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Item 7 — Management's Discussion and Analysis
Affirm Holdings, Inc. · 10-K · FY 2026 · Period ended Jun 30, 2026
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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K (“Form 10-K”). You should review the section titled “Risk Factors” for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Unless the context otherwise requires, all references in this Report to “Affirm,” the “Company,” “we,” “our,” “us,” or similar terms refer to Affirm Holdings, Inc. and its subsidiaries. A discussion regarding our financial condition and results of operations for the fiscal year ended June 30, 2026 compared to the fiscal year ended June 30, 2025 is presented below. A discussion regarding our financial condition and results of operations for the fiscal year ended June 30, 2025 compared to the fiscal year ended June 30, 2024 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended June 30, 2025.
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 payment network allows 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. 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 consumer- and 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, enabling consumers to apply for installment loans, and upon approval, use the Affirm Card online or in-store 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 shopping and offers marketplace.
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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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 may vary based on the loan terms and product offering; we generally earn larger merchant fees on 0% APR financing products.
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.
In order to accelerate our ubiquity, we 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. Similarly, we also facilitate the issuance of virtual cards directly to consumers through our app, allowing them to shop with merchants that may not yet be fully integrated with Affirm. When these cards are used over established card networks, we earn a portion of the interchange fee from the transaction.
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 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 consolidated financial statements for more information on the performance fee liability.
During the year ended June 30, 2026, we originated 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 years ended June 30, 2026, 2025 and 2024, we directly originated approximately $9.5 billion, or 19%, $6.3 billion, or 17%, and $4.5 billion, or 17% of loans, respectively.
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
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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-K.
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 transactions, 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. Our total platform portfolio is defined as the unpaid principal balance outstanding of all loans facilitated through our platform as of the balance sheet date, including loans held for investment, loans held for sale, and loans owned by third parties. As of both June 30, 2026 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.
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. 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 operating results are impacted by the percentage of GMV related to transactions occurring through direct merchant point-of-sale integrations relative to GMV processed by our card-issuing partners, which includes transactions on the Affirm Card, our virtual debit cards, and with merchants that integrate Affirm services through one of our platform partners or utilize one of our card-issuing partners to process transactions. While commercial and economic terms vary across these offerings, we generally earn a portion of the interchange fees paid by the merchant which are shared with us through our agreement with the card-issuing partner.
Our operating results are also impacted by the percentage and mix of loans we hold on our balance sheet versus those sold to third-party investors. This is driven by our funding strategy, prevailing capital market conditions, and the supply of capital available from our diverse funding channels and relationships. Because the majority of transactions on our platform result in a loan origination, changes in GMV product mix are generally correlated with the mix of loans purchased from our bank partner or originated through one of our subsidiaries.
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The following table presents the composition of loans held for investment, less accrued interest receivable, by loan product, as of the end of each period presented (in thousands):
June 30, 2026 June 30, 2025 June 30, 2024
Interest-bearing monthly installment loans $ 6,973,844 $ 5,064,696 $ 4,364,673
0% APR monthly installment loans 1,891,632 1,473,549 971,014
Pay-in-X 600,907 419,337 271,609
Total $ 9,466,383 $ 6,957,582 $ 5,607,296
The following table presents the composition of the average balance of loans held for investment, less accrued interest receivable, by loan product, for each period presented (in thousands):
Year ended June 30, 2026 v 2025
2026 2025 Change $ Change %
(in thousands, except percentages)
Average loan balance (1)
Interest-bearing monthly installment loans $ 5,911,201 $ 4,843,489 $ 1,067,712 22 %
0% APR monthly installment loans 1,692,756 1,210,934 481,823 40 %
Pay-in-X $ 546,666 $ 362,522 $ 184,144 51 %
Total $ 8,150,624 $ 6,416,945 $ 1,733,679 27 %
(1) The average balance of loans held for investment, less accrued interest receivable, is calculated using the ending
balances at each quarter-end during the fiscal year, including the prior fiscal year-end.
Loans held for investment increased by 36% and 24%, respectively, over the years ended June 30, 2026 and 2025. The balance and product mix of loans held for investment in a given period is driven by the volume and composition of loan purchases and originations as well as the volume, composition and timing of loan sales to third party investors and securitizations.
With respect to the years ended June 30, 2026 and 2025, loans held for investment increased primarily due to overall GMV growth. For the year ended June 30, 2026, the average balance of interest-bearing monthly installment loans increased by 22%, while the average balance of 0% APR monthly installment loans and Pay-in-X loans increased by 40% and 51%, respectively, compared to the same period in 2025.
During the year ended June 30, 2026, we purchased $40.2 billion of loans from our originating bank partners and directly originated $9.5 billion of loans. The purchased volume of loans originated by our bank partners during the periods primarily included a mix of interest bearing and 0% APR monthly installment products whereas the volume of loans originated through one of our subsidiaries during the periods was primarily Pay-in-X. The total volume and composition of loans purchased and originated during the periods is correlated with the volume and composition of GMV.
