-042022-02-040001820953us-gaap:RevolvingCreditFacilityMemberus-gaap:BaseRateMember2022-02-042022-02-040001820953us-gaap:RevolvingCreditFacilityMember2022-02-042022-02-040001820953us-gaap:RevolvingCreditFacilityMember2022-12-310001820953afrm:ConvertibleSeniorNotesMember2021-11-232021-11-230001820953afrm:AffirmAssetSecuritizationTrust2021ANotesMember2022-12-310001820953afrm:AffirmAssetSecuritizationTrust2020Z1NotesMember2022-12-310001820953afrm:AffirmAssetSecuritizationTrust2020ANotesMember2022-12-310001820953afrm:AffirmAssetSecuritizationTrust2021BNotesMember2022-12-310001820953us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberafrm:WarehouseCreditFacilityMember2022-12-310001820953afrm:SecuritizationMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-12-310001820953us-gaap:VariableInterestEntityPrimaryBeneficiaryMemberafrm:WarehouseCreditFacilityMember2022-06-300001820953afrm:SecuritizationMemberus-gaap:VariableInterestEntityPrimaryBeneficiaryMember2022-06-300001820953us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberafrm:SecuritizationMember2022-12-310001820953us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2022-12-310001820953us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMemberafrm:SecuritizationMember2022-06-300001820953us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2022-06-300001820953afrm:SecuritizationNotesReceivableAndCertificatesMember2022-12-310001820953us-gaap:LineOfCreditMemberafrm:AffirmAssetSecuritizationTrust2021Z1NotesMemberus-gaap:OtherAssetsMember2022-12-310001820953us-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2022-12-310001820953us-gaap:MoneyMarketFundsMemberus-gaap:CashEquivalentsMember2022-06-300001820953us-gaap:CashEquivalentsMemberus-gaap:CertificatesOfDepositMember2022-12-310001820953us-gaap:CashEquivalentsMemberus-gaap:CertificatesOfDepositMember2022-06-300001820953us-gaap:CashEquivalentsMemberus-gaap:CommercialPaperMember2022-12-310001820953us-gaap:CashEquivalentsMemberus-gaap:CommercialPaperMember2022-06-300001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:CashEquivalentsMember2022-12-310001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:CashEquivalentsMember2022-06-300001820953us-gaap:CertificatesOfDepositMember2022-12-310001820953us-gaap:CertificatesOfDepositMember2022-06-300001820953us-gaap:CorporateBondSecuritiesMember2022-12-310001820953us-gaap:CorporateBondSecuritiesMember2022-06-300001820953us-gaap:CommercialPaperMember2022-12-310001820953us-gaap:CommercialPaperMember2022-06-300001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMember2022-12-310001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMember2022-06-300001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-12-310001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMember2022-06-300001820953afrm:SecuritizationNotesReceivableAndCertificatesMember2022-06-300001820953us-gaap:OtherDebtSecuritiesMember2022-12-310001820953us-gaap:OtherDebtSecuritiesMember2022-06-300001820953us-gaap:CashAndCashEquivalentsMemberafrm:CertificatesOfDepositCorporateBondsNonUSGovernmentBondsAndCommercialPaperMember2022-12-310001820953us-gaap:CashAndCashEquivalentsMemberafrm:CertificatesOfDepositCorporateBondsNonUSGovernmentBondsAndCommercialPaperMember2022-06-30afrm:position0001820953afrm:CertificatesOfDepositCorporateBondsUSGovernmentBondsAndCommercialPaperMemberus-gaap:CashEquivalentsMember2022-12-310001820953afrm:CertificatesOfDepositCorporateBondsUSGovernmentBondsAndCommercialPaperMemberus-gaap:CashEquivalentsMember2022-06-300001820953us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2022-12-310001820953us-gaap:MoneyMarketFundsMember2022-12-310001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-12-310001820953us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:FairValueInputsLevel3Memberus-gaap:CertificatesOfDepositMember2022-12-310001820953us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-12-310001820953us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2022-12-310001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-12-310001820953us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-12-310001820953us-gaap:FairValueMeasurementsRecurringMember2022-12-310001820953us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:MoneyMarketFundsMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:FairValueInputsLevel3Memberus-gaap:MoneyMarketFundsMember2022-06-300001820953us-gaap:MoneyMarketFundsMember2022-06-300001820953us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:CertificatesOfDepositMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:FairValueInputsLevel3Memberus-gaap:CertificatesOfDepositMember2022-06-300001820953us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2022-06-300001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:USGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-06-300001820953us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:CorporateBondSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-06-300001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953afrm:NonUSGovernmentAgenciesDebtSecuritiesMemberus-gaap:FairValueInputsLevel3Member2022-06-300001820953us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2022-06-300001820953us-gaap:FairValueMeasurementsRecurringMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMember