10-Q – 2026-02-05 – afrm-20251231.htm

Servicing assets Discount Rate 30.00   % 30.00   % 30.00   %
Adequate Compensation 2.00   % 2.00   % 2.00   %
Default Rate 10.24   % 15.68   % 12.04   %
Servicing liabilities Discount Rate 30.00   % 30.00   % 30.00   %
Adequate Compensation 2.00   % 2.00   % 2.00   %
Default Rate 3.71   % 7.89   % 5.26   %

(1) Unobservable inputs were weighted by relative fair value

The following table summarizes the effect that adverse changes in estimates would have on the fair value of the servicing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):

December 31, 2025 June 30, 2025
Servicing assets
Default Rate assumption:
Default Rate increase of 25% $ 1   $ 1  
Default Rate increase of 50% $ 2   $ 2  
Adequate Compensation assumption:
Adequate Compensation increase of 10% $ ( 1,511 ) $ ( 1,439 )
Adequate Compensation increase of 20% $ ( 3,021 ) $ ( 2,879 )
Discount Rate assumption:
Discount Rate increase of 25% $ ( 37 ) $ ( 35 )
Discount Rate increase of 50% $ ( 70 ) $ ( 66 )
Servicing liabilities
Default Rate assumption:
Default Rate increase of 25% $ —   $ —  
Default Rate increase of 50% $ —   $ —  
Adequate Compensation assumption:
Adequate Compensation increase of 10% $ 5,891   $ 4,593  
Adequate Compensation increase of 20% $ 11,781   $ 9,186  
Discount Rate assumption:
Discount Rate increase of 25% $ —   $ ( 1 )
Discount Rate increase of 50% $ —   $ ( 1 )

Performance Fee Liability

In accordance with our agreements with our originating bank partners, we pay a fee for each loan that is fully repaid by the consumer, due at the end of the period in which the loan is fully repaid. We recognize a liability upon the purchase of a loan for the expected future payment of the performance fee. This liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets. Any changes in the fair value of the liability are reflected in other income, net, in the interim condensed consolidated statements of operations and comprehensive income (loss). 

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The following table summarizes the activity related to the fair value of the performance fee liability (in thousands):

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Fair value at beginning of period $ 1,975   $ 1,541   $ 1,870   $ 1,503  
Purchases of loans 916   566   1,639   1,089  
Settlements paid ( 689 ) ( 501 ) ( 1,281 ) ( 978 )
Subsequent changes in fair value 175   167   149   159  
Fair value at end of period $ 2,377   $ 1,773   $ 2,377   $ 1,773  

The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the performance fee liability as of December 31, 2025 and June 30, 2025:

December 31, 2025
Unobservable Input Minimum Maximum Weighted Average (2)

Discount Rate 7.00 % 10.00 % 8.89 %
Refund Rate 1.50 % 1.50 % 1.50 %
Loss Rate (1)
0.84 % 4.65 % 3.15 %

June 30, 2025
Unobservable Input Minimum Maximum Weighted Average (2)

Discount Rate 7.25 % 10.00 % 9.23 %
Refund Rate 1.50 % 1.50 % 1.50 %
Loss Rate (1)
0.87 % 4.65 % 3.07 %

(1) The Loss Rate is net of recoveries
(2) Unobservable inputs were weighted by remaining principal balances

Securitization Notes Receivable and Residual Trust Certificates

As of December 31, 2025, we held notes receivable and residual trust certificates with an aggregate fair value of $ 80.1 million in co nnection with unconsolidated securitizations. The balances correspond to the 5 % economic risk retention we are required to maintain as the securitization sponsor.

These assets are measured at fair value using a discounted cash flow model, and presented within securities available for sale at fair value in the interim condensed consolidated balance sheets. Changes in the fair value, other than declines in fair value due to credit recognized as an allowance, are reflected in other comprehensive income in the interim condensed consolidated statements of operations and comprehensive income (loss). Declines in fair value due to credit are reflected in other income, net in the interim condensed consolidated statements of operations and comprehensive income (loss).

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The following table summarizes the activity related to the fair value of the notes receivable and residual trust certificates (in thousands):
Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Fair value at beginning of period $ 54,263   $ 38,926   $ 75,469   $ 51,670  
Additions 44,611   41,943   44,611   41,943  
Cash received (due to payments) ( 19,758 ) ( 12,036 ) ( 42,325 ) ( 26,419 )
Change in unrealized gain (loss) ( 267 ) ( 510 ) ( 305 ) ( 541 )
Accrued interest 1,048   931   2,258   2,976  
Reversal of (impairment on) securities available for sale 183   ( 203 ) 372   ( 578 )
Fair value at end of period $ 80,080   $ 69,051   $ 80,080   $ 69,051  

The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of t he notes receivable and residual trust certificates as o f December 31, 2025 and June 30, 2025 :

December 31, 2025
Unobservable Input Minimum Maximum Weighted Average (2)

Discount Rate 3.47 % 55.11 % 6.04 %
Default Rate (1)
0.99 % 9.38 % 8.01 %
Prepayment Rate 14.81 % 26.00 % 23.63 %

June 30, 2025
Unobservable Input Minimum Maximum Weighted Average (2)

Discount Rate 2.86 % 30.29 % 6.89 %
Default Rate 0.94 % 8.40 % 7.65 %
Prepayment Rate 21.46 % 24.85 % 23.14 %

(1) The cumulative loss relative to the outstanding balance as of December 31, 2025
(2) Unobservable inputs were weighted by relative fair value

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The following table summarizes the effect that adverse changes in estimates would have on the fair value of the notes receivable and residual trust certificates given hypothetical changes in significant unobservable inputs (in thousands):

December 31, 2025 June 30, 2025
Discount Rate Assumption:
Discount Rate increase of 25% $ ( 709 ) $ ( 727 )
Discount Rate increase of 50% $ ( 1,409 ) $ ( 1,427 )
Default Rate assumption:
Default Rate increase of 25% $ ( 3,214 ) $ ( 2,688 )
Default Rate increase of 50% $ ( 4,026 ) $ ( 3,698 )
Prepayment Rate assumption:
Prepayment Rate change of 25% $ ( 164 ) $ ( 130 )
Prepayment Rate change of 50% $ ( 331 ) $ ( 259 )

Residual Interests in Structured Transactions

As of December 31, 2025 , we held residual interests in structured transactions with an aggregate fair value of $ 5.4 million in connection with certain forward flow loan sale transactions.

These assets are measured at fair value using a discounted cash flow model, and presented within securities available for sale at fair value in the interim condensed consolidated balance sheets. Changes in the fair value, except for credit impairments, are reflected in other comprehensive income in the interim condensed consolidated statements of operations and comprehensive income (loss).

The following table summarizes the activity related to the fair value of the assets (in thousands):

Three Months Ended December 31, 2025 Six Months Ended December 31, 2025
Fair value at beginning of period $ 4,017   $ 2,284  
Capital contribution 1,124   2,703  
Subsequent changes in fair value 294   448  
Fair value at the end of period 5,436   5,436  

Significant unobservable inputs used for our Level 3 fair value measurement of the residual interests are the discount rate, loss rate, and prepayment rate. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.

The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the residual interests in structured transactions as o f December 31, 2025 and June 30, 2025:

December 31, 2025
Unobservable Input Minimum Maximum Weighted Average (1)

Discount Rate 20.00 % 20.00 % 20.00 %
Default Rate 9.31 % 9.31 % 9.31 %
Prepayment Rate 47.89 % 47.89 % 47.89 %

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June 30, 2025
Unobservable Input Minimum Maximum Weighted Average (1)

Discount Rate 20.00 % 20.00 % 20.00 %
Default Rate 8.88 % 8.88 % 8.88 %
Prepayment Rate 48.85 % 48.85 % 48.85 %

(1) Unobservable inputs were weighted by relative fair value

The following table summarizes the effect that adverse changes in estimates would have on the fair value of the residual interests in structured transactions given hypothetical changes in significant unobservable inputs (in thousands):

December 31, 2025 June 30, 2025
Discount Rate assumption:
Discount Rate increase of 20% $ ( 374 ) $ ( 181 )
Discount Rate increase of 40% $ ( 712 ) $ ( 343 )
Default Rate assumption:
Default Rate increase of 20% $ ( 25 ) $ ( 28 )
Default Rate increase of 40% $ ( 57 ) $ ( 50 )
Prepayment Rate assumption:
Prepayment Rate increase of 20% $ ( 73 ) $ ( 35 )
Prepayment Rate increase of 40% $ ( 134 ) $ ( 64 )

Profit Share Liability

We have commercial agreements with certain enterprise partners, in which we are obligated to share in the profitability of transactions facilitated by our platform. Upon capture of a loan under these programs, we record a liability associated with the estimated future profit to be shared over the life of the loan based on estimated profitability levels of each program. The liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets.

The following table summarizes the activity related to the fair value of the profit share liability (in thousands):

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Fair value at beginning of period $ 7,592   $ 2,015   $ 9,323   $ 1,974  
Facilitation of loans 675   4,238   3,822   5,465  
Actual performance ( 4,500 ) ( 3,271 ) ( 9,596 ) ( 6,299 )
Subsequent changes in fair value 946   3,129   1,164   4,971  
Fair value at end of period $ 4,713   $ 6,111   $ 4,713   $ 6,111  

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The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the profit sharing liability as of December 31, 2025 and June 30, 2025 :

December 31, 2025
Unobservable Input Minimum Maximum Weighted Average (1)

Discount Rate 30.00 % 30.00 % 30.00 %
Program Profitability 1.00 % 3.28 % 2.81 %

June 30, 2025
Unobservable Input Minimum Maximum Weighted Average (1)

Discount Rate 30.00 % 30.00 % 30.00 %
Program Profitability 0.23 % 3.28 % 2.86 %

(1) Unobservable inputs were weighted by relative fair value

Risk Sharing Arrangements

In connection with certain capital funding arrangements with third-party loan buyers, we have entered into risk sharing agreements where we may be required to make a payment to the loan buyer or are entitled to receive a payment from the loan buyer, depending on the actual versus expected loan performance as contractually agreed to with the counterparty, and subject to a cap based on a percentage of the principal balance of loans sold. Loan performance is evaluated at a cohort level based on the month loans were sold.

We account for these arrangements as derivatives measured at fair value with gains and losses recognized in gain on sales of loans in our interim condensed consolidated statements of operations and comprehensive income (loss). For each counterparty, we have recognized a net asset or net liability based on the estimated fair value of future payments we expect to receive from or make to the counterparty. As of December 31, 2025, we estimated the fair value of future settlements using a discounted cash flow model.

