Affirm Holdings, Inc.
For the period ended Dec 31, 2025. Filed Feb 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Dec 31, 2025 · Filed Feb 5, 2026
AFRM$68.11-2.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-06.
0001628280-25-050295
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-05.
0001628280-26-005855
Item 2. Managements Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 148 previous paragraphs and 152 current paragraphs.
102 unchanged; 42 reworded; 8 added; 3 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (8)
Current report
(1)Not meaningful (“NM”)
Current report
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.
Current report
Affirm Bank Applications
Current report
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.
Current report
U.S. Income Tax
Current report
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.
Current report
(1)Not meaningful (“NM”)
Current report
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.
Removed paragraphs (3)
Previous report
U.S. Income Tax Developments
Previous report
For the three months ended September 30, 2025, the top five merchants and platform partners represented approximately 44% of total GMV, as compared to 47% for the three months ended September 30, 2024. GMV attributable to Amazon during the three months ended September 30, 2025 and September 30, 2024 represented 21% and 23%, respectively, of total GMV.
Previous report
Provision for credit losses increased by $2.9 million, or 2%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily driven by an increase in the provision expense for loans held for investment which increased by $1.6 million, or 1%. Higher provision for credit losses for loans held for investment resulted from a $1.1 billion or 19% increase in the average balance of loans held for investment during the three months ended September 30, 2025 compared to the same period in 2024, and a year over year increase in the allowance rate from to 5.6% as of September 30, 2024 to 5.9% as of September 30, 2025. The allowance rate increased as a result of changes in loan mix, including holding a higher percentage of seasoned and longer term loans on our balance sheet as of September 30, 2025. The impact of the increase in average loan balance and a higher allowance rate was offset by an increase in recoveries during the three months ended September 30, 2025 relative to the same period during the prior year.
Reworded paragraphs (42)
Previous wording
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 months ended September 30, 2025 and 2024, Pay-in-X represented 15% and 14%, respectively, of total GMV facilitated through our platform while 0% APR installment loans represented 13% and 11%, respectively.
Current wording
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.
Previous wording
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 months ended September 30, 2025 and 2024, interest bearing loans represented 72% and 75% of total GMV facilitated through our platform, respectively.
Current wording
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.
Previous wording
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 ourconsolidated subsidiaries. We directly originated approximately $1.9 billion, or 18% and $1.3 billion, or 17%, for the three months ended September 30, 2025 and 2024, respectively.
Current wording
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 ourconsolidated 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.
Previous wording
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 both September 30, 2025 and June 30, 2025, our equity capital as a percentage of our total platform portfolio was 4%. 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.
Current wording
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.
Previous wording
We regularly monitor the direct and indirect impacts of the current macroeconomic conditions on our business, financial condition, and results of operations. Since 2022, the U.S. Federal Reserve has maintained an elevated federal funds interest rate. Despite the Federal Reserve’s decision to begin to decrease the federal funds interest rate in September 2024, 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 consumer spending. These challenges have affected, and may continue to affect, our business and results of operations in the following ways:
Current wording
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:
Previous wording
•Shifts in consumer demand: We have experienced, and may continue to experience, fluctuations in consumer demand across different merchandise categories due to economic uncertainty, inflationary pressures, elevated interest rates, and other macroeconomic factors. If such conditions deteriorate in future periods, consumer demand may be negatively impacted.
Current wording
•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.
Previous wording
•Elevated borrowing costs: The Federal Reserve began decreasing the federal funds interest rate in late 2024, leading to a decline in our average funding costs in recent fiscal periods. However, the overall interest rate environment remains elevated compared to historical levels, and there is continued uncertainty as to whether and to what extent the Federal Reserve may decrease the federal funds rate further in the future. To the extent the current elevated interest rate environment persists, our transaction costs may remain elevated when compared to historical fiscal periods.
Current wording
•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.