2022-12-310001820953srt:MinimumMemberafrm:MeasurementInputAdequateCompensationMember2022-12-310001820953srt:MaximumMemberafrm:MeasurementInputAdequateCompensationMember2022-12-310001820953afrm:MeasurementInputAdequateCompensationMembersrt:WeightedAverageMember2022-12-310001820953srt:MinimumMemberus-gaap:MeasurementInputDefaultRateMember2022-12-310001820953us-gaap:MeasurementInputDefaultRateMembersrt:MaximumMember2022-12-310001820953us-gaap:MeasurementInputDefaultRateMembersrt:WeightedAverageMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMember2022-06-300001820953srt:MinimumMemberafrm:MeasurementInputAdequateCompensationMember2022-06-300001820953srt:MaximumMemberafrm:MeasurementInputAdequateCompensationMember2022-06-300001820953afrm:MeasurementInputAdequateCompensationMembersrt:WeightedAverageMember2022-06-300001820953srt:MinimumMemberus-gaap:MeasurementInputDefaultRateMember2022-06-300001820953us-gaap:MeasurementInputDefaultRateMembersrt:MaximumMember2022-06-300001820953us-gaap:MeasurementInputDefaultRateMembersrt:WeightedAverageMember2022-06-300001820953us-gaap:MeasurementInputDefaultRateMember2022-12-310001820953us-gaap:MeasurementInputDefaultRateMember2022-06-300001820953afrm:MeasurementInputAdequateCompensationMember2022-12-310001820953afrm:MeasurementInputAdequateCompensationMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMember2022-06-300001820953afrm:PerformanceFeeLiabilityMember2022-09-300001820953afrm:PerformanceFeeLiabilityMember2021-09-300001820953afrm:PerformanceFeeLiabilityMember2022-06-300001820953afrm:PerformanceFeeLiabilityMember2021-06-300001820953afrm:PerformanceFeeLiabilityMember2022-10-012022-12-310001820953afrm:PerformanceFeeLiabilityMember2021-10-012021-12-310001820953afrm:PerformanceFeeLiabilityMember2022-07-012022-12-310001820953afrm:PerformanceFeeLiabilityMember2021-07-012021-12-310001820953afrm:PerformanceFeeLiabilityMember2022-12-310001820953afrm:PerformanceFeeLiabilityMember2021-12-310001820953srt:MinimumMemberafrm:MeasurementInputRefundRateMember2022-12-310001820953srt:MaximumMemberafrm:MeasurementInputRefundRateMember2022-12-310001820953afrm:MeasurementInputRefundRateMembersrt:WeightedAverageMember2022-12-310001820953srt:MinimumMemberafrm:MeasurementInputRefundRateMember2022-06-300001820953srt:MaximumMemberafrm:MeasurementInputRefundRateMember2022-06-300001820953afrm:MeasurementInputRefundRateMembersrt:WeightedAverageMember2022-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-09-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2021-09-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2021-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-10-012022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2021-10-012021-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-07-012022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2021-07-012021-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2021-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMembersrt:MaximumMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMembersrt:WeightedAverageMember2022-12-310001820953srt:MinimumMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberafrm:MeasurementInputLossRateMember2022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberafrm:MeasurementInputLossRateMembersrt:MaximumMember2022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberafrm:MeasurementInputLossRateMembersrt:WeightedAverageMember2022-12-310001820953srt:MinimumMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberus-gaap:MeasurementInputPrepaymentRateMember2022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMembersrt:MaximumMemberus-gaap:MeasurementInputPrepaymentRateMember2022-12-310001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberus-gaap:MeasurementInputPrepaymentRateMembersrt:WeightedAverageMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMembersrt:MaximumMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMembersrt:WeightedAverageMember2022-06-300001820953srt:MinimumMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberafrm:MeasurementInputLossRateMember2022-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberafrm:MeasurementInputLossRateMembersrt:MaximumMember2022-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberafrm:MeasurementInputLossRateMembersrt:WeightedAverageMember2022-06-300001820953srt:MinimumMemberafrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberus-gaap:MeasurementInputPrepaymentRateMember2022-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMembersrt:MaximumMemberus-gaap:MeasurementInputPrepaymentRateMember2022-06-300001820953afrm:ResidualTrustCertificatesHeldByThirdPartiesInConsolidatedVIEsMemberus-gaap:MeasurementInputPrepaymentRateMembersrt:WeightedAverageMember2022-06-300001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2022-09-300001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2021-09-300001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2021-06-300001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2022-10-012022-12-310001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2021-10-012021-12-310001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2022-07-012022-12-310001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2021-07-012021-12-310001820953afrm:SeniorNotesAndResidualTrustCertificatesMember2021-