The following table summarizes the activity related to the fair value of the risk sharing assets (in thousands):
Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Fair value at beginning of period $ 41,565   $ 45,330   $ 43,179   $ 33,884  
Initial transfers of financial assets 4,761   5,191   11,269   15,568  
Cash settlements ( 9,126 ) ( 5,824 ) ( 17,466 ) ( 5,824 )
Subsequent changes in fair value 1,792   272   2,010   1,341  
Fair value at end of period $ 38,992   $ 44,969   $ 38,992   $ 44,969  

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The following table summarizes the activity related to the fair value of the risk sharing liabilities (in thousands):
Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Fair value at beginning of period $ —   $ 1,801   $ 90   $ 918  
Cash settlements —   ( 445 ) ( 90 ) ( 445 )
Subsequent changes in fair value —   142   —   1,025  
Fair value at end of period $ —   $ 1,498   $ —   $ 1,498  

The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the risk sharing arrangements as of December 31, 2025 and June 30, 2025:

December 31, 2025
Unobservable Input Minimum Maximum Weighted Average (1)

Risk sharing assets Discount Rate 6.88 % 20.00 % 17.68 %
Loss Rate 3.34 % 4.94 % 4.15 %
Prepayment Rate 18.34 % 20.96 % 19.68 %
Risk sharing liabilities Discount Rate 20.00 % 20.00 % 20.00 %
Loss Rate 3.48 % 5.27 % 4.46 %

June 30, 2025
Unobservable Input Minimum Maximum Weighted Average (1)

Risk sharing assets Discount Rate 20.00 % 20.00 % 20.00 %
Loss Rate 3.32 % 4.91 % 4.13 %
Prepayment Rate 19.84 % 22.89 % 21.34 %
Risk sharing liabilities Discount Rate 20.00 % 20.00 % 20.00 %
Loss Rate 3.47 % 5.35 % 4.42 %

(1) Unobservable inputs were weighted by principal balance of loans sold under each cohort

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The following table summarizes the effect that adverse changes in estimates would have on the fair value of the risk sharing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):

December 31, 2025 June 30, 2025
Risk sharing assets
Prepayment Rate assumption:
Prepayment Rate decrease of 25% $ ( 1,813 ) $ ( 1,896 )
Prepayment Rate decrease of 50% $ ( 3,751 ) $ ( 3,923 )
Loss Rate assumption:
Loss Rate increase of 25% $ ( 14,821 ) $ ( 15,150 )
Loss Rate increase of 50% $ ( 29,640 ) $ ( 30,277 )
Discount Rate assumption:
Discount Rate increase of 25% $ ( 583 ) $ ( 903 )
Discount Rate increase of 50% $ ( 1,130 ) $ ( 1,745 )
Risk sharing liabilities
Loss Rate assumption:
Loss Rate increase of 25% $ 5,384   $ 16,946  
Loss Rate increase of 50% $ 10,534   $ 24,676  
Discount Rate assumption:
Discount Rate increase of 25% $ —   $ —  
Discount Rate increase of 50% $ —   $ —  

Financial Assets and Liabilities Not Recorded at Fair Value

The following table presents the fair value and our assessment of the classification of this measurement within the fair value hierarchy for financial assets and liabilities held at amortized cost as of December 31, 2025 and June 30, 2025 (in thousands):

December 31, 2025
Carrying Amount Level 1 Level 2 Level 3 Balance at Fair Value
Assets:
Loans held for sale $ 6   $ —   $ 6   $ —   $ 6  
Loans held for investment, net 8,295,439   —   —   8,970,675   8,970,675  

Total assets $ 8,295,445   $ —   $ 6   $ 8,970,675   $ 8,970,681  
Liabilities:
Convertible senior notes, net (1)
$ 1,127,658   $ —   $ 1,241,762   $ —   $ 1,241,762  
Notes issued by securitization trusts 4,834,736   —   —   4,866,377   4,866,377  
Funding debt 3,046,846   —   —   3,064,040   3,064,040  
Total liabilities $ 9,009,240   $ —   $ 1,241,762   $ 7,930,417   $ 9,172,179  

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June 30, 2025
Carrying Amount Level 1 Level 2 Level 3 Balance at Fair Value
Assets:

Loans held for investment, net 6,628,606   —   —   7,085,840   7,085,840  

Total assets $ 6,628,606   $ —   $ —   $ 7,085,840   $ 7,085,840  
Liabilities:
Convertible senior notes, net (1)
$ 1,153,000   $ —   $ 1,205,287   $ —   $ 1,205,287  
Notes issued by securitization trusts 4,833,855   —   —   4,868,980   4,868,980  
Funding debt 1,622,808   —   —   1,640,765   1,640,765  
Total liabilities $ 7,609,663   $ —   $ 1,205,287   $ 6,509,745   $ 7,715,032  

(1) As of December 31, 2025, includes convertible senior notes due 2026 with a carrying amount and fair value of $ 220.9 million and $ 211.4 million, respectively, and convertible senior notes due 2029 with a carrying amount and fair value of $ 906.8 million and $ 1.0 billion, respectively. As of June 30, 2025, includes convertible senior notes due 2026 with a carrying amount and fair value of $ 247.9 million and $ 232.7 million, respectively, and convertible senior notes due 2029 with a carrying amount and fair value of $ 905.1 million and $ 972.6 million, respectively. The estimated fair value of the convertible senior notes is determined based on a market approach, using the estimated or actual bids and offers of the notes in an over-the-counter market on the last business day of the period.

13.    Stockholders’ Equity

Common Stock

We had shares of common stock reserved for issuance as follows:

December 31, 2025 June 30, 2025

Available outstanding under equity compensation plans 34,868,631   39,122,013  
Available for future grant under equity compensation plans 67,415,813   53,851,610  
Total 102,284,444   92,973,623  

The common stock is not redeemable. We have two classes of common stock: Class A common stock and Class B common stock. Each holder of Class A common stock has the right to one vote per share of common stock. Each holder of Class B common stock has the right to 15 votes and can be converted at any time into one share of Class A common stock. Holders of Class A and Class B common stock are entitled to notice of any stockholders’ meeting in accordance with the bylaws of the corporation, and are entitled to vote upon such matters and in such manner as may be provided by law. Subject to the prior rights of holders of all classes of stock at the time outstanding having prior rights as to dividends, the holders of the common stock are entitled to receive, when and as declared by the Board of Directors, out of any assets of the corporation legally available therefore, such dividends as may be declared from time to time by the Board of Directors.

Common Stock Warrants

Common stock warrants are included as a component of additional paid in capital within the interim condensed consolidated balance sheets.

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In November 2025, in connection with the execution of an amended commercial agreement with Amazon, we modified the exercise price of the warrants vesting February 2026 and thereafter from $ 100 per share to $ 63.06 per share . The fair value of the warrants was remeasured as of the modification date using the Black Scholes-Merton option pricing model with the following assumptions: a dividend yield of zero ; remaining years to maturity of 3.6 ; volatility of 94 %; and a risk-free rate of 3.63 %. The remaining fair value of the warrants, including the incremental cost resulting from the modification, will be recognized within our consolidated statements of operations and comprehensive income (loss) as a component of sales and marketing expense as the warrants vest, based upon Amazon’s satisfaction of the vesting conditions.
During the three and six months ended December 31, 2025, we recognized $ 61.2 million and $ 102.2 million, respectively, within sales and marketing expense, compared to $ 86.8 million and $ 194.0 million for the three and six months ended December 31, 2024, respectively, based upon the grant-date fair value of the warrant shares that vested. Refer to Note 5.  Balance Sheet Components for more information on the commercial agreement asset recognized in connection with the warrants and the related amortization.

The following table summarizes the warrants activity for the six months ended December 31, 2025:
Number of Shares Weighted Average Exercise Price ($) Weighted Average Remaining Life (years)
Warrants outstanding, June 30, 2025 18,500,000   $ 81.08 3.90
Granted —   — 0.00
Exercised —   — 0.00
Cancelled —   — 0.00
Warrants outstanding, December 31, 2025
18,500,000   $ 68.78 3.40
Vested and exercisable, December 31, 2025
12,147,629   $ 71.19 3.40

As of December 31, 2025, unrecognized compensation expense related to the unvested warrants was approximately $ 519.5 million, which is expected to be recognized over a remaining weighted-average period of 2.9 years.

Share Repurchases

There were no share repurchases during the three and six months ended December 31, 2025.

14.    Equity Incentive Plans

2012 Stock Plan

Under our Amended and Restated 2012 Stock Plan (the “Plan”), we may grant incentive and nonqualified stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, officers, directors, and consultants. As of December 31, 2025, the maximum number of shares of common stock which may be issued under the Plan is 192,859,800 Class A shares and there were 67,415,813 shares of Class A common stock available for future grants under the Plan.

Stock Options

Stock option awards generally vest over a period of four years , with some awards vesting 25 % on the 12 month anniversary of the vesting commencement date and the remaining 75 % vesting ratably over the next three years . The contractual term is 10 years from the date of grant, or three months after termination of employment.

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The following table summarizes our stock option activity for the six months ended December 31, 2025:

Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands)
Balance as of June 30, 2025
12,955,978   $ 19.12   5.18

Exercised ( 1,966,068 ) 16.45  
Forfeited, expired or canceled ( 140,822 ) 32.06  
Balance as of December 31, 2025
10,849,088   19.44   4.76
Vested and exercisable, December 31, 2025
9,362,226   $ 18.01   4.27 $ 529,250  
Vested and exercisable, and expected to vest thereafter (1) December 31, 2025
10,847,762   $ 19.46   4.76 $ 597,429  

(1) Options expected to vest reflect the application of an estimated forfeiture rate.

There were no options granted during the six months ended December 31, 2025. As of December 31, 2025, unrecognized compensation expense related to unvested stock options was approximately $ 27.7 million, which is expected to be recognized over a remaining weighted-average period of 1.8 years.

Value Creation Award

In November 2020, the Company ’ s Board of Directors approved a long-term, multi-year performance-based stock option grant providing Mr. Levchin with the opportunity to earn the right to purchase up to 12,500,000 shares of the Company ’ s Class A common stock (the “Value Creation Award”). We recognize stock-based compensation on these awards based on the grant date fair value using an accelerated attribution method over the requisite service period, and only if performance-based conditions are considered probable of being satisfied. We incurred stock-based compensation expense of $ 5.5 million and $ 11.0 million during the three and six months ended December 31, 2025, respectively, and $ 12.4 million and $ 24.7 million during the three and six months ended December 31, 2024, respectively, associated with the Value Creation Award as a component of general and administrative expense within the interim condensed consolidated statements of operations and comprehensive income (loss).

The following table summarizes our Value Creation Award activity for the six months ended December 31, 2025:

Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands)
Balance as of June 30, 2025
12,500,000   $ 49.00   5.29
Exercised ( 1,333,332 ) 49.00  
Balance as of December 31, 2025
11,166,668   49.00   5.04
Vested and exercisable, December 31, 2025
2,666,668   $ 49.00   5.04 $ 67,813  

As of December 31, 2025, unrecognized compensation expense related to the Value Creation Award was approximately $ 0.8  million, which is expected to be recognized during the fiscal quarter ended March 31, 2026.

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Restricted Stock Units

RSUs are subject to a service-based vesting condition. We record stock-based compensation expense for service-based RSUs on a straight-line basis over the requisite service period, which is generally one to three years .

The following table summarizes our RSU activity during the six months ended December 31, 2025:

Number of Shares Weighted Average Grant Date Fair Value
Non-vested at June 30, 2025
13,666,035   $ 30.98  
Granted 5,993,867   67.73  
Vested ( 6,176,746 ) 37.44  
Forfeited, expired or canceled ( 893,037 ) 37.72  
Non-vested at December 31, 2025
12,590,119   $ 44.83  

As of December 31, 2025, unrecognized compensation expense related to unvested RSUs was approximately $ 527.8 million, which is expected to be recognized over a remaining weighted-average period of 1.5 years.