During the year ended June 30, 2026, we held substantially all Pay-in-X loans on our balance sheet, while selling a percentage of our interest bearing monthly installment loans and 0% APR monthly installment loans to third party investors, either directly or through off balance sheet securitizations. During the year ended June 30, 2026, we sold loans with an unpaid principal balance of $21.9 billion, comprised of 86% interest-bearing monthly installment loans and 14% 0% APR monthly installment loans.
Refer to Key Operating Metrics for additional information on GMV for the year ended June 30, 2026, compared to the same period in 2025.
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Seasonality
We experience seasonal fluctuations in our business as a result of consumer spending patterns. Historically, our GMV has tended to be higher during our second and fourth fiscal quarters, due to increases in retail commerce during the holiday season and other promotional activity. Our loan delinquencies tend to be at their lowest during our fiscal third and fourth quarters, as consumer savings benefit from tax refunds. Adverse events that occur during these quarters 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 late 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, persistent inflation, 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: 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, persistent 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.
•Managing delinquency rates: We are continuously optimizing our underwriting to manage delinquency rates. While these actions did not adversely affect our GMV growth rates during fiscal 2026, any future credit tightening could adversely impact GMV growth rates.
•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 or increase the federal funds rate in the future.
•Volatile capital markets: Since fiscal 2024, capital markets have shown improvement against prior periods. Strong loan performance has allowed us to add substantial capacity across funding channels.
Despite these improvements, uncertainties remain in the macroeconomic environment that may result in fluctuations of available capital in our lending marketplace due to shifts in the risk preferences of our lending partners and institutional investors or for other reasons.
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 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 by up to twelve additional months beyond the current remaining term, capped at a total remaining term of twenty-four months.
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These loan modification programs also impact our delinquency rates, and such impact can vary over time. The volume of loan modifications during the fiscal year ended June 30, 2026 increased to 0.25% up from 0.17% in the same period in 2025. Our reported delinquency and charge off rates include loans which have become past due or have charged off subsequent to modification. 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 continues to evaluate the impact of these provisions of the Act on our Consolidated Financial Statements.
During the fourth quarter of the year ended June 30, 2026, after considering all available positive and negative evidence, we concluded that sufficient positive evidence was available to support the determination that it is more likely than not that a significant portion of our domestic deferred tax assets will be realized. We gave significant weight to objectively verifiable evidence, including our achievement of a cumulative U.S. income position over the three-year period, measured using pretax book income adjusted for permanent book-to-tax differences, and sustained improvements in operating performance, including continued U.S. profitability in recent periods. We also considered anticipated future taxable income. Accordingly, we released a significant portion of our domestic valuation allowance, resulting in a non-cash income tax benefit of approximately $1.5 billion during the year ended June 30, 2026.
As a result of this valuation allowance release, our future effective tax rate may differ from historical periods as changes in domestic deferred tax assets and liabilities will generally be recognized in income tax expense or benefit as they arise. Our cash taxes are expected to continue to differ from our income tax expense due to available tax attributes, timing differences, and other items.
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.
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June 30, 2026 June 30, 2025 June 30, 2024
(in billions)
Gross merchandise volume (GMV) $ 50.2 $ 36.7 $ 26.6
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 year ended June 30, 2026, GMV was $50.2 billion, which represented an increase of approximately 37% and 88% compared to the years ended June 30, 2025 and 2024, respectively. Overall, the increase in GMV was driven by growth in our direct to consumer products, including Affirm Card, and overall increases in active merchants, active consumers and average transactions per consumer. In addition, for the year ended June 30, 2026, GMV from our top five merchants and platform partners collectively grew 26% and 75% as compared to the same period in 2025 and 2024, respectively. The composition of our top five merchants and platform partners is determined based on GMV for each reporting period and, accordingly, the specific merchants and/or platform partners included in the top five may change period-over-period. During the year ended June 30, 2026, the concentration of GMV derived from our top five partners declined slightly to 44% compared to 47% for the years ended 2025 and 2024 as a result of the continued diversification of GMV across merchants, platform partners and through our direct to consumer products. GMV attributable to Amazon represented 22% of total GMV for the year ended June 30, 2026, compared to 22% and 21% for the same period in 2025 and 2024, respectively.
During the year ended June 30, 2026, GMV increased for interest-bearing installment loans, 0% APR monthly installment loans and Pay-in-X, compared to the same period in 2025 and 2024; however, the rate of GMV growth varied by product type over the same periods. Growth rates varied by product due to differences in merchant and platform mix and timing of certain promotions and campaigns.
GMV from interest-bearing installment loans grew 33% and 79% as compared to the same period in 2025 and 2024, respectively. Interest-bearing installment loans represented 70%, 72%, and 74% of total GMV for the years ended June 30, 2026, 2025, and 2024, respectively.