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953srt:MinimumMemberafrm:MeasurementInputLossRateMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953afrm:MeasurementInputLossRateMembersrt:MaximumMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953afrm:MeasurementInputLossRateMembersrt:WeightedAverageMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953srt:MinimumMemberus-gaap:MeasurementInputPrepaymentRateMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953srt:MaximumMemberus-gaap:MeasurementInputPrepaymentRateMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953us-gaap:MeasurementInputPrepaymentRateMembersrt:WeightedAverageMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953srt:MinimumMemberafrm:MeasurementInputLossRateMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953afrm:MeasurementInputLossRateMembersrt:MaximumMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953afrm:MeasurementInputLossRateMembersrt:WeightedAverageMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953srt:MinimumMemberus-gaap:MeasurementInputPrepaymentRateMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953srt:MaximumMemberus-gaap:MeasurementInputPrepaymentRateMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953us-gaap:MeasurementInputPrepaymentRateMembersrt:WeightedAverageMemberafrm:SeniorNotesAndResidualTrustCertificatesMember2022-06-300001820953afrm:MeasurementInputLossRateMember2022-12-310001820953afrm:MeasurementInputLossRateMember2022-06-300001820953us-gaap:MeasurementInputPrepaymentRateMember2022-12-310001820953us-gaap:MeasurementInputPrepaymentRateMember2022-06-300001820953us-gaap:CommonClassBMemberafrm:PayBrightMember2022-07-012022-09-300001820953afrm:ContingentConsiderationMember2022-09-300001820953afrm:ContingentConsiderationMember2021-09-300001820953afrm:ContingentConsiderationMember2022-06-300001820953afrm:ContingentConsiderationMember2021-06-300001820953afrm:ContingentConsiderationMember2022-10-012022-12-310001820953afrm:ContingentConsiderationMember2021-10-012021-12-310001820953afrm:ContingentConsiderationMember2022-07-012022-12-310001820953afrm:ContingentConsiderationMember2021-07-012021-12-310001820953afrm:ContingentConsiderationMember2022-12-310001820953afrm:ContingentConsiderationMember2021-12-310001820953afrm:CommercialAgreementProfitShareLiabilityMember2022-09-300001820953afrm:CommercialAgreementProfitShareLiabilityMember2021-09-300001820953afrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953afrm:CommercialAgreementProfitShareLiabilityMember2021-06-300001820953afrm:CommercialAgreementProfitShareLiabilityMember2022-10-012022-12-310001820953afrm:CommercialAgreementProfitShareLiabilityMember2021-10-012021-12-310001820953afrm:CommercialAgreementProfitShareLiabilityMember2022-07-012022-12-310001820953afrm:CommercialAgreementProfitShareLiabilityMember2021-07-012021-12-310001820953afrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953afrm:CommercialAgreementProfitShareLiabilityMember2021-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953afrm:MeasurementInputProgramProfitabilityMembersrt:MinimumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953afrm:MeasurementInputProgramProfitabilityMembersrt:MaximumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953afrm:MeasurementInputProgramProfitabilityMembersrt:WeightedAverageMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-12-310001820953us-gaap:MeasurementInputDiscountRateMembersrt:MinimumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:MaximumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953us-gaap:MeasurementInputDiscountRateMembersrt:WeightedAverageMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953afrm:MeasurementInputProgramProfitabilityMembersrt:MinimumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953afrm:MeasurementInputProgramProfitabilityMembersrt:MaximumMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953afrm:MeasurementInputProgramProfitabilityMembersrt:WeightedAverageMemberafrm:CommercialAgreementProfitShareLiabilityMember2022-06-300001820953us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-12-310001820953us-gaap:FairValueInputsLevel1Member2022-12-310001820953us-gaap:FairValueInputsLevel2Member2022-12-310001820953us-gaap:FairValueInputsLevel3Member2022-12-310001820953us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-12-310001820953us-gaap:CarryingReportedAmountFairValueDisclosureMember2022-06-300001820953us-gaap:FairValueInputsLevel1Member2022-06-300001820953us-gaap:FairValueInputsLevel2Member2022-06-300001820953us-gaap:FairValueInputsLevel3Member2022-06-300001820953us-gaap:EstimateOfFairValueFairValueDisclosureMember2022-06-300001820953us-gaap:EmployeeStockOptionMember2022-12-310001820953us-gaap:EmployeeStockOptionMember2022-06-300001820953afrm:ShareBasedPaymentAgreementOptionFutureGrantMember2022-12-310001820953afrm:ShareBasedPaymentAgreementOptionFutureGrantMember2022-06-30afrm:vote0001820953us-gaap:CommonClassAMemberafrm:FirstWarrantSharesMember2021-11-300001820953srt:MinimumMember2021-11-012021-11-300001820953afrm:SecondWarrantSharesMember2021-11-300001820953us-gaap:CommonClassAMember2021-11-300001820953us-gaap:CommonClassAMemberafrm:FirstWarrantSharesMember2021-11-012021-11-300001820953srt:MaximumMember2021-11-012021-11-300001820953us-gaap:CommonClassAMemberafrm:AmendedAndRestated2012StockPlanMember2022-12-310001820953srt:MinimumMemberus-gaap:EmployeeStockOptionMember2022-07-012022-12-310001820953srt:MaximumMemberus-gaap:EmployeeStockOptionMember2022-07-012022-12-310001820953us-gaap:EmployeeStockOptionMember2022-07-012022-12-310001820953us-gaap:ShareBasedCompensationAwardTrancheOneMemberus-gaap:EmployeeStockOptionMember2022-07-012022-12-310001820953us-gaap:ShareBasedCompensationAwardTrancheTwoMemberus-gaap:EmployeeStockOptionMember2022-07-012022-12-310001820953afrm:PerformanceBasedStockOptionsMember2022-07-012022-12-310001820953afrm:PerformanceBasedStockOptionsMember2022-10-012022-12-310001820953afrm:PerformanceBasedStockOptionsMember2021-10-012021-12-310001820953afrm:PerformanceBasedStockOptionsMember2021-07-012021-12-310001820953afrm:PerformanceBasedStockOptionsMember2022-12-310001820953us-gaap:RestrictedStockUnitsRSUMember2021-01-140001820953srt:MaximumMemberus-gaap:RestrictedStockUnitsRSUMember2022-07-012022-12-310001820953srt:MinimumMemberus-gaap:RestrictedStockUnitsRSUMember2022-07-012022-12-310001820953us-gaap:RestrictedStockUnitsRSUMember2022-06-300001820953us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-12-310001820953us-gaap:RestrictedStockUnitsRSUMember2022-12-310001820953us-gaap:CommonClassAMemberafrm:A2020EmployeeStockPurchasePlanMember2020-11-180001820953us-gaap:CommonClassAMemberafrm:A2020EmployeeStockPurchasePlanMember2020-11-182022-12-310001820953afrm:A2020EmployeeStockPurchasePlanMember2020-11-182020-11-180001820953us-gaap:GeneralAndAdministrativeExpenseMember2022-10-012022-12-310001820953us-gaap:GeneralAndAdministrativeExpenseMember2021-10-012021-12-310001820953us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-12-310001820953us-gaap:GeneralAndAdministrativeExpenseMember2021-07-012021-12-310001820953afrm:TechnologyAndDataAnalyticsExpenseMember2022-10-012022-12-310001820953afrm:TechnologyAndDataAnalyticsExpenseMember2021-10-012021-12-310001820953afrm:TechnologyAndDataAnalyticsExpenseMember2022-07-012022-12-310001820953afrm:TechnologyAndDataAnalyticsExpenseMember2021-07-012021-12-310001820953us-gaap:SellingAndMarketingExpenseMember2022-10-012022-12-310001820953us-gaap:SellingAndMarketingExpenseMember2021-10-012021-12-310001820953us-gaap:SellingAndMarketingExpenseMember2022-07-012022-12-310001820953us-gaap:SellingAndMarketingExpenseMember2021-07-012021-12-310001820953afrm:ProcessingAndServicingExpenseMember2022-10-012022-12-310001820953afrm:ProcessingAndServicingExpenseMember2021-10-012021-12-310001820953afrm:ProcessingAndServicingExpenseMember2022-07-012022-12-310001820953afrm:ProcessingAndServicingExpenseMember2021-07-012021-12-310001820953afrm:ReturnlyTechnologiesIncMember2021-05-012021-05-010001820953afrm:ReturnlyTechnologiesIncMember2022-07-012022-12-310001820953us-gaap:CommonClassAMember2022-10-012022-12-310001820953us-gaap:CommonClassBMember2022-10-012022-12-310001820953us-gaap:CommonClassAMember2022-07-012022-12-310001820953us-gaap:CommonClassBMember2022-07-012022-12-310001820953us-gaap:CommonClassAMember2021-10-012021-12-310001820953us-gaap:CommonClassBMember2021-10-012021-12-310001820953us-gaap:CommonClassAMember2021-07-012021-12-310001820953us-gaap:CommonClassBMember2021-07-012021-12-310001820953us-gaap:RestrictedStockUnitsRSUMember2022-07-012022-12-310001820953us-gaap:RestrictedStockUnitsRSUMember2021-07-012021-12-310001820953us-gaap:EmployeeStockOptionMember2022-07-012022-12-310001820953us-gaap:EmployeeStockOptionMember2021-07-012021-12-310001820953us-gaap:WarrantMember2022-07-012022-12-310001820953us-gaap:WarrantMember2021-07-012021-12-310001820953us-gaap:EmployeeStockMember2022-07-012022-12-310001820953us-gaap:EmployeeStockMember2021-07-012021-12-310001820953country:US2022-10-012022-12-310001820953country:US2021-10-012021-12-310001820953country:US2022-07-012022-12-310001820953country:US2021-07-012021-12-310001820953country:CA2022-10-012022-12-310001820953country:CA2021-10-012021-12-310001820953country:CA2022-07-012022-12-310001820953country:CA2021-07-012021-12-310001820953afrm:OtherGeographicalMember2022-10-012022-12-310001820953afrm:OtherGeographicalMember2022-07-012022-12-310001820953country:US2022-12-310001820953country:US2022-06-300001820953country:CA2022-12-310001820953country:CA2022-06-300001820953afrm:OtherGeographicalMember2022-12-310001820953afrm:OtherGeographicalMember2022-06-300001820953afrm:ButterHoldingsLtdMemberus-gaap:SubsequentEventMember2023-02-012023-02-010001820953us-gaap:SubsequentEventMember2023-02-082023-02-08afrm:employee0001820953srt:MinimumMemberus-gaap:SubsequentEventMember2023-02-080001820953srt:MaximumMemberus-gaap:SubsequentEventMember2023-02-080001820953srt:MinimumMemberus-gaap:OneTimeTerminationBenefitsMemberus-gaap:SubsequentEventMember2023-02-080001820953us-gaap:OneTimeTerminationBenefitsMembersrt:MaximumMemberus-gaap:SubsequentEventMember2023-02-080001820953us-gaap:FacilityClosingMemberus-gaap:SubsequentEventMember2023-02-08
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 December 31, 2022
OR
| | | | | |
☐ | 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) 984-0490
(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 February 3, 2023, the number of shares of the registrant’s Class A common stock outstanding was 233,906,114 and the number of shares of the registrant’s Class B common stock outstanding was 60,088,662.