Performance Stock Units

In September 2025, we began granting PSUs to select executives and employees. Vesting is contingent upon completion of a continuous three-year service period and the achievement of company financial performance goals, including target growth rates for revenue less transaction costs and adjusted operating income. The number of shares that vest at the end of the performance period will range between 0 % and 200 % of the target shares based on actual performance against the applicable targets, which will be measured at the end of each fiscal year and averaged at the end of the three-year period. We record stock-based compensation expense for the number of PSUs that are probable of vesting based on the estimated achievement of the performance conditions. If the minimum conditions are not met, any recognized compensation cost will be reversed. The expense is recognized on a straight-line basis over the three-year period.

The following table summarizes our PSU activity during the six months ended December 31, 2025:

Number of Shares Weighted Average Grant Date Fair Value
Non-vested at June 30, 2025
—   $ —  
Granted 262,756   89.91  

Non-vested at December 31, 2025
262,756   $ 89.91  

As of December 31, 2025, unrecognized compensation expense related to unvested PSUs was approximately $ 25.6 million, which is expected to be recognized over a remaining weighted-average period of 2.5 years.

2020 Employee Stock Purchase Plan

On November 18, 2020, our Board of Directors adopted and approved the 2020 Employee Stock Purchase Plan (“ESPP”). The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum effort towards the success of the Company and that of its affiliates. A total of 19.1 million shares of Class A common stock are reserved and available for issuance under the ESPP and 2.2 million shares have been issued as of December 31, 2025. The ESPP provides for six-month offering periods beginning December 1 and June 1 of each year. At the end of each offering
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period, shares of our Class A common stock are purchased on behalf of each ESPP participant at a price per share equal to 85 % of the lesser of (1) the fair market value of the Class A common stock on first day of the offering period (the grant date) or (2) the fair market value of the Class A common stock on the last day of the offering period (the purchase date). We use the Black-Scholes-Merton option pricing model to measure the fair value of the purchase rights issued under the ESPP at the first day of the offering period, which represents the grant date. We record stock-based compensation expense on a straight-line basis over each six-month offering period, the requisite service period of the award.

Stock-Based Compensation Expense

The following table presents the components and classification of stock-based compensation (in thousands):

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
General and administrative $ 50,588   $ 57,719   $ 106,362   $ 120,524  
Technology and data analytics 23,012   23,677   47,776   49,648  
Sales and marketing 3,984   4,482   9,060   9,677  
Processing and servicing 215   220   455   482  
Total stock-based compensation in operating expenses 77,800   86,098   163,653   180,331  
Capitalized into property, equipment and software, net 46,636   44,708   99,521   94,186  
Total stock-based compensation $ 124,436   $ 130,806   $ 263,174   $ 274,517  

15.    Income Taxes

The quarterly provision for income taxes is based on the current estimate of the annual effective income tax rate and the tax effect of discrete items occurring during the quarter. Our quarterly provision and the estimate of the annual effective tax rate are subject to significant variation due to several factors, including variability in the pre-tax jurisdictional mix of earnings and the impact of discrete items.

For the three and six months ended December 31, 2025, we recorded income tax expense (benefit) of $ 3.7 million and $ 6.0 million, respectively, which was primarily attributable to various foreign income taxes. For the three and six months ended December 31, 2024, we recorded income tax expense (benefit) of $ 2.5 million and $ 4.4 million, respectively, which was primarily attributable to various U.S state and foreign income taxes.

As of December 31, 2025, we continue to recognize a full valuation allowance against our U.S. federal and state and certain foreign net deferred tax assets. We will release the domestic valuation allowance when there is sufficient positive evidence to support a conclusion that it is more likely than not the deferred tax assets will be realized. Recent earnings performance has improved the mix of positive versus negative evidence, and if these trends were to continue, we expect that additional positive evidence may be available within our fiscal year ending June 30, 2026 to support the release of a significant portion of the domestic valuation allowance. The timing and amount of any valuation allowance release is subject to change based on multiple factors, including our level of profitability and the extent to which we believe we can sustain it over time. Release of any portion of the valuation allowance would result in the recognition of certain deferred tax assets with a potential corresponding decrease to income tax expense for the period the release is recorded.

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16.    Net Income (Loss) per Share Attributable to Common Stockholders

The following table presents basic and diluted net income (loss) per share attributable to common stockholders for Class A and Class B common stock (in thousands, except share and per share data):

Three Months Ended December 31, Six Months Ended December 31,
2025 2025
Class A Class B Class A Class B
Numerator:
Net income attributable to common stockholders - basic $ 113,805   $ 15,781   $ 184,510   $ 25,770  
Net income attributable to common stockholders - diluted $ 114,487   $ 15,099   $ 185,734   $ 24,546  
Denominator:
Weighted average shares of common stock - basic 293,563,836   40,706,914   291,535,791   40,718,687  
Dilutive effect of stock equivalents:
Restricted stock units 6,561,719   —   7,292,050   —  
Stock options 7,682,217   —   8,173,175   —  
Value creation award vested shares 851,076   —   1,081,896   —  
Employee stock purchase plan shares —   —   20,484   —  
Weighted average shares of common stock - diluted 308,658,848   40,706,914   308,103,396   40,718,687  
Net income per share:
Basic $ 0.39   $ 0.39   $ 0.63   $ 0.63  
Diluted $ 0.37   $ 0.37   $ 0.60   $ 0.60  

Three Months Ended December 31, Six Months Ended December 31,
2024 2024
Class A Class B Class A Class B
Numerator:
Net income (loss) attributable to common stockholders - basic $ 69,983   $ 10,377   $ ( 17,227 ) $ ( 2,635 )
Net income (loss) attributable to common stockholders - diluted $ 70,672   $ 9,688   $ ( 17,227 ) $ ( 2,635 )
Denominator:
Weighted average shares of common stock - basic 280,666,562   41,615,772   277,776,478   42,481,967  
Dilutive effect of stock equivalents:
Restricted stock units 11,983,390   —   —   —  
Stock options 10,241,926   —   —   —  
Value creation award vested shares 473,889   —   —   —  
Common stock warrants 215,029   —   —   —  
Weighted average shares of common stock - diluted 303,580,796   41,615,772   277,776,478   42,481,967  
Net income (loss) per share:
Basic $ 0.25   $ 0.25   $ ( 0.06 ) $ ( 0.06 )
Diluted $ 0.23   $ 0.23   $ ( 0.06 ) $ ( 0.06 )

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The following common stock equivalents were excluded from the calculation of diluted net income (loss) per share attributable to common stockholders because their inclusion would have been anti-dilutive:

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
Common stock warrants 8,647,629   6,278,501   8,647,629   6,278,501  
Restricted stock units 532,903   773,998   532,903   20,685,982  
Employee stock purchase plan shares 211,939   189,621   211,939   189,621  
Stock options 162,014   906,767   162,014   14,260,228  
Value creation award vested shares —   —   —   4,000,000  
Total 9,554,485   8,148,887   9,554,485   45,414,332  

17.   Segment Information

The Company is managed on a consolidated basis as a single operating and reportable segment. This reflects the way in which our Chief Operating Decision Maker (“CODM”), the Chief Executive Officer of Affirm Holdings, Inc., regularly reviews internally reported financial information. Net income is the primary measure of segment profit and loss reviewed by the CODM. Net income is used in the budget and forecast process, to assess business performance, and to make decisions on strategy and resource allocation.

The CODM is regularly provided with the consolidated expenses presented within the interim condensed consolidated statement of operations and comprehensive income (loss). Refer to the interim condensed consolidated statement of operations and comprehensive income (loss) for further information related to our revenues, expenses, and net income.

Refer to the interim condensed consolidated statement of cash flows for further information related to significant noncash items including depreciation and amortization expense.

The CODM does not review segment assets at a different level than the amounts presented within the interim condensed consolidated balance sheets.

Refer to Note 3. Revenue for further information on the types of products and services the Company derives its revenues from.

18.    Subsequent Events

Grant of Annual Equity Award to Founder and Chief Executive Officer

On January 13, 2026, at the recommendation of its Compensation Committee, the Board of Directors approved the grant of an equity award under the Company’s Amended and Restated 2012 Stock Plan consisting of PSUs that vest into shares of the Company’s Class A Common Stock, par value $ 0.00001 per share, to Max Levchin, its Founder and Chief Executive Officer. The grant consisted of 333,667 PSUs (the “PSU Grant”).

The PSU Grant vesting conditions align with those applicable to the grants of PSUs awarded to the Company’s other executive officers in September 2025. Refer to Note 14. Equity Incentive Plans in the notes to the interim condensed consolidated financial statements for more information.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”) and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal year ended June 30, 2025 included in our Annual Report on Form 10-K. Some of the information contained in this discussion and analysis, including information with respect to our planned investments to drive future growth, includes forward-looking statements that involve risks and uncertainties. You should review the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” of this Form 10-Q and our most recently filed Annual Report on Form 10-K for a discussion of forward-looking statements and important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

Overview

We are building the next generation payment network. We believe that by using modern technology, strong engineering talent, and a mission-driven approach, we can reinvent payments and commerce. Our solutions, which are built on trust and transparency, are designed to make it easier for consumers to spend and save responsibly and with confidence, easier for merchants and commerce platforms to convert sales and grow, and easier for commerce to thrive.
Our point-of-sale solutions allow consumers to pay for purchases in fixed amounts without deferred interest, late fees, or penalties. We empower consumers to pay over time rather than paying for a purchase entirely upfront. This increases consumers’ purchasing power and gives them more control and flexibility. Our platform facilitates both true 0% APR payment options and interest-bearing loans. On the merchant side, we offer commerce enablement, demand generation, and consumer acquisition tools. Our solutions empower merchants to more efficiently promote and sell their products, optimize their consumer acquisition strategies, and drive incremental sales. We also provide valuable product-level data and insights — information that merchants cannot easily get elsewhere — to better inform their strategies. Finally, for consumers, our app unlocks the full suite of Affirm products for a delightful end-to-end consumer experience. Consumers can use our app to apply for installment loans, and upon approval, they can use the Affirm Card digitally online or in-stores to complete a purchase. Additionally, consumers can manage the pre and post purchase split of Affirm Card transactions into a loan, manage payments, open a high-yield savings account, and access a personalized marketplace.
Our Company is predicated on the principles of simplicity, transparency, and putting people first. By adhering to these principles, we have built enduring, trust-based relationships with consumers and merchants that we believe will set us up for long-term, sustainable success. We believe our innovative approach uniquely positions us to define the future of commerce and payments.
Technology and data are at the core of everything we do. Our expertise in sourcing, aggregating, and analyzing data has been what we believe to be the key competitive advantage of our platform since our founding. We believe our proprietary technology platform and data give us a unique advantage in pricing risk. We use data to inform our risk scoring in order to generate value for our consumers, merchants, and capital partners. We also prioritize building our own technology and investing in product and engineering talent as we believe these are enduring competitive advantages that are difficult to replicate. Our solutions use the latest in machine learning, artificial intelligence, cloud-based technologies, and other modern tools to create differentiated and scalable products.
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Three Months Ended December 31, Six Months Ended December 31,
2025 2024 $ % 2025 2024 $ %
(in thousands, except percentages)
Total revenue, net $ 1,123,019   $ 866,381   $ 256,638   30   % $ 2,056,357   $ 1,564,861   $ 491,496   31   %
Total operating expenses 1,005,393   870,703   134,690   15   % 1,875,070   1,701,805   173,265   10   %
Operating income (loss) $ 117,626   $ (4,322) $ 121,948   NM (1)
$ 181,287   $ (136,944) $ 318,231   NM (1)