Previous wording
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 September 30, 2025 decreased compared to the same period in 2024. Loans modified within the last three and twelve months represent 0.12% and 0.20%, respectively, of the outstanding principal balance of loans held on our balance sheet as of September 30, 2025. 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 September 30, 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.
Current wording
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.
Previous wording
Additionally, if our recent trend of pretax earnings continues, we believe it is reasonably possible that we may have sufficient positive evidence within the next 12 months to conclude 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 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, which would represent a non-cash benefit.
Current wording
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 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.
Previous wording
For the three months ended September 30, 2025, GMV was $10.8 billion, which represented an increase of approximately 42%, as compared to the same period 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.
Current wording
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.
Previous wording
During the three months ended September 30, 2025, GMV growth was diversified across categories and loan products, primarily driven by our services and travel and ticketing categories, as well as our 0% APR installment loans. For the three months ended September 30, 2025, GMV from 0% APR monthly installment loans was $1.4 billion which represented an increase of approximately 74% from $826.0 million for the three months ended September 30, 2024.
Current wording
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.
Previous wording
As of September 30, 2025, we had approximately 24.1 million active consumers, which represented an increase of 24% compared to approximately 19.5 million active consumers as of September 30, 2024. The increase 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.
Current wording
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 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.
Previous wording
As of September 30, 2025, we had approximately 6.1 transactions per active consumer, an increase of 20% compared to September 30, 2024. The increase was primarily due to platform growth, a higher frequency of repeat users driven by consumer engagement, and growth of Affirm Card active consumers. As of September 30, 2025 and September 30, 2024, Affirm Card represented approximately 11% and 9% of the total number of transactions.
Current wording
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.
Previous wording
(1)Upon purchase of a loan from our originating bank partners at a price above the fair market value of the loan or upon the origination of a loan with a par value in excess of the fair market value of the loan, a discount is included in the amortized cost basis of the loan. 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:
Current wording
(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:
Previous wording
Comparison of the Three Months Ended September 30, 2025 and 2024
Current wording
Comparison of the Three and Six Months Ended December 31, 2025 and 2024
Previous wording
Merchant network revenue increased by $66.8 million, or 36%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase is primarily attributed to an increase of $3.2 billion, or 42%, in GMV for the three months ended September 30, 2025, compared to the same period in 2024. GMV from our top five merchants and platform partners for the three months ended September 30, 2025, increased 33% compared to the same period in 2024. Our number of active consumers also grew, reaching 24.1 million, as of September 30, 2025, up from approximately 19.5 million as of September 30, 2024.
Current wording
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 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.
Previous wording
Transactions per active consumer increased from 5.1 as of September 30, 2024 to 6.1 as of September 30, 2025. The increase in active consumers and transactions per active consumer is partially offset by a decrease in AOV. For the three months ended September 30, 2025, AOV was $260, down from $279 for the same period 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.
Current wording
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.
Previous wording
Card network revenue increased by $21.9 million, or 46%, for the three months ended September 30, 2025, compared to the same period 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 $3.7 billion of GMV processed through our issuer processors, an increase of approximately 50% for the three months ended September 30, 2025, as compared to the same period 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.
Current wording
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.
Previous wording
Interest income increased by $77.1 million, or 20%, for the three months ended September 30, 2025, compared to the same period in 2024. Generally, interest income is correlated with the changes in the average balance of loans held for investment, which increased by 19% to $7.1 billion for the three months ended September 30, 2025, compared to the same period in 2024.
Current wording
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.
Previous wording
Gain on sales of loans increased by $55.4 million, or 87%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase is driven by higher loan sale volume to third-party loan buyers and favorable transaction economics which are impacted by the composition of our loan portfolio sold and other market factors. We sold loans with an unpaid principal balance of $4.9 billion for the three months ended September 30, 2025, compared to $2.8 billion for the same period in 2024, an increase of 76%.
Current wording
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.