TABLE OF CONTENTS
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 for 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 engage new and existing originating bank partners;
•the availability of funding sources to support our business model;
•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 or sustain profitability in the future;
•the impact of any reduction in our workforce, including our ability to realize certain cost savings anticipated as a result of the reduction and our ability to continue to attract and retain highly skilled employees;
•our ability to remain in compliance with laws and regulations that currently apply or become applicable to our business;
•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;
•the impact of macroeconomic conditions on our business, including the impacts of inflation, a rising interest rate environment and increasing recessionary concerns; and
•the size and growth rates of the markets in which we compete.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. 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 our most recently filed Annual Report on Form 10-K for the fiscal year ended June 30, 2022 (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 risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause 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, we cannot guarantee future results, levels of activity, performance, achievements, events, 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, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
In addition, statements such as “we believe” and similar statements reflect our current beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, 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 statements are inherently uncertain and you are cautioned not to unduly rely upon these 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 as an inactive textual reference and do not intend it to be an active link to our website.
Part I - Financial Information
Item 1. Unaudited Financial Statements
AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except shares and per share amounts)
| | | | | | | | | | | | | | |
| | December 31, 2022 | | June 30, 2022 |
Assets | | | | |
Cash and cash equivalents | | $ | 1,440,333 | | | $ | 1,255,171 | |
Restricted cash | | 424,460 | | | 295,636 | |
Securities available for sale at fair value | | 914,923 | | | 1,595,373 | |
Loans held for sale | | 344 | | | 2,670 | |
Loans held for investment | | 3,655,504 | | | 2,503,561 | |
Allowance for credit losses | | (182,100) | | | (155,392) | |
Loans held for investment, net | | 3,473,404 | | | 2,348,169 | |
Accounts receivable, net | | 201,622 | | | 142,052 | |
Property, equipment and software, net | | 248,939 | | | 171,482 | |
Goodwill | | 527,630 | | | 539,534 | |
Intangible assets | | 63,755 | | | 78,942 | |
Commercial agreement assets | | 220,082 | | | 263,196 | |
Other assets | | 289,259 | | | 281,567 | |
Total Assets | | $ | 7,804,751 | | | $ | 6,973,792 | |
Liabilities and Stockholders’ Equity | | | | |
Liabilities: | | | | |
Accounts payable | | $ | 28,974 | | | $ | 33,072 | |
Payable to third-party loan owners | | 127,378 | | | 71,383 | |
Accrued interest payable | | 11,971 | | | 6,659 | |
Accrued expenses and other liabilities | | 220,619 | | | 237,598 | |
Convertible senior notes, net | | 1,708,779 | | | 1,706,668 | |
Notes issued by securitization trusts | | 1,314,212 | | | 1,627,580 | |
Funding debt | | 1,882,670 | | | 672,577 | |
Total liabilities | | 5,294,603 | | | 4,355,537 | |
Commitments and contingencies (Note 8) | | | | |
Stockholders’ equity: | | | | |
Class A common stock, par value $0.00001 per share: 3,030,000,000 shares authorized, 232,003,118 shares issued and outstanding as of December 31, 2022; 3,030,000,000 shares authorized, 227,255,529 shares issued and outstanding as of June 30, 2022 | | 2 | | | 2 | |
Class B common stock, par value $0.00001 per share: 140,000,000 shares authorized, 60,088,662 shares issued and outstanding as of December 31, 2022; 140,000,000 authorized, 60,109,844 shares issued and outstanding as of June 30, 2022 | | 1 | | | 1 | |
Additional paid in capital | | 4,716,385 | | | 4,231,303 | |
Accumulated deficit | | (2,179,608) | | | (1,605,902) | |
Accumulated other comprehensive loss | | (26,632) | | | (7,149) | |
Total stockholders’ equity | | 2,510,148 | | | 2,618,255 | |
Total Liabilities and Stockholders’ Equity | | $ | 7,804,751 | | | $ | 6,973,792 | |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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.
| | | | | | | | | | | | | | |
| | December 31, 2022 | | June 30, 2022 |
Assets of consolidated VIEs, included in total assets above | | | | |
Restricted cash | | $ | 248,612 | | | $ | 164,530 | |
Loans held for investment | | 3,153,253 | | | 2,179,026 | |
Allowance for credit losses | | (148,125) | | | (124,052) | |
Loans held for investment, net | | 3,005,128 | | | 2,054,974 | |