Other income, net 15,612  87,181  (71,569) (82) % 34,970  121,483  (86,513) (71) %
Income (loss) before income taxes $ 133,238   $ 82,859   $ 50,379   61   % $ 216,257   $ (15,461) $ 231,718   NM (1)

Income tax expense 3,652  2,499  1,153  46  % 5,977  4,401  1,576  36  %
Net income (loss) $ 129,586   $ 80,360   $ 49,226   61   % $ 210,280   $ (19,862) $ 230,142   NM (1)

(1) Not meaningful (“NM”)

Our Financial Model

Our Revenue Model
We have three main loan product offerings: Pay-in-X, 0% annual percentage rate (“APR”) monthly installment loans and interest-bearing monthly installment loans. Pay-in-X primarily consists of short-term payment plans with one to four 0% APR installments.
From merchants, we typically earn a fee when we help them convert a sale and facilitate a transaction. Merchant fees depend on the individual arrangement between us and each merchant and vary based on the terms of the product offering; we generally earn larger merchant fees on 0% APR financing products. For the three and six months ended December 31, 2025, Pay-in-X represented 17% and 16%, respectively, of total GMV facilitated through our platform while 0% APR installment loans represented 15% for both the three and six months ended December 31, 2025. For the three and six months ended December 31, 2024, Pay-in-X represented 15% and 14%, respectively, of total GMV facilitated through our platform while 0% APR installment loans represented 13% and 12%, respectively.
From consumers, we earn interest income on the simple interest loans that we originate or purchase from our originating bank partners. Interest rates charged to our consumers vary depending on the transaction risk, creditworthiness of the consumer, the repayment term selected by the consumer, the amount of the loan, and the individual arrangement with a merchant. Because our consumers are never charged deferred or compounding interest, late fees, or penalties on the loans, we are not incentivized to profit from our consumers’ hardships. In addition, interest income includes the amortization of any discounts or premiums on loan receivables created upon either the purchase of a loan from one of our originating bank partners or our direct origination of a loan. For the three and six months ended December 31, 2025, interest bearing loans represented 67% and 69%, respectively, of total GMV facilitated through our platform. For the three and six months ended December 31, 2024, interest bearing loans represented 72% and 73%, respectively, of total GMV facilitated through our platform.
In order to accelerate our ubiquity, we facilitate the issuance of one-time-use virtual cards directly to consumers through our app, allowing them to shop with merchants that may not yet be fully integrated with Affirm. Similarly, we also facilitate the issuance of the Affirm Card, a card that can be used physically or virtually and which allows consumers to link a bank account to pay in full, or pay later by accessing credit through the Affirm App. When these cards are used over established card networks, we earn a portion of the interchange fee from the transaction.

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Our Loan Origination and Servicing Model
When a consumer applies for a loan through our platform, the loan is underwritten using our proprietary risk model. Once approved for the loan, the consumer then selects their preferred repayment option. A portion of these loans are funded and issued by our originating bank partners, which include Cross River Bank, an FDIC-insured New Jersey state-chartered bank, Celtic Bank, an FDIC-insured Utah state-chartered industrial bank, and Lead Bank, an FDIC-insured Missouri state-chartered bank. These partnerships allow us to benefit from our partners’ ability to originate loans under their banking licenses while complying with various federal, state, and other laws. Under this arrangement, we must comply with our originating bank partners' credit policies and underwriting procedures, and our originating bank partners maintain ultimate authority to decide whether to originate a loan or not. When an originating bank partner originates a loan, it funds the loan through its own funding sources and may subsequently offer and sell the loan to us. Pursuant to our agreements with these partners, we are obligated to purchase the loans facilitated through our platform that such partner offers us and our obligation is secured by cash deposits. To date, we have purchased all of the loans facilitated through our platform and originated by our originating bank partners. When we purchase a loan from an originating bank partner, the purchase price is equal to the outstanding principal balance of the loan, plus a fee and any accrued interest. The originating bank partner also retains an interest in the loans purchased by us through a loan performance fee that is payable by us on the aggregate principal amount of a loan that is paid by a consumer. Refer to Note 12. Fair Value of Financial Assets and Liabilities in the notes to the interim condensed consolidated financial statements for more information on the performance fee liability.

We are also able to originate loans directly under our lending, servicing, and brokering licenses in Canada, the U.K., and across most states in the U.S. through our consolidated subsidiaries. For the three and six months ended December 31, 2025, we directly originated approximately $2.8 billion, or 20%, and $4.7 billion, or 19%, respectively, of loans compared to approximately $1.7 billion, or 17%, and $3.0 billion, or 17%, for the same periods in 2024.
We act as the servicer on all loans that we originate directly or purchase from our originating bank partners and earn a servicing fee on loans held by third parties, including bank partners prior to loan purchase and third-party loan buyers if subsequently sold as part of our funding strategy. In the normal course of business, we do not sell the servicing rights on any of the loans. To allow for flexible staffing to support overflow and seasonal traffic, we partner with several sub-servicers to manage consumer care, first priority collections, and third-party collections in accordance with our policies and procedures.

Factors Affecting Our Performance
Our performance has been and may continue to be affected by many factors, including those identified below, as well as the factors discussed in the section titled “Risk Factors” in this Form 10-Q and in our most recently filed Annual Report on Form 10-K for the fiscal year ended June 30, 2025, as updated from time to time in our filings with the SEC.
Expanding our Network, Diversity, and Mix of Funding Relationships
Our capital efficient funding model is integral to the success of our platform. As we scale the number of transactions on our network and grow GMV, we maintain a variety of funding relationships in order to support our network. Our diversified funding relationships include warehouse facilities, securitization trusts, variable funding notes, forward flow arrangements, and partnerships with banks. Given the short duration and strong performance of our assets, funding can be recycled quickly, resulting in a high-velocity, capital efficient funding model. As of December 31, 2025 and June 30, 2025, our equity capital as a percentage of our total platform portfolio, defined as the unpaid principal balance of all loans facilitated through our platform, was 5% and 4%, respectively. The mix of on-balance sheet and off-balance sheet funding is a function of how we choose to allocate loan volume, which is determined by the economic arrangements and supply of capital available to us, both of which may also impact our results in any given period.
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Mix of Business on Our Platform
The shifts in merchant volumes and products offered in any period affect our operating results. These shifts impact GMV, revenue, our financial results, and our key operating metric performance for that period. Differences in loan product mix result in varying loan terms, APRs, and payment frequencies.
Product and economic terms of commercial agreements vary among our merchants, which may impact our results. For example, our low average order value (“AOV”) products generally benefit from shorter duration, but also have lower revenue as a percentage of GMV when compared to high AOV products. Merchant mix shifts are driven in part by the products offered by the merchant, the economic terms negotiated with the merchant, merchant-side activity relating to the marketing of their products, whether or not the merchant is fully integrated within our network, and general economic conditions affecting consumer demand. Our revenue as a percentage of GMV in any given period varies across products. As such, as we continue to expand our network to include more merchants and product offerings, revenue as a percentage of GMV may vary.
Additionally, our commercial agreements with our platform partners, the expansion of our consumer eligibility criteria, along with the growing repeat usage of our Affirm Card offerings, are driving an increase in low AOV transactions. As a result, while we expect that transactions per active consumer may increase, revenue as a percentage of GMV may decline in the medium term to the extent that a greater portion of our GMV comes from Affirm Card and other low-AOV offerings.
Seasonality
We experience seasonal fluctuations in our business as a result of consumer spending patterns, including Affirm Card, which we expect to mimic the seasonality of our general business in the near term. Historically, our GMV has been the strongest during our fiscal second quarter due to increases in retail commerce during the holiday season and our loan delinquencies are at their lowest during our fiscal third and fourth quarter, as consumer savings benefit from tax refunds. Adverse events that occur during our second fiscal quarter could have a disproportionate effect on our financial results for the fiscal year.
Macroeconomic Environment
We regularly monitor the direct and indirect impacts of the current macroeconomic conditions on our business, financial condition, and results of operations. Following the Federal Reserve’s decision to begin reducing the federal funds interest rate in September 2024, interest rates have declined; however, uncertainty remains as to whether and to what extent the federal funds interest rate will remain at current levels, increase or decrease in future periods. Simultaneously, economic uncertainty and unpredictability, including the prospect of economic recession and the magnitude, duration and impact of tariffs on global trade, has impacted and may continue to impact both consumer spending and loan repayments. These challenges have affected, and may continue to affect, our business and results of operations in the following ways:
• Shifts in consumer demand and loan repayment: We have experienced, and may continue to experience, fluctuations in consumer demand across different merchandise categories as well as an increase in delinquencies due to economic uncertainty, inflationary pressures, elevated interest rates, and other macroeconomic factors. If such conditions deteriorate in future periods, consumer demand and loan repayments may be negatively impacted.

• Borrowing costs: The Federal Reserve began decreasing the federal funds interest rate in late 2024, leading to a decline in our average funding costs. However, there is continued uncertainty as to whether and to what extent the Federal Reserve may decrease the federal funds rate further in the future.

• Volatile capital markets: Since fiscal 2024, capital markets have shown improvement against recent periods. Strong loan performance has allowed us to add substantial capacity across funding channels. Despite these improvements, uncertainties remain in the macroeconomic environment, especially with regard to inflation, the prospect of recession, the magnitude, duration and impact of tariffs on global trade,
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and the potential for increased unemployment. To address these uncertainties, we leverage our diverse capital ecosystem consisting of multiple funding channels, a diverse set of counterparties, and varying maturity debt schedule to support resilience across various macroeconomic conditions and economic cycles.

Consumer Credit Optimization and Loan Performance

We continue to optimize our underwriting and take other actions to manage consumer loan repayment, increase collections and minimize losses. For example, we offer loan modifications to borrowers experiencing financial difficulty to provide greater flexibility for consumers to repay their obligations, through payment deferrals or loan re-amortizations. A payment deferral extends the next payment due date, and while a consumer may receive more than one deferral, the total deferral period may not exceed three months. A loan re-amortization lowers the monthly payments by extending the term, which may not exceed twenty-four months.

These loan modification programs also impact our delinquency rates, and such impact can vary over time. The volume of loan modifications during the fiscal quarter ended December 31, 2025 increased to 0.18% up from 0.15% in the same period in 2024. As of December 31, 2025, loans modified within the last twelve months represent 0.25%, respectively, of the outstanding principal balance of loans held on our balance sheet, compared to 0.29%, for the same periods in 2024. Our reported delinquency and charge off rates include loans which have become past due or have charged off subsequent to modification. An unknown percentage of loans which have been modified and are current as of December 31, 2025 may become delinquent or charge off in the future. We continue to evaluate the effectiveness of these programs and may modify, expand, or contract their usage, which may affect the timing of reported delinquencies and charge offs in future periods.