Previous wording
Servicing income increased by $13.7 million, or 53%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase was primarily due to an increase in net 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 off-balance sheet loans increased from $5.4 billion during the three months ended September 30, 2024, to $8.4 billion during the same period in 2025, an increase of 57%.
Current wording
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.
Previous wording
Loss on loan purchase commitment increased by $17.3 million, or 32%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in total volume of loans purchased. During the three months ended September 30, 2025, we purchased $8.7 billion of loans from our originating bank partners, compared to $6.4 billion in the same period in 2024, representing an increase of 36%. Of the total loans purchased, 0% APR installment loans represented $1.3 billion during the three months ended September 30, 2025, and $0.8 billion for the same period in 2024, an increase of $0.5 billion.
Current wording
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.
Previous wording
Funding costs increased by $5.9 million, or 6%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase is primarily due to an increase of funding debt and notes issued by securitization trusts during the three months ended September 30, 2025. The average total of funding debt from warehouses and securitizations for the three months ended September 30, 2025 was $6.5 billion, compared to $5.4 billion during the same period in 2024, an increase of $1.1 billion, or 21%. This was partially offset by favorable repricing within our securitizations. The increase was also attributable to a larger volume of on-balance sheet loans being retained during the period. The average on-balance sheet loan balance was $7.1 billion for the three months ended September 30, 2025, an increase of 19% compared to $6.0 billion during the same period in 2024.
Current wording
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.
Previous wording
Processing and servicing expense increased by $38.7 million, or 41%, for the three months ended September 30, 2025, compared to the same period in 2024. This increase is driven partially by an increase in payment processing fees of $23.5 million, or 42%, related to an increase of $2.9 billion, or 41%, in payment volume for the three months ended September 30, 2025, compared to the same period in 2024.
Current wording
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.
Previous wording
Technology and data analytics expense increased by $33.8 million, or 25%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase is partially driven by amortization of internally-developed software which increased by $19.3 million, or 43%, for the three months ended September 30, 2025, compared to the same period in 2024, as a result of an increase in the number of capitalized projects. Capitalized projects in service grew by 59% from approximately 1,000 projects as of September 30, 2024 to 1,590 projects as of September 30, 2025. Data infrastructure and hosting costs increased by $8.9 million, or 38%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase in data infrastructure and hosting costs was primarily driven by an increase in the number of consumer transactions. During the three months ended September 30, 2025, the number of consumer transactions increased by 52% from continued growth at our merchants and platform partners. Stock-based compensation and payroll and personnel-related costs increased by $3.3 million, or 6%, for the three months ended September 30, 2025, compared to the same period in 2024, primarily due to an increase in headcount.
Current wording
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.
Previous wording
Sales and marketing expense decreased by $66.7 million, or 46%, during the three months ended September 30, 2025, compared to the same period in 2024. The decrease was primarily driven by a $66.3 million, or 62%, decrease in Amazon warrant expense during the three months ended September 30, 2025, compared to the same period in 2024, primarily due to a portion of the warrants becoming fully vested as of December 2024.
Current wording
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.
Previous wording
General and administrative expense increased by $6.5 million, or 5%, during the three months ended September 30, 2025, compared to the same period in 2024. The increase is primarily due to increases in professional services, related to consulting and legal fees, as well as, software and subscriptions.
Current wording
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.
Previous wording
Other income, net, decreased by $14.9 million, or 44%, during the three months ended September 30, 2025, compared to the same period in 2024. The decrease for the three months ended September 30, 2025, was primarily driven by a $18.1 million, or 92%, reduction in gain recognized on the early extinguishment of convertible debt reflecting fewer repurchases, compared to the same period in 2024. This was partially offset by the absence of investment impairments during the three months ended September 30, 2025, compared to a $3.0 million impairment for the same period in 2024.
Current wording
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.
Previous wording
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 September 30, 2025, we had $2.2 billion in cash and cash equivalents and available for sale securities, $5.4 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.
Current wording
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.