Accounts receivable, net | | 8,196 | | | 8,195 | |
Other assets | | 17,554 | | | 14,570 | |
Total assets of consolidated VIEs | | $ | 3,279,490 | | | $ | 2,242,269 | |
Liabilities of consolidated VIEs, included in total liabilities above | | | | |
Accounts payable | | $ | 2,801 | | | $ | 2,897 | |
Accrued interest payable | | 11,937 | | | 6,525 | |
Accrued expenses and other liabilities | | 17,045 | | | 15,494 | |
Notes issued by securitization trusts | | 1,314,212 | | | 1,627,580 | |
Funding debt | | 1,704,812 | | | 514,033 | |
Total liabilities of consolidated VIEs | | 3,050,807 | | | 2,166,529 | |
Total net assets | | $ | 228,683 | | | $ | 75,740 | |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
(in thousands, except share and per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended December 31, | | Six Months Ended December 31, |
| | 2022 | | 2021 | | 2022 | | 2021 |
Revenue | | | | | | | | |
Merchant network revenue | | $ | 134,019 | | | $ | 127,087 | | | $ | 247,168 | | | $ | 219,331 | |
Virtual card network revenue | | 29,117 | | | 26,558 | | | 55,825 | | | 45,953 | |
Total network revenue | | 163,136 | | | 153,645 | | | 302,993 | | | 265,284 | |
Interest income | | 155,321 | | | 138,355 | | | 292,123 | | | 255,657 | |
Gain on sales of loans | | 59,607 | | | 57,690 | | | 123,202 | | | 88,669 | |
Servicing income | | 21,494 | | | 11,321 | | | 42,864 | | | 20,786 | |
Total Revenue, net | | $ | 399,558 | | | $ | 361,011 | | | $ | 761,182 | | | $ | 630,396 | |
Operating Expenses | | | | | | | | |
Loss on loan purchase commitment | | $ | 38,422 | | | $ | 65,265 | | | $ | 74,032 | | | $ | 116,943 | |
Provision for credit losses | | 106,689 | | | 52,640 | | | 170,939 | | | 116,287 | |
Funding costs | | 43,751 | | | 17,700 | | | 68,817 | | | 34,453 | |
Processing and servicing | | 66,508 | | | 41,849 | | | 120,867 | | | 67,050 | |
Technology and data analytics | | 156,747 | | | 94,989 | | | 301,708 | | | 173,002 | |
Sales and marketing | | 188,334 | | | 143,476 | | | 352,207 | | | 207,436 | |
General and administrative | | 158,639 | | | 141,292 | | | 319,611 | | | 277,496 | |
Total Operating Expenses | | 759,090 | | | 557,211 | | | 1,408,181 | | | 992,667 | |
Operating Loss | | $ | (359,532) | | | $ | (196,200) | | | $ | (646,999) | | | $ | (362,271) | |
Other income (expense), net | | 35,527 | | | 36,741 | | | 71,545 | | | (103,632) | |
Loss Before Income Taxes | | $ | (324,005) | | | $ | (159,459) | | | $ | (575,454) | | | $ | (465,903) | |
Income tax (benefit) expense | | (1,568) | | | 276 | | | (1,748) | | | 447 | |
Net Loss | | $ | (322,437) | | | $ | (159,735) | | | $ | (573,706) | | | $ | (466,350) | |
Other Comprehensive Loss | | | | | | | | |
Foreign currency translation adjustments | | $ | 4,522 | | | $ | 2,341 | | | $ | (17,024) | | | $ | (1,461) | |
Unrealized loss on securities available for sale, net | | 3,069 | | | (657) | | | (2,459) | | | (936) | |
Net Other Comprehensive Loss | | 7,591 | | | 1,684 | | | (19,483) | | | (2,397) | |
Comprehensive Loss | | $ | (314,846) | | | $ | (158,051) | | | $ | (593,189) | | | $ | (468,747) | |
Per share data: | | | | | | | | |
Net loss per share attributable to common stockholders for Class A and Class B | | | | | | | | |
Basic | | $ | (1.10) | | | $ | (0.57) | | | $ | (1.96) | | | $ | (1.70) | |
Diluted | | $ | (1.10) | | | $ | (0.57) | | | $ | (1.96) | | | $ | (1.70) | |
Weighted average common shares outstanding | | | | | | | | |
Basic | | 293,683,331 | | | 281,533,888 | | | 292,306,300 | | | 273,588,094 | |
Diluted | | 293,683,331 | | | 281,533,888 | | | 292,306,300 | | | 273,588,094 | |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
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 | | 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 | |
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 Income | | Total Stockholders’ Equity |
| | | | | | | Shares | | Amount | | | | |
Balance as of June 30, 2021 | | | | | | | 269,358,104 | | | $ | 3 | | | $ | 3,467,236 | | | $ | (898,485) | | | $ | 6,773 | | | $ | 2,575,527 | |
Issuance of common stock upon exercise of stock options | | | | | | | 7,403,503 | | | — | | | 37,470 | | | — | | | — | | | 37,470 | |
| | | | | | | | | | | | | | | | | |
Issuance of common stock in acquisition | | | | | | | 183,733 | | | — | | | 10,000 | | | — | | | — | | | 10,000 | |
Vesting of restricted stock units | | | | | | | 772,653 | | | — | | | — | | | — | | | — | | | — | |
Repurchases of common stock | | | | | | | (821) | | | — | | | (4) | | | — | | | — | | | (4) | |
Stock-based compensation | | | | | | | — | | | — | | | 104,879 | | | — | | | — | | | 104,879 | |
Tax withholding on stock-based compensation | | | | | | | — | | | — | | | (39,817) | | | — | | | — | | | (39,817) | |
Foreign currency translation adjustments | | | | | | | — | | | — | | | — | | | — | | | (3,802) | | | (3,802) | |
Unrealized loss on securities available for sale | | | | | | | — | | | — | | | — | | | — | | | (279) | | | (279) | |