Regulatory Developments

We are subject to the regulatory and enforcement authority of the Consumer Financial Protection Bureau (the “CFPB”) as a facilitator, servicer, acquirer or originator of consumer credit. As such, the CFPB has in the past requested reports concerning our organization, business conduct, markets, and activities, and we expect that the CFPB will continue to do so from time to time in the future.
Additionally, state regulatory agencies and state attorneys general have publicly indicated that they plan to increase oversight of financial services companies. Such state authorities may initiate legal proceedings against us under state consumer protection statutes or various federal consumer financial services statutes, subject to the jurisdiction of the CFPB and FTC. These actions may result in financial penalties, which, individually or in aggregate, may adversely impact our operations.
Affirm Bank Applications
On January 23, 2026, we submitted applications to the Nevada Financial Institutions Division and the Federal Deposit Insurance Corporation (“FDIC”) to establish Affirm Bank, a proposed Nevada-chartered industrial loan company. If approved, the proposed entity would operate as a wholly owned, Nevada-chartered, FDIC-insured bank subsidiary, and maintain its own independent governance and internal controls. The proposed bank subsidiary would complement our current business and bank partnership models, including by providing greater flexibility and diversification, to help advance responsible innovation in financial services.
U.S. Income Tax
On July 4, 2025, the One Big Beautiful Bill Act (the “Act”) was enacted into law, which included certain modifications to U.S. tax law. The Company is currently evaluating the future impact of these provisions of the Act on our Consolidated Financial Statements.
In addition, our assessment of income taxes is influenced by our recent operating results and expectations regarding future profitability. Recent pretax earnings performance has improved the mix of positive versus negative evidence considered in evaluating the realizability of our deferred tax assets. If these trends continue, we expect that additional positive evidence may be available within our fiscal year ending June 30, 2026 to support the conclusion that a significant portion of the domestic valuation allowance is no longer needed. The timing and amount of any valuation allowance release is subject to change based on multiple factors, including our level of profitability and the
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extent to which we believe we can sustain it over time. Release of any portion of the valuation allowance would result in the recognition of certain deferred tax assets with a potential corresponding decrease to income tax expense for the period the release is recorded, which would represent a non-cash benefit to net income.

Key Operating Metrics

We focus on several key operating metrics to measure the performance of our business and help determine our strategic direction. In addition to revenue, net income (loss), and other results under U.S. GAAP, the following tables set forth key operating metrics we use to evaluate our business.

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 % Change 2025 2024 % Change
(in billions)
GMV $ 13.8  $ 10.1  36  % $ 24.6  $ 17.7  38  %

GMV
We measure GMV to assess the volume of transactions that take place on our platform. We define GMV as the total dollar amount of all transactions on the Affirm platform during the applicable period, net of refunds. GMV does not represent revenue earned by us; however, it is an indicator of the success of our merchants and the strength of our platform.
For the three and six months ended December 31, 2025, GMV was $13.8 billion and $24.6 billion, respectively, which represented an increase of approximately 36% and 38%, respectively, as compared to the same periods in 2024. Overall, the increase in GMV was driven by growth in several key areas including our top five merchants and platform partners, our direct to consumer products, including Affirm Card, and overall increases in our active merchant base, active consumers and average transactions per consumer.

During the three and six months ended December 31, 2025, GMV growth was diversified across categories and loan products, primarily driven by our electronics and home and lifestyle categories, as well as our 0% APR installment loans. For the three and six months ended December 31, 2025, GMV from 0% APR monthly installment loans was $2.1 billion and $3.6 billion, respectively, which represented an increase of approximately 65% and 68%, respectively, from $1.3 billion and $2.1 billion for the three and six months ended December 31, 2024, respectively.

For the three and six months ended December 31, 2025, GMV from our top five merchants and platform partners collectively grew 23% and 27%, respectively, as compared to the same periods in 2024. However, during the three and six months ended December 31, 2025, the concentration of GMV derived from our top five partners declined slightly to 46% and 45%, respectively, compared to 51% and 49% for the same periods in 2024. GMV attributable to Amazon during the three and six months ended December 31, 2025 represented 24% and 23%, respectively, of total GMV. GMV attributable to Amazon during the three and six months ended December 31, 2024 represented 25% and 24%, respectively, of total GMV.

December 31, 2025 December 31, 2024 % Change
(in thousands, except per consumer data)
Active consumers 25,799  20,968  23  %
Transactions per active consumer 6.4  5.3 20  %

Active Consumers
We assess consumer adoption and engagement by the number of active consumers across our platform. Active consumers are the primary measure of the size of our network. We define an active consumer as a consumer who completes at least one transaction on our platform during the 12 months prior to the measurement date.
As of December 31, 2025, we had approximately 25.8 million active consumers, which represented an increase of 23% compared to approximately 21.0 million active consumers as of December 31, 2024. The increase
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was primarily due to a high retention rate of existing consumers and the acquisition of new consumers through an expansion in active merchants and platform partnerships.
Transactions per Active Consumer
We believe the value of our network is amplified with greater consumer engagement and repeat usage, highlighted by increased transactions per active consumer. Transactions per active consumer is defined as the average number of transactions that an active consumer has conducted on our platform during the 12 months prior to the measurement date.
As of December 31, 2025, we had approximately 6.4 transactions per active consumer, an increase of 20% compared to December 31, 2024. The increase was primarily due to platform growth and a higher frequency of repeat users driven by consumer engagement, including growth of Affirm Card active consumers. As of December 31, 2025 and December 31, 2024, Affirm Card represented approximately 13% and 10%, respectively, of the total number of transactions.

Results of Operations

The following tables set forth selected interim condensed consolidated statements of operations and comprehensive income (loss) data for each of the periods presented:

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 $ % 2025 2024 $ %
(in thousands, except percentages)
Revenue
Merchant network revenue $ 328,380  $ 244,895  $ 83,485  34  % $ 579,527  $ 429,234  $ 150,293  35  %
Card network revenue 73,035  58,142  14,893  26  % 142,365  105,622  36,743  35  %
Total network revenue 401,415  303,037  98,378  32  % 721,892  534,856  187,036  35  %
Interest income (2)
493,626  409,367  84,259  21  % 947,749  786,431  161,318  21  %
Gain on sales of loans (2)
185,231  125,287  59,944  48  % 304,280  188,900  115,380  61  %
Servicing income 42,748  28,690  14,058  49  % 82,437  54,674  27,763  51  %
Total revenue, net 1,123,019   866,381   256,638   30   % 2,056,357   1,564,861   491,496   31   %
Operating expenses (3)

Loss on loan purchase commitment 96,065  70,278  25,787  37  % 167,617  124,515  43,102  35  %
Provision for credit losses 214,153  152,980  61,173  40  % 376,905  312,804  64,101  20  %
Funding costs 111,717  107,762  3,955  4  % 221,744  211,907  9,837  5  %
Processing and servicing 158,582  115,960  42,622  37  % 292,389  211,106  81,283  39  %
Technology and data analytics 184,871  148,213  36,658  25  % 352,976  282,503  70,473  25  %
Sales and marketing 98,782  136,038  (37,256) (27) % 177,273  281,271  (103,998) (37) %
General and administrative 141,223  139,412  1,811  1  % 286,165  277,894  8,271  3  %
Restructuring and other —  60  (60) (100) % —  (195) 195  (100) %
Total operating expenses 1,005,393   870,703   134,690   15   % 1,875,070   1,701,805   173,265   10   %
Operating income (loss) $ 117,626   $ (4,322) $ 121,948   NM (1)
$ 181,287   $ (136,944) $ 318,231   NM (1)

Other income, net 15,612  87,181  (71,569) (82) % 34,970  121,483  (86,513) (71) %
Income (loss) before income taxes $ 133,238   $ 82,859   $ 50,379   61   % $ 216,257   $ (15,461) $ 231,718   NM (1)

Income tax expense 3,652  2,499  1,153  46  % 5,977  4,401  1,576  36  %
Net income (loss) $ 129,586   $ 80,360   $ 49,226   61   % $ 210,280   $ (19,862) $ 230,142   NM (1)

(1) Not meaningful (“NM”)
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(2) Upon purchase of a loan from our originating bank partners at a price above the fair market value of the loan or upon the origination of a loan with a par value in excess of the fair market value of the loan, a discount is included in the amortized cost basis of the loan. For loans held for investment, this discount is amortized over the life of the loan into interest income. For loans held for sale, when a loan is sold to a third-party loan buyer or off-balance sheet securitization trust, the unamortized discount is released in full at the time of sale and recognized as part of the gain or loss on sales of loans. However, the cumulative value of the loss on loan purchase commitment or loss on origination, the interest income recognized over time from the amortization of discount while retained, and the release of discount into gain on sales of loans, together net to zero over the life of the loan. The following table details activity for the discount, included in loans held for investment, for the periods indicated:

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
(in thousands)
Balance at the beginning of the period $ 106,310  $ 100,203  $ 102,680  $ 98,527 
Additions from loans purchased or originated, net of refunds 153,748  100,764  259,837  178,953 
Amortization of discount (85,904) (64,115) (157,220) (120,812)
Unamortized discount released on loans sold (41,653) (31,732) (72,426) (51,887)
Impact of foreign currency translation 519  (1,687) 149  (1,348)
Balance at the end of the period $ 133,019  $ 103,433  $ 133,019  $ 103,433 

(3) Amounts include stock-based compensation as follows:

Three Months Ended December 31, Six Months Ended December 31,
2025 2024 2025 2024
(in thousands)
General and administrative $ 50,588  $ 57,719  $ 106,362  $ 120,524 
Technology and data analytics 23,012  23,677  47,776  49,648 
Sales and marketing 3,984  4,482  9,060  9,677 
Processing and servicing 215  220  455  482 
Total stock-based compensation in operating expenses 77,800  86,098  163,653  180,331 
Capitalized into property, equipment and software, net 46,636  44,708  99,521  94,186 
Total stock-based compensation $ 124,436  $ 130,806  $ 263,174  $ 274,517 