Previous wording
Our warehouse credit facilities allow us to borrow up to an aggregate of $5.2 billion, and mature between 2027 and 2032. We may continue to pledge new receivables to allow us to borrow up to the commitment amount 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 September 30, 2025, we have drawn an aggregate of $1.2 billion on our warehouse credit facilities. As of September 30, 2025, we were in compliance with all applicable covenants in the agreements.
Current wording
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 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.
Previous wording
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 September 30, 2025, the aggregate commitment amount of these facilities was $644.5 million on a revolving basis, of which $460.1 million was drawn.
Current wording
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.
Previous wording
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 September 30, 2025, we have drawn an aggregate of $65.2 million on our VFN. As of September 30, 2025, we were in compliance with all applicable covenants in the agreements.
Current wording
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.
Previous wording
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 $21.3 million in debt outstanding under our sale and repurchase agreements disclosed within funding debt in the interim condensed consolidated balance sheets as of September 30, 2025.
Current wording
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.
Previous wording
Net cash provided by operating activities was $374.6 million for the three months ended September 30, 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 $293.9 million.
Current wording
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.
Previous wording
Net cash provided by operating activities was $196.9 million for the three months ended September 30, 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 $297.1 million.
Current wording
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.
Previous wording
Net cash used in investing activities was $139.6 million for the three months ended September 30, 2025. Cash outflows were primarily driven by purchases and origination of loans held for investment of $9.8 billion, purchases of securities available for sale of $146.5 million, and property, equipment and software additions of $54.4 million. Cash inflows included $5.4 billion from principal repayments and other loan servicing activity, $4.3 billion in proceeds from the sale of loans held for investment, and $216.4 million of proceeds from maturities and repayments of securities available for sale.
Current wording
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 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.
Previous wording
Net cash used in investing activities was $575.0 million for the three months ended September 30, 2024, Cash outflows were primarily driven by purchases and origination of loans held for investment of $6.4 billion, purchases of securities available for sale of $136.7 million, and property, equipment and software additions of $44.2 million. Cash inflows included $4.1 billion of principal repayments and other loan servicing activity, $1.6 billion in proceeds from the sale of loans held for investment, and $215.7 million of proceeds from maturities and repayments of securities available for sale.
Current wording
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.
Previous wording
Net cash provided by financing activities was $110.1 million for the three months ended September 30, 2025. Cash inflows were driven by $9.1 billion in proceeds from the issuance of secured debt, including funding debt and securitization notes and certificates, and $94.8 million from the exercise of common stock options and warrants and employee contributions to ESPP. Cash outflows included $8.9 billion related to principal repayments on secured debt, $24.8 million related to the extinguishment of a portion of our 2026 Notes and $112.3 million for taxes paid on vested equity awards.
Current wording
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.
Previous wording
Net cash provided by financing activities was $465.6 million for the three months ended September 30, 2024. Cash inflows were primarily driven by $3.9 billion in proceeds from the issuance of secured debt, including funding debt and securitization notes and certificates. Cash outflows included $3.3 billion related to principal repayments on secured debt, $120.1 million related to the extinguishment of a portion of our 2026 Notes, and $63.2 million related to taxes paid on vested equity awards.
Current wording
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.
Previous wording
There were no material changes outside of the ordinary course of business in our commitments and contractual obligations for the three months ended September 30, 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.
Current wording
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.
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Previous report — wording carried elsewhere
During the three months ended September 30, 2025, our platform fees increased by $11.0 million, or 52%, due to an increase in volume with a large enterprise partner. Additionally, our customer service and collection costs increased by $6.4 million, or 43%, for the three months ended September 30, 2025, compared to the same period in 2024. This is driven by growth in our overall loan portfolio, including both loans held for investment and loans serviced for third parties, due to the increase in the number of consumer transactions. The number of consumer transactions increased by 52% during the three months ended September 30, 2025, from continued growth at our merchants and platform partners.