Net Loss | | | | | | | — | | | — | | | — | | | (306,615) | | | — | | | (306,615) | |
Balance as of September 30, 2021 | | | | | | | 277,717,172 | | | $ | 3 | | | $ | 3,579,764 | | | $ | (1,205,100) | | | $ | 2,692 | | | $ | 2,377,359 | |
Issuance of common stock upon exercise of stock options | | | | | | | 4,689,973 | | | — | | | 21,674 | | | — | | | — | | | 21,674 | |
Vesting of restricted stock units | | | | | | | 803,263 | | | — | | | — | | | — | | | — | | | — | |
Vesting of warrants for common stock | | | | | | | — | | | — | | | 198,383 | | | — | | | — | | | 198,383 | |
Stock-based compensation | | | | | | | — | | | — | | | 101,920 | | | — | | | — | | | 101,920 | |
Tax withholding on stock-based compensation | | | | | | | — | | | — | | | (72,963) | | | — | | | — | | | (72,963) | |
Foreign currency translation adjustments | | | | | | | — | | | — | | | — | | | — | | | 2,341 | | | 2,341 | |
Unrealized gain (loss) on securities available for sale | | | | | | | — | | | — | | | — | | | — | | | (657) | | | (657) | |
Net Loss | | | | | | | — | | | — | | | — | | | (159,735) | | | — | | | (159,735) | |
Balance as of December 31, 2021 | | | | | | | 283,210,408 | | | $ | 3 | | | $ | 3,828,778 | | | $ | (1,364,835) | | | $ | 4,376 | | | $ | 2,468,322 | |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
| | | | | | | | | | | | | | |
| | Six Months Ended December 31, |
| | 2022 | | 2021 |
Cash Flows from Operating Activities | | | | |
Net Loss | | $ | (573,706) | | | $ | (466,350) | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | |
Provision for credit losses | | 170,939 | | | 116,287 | |
Amortization of premiums and discounts on loans, net | | (68,853) | | | (87,678) | |
Gain on sales of loans | | (123,202) | | | (88,669) | |
Changes in fair value of assets and liabilities | | (11,035) | | | 104,900 | |
Amortization of commercial agreement assets | | 43,114 | | | 43,885 | |
Amortization of debt issuance costs | | 1,752 | | | 9,568 | |
Amortization of discount on securities available for sale | | (14,923) | | | — | |
Commercial agreement warrant expense | | 236,796 | | | 64,854 | |
Stock-based compensation | | 241,583 | | | 181,726 | |
Depreciation and amortization | | 43,886 | | | 22,505 | |
Other | | 1,136 | | | (5,198) | |
Change in operating assets and liabilities: | | | | |
Purchases of loans held for sale | | (3,323,750) | | | (2,614,002) | |
Proceeds from the sale of loans held for sale | | 3,428,673 | | | 2,607,759 | |
Accounts receivable, net | | (63,416) | | | (48,117) | |
Other assets | | (13,727) | | | 65,422 | |
Accounts payable | | (4,098) | | | (12,169) | |
Payable to third-party loan owners | | 55,995 | | | 21,436 | |
Accrued interest payable | | 5,903 | | | (131) | |
Accrued expenses and other liabilities | | (10,400) | | | 8,868 | |
Net Cash Provided by (Used in) Operating Activities | | 22,667 | | | (75,104) | |
Cash Flows from Investing Activities | | | | |
Purchases and origination of loans held for investment | | (6,535,457) | | | (4,652,346) | |
Proceeds from the sale of loans held for investment | | 702,987 | | | 780,276 | |
Principal repayments and other loan servicing activity | | 4,628,825 | | | 3,563,123 | |
Acquisition, net of cash and restricted cash acquired | | — | | | (5,999) | |
| | | | |
Additions to property, equipment and software | | (65,401) | | | (38,159) | |
Purchases of securities available for sale | | (105,629) | | | (511,724) | |
Proceeds from maturities and repayments of securities available for sale | | 798,149 | | | 59,126 | |
Other investing cash inflows (outflows) | | 1,588 | | | (13,870) | |
| | | | |
Net Cash Used in Investing Activities | | (574,938) | | | (819,573) | |
Cash Flows from Financing Activities | | | | |
Proceeds from issuance of convertible debt, net | | — | | | 1,704,300 | |
Proceeds from funding debt | | 3,367,729 | | | 1,497,674 | |
Payment of debt issuance costs | | (4,773) | | | (8,151) | |
Principal repayments of funding debt | | (2,147,035) | | | (1,527,568) | |
Proceeds from issuance of notes and residual trust certificates by securitization trusts | | 250,000 | | | 499,640 | |
Principal repayments of notes issued by securitization trusts | | (559,383) | | | (102,467) | |
| | | | |
| | | | |
| | | | |
Proceeds from exercise of common stock options and warrants and contributions to ESPP | | 8,246 | | | 59,569 | |
Repurchases of common stock | | (109) | | | (4) | |
Payments of tax withholding for stock-based compensation | | (45,320) | | | (112,780) | |
Net Cash Provided by Financing Activities | | 869,355 | | | 2,010,213 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | | (3,098) | | | 6,635 | |
Net Increase in Cash, Cash Equivalents and Restricted Cash | | 313,986 | | | 1,122,171 | |
Cash, Cash equivalents and Restricted cash, Beginning of period | | 1,550,807 | | | 1,692,632 | |
Cash, Cash Equivalents and Restricted Cash, End of Period | | $ | 1,864,793 | | | $ | 2,814,803 | |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONT.