Comparison of the Three and Six Months Ended December 31, 2025 and 2024

Merchant network revenue
Merchant network revenue is impacted by both GMV and the mix of loans originated on our platform as merchant fees vary based on loan characteristics. In particular, merchant network revenue as a percentage of GMV typically increases with longer-term, non interest-bearing loans with higher AOVs, and decreases with shorter-term, interest-bearing loans with lower AOVs.
Merchant network revenue increased by $83.5 million, or 34%, and $150.3 million, or 35%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase is primarily attributed to an increase of $3.6 billion, or 36%, and $6.8 billion, or 38%, in GMV for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. GMV from our top five
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merchants and platform partners for the three and six months ended December 31, 2025, increased 23% and 27%, respectively, compared to the same periods in 2024.
Active consumers grew, reaching 25.8 million, as of December 31, 2025, up from 21.0 million as of December 31, 2024. Transactions per active consumer also increased from 5.3 as of December 31, 2024 to 6.4 as of December 31, 2025. The increase in active consumers and transactions per active consumer is partially offset by a decrease in AOV. For the three and six months ended December 31, 2025, AOV was $251 and $255, respectively, down from $267 and $270 for the same periods in 2024. The decrease in AOV is driven by the diversification of our merchant base and our ongoing initiative to drive repeat usage of our platform beyond one-time high AOV purchases.
Card network revenue
Card network revenue increased by $14.9 million, or 26%, and $36.7 million, or 35%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. Card network revenue growth is correlated with the growth of GMV processed by our issuer processors. As such, the increase is primarily driven by $4.5 billion and $8.2 billion of GMV processed through our issuer processors, an increase of approximately 45% and 47% for the three and six months ended December 31, 2025, respectively, as compared to the same periods in 2024. This was driven by increased card activity primarily through Affirm Card and our one-time-use virtual debit cards, as well as growth in existing and new merchants utilizing our agreement with card-issuing partners as a means of integrating Affirm services. Card network revenue is also impacted by the mix of merchants as different merchants can have different interchange rates depending on their industry or size, among other factors.
Interest income
Interest income increased by $84.3 million, or 21%, and $161.3 million, or 21%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. Generally, interest income is correlated with the changes in the average balance of loans held for investment, which increased by 22% to $8.0 billion and 23% to $7.7 billion for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024.
Gain on sales of loans
Gain on sales of loans increased by $59.9 million, or 48%, and $115.4 million, or 61%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase is driven by higher loan sale volume to third-party loan buyers and favorable transaction economics. We sold loans with an unpaid principal balance of $6.0 billion and $10.9 billion for the three and six months ended December 31, 2025, respectively, compared to $4.6 billion and $7.4 billion for the same periods in 2024, respectively, an increase of 29% and 47%, respectively.
Servicing income
Servicing income includes net servicing fee revenue and fair value adjustments for servicing assets and liabilities, and is recognized for loan portfolios sold to third-party loan buyers and for loans held within our off-balance sheet securitizations. Servicing fee revenue varies by contractual servicing fee arrangement and is earned as a percentage of the average unpaid principal balance of loans held by each counterparty where we have a servicing agreement. We reduce servicing income for certain fees we are required to pay per our contractual servicing arrangement.
With respect to fair value adjustments, we remeasure the fair value of servicing assets and liabilities each period and recognize the change in fair value in servicing income. We utilize a discounted cash flow approach to remeasure the fair value of servicing rights. Because we earn servicing income based on the outstanding principal balance of the portfolio, fair value adjustments are impacted by the timing and amount of loan repayments. As such, over the term of each loan portfolio sold, fair value adjustments for servicing assets will decrease servicing income
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and fair value adjustments for servicing liabilities will increase servicing income. We discuss our valuation methodology and significant Level 3 inputs for servicing assets and liabilities within Note 12. Fair Value of Financial Assets and Liabilities in the notes to the interim condensed consolidated financial statements.
Servicing income increased by $14.1 million, or 49%, and $27.8 million, or 51%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase was primarily due to an increase in servicing fee revenue which is calculated as a percentage of the unpaid principal balance of off-balance sheet loans. The average unpaid principal balance of loans held by third-party investors and off-balance sheet securitizations increased to $9.1 billion and $8.6 billion for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024, an increase of 50% for both periods.
Loss on loan purchase commitment
We purchase certain loans from our originating bank partners that are processed through our platform and put back to us by our originating bank partners. Under the terms of the agreements with our originating bank partners, we are generally required to pay the principal amount plus accrued interest for such loans and fees. In certain instances, our originating bank partners may originate loans with zero or below market interest rates that we are required to purchase. In these instances, we may be required to purchase the loan for a price in excess of the fair market value of such loans, which results in a loss. These losses are recognized as loss on loan purchase commitment in our interim condensed consolidated statements of operations and comprehensive income (loss). These costs are incurred on a per loan basis.
Loss on loan purchase commitment increased by $25.8 million, or 37%, and $43.1 million, or 35%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024, primarily due to an increase in total volume of loans purchased. During the three and six months ended December 31, 2025, we purchased $10.8 billion and $19.5 billion, respectively, of loans from our originating bank partners, compared to $8.1 billion and $14.5 billion in the same periods in 2024, respectively, representing an increase of 33% and 34%, respectively. Of the total loans purchased, 0% APR installment loans represented $1.8 billion and $3.1 billion during the three and six months ended December 31, 2025, respectively, and $1.2 billion and $2.0 billion for the same periods in 2024, respectively, an increase of 54%, and 57%, respectively.
Provision for credit losses
Provision for credit losses generally represents the amount of expense required to maintain the allowance for credit losses within our interim condensed consolidated balance sheet, which represents management’s estimate of future losses on loans and other receivables. In the event that our loans and receivables outperform our expectation and/or we reduce our expectation of credit losses in future periods, we may release reserves and thereby reduce the allowance for credit losses, yielding income in the provision for credit losses. The provision is determined based on our estimate of expected future losses on loans originated during the period and held for investment on our balance sheet, changes in our estimate of future losses on loans outstanding as of the end of the period and the net charge-offs incurred in the period.
Provision for credit losses increased by $61.2 million, or 40%, and $64.1 million, or 20%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. Provision expense is primarily related to loans held for investment, where the amount of provision expense recognized during the period will depend on the balance and composition of loans held for investment, future loss expectations and net charge-offs realized during the period. For the three and six months ended December 31, 2025, the provision expense for loans held for investment increased by $61.1 million, or 42%, and $62.7 million, or 21%, respectively. Over this same time period, the balance of loans held for investment increased to $6.8 billion as of December 31, 2025 compared to $7.2 billion and $7.0 billion as of September 30, 2025 and June 30, 2025, respectively.
Funding costs
Funding costs consist of interest expense and the amortization of fees for certain borrowings collateralized by our loans including warehouse credit facilities and consolidated securitizations, sale and repurchase agreements collateralized by our retained securitization interests, and other costs incurred in connection with funding the
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purchases and originations of loans. Funding costs for a given period are driven by the average outstanding balance of funding debt and notes issued by securitization trusts as well as our contractual interest rate and distribution of loans across funding facilities, net of the impact of any designated cash flow hedges.
Funding costs increased by $4.0 million, or 4%, and $9.8 million, or 5%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase is primarily due to an increase of funding debt and notes issued by securitization trusts during the three and six months ended December 31, 2025. The average total of funding debt from warehouses and securitizations for the three and six months ended December 31, 2025 was $7.2 billion and $7.0 billion, respectively, compared to $5.9 billion and $5.7 billion during the same periods in 2024, an increase of $1.3 billion, or 22%, and $1.3 billion, or 24%. This was offset by favorable pricing terms.
Processing and servicing

Processing and servicing expense consists primarily of payment processing fees, third-party customer support and collection expense, salaries and personnel-related costs of our customer care team, platform fees, and allocated overhead.
Processing and servicing expense increased by $42.6 million, or 37%, and $81.3 million, or 39%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. This increase is driven partially by an increase in payment processing fees of $29.6 million, or 46%, and $53.2 million, or 44%, related to an increase of $3.1 billion, or 40%, and $6.0 billion, or 40%, in payment volume for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. Platform fees increased by $6.1 million, or 19%, and $17.1 million, or 32%, respectively, due to an increase in volume with a large enterprise partner. Additionally, our customer service and collection costs increased by $9.1 million, or 54%, and $15.6 million, or 49%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. These increases are driven by growth in our overall loan portfolio, including both loans held for investment and loans serviced for third parties.
Technology and data analytics
Technology and data analytics expense consists primarily of the salaries, stock-based compensation, and personnel-related costs of our engineering, product, and credit and analytics employees, as well as the amortization of internally-developed software and technology intangible assets, and our infrastructure and hosting costs.
Technology and data analytics expense increased by $36.7 million, or 25%, and $70.5 million, or 25%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase is partially driven by amortization of internally-developed software which increased by $21.2 million, or 40%, and $40.5 million, or 42%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024, as a result of an increase in the number of capitalized projects. Capitalized projects in service grew by 34% from approximately 1,230 projects as of December 31, 2024 to 1,650 projects as of December 31, 2025. Data infrastructure and hosting costs increased by $9.0 million, or 33%, and $17.9 million, or 35%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase in data infrastructure and hosting costs was primarily driven by an increase in the number of consumer transactions. For the three and six months ended December 31, 2025, the number of consumer transactions increased by 44% and 47%, respectively, from continued growth at our merchants and platform partners when compared to the same periods in 2024. Payroll and personnel-related expenses increased by $2.6 million, or 5%, and $6.0 million, or 6%, for the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024, primarily due to an increase in headcount.
Sales and marketing
Sales and marketing costs consist of the expense related to warrants and other share-based payments granted to our enterprise partners, salaries and personnel-related costs, and costs of marketing and promotional activities.
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Sales and marketing expense decreased by $37.3 million, or 27%, and $104.0 million, or 37%, during the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The decrease was primarily driven by a $25.6 million, or 29%, and $91.9 million, or 47%, decrease in Amazon warrant expense during the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024, primarily due to a portion of the warrants becoming fully vested as of December 2024. Additionally, the decrease was also driven by a $6.2 million, or 69%, and $12.4 million, or 69%, decrease in Shopify warrant expense during the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024, primarily due to an amendment made in our partnership agreement, which extended the period of benefit over which we amortize the commercial agreement asset.
General and administrative
General and administrative expenses consist primarily of expenses related to our finance, legal, risk operations, human resources, and administrative personnel. General and administrative expenses also include costs related to fees paid for professional services, including legal, tax and accounting services, allocated overhead, and certain discretionary expenses incurred from operating our technology platform.
General and administrative expense increased by $1.8 million, or 1%, and $8.3 million, or 3%, during the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The increase is primarily due to increases in software and subscriptions.
Other income, net
Other income, net includes interest earned on our money market funds included in cash and cash equivalents and restricted cash, interest earned on securities available for sale, impairment or other adjustments to the cost basis of non-marketable equity securities held as cost, gains and losses on derivative agreements not designated within a hedging relationship, amortization of convertible debt issuance cost as well as gains (losses) on extinguishment, revolving credit facility issuance costs, fair value adjustments related to contingent liabilities, and other income or expense arising from activities that are unrelated to our primary business.
Other income, net, decreased by $71.6 million, or 82%, and $86.5 million, or 71%, during the three and six months ended December 31, 2025, respectively, compared to the same periods in 2024. The decrease was primarily driven by a $62.8 million, or 100%, and $80.9 million, or 98% reduction in the gain recognized on the early extinguishment of convertible debt for the three and six months ended December 31, 2025, respectively, reflecting fewer repurchases, compared to the same periods in 2024.

Liquidity and Capital Resources

Sources and Uses of Funds
We maintain a capital-efficient model through a diverse set of funding sources. When we originate a loan directly or purchase a loan originated by our originating bank partners, we often utilize warehouse credit facilities with certain lenders to finance our lending activities or loan purchases. We sell the loans we originate or purchase from our originating bank partners to whole loan buyers and securitization investors through forward flow arrangements and securitization transactions, and earn servicing fees from continuing to act as the servicer on the loans. We proactively manage the allocation of loans on our platform across various funding channels based on several factors including, but not limited to, internal risk limits and policies, capital market conditions and channel economics. Our excess funding capacity and committed and long-term relationships with a diverse group of existing funding partners help provide flexibility as we optimize our funding to support the growth in loan volume.
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Our principal sources of liquidity are cash and cash equivalents, available for sale securities, available capacity from warehouse and revolving credit facilities, securitization trusts, forward flow loan sale arrangements, and certain cash flows from our operations. As of December 31, 2025, we had $2.3 billion in cash and cash equivalents and available for sale securities, $4.2 billion in available funding debt capacity, excluding our purchase commitments from third party loan buyers, and $330.0 million in borrowing capacity available under our revolving credit facility. We believe our principal sources of liquidity are sufficient to meet both our existing operating, working capital, and capital expenditure requirements and our currently planned growth for at least the next 12 months.
The following table summarizes our cash, cash equivalents and investments in debt securities (in thousands):

December 31, 2025 June 30, 2025
Cash and cash equivalents (1)
$ 1,527,880  $ 1,354,455 
Investments in short-term debt securities (2)
499,150  652,491 
Investments in long-term debt securities (2)
224,225  218,934 
Cash, cash equivalent and investments in debt securities
$ 2,251,255  $ 2,225,880 

(1) Cash and cash equivalents consist of checking, money market and savings accounts held at financial institutions and short-term highly liquid marketable securities, including money market funds, agency bonds, commercial paper, and government bonds purchased with an original maturity of three months or less.
(2) Securities available for sale at fair value primarily consist of certificates of deposits, corporate bonds, municipal bonds, commercial paper, agency bonds, and government bonds. Short-term securities have maturities less than or equal to one year, and long-term securities range from greater than one year to less than five years.

Debt
Debt as of December 31, 2025 primarily includes funding debt, notes issued by securitization trusts, convertible senior notes and our revolving credit facilities. A detailed description of each of our borrowing arrangements is included in Note 8. Debt in the notes to the interim condensed consolidated financial statements.
The following table summarizes the future maturities of our warehouse credit facilities, variable funding notes, sale and repurchase agreements, and notes issued by securitizations trusts as of December 31, 2025:

Maturity Fiscal Year Borrowing Capacity Principal Outstanding
(in thousands)
2026 $ —  $ — 
2027 1,950,000  535,867 
2028 1,653,083  1,156,719 
2029 1,250,000  1,262,831 
2030 990,698  941,150 
Thereafter 6,300,000  4,017,209 
Total $ 12,143,781   $ 7,913,776  

Warehouse Credit Facilities
Our warehouse credit facilities allow us to borrow up to an aggregate of $5.3 billion, and mature between 2027 and 2032. We may continue to pledge new receivables to allow us to borrow up to the commitment amount
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throughout the revolving period for each facility. The length of the revolving period, the maximum amount we may borrow against pledged collateral balance during the revolving period, and the length of the amortization period prior to the maturity date varies across borrowing facilities depending on negotiated loan terms. As of December 31, 2025, we have drawn an aggregate of $1.9 billion on our warehouse credit facilities. As of December 31, 2025, we were in compliance with all applicable covenants in the agreements.
We use various credit facilities to finance the origination of loan receivables in Canada. Similar to our U.S. warehouse credit facilities, borrowings under these agreements are referred to as funding debt, and proceeds from the borrowings may only be used for the purposes of facilitating loan funding and origination. These facilities are secured by Canadian loan receivables pledged to the respective facility as collateral, maturing between 2028 and 2030. As of December 31, 2025, the aggregate commitment amount of these facilities was $693.8 million on a revolving basis, of which $548.0 million was drawn.
As we continue to expand in new geographies, we intend to add the necessary funding capacity to support our growth objectives.
Variable Funding Note
We have entered into a syndicated revolving loan agreement through a securitization master trust which is utilized to fund the purchase and origination of loans. In connection with the loan agreement, the master trust issued a variable funding note (“VFN”), where borrowings will be secured by loan collateral sold to the master trust. Our VFN allows us to borrow up to an aggregate of $1.4 billion and matures in 2032. As of December 31, 2025, we have drawn an aggregate of $597.2 million on our VFN. As of December 31, 2025, we were in compliance with all applicable covenants in the agreements.

Sale and Repurchase Agreements
We entered into various sale and repurchase agreements pursuant to our retained interests in our off-balance sheet securitizations where we have sold these securities to a counterparty with an obligation to repurchase at a future date and price. These repurchase agreements have a term equaling the contractual life of the securitization notes pledged. We had $13.7 million in debt outstanding under our sale and repurchase agreements disclosed within funding debt in the interim condensed consolidated balance sheets as of December 31, 2025.
Securitizations
We finance the origination and purchase of loans though our asset-backed securitization program using a combination of amortizing, revolving and variable funding structures. In connection with our program, we sponsor and establish trusts (deemed to be VIEs) which issue securities collateralized by the loans we sell to the trust. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. For these VIEs, the creditors have no recourse to the general credit of Affirm and the liabilities of the VIEs can only be settled by the respective VIEs’ assets. Additionally, the assets of the VIEs can be used only to settle obligations of the VIEs. Refer to Note 9. Securitization and Variable Interest Entities in the notes to the interim condensed consolidated financial statements for further details.
Revolving Credit Facility
Our revolving credit facility has an aggregate commitment amount of $330.0 million, with a final maturity date of June 26, 2027. Proceeds from the borrowings under this facility will be used for general corporate purposes in the ordinary course of business. As of December 31, 2025, there are no borrowings outstanding under the facility. The facility contains certain covenants and restrictions, including certain financial maintenance covenants. As of December 31, 2025, we were in compliance with all applicable covenants in the agreements. Refer to Note 8. Debt
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in the notes to the interim condensed consolidated financial statements for further details on our revolving credit facility.
Convertible Senior Notes
Our convertible senior notes have an aggregate principal balance of $1.1 billion, and bear no interest, in the case of the 2026 Notes, and bear an interest rate of 0.75% per year, in the case of the 2029 Notes, which is payable semiannually. The 2026 Notes mature on November 15, 2026, and the 2029 Notes mature on December 15, 2029, in each case unless earlier converted, redeemed, or repurchased in accordance with their terms. Refer to Note 8. Debt in the notes to the interim condensed consolidated financial statements for further details.
Other Funding Sources
Forward Flow Loan Sale Arrangements
We have forward flow loan sale arrangements that facilitate the sale of whole loans across a diverse third-party investor base. Forward flow arrangements are generally fixed term in nature, with term lengths ranging between one to three years, during which we periodically sell loans to each counterparty based on the terms of our negotiated agreement. As part of our capital strategy, we seek to partner with counterparties that can provide long-term, stable funding to support the ongoing growth and diversification of our loan portfolio.

Cash Flow Analysis

The following table provides a summary of cash flow data during the periods indicated:

Six Months Ended December 31,
2025 2024
(in thousands)
Net cash provided by operating activities 548,310  508,884 
Net cash used in investing activities (1,504,608) (664,067)
Net cash provided by financing activities 1,296,666  609,721 

Cash Flows from Operating Activities
Our largest sources of operating cash are fees charged to merchant partners on transactions processed through our platform and interest income from consumers’ loans. Our primary uses of cash from operating activities are for general and administrative, technology and data analytics, funding costs, processing and servicing, and sales and marketing expenses.
Net cash provided by operating activities was $548.3 million for the six months ended December 31, 2025, which reflected adjustments for significant non-cash items, including provision for losses, amortization of premiums and discounts on loans, gain on sale of loans, commercial agreement warrant expense, stock-based compensation, depreciation and amortization, and changes in operating assets and liabilities. Total adjustments and changes in operating assets and liabilities collectively resulted in a net increase in operating cash flows of $338.0 million.

Net cash provided by operating activities was $508.9 million for the six months ended December 31, 2024, which reflected adjustments for significant non-cash items, including provision for credit losses, amortization of premiums and discounts on loans, gain on sale of loans, commercial agreement warrant expense, stock-based compensation, depreciation and amortization, and changes in operating assets and liabilities. Total adjustments and changes in operating assets and liabilities collectively resulted in a net increase in operating cash flows of $528.7 million.
Cash Flows from Investing Activities
Net cash used in investing activities was $1.5 billion for the six months ended December 31, 2025. Cash outflows were primarily driven by purchases and origination of loans held for investment of $22.5 billion, purchases
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of securities available for sale of $214.4 million, and property, equipment and software additions of $110.1 million. Cash inflows included $11.2 billion from principal repayments and other loan servicing activity, $9.6 billion in proceeds from the sale of loans held for investment, and $426.7 million of proceeds from maturities and repayments of securities available for sale.
Net cash used in investing activities was $664.1 million for the six months ended December 31, 2024. Cash outflows were primarily driven by purchases and origination of loans held for investment of $15.1 billion, purchases of securities available for sale of $184.9 million, and property, equipment and software additions of $88.1 million. Cash inflows included $8.7 billion of principal repayments and other loan servicing activity, $5.3 billion in proceeds from the sale of loans held for investment, and $720.6 million of proceeds from maturities and repayments of securities available for sale.
Cash Flows from Financing Activities
Net cash provided by financing activities was $1.3 billion for the six months ended December 31, 2025. Cash inflows were driven by $18.4 billion in proceeds from the issuance of secured debt, including funding debt and securitization notes and certificates, and $104.1 million from the exercise of common stock options and warrants and employee contributions to ESPP. Cash outflows included $17.0 billion related to principal repayments on secured debt, $25.8 million related to the extinguishment of a portion of our 2026 Notes and $193.2 million for taxes paid on vested equity awards.
Net cash provided by financing activities was $609.7 million for the six months ended December 31, 2024. Cash inflows were primarily driven by $8.6 billion in proceeds from the issuance of secured debt, including funding debt and securitization notes and certificates. Cash outflows included $7.5 billion related to principal repayments on secured debt, $1,012.9 million related to the extinguishment of a portion of our 2026 Notes, and $158.5 million related to taxes paid on vested equity awards.

Contractual Obligations

There were no material changes outside of the ordinary course of business in our commitments and contractual obligations for the three and six months ended December 31, 2025 from the commitments and contractual obligations disclosed in the section titled “ Management ’ s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations ,” set forth in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, which was filed with the SEC on August 28, 2025.

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in activities that are not reflected within our interim condensed consolidated balance sheets, generally referred to as off-balance sheet arrangements. These activities involve transactions with unconsolidated VIEs, including securitization and forward flow transactions. Across these transactions, ongoing involvement typically includes contractual loan servicing arrangements and loan repurchase obligations in connection with breaches in ordinary course of business representations and warranties.

We have entered into unconsolidated securitization transactions where Affirm is the sponsor and risk retention holder, Affirm could experience a loss of up to 5% of both the senior notes and residual trust certificates. In the unlikely event principal payments on the loans backing any off-balance sheet securitization are insufficient to pay holders of senior notes and residual trust certificates, including any retained interests held by Affirm, then any amounts we contributed to the securitization reserve accounts may be depleted.

Under certain other forward flow loan sale arrangements with third-party loan buyers, we have entered into risk sharing agreements where we may be required to make a payment to the loan buyer or are entitled to receive a payment from the loan buyer, depending on the actual versus expected loan performance as contractually agreed to with the counterparty, and subject to a cap based on a percentage of the principal balance of loans sold.

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In addition to risk sharing arrangements, we may hold beneficial interests in certain off-balance sheet VIEs that have been established by third-party loan buyers in connection with structured transactions. These beneficial interests represent our right to receive a portion of the residual cash flows from the underlying loans sold in connection with these transactions.

Risk sharing arrangements and beneficial interests are considered variable interests in the unconsolidated VIEs holding the loan assets transferred, as their value is exposed to the performance of those loans. For off-balance sheet VIEs where we hold variable interest, we have determined that our exposure to transaction economics is insignificant relative to the expected losses or residual returns.