(Unaudited)
(in thousands)
| | | | | | | | | | | | | | |
| | Six Months Ended December 31, |
| | 2022 | | 2021 |
Reconciliation to amounts on consolidated balance sheets (as of period end) | | | | |
Cash and cash equivalents | | 1,440,333 | | | 2,567,401 | |
Restricted cash | | 424,460 | | | 247,402 | |
Total Cash, Cash Equivalents and Restricted Cash | | $ | 1,864,793 | | | $ | 2,814,803 | |
| | | | | | | | | | | | | | |
| | Six Months Ended December 31, |
| | 2022 | | 2021 |
Supplemental Disclosures of Cash Flow Information | | | | |
Cash payments for interest expense | | $ | 55,900 | | | $ | 23,143 | |
Cash paid for operating leases | | 8,244 | | | 8,232 | |
Cash paid for income taxes | | 212 | | | 80 | |
Supplemental Disclosures of Non-Cash Investing and Financing Activities | | | | |
Stock-based compensation included in capitalized internal-use software | | 43,647 | | | 25,073 | |
Issuance of common stock in connection with acquisition | | — | | | 10,000 | |
Additions to property and equipment included in accrued expenses | | — | | | 107 | |
| | | | |
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.
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, with terms ranging from one to sixty months. 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, 2022. The balance sheet as of June 30, 2022 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 variable consideration for revenue, 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 directly originated loans, the fair value of assets acquired and any contingent consideration transferred in business combinations, the evaluation for impairment of intangible assets 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, and stock-based compensation, including the fair value of warrants issued to nonemployees. We base our estimates on market-based inputs, historical experience, current events, and other factors we believe to be reasonable under the circumstances. These estimates are subjective in nature and to the extent that there are differences between these estimates and actual results, our financial condition or operating results in future periods may be 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, 2022, which was filed with the SEC on August 29, 2022.
Recently Adopted Accounting Standards
Financial Instruments - Credit Losses
In March 2022, the FASB issued ASU 2022-02, “Financial Instruments— Credit Losses (Topic 326), Troubled Debt Restructurings and Vintage Disclosure” which addresses areas identified by the FASB as part of its post-implementation review of the current expected credit losses model or “CECL” previously issued in ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326)”. The amendments in this ASU eliminate the accounting guidance for troubled debt restructurings by creditors while enhancing the disclosure requirements for loan refinancing and restructurings made with borrowers experiencing financial difficulty. In addition, the amendments require a public business entity to disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases in the vintage disclosures. For entities that have adopted ASU 2016-13, ASU 2022-02 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted if an entity has adopted ASU 2016-13. Amendments in this ASU should be applied prospectively except for the transition method related to the accounting for troubled debt restructurings in which an entity has the option to apply a modified retrospective transition method resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. We early adopted the new standard effective July 1, 2022 on a prospective basis. The adoption of the guidance did not have a material impact on our interim condensed financial statements.
Recent Accounting Pronouncements Not Yet Adopted
Business Combinations
In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”, which requires contract assets and contract liabilities, such as deferred revenue, acquired in a business combination to be recognized and measured in accordance with Topic 606 (Revenue from Contracts with Customers). ASU 2021-08 is expected to reduce diversity in practice and increase comparability for both the recognition and measurement of acquired revenue contracts with customers at the date of and after a business combination. The ASU is effective for fiscal years beginning after December 15, 2022 and should be applied prospectively to acquisitions occurring on or after the effective date. Early adoption is permitted, including for interim periods, and is applicable to all business combinations for which the acquisition date occurs within the beginning of the fiscal year of adoption. We are in the process of evaluating the impact of adopting this accounting standard update on our consolidated financial statements and disclosures.
Reference Rate Reform
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”. Subject to meeting certain criteria, the new guidance provides optional expedients and exceptions to applying contract modification accounting under existing U.S. GAAP, to address the expected phase out of the London Interbank Offered Rate (“LIBOR”). In January 2021, the FASB also issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope”, which provides additional optional expedients and exceptions applicable to all entities that have derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”, to extend the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. These ASUs are effective for all entities upon their respective issuance dates through December 31, 2024. We have reviewed all our financial agreements that utilize LIBOR as the reference rate and determined there is no impact to our interim condensed consolidated financial statements as of December 31, 2022. Throughout the remaining effective period for ASU 2020-04, ASU 2021-01 and ASU 2022-06, we will continue to evaluate the available relief measures within each of these amendments and will determine any impact on our consolidated financial statements and disclosures, as applicable.
3. Revenue
The following table presents the company’s revenue disaggregated by revenue source (in thousands):
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended December 31, | | Six Months Ended December 31, |
| 2022 | | 2021 | | 2022 | | 2021 |
| | | | | | | |
Merchant network revenue | $ | 134,019 | | | $ | 127,087 | | | $ | 247,168 | | | $ | 219,331 | |
Virtual card network revenue | 29,117 | | | 26,558 | | | 55,825 | | | 45,953 | |
| | | | | | | |
Interest income | 155,321 | | | 138,355 | | | 292,123 | | | 255,657 | |
Gain on sales of loans | 59,607 | | | 57,690 | | | 123,202 | | | 88,669 | |
Servicing income | 21,494 | | | 11,321 | | | 42,864 | | | 20,786 | |
Total Revenue, net | $ | 399,558 | | | $ | 361,011 | | | $ | 761,182 | | | $ | 630,396 | |
Merchant Network Revenue
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. 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 merchant network revenue. In certain cases, the losses incurred on loans originated for a merchant may exceed the total network revenue earned on those loans. To the extent we do not expect to recover the losses in future periods, 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 six months ended December 31, 2022, there were no merchants that exceeded 10% of total revenue. For the three and six months ended December 31, 2021, approximately 11% and 10% of total revenue, respectively, was driven by one merchant.