As of December 31, 2025, the aggregate outstanding balance of loans held by third-party investors and off-balance sheet securitizations was $9.7 billion. Refer to Note 9. Securitization and Variable Interest Entities and Note 12. Fair Value of Financial Assets and Liabilities of the accompanying notes to our interim condensed consolidated financial statements for more information.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP and requires us to make certain estimates and judgments that affect the amounts reported in our consolidated financial statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Because certain of these accounting policies require significant judgment, our actual results may differ materially from our estimates. To the extent that there are differences between our estimates and actual results, our future consolidated financial statement presentation, financial condition, results of operations, and cash flows may be affected.
We evaluate our critical accounting policies and estimates on an ongoing basis and update them as necessary based on changes in market conditions or factors specific to us. There have been no material changes in our significant accounting policies or critical accounting estimates during the three and six months ended December 31, 2025.
For a complete discussion of our significant accounting policies and critical accounting estimates, refer to our Annual Report on Form 10-K for the year ended June 30, 2025 within Note 2 to the Notes to Consolidated Financial Statements and “ Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Estimates. ”
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have operations within the United States, Canada and U.K., and we are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and interest rates. Our market risk exposure is primarily the result of fluctuations in interest rates. Foreign currency exchange rates do not pose a material market risk exposure, as our current operations are primarily in the U.S.
Interest Rate Risk
Our securities available for sale at fair value as of December 31, 2025, included $718.1 million of marketable debt securities with maturities greater than three months. An increase in interest rates would have an adverse impact on the fair market value of our fixed rate securities while floating rate securities would produce less income than expected if interest rates were to decrease. Because our investment policy is to invest in conservative, liquid investments and because our business strategy does not rely on generating material returns from our investment portfolio, we do not expect our market risk exposure on marketable debt securities to be significant.
Continued volatility in interest rates and inflation, which may persist longer than previously expected, may adversely impact our consumers’ spending levels, and ability and willingness to pay outstanding amounts owed to us. Elevated interest rates may lead to higher payment obligations on our future credit products but also for consumers’ other financial commitments, including their mortgages, credit cards, and other types of loans. Therefore, elevated interest rates may lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our operating results.
We rely on a variety of funding sources with varying degrees of interest rate sensitivities. Certain of our funding arrangements bear a variable interest rate. Given the fixed interest rates charged on the loans that we purchase from our originating bank partners or originate ourselves, a rising variable interest rate would reduce our interest margin earned in these funding arrangements. Additionally, certain of our loan sale agreements are repriced on a recurring basis using a mechanism tied to interest rates as well as loan performance. Increases in interest rates could reduce our loan sale economics. We also rely on securitization transactions, with notes typically bearing a fixed coupon. For future securitization issuances, higher interest rates could have several outcomes. For consolidated securitizations, higher interest rates may result in higher coupons paid and therefore higher funding costs. For transactions that are not consolidated, higher interest rates may impact overall deal economics which are a function of numerous transaction terms.
We maintain an interest rate risk management program which measures and manages the potential volatility of earnings that may arise from changes in interest rates. We use interest rate derivatives to mitigate the effects of changes in interest rates on our variable rate debt which eliminates some, but not all, of the interest rate risk. Some of these contracts are designated as cash flow hedges for accounting purposes. For those contracts designated as cash flow hedges, the effective portion of the gain or loss on the derivatives is recorded in other comprehensive income (loss) and is reclassified into funding costs in the same period the hedged transaction affects earnings. Factoring in the interest rate risk management program and the repricing of investment securities, as of December 31, 2025, we estimate that a hypothetical instantaneous 100 basis point upward parallel shock to interest rates would have a less than $70.0 million adverse impact on our cash flows associated with our market risk sensitive instruments over the next 12 months. This measure projects the changes in cash flows associated with all assets and liabilities, including derivatives, based on contractual market rate-based repricing conditions over a twelve-month time horizon. It considers forecasted business growth and anticipated future funding mix.
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Credit Risk
We have credit risk primarily related to our consumer loans held for investment. We are exposed to default risk on both loan receivables purchased from our originating bank partners and loan receivables that are directly originated. The ultimate collectability of a substantial portion of the loan portfolio is susceptible to changes in economic and market conditions. To manage this risk, we utilize our proprietary underwriting models to make lending decisions, score, and price loans in a manner that we believe is reflective of the credit risk. Other credit levers, such as user limits and/or down payment requirements, are used to determine the likelihood of a consumer being able to pay.

To monitor portfolio performance, we utilize a wide range of internal and external metrics to review user and loan populations. Each week, management reviews performance for each consumer segment, typically split by ITACs model score at the time of origination, financial product originated, age of loan, and delinquency status. Internal performance trendlines are measured against external factors such as unemployment, CPI, and consumer sentiment to determine what changes, if any, in risk strategy is warranted.

As of December 31, 2025 and June 30, 2025, we were exposed to credit risk on $8.8 billion and $7.0 billion, respectively, of loans held within our interim condensed consolidated balance sheet. Loan receivables are diversified geographically. As of both December 31, 2025 and June 30, 2025, approximately 11% and 10% of loan receivables related to customers residing in the states of California and Texas, respectively. No other states or provinces represent 10% or more of total loan receivables.

In addition, we have credit risk exposure in relation to certain off-balance sheet loans sold to third parties where we have entered into risk sharing arrangements, retained interests in unconsolidated securitization trusts and our residual interests in structured transactions. As of December 31, 2025 and June 30, 2025, we have sold $10.2 billion and $8.6 billion, respectively, in unpaid principal balance loans which are subject to risk sharing arrangements, of which our maximum exposure to losses was $75.9 million and $91.1 million, respectively. The fair value of notes receivable and residual trust certificate retained interests in unconsolidated securitization trusts was $80.1 million and $69.1 million as of December 31, 2025 and December 31, 2024, respectively. The fair value of residual interests in structured transactions was $5.4 million as of December 31, 2025, of which our maximum exposure to losses was $17.7 million.

We are also exposed to credit risk in the event of nonperformance by the financial institutions holding our cash and the issuers of our cash equivalents and available for sale securities. We maintain our cash deposits and cash equivalents in highly-rated, federally-insured financial institutions in excess of federally insured limits. We manage this risk by conducting business with well-established financial institutions, diversifying our counterparties and having guidelines regarding credit rating and investment maturities to safeguard liquidity. Although, we are not substantially dependent on a single financing source and have not historically experienced any credit losses related to these financial institutions, if multiple financing sources were to be unable to fulfill their funding obligations to us, it could have a material adverse effect on our financial condition, results of operations and cash flows.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our CEO and CFO concluded that such disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q and designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the requisite time periods specified in the applicable rules and forms and is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitation on the Effectiveness of Internal Control

The effectiveness of any system of internal control over financial reporting is subject to inherent limitations, including the exercise of judgment in designing, implementing, operating, and evaluating the controls and procedures, and the inability to eliminate misconduct completely. Accordingly, any system of internal control over financial reporting, no matter how well designed and operated, can only provide reasonable, not absolute assurance that its objectives will be met. In addition, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business but such improvements will be subject to the same inherent limitations outlined in this section.

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Part II - Other Information

Item 1. Legal Proceedings

Please refer to Note 7. Commitments and Contingencies of the accompanying notes to our interim condensed consolidated financial statements .

From time to time, we may be subject to other legal proceedings and claims in the ordinary course of business. We are not presently a party to any such other legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition, or cash flows. The results of any current or future litigation cannot be predicted with certainty, and regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.

Item 1A. Risk Factors

The risks described under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025 could materially and adversely affect our business, financial condition, results of operations, cash flows, future prospects, and the trading price of our Class A common stock. The risks and uncertainties described therein are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we currently deem immaterial may also become important factors that adversely affect our business.

You should carefully read and consider such risks, together with all of the other information in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, in this Quarterly Report on Form 10-Q (including the disclosures in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in our interim condensed consolidated financial statements and related notes), and in the other documents that we file with the SEC.

There have been no material changes from the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.
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Item 5. Other Information

(c)      Rule 10b5-1 Trading Plans

During the three months ended December 31, 2025, the following directors and officers of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, as follows:

On December 2, 2025 , Noel Watson , a member of our Board of Directors , adopted a Rule 10b5-1 trading arrangement providing for the sale of the Company's Class A common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of Exchange Act Rule 10b5-1(c). Mr. Watson’s Rule 10b5-1 Trading Plan provides for the sale of up to 8,000 shares of our Class A common stock pursuant to one or more limit orders on or after March 3, 2026 until November 16, 2026 , or earlier if all transactions under the trading arrangement are completed.

On December 9, 2025 , Libor Michalek , our President and a member of our Board of Directors , adopted a Rule 10b5-1 Trading Plan. Mr. Michalek’s Rule 10b5-1 Trading Plan provides for the exercise of up to 500,000 employee stock options, subject to increase based on any employee stock options not exercised under a previous 10b5-1 Trading Plan which will expire on March 31, 2026, and sale of the underlying shares of our Class A common stock pursuant to one or more limit orders from April 1, 2026 until March 31, 2027 , or earlier if all transactions under the trading arrangement are completed.

On December 9, 2025 , Michael Linford , our Chief Operating Officer , adopted a Rule 10b5-1 Trading Plan. Mr. Linford’s Rule 10b5-1 Trading Plan provides for the exercise of up to 533,870 employee stock options and sale of the underlying shares of our Class A common stock pursuant to one or more limit orders from March 10, 2026 until September 30, 2026 , or earlier if all transactions under the trading arrangement are completed.

No other directors or officers, as defined in Rule 16a-1(f), adopted and/or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Regulation S-K Item 408, during the three months ended December 31, 2025.

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Item 6. Exhibits

Incorporated by Reference

Exhibit Number
Description
Form
File No.
Exhibit
Filing Date
Filed Herewith

4.1 Second Amendment to the Amended and Restated Warrant to Purchase Class A Common Stock of Affirm Holdings, Inc., by and between Affirm Holdings, Inc. and Amazon.com Services LLC, dated as of November 2, 2025 *
X

10.1 Loan Servicing Agreement, dated as of May 31 , 2023 , between Lead Bank and Affirm, Inc.*
X

10.2 Loan Sale Agreement, dated as of May 31, 2023, between Lead Bank and Affirm, Inc.*
X

10.3 Loan Program Agreement, dated as of May 31, 2023, between Lead Bank and Affirm, Inc.*
X

10.4 Second Amended and Restated Installment Financing Services Agreement, dated as of November 6, 2025, by and among Affirm Holdings, Inc., Amazon.com Services LLC and Amazon Payments, Inc.*
X

10.5+ Form of Director RSU Agreement pursuant to the Affirm Holdings, Inc. Amended and Restated 2012 Stock Plan
X

10.6+ Nonqualified Deferred Compensation Plan
X

31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Exchange Act, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X

32.1
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X

32.2
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
X

101.INS
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
X

101.SCH
Inline XBRL Taxonomy Extension Schema Document
X

101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
X

101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
X

101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
X

101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
X

104 Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) X

+ Denotes management contract or compensatory plan or arrangement.
*
Portions of the exhibit have been omitted as the Company has determined that: (i) the omitted information is not material; and (ii) the Company customarily and actually treats the omitted information as private or confidential.

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized,

AFFIRM HOLDINGS, INC.

Date: February 5, 2026
By: /s/ Max Levchin
Max Levchin
Chief Executive Officer
(Principal Executive Officer)

By: /s/ Rob O’Hare
Rob O’Hare
Chief Financial Officer
(Principal Financial Officer)

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