GMV from Pay-in-X grew 50% and 99% as compared to the same period in 2025 and 2024, respectively. Pay-in-X represented 16%, 14%, and 15% of total GMV for the years ended June 30, 2026, 2025, and 2024, respectively.
GMV from 0% APR monthly installment loans grew 46% and 138% as compared to the same period in 2025 and 2024, respectively. 0% APR installment loans represented 14%, 13%, and 11% of total GMV for the years ended June 30, 2026, 2025, and 2024, respectively.
June 30, 2026 June 30, 2025 June 30, 2024
(in thousands, except per consumer data)
Active consumers 27,782 23,003 18,713
Transactions per active consumer 7.0 5.8 4.9
Active Consumers
We assess consumer adoption and engagement by the number of active consumers across our platform. Active consumers are the primary measure of the size of our network. 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 June 30, 2026, we had approximately 27.8 million active consumers, which represented an increase of 21% and 48% compared to June 30, 2025, and June 30, 2024, respectively. The increase was primarily due to a high retention rate of existing consumers, including continued adoption and engagement among Affirm Card users,
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which represent an increasing percentage of our active consumer population, 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 June 30, 2026, we had approximately 7.0 transactions per active consumer, an increase of 20% and 44%, compared to the same period in 2025 and 2024, respectively. 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 June 30, 2026, Affirm Card represented approximately 15% of the total number of transactions compared to approximately 10% and 8% as of June 30, 2025 and 2024, respectively.
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Results of Operations
The following tables set forth selected consolidated statements of operations and comprehensive income (loss) data for each of the periods presented:
Year ended June 30, 2026 vs 2025 2025 vs 2024
2026 2025 2024 $ Change % Change $ Change % Change
(in thousands, except percentages)
Revenue
Merchant network revenue $ 1,149,932 $ 882,658 $ 674,607 $ 267,274 30 % $ 208,051 31 %
Card network revenue 293,990 231,308 151,401 62,682 27 % 79,907 53 %
Total network revenue 1,443,922 1,113,966 826,008 329,956 30 % 287,958 35 %
Interest income (2) 2,047,485 1,608,221 1,204,355 439,264 27 % 403,866 34 %
Gain on sales of loans (2) 596,553 381,622 197,153 214,931 56 % 184,469 94 %
Servicing income 173,123 120,602 95,483 52,521 44 % 25,119 26 %
Total revenue, net 4,261,082 3,224,412 2,322,999 1,036,670 32 % 901,413 39 %
Operating expenses (3)
Loss on loan purchase commitment 311,864 242,264 180,395 69,600 29 % 61,869 34 %
Provision for credit losses 796,650 616,683 460,628 179,967 29 % 156,055 34 %
Funding costs 454,016 425,451 344,253 28,565 7 % 81,198 24 %
Processing and servicing 613,587 457,849 343,249 155,738 34 % 114,600 33 %
Technology and data analytics 747,145 589,723 501,857 157,422 27 % 87,866 18 %
Sales and marketing 342,531 434,847 576,405 (92,316) (21) % (141,558) (25) %
General and administrative 578,312 545,053 525,291 33,259 6 % 19,762 4 %
Restructuring and other — (184) 6,768 184 (100) % (6,952) (103) %
Total operating expenses 3,844,105 3,311,685 2,938,846 532,420 16 % 372,839 13 %
Operating income (loss) $ 416,977 $ (87,273) $ (615,847) $ 504,250 NM (1) $ 528,574 86 %
Other income, net 75,750 148,737 100,320 (72,987) (49) % 48,417 48 %
Income (loss) before income taxes $ 492,727 $ 61,464 $ (515,527) $ 431,263 NM (1) $ 576,991 112 %
Income tax expense (benefit) (1,437,067) 9,279 2,230 (1,446,346) NM (1) 7,049 316 %
Net income (loss) $ 1,929,793 $ 52,186 $ (517,757) $ 1,877,607 NM (1) $ 569,943 110 %
(1)Not meaningful (“NM”)
(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. See Note 4. Loans Held for Investment and Allowance for Credit Losses for a table detailing the discount activity for loans held for investment for the periods presented.
(3)Amounts include stock-based compensation expense. See Note 14. Equity Incentive Plans for the amounts presented within each operating expense line item for the periods presented.
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Comparison of the Years Ended June 30, 2026 and 2025
Merchant Network Revenue
Merchant network revenue is impacted by both GMV and the mix of loans originated on our platform, including the distribution of loans by product. While we generally earn higher merchant fees on 0% versus interest-bearing loan products, merchant fee rates on each transaction are also impacted by the existence of a commercial agreement and negotiated pricing with each merchant, which may vary depending on loan term, loan size, borrower credit risk, and pricing incentives. We generally earn lower merchant revenue on our direct to consumer products, including Affirm Card, which are predominantly interest-bearing.
Merchant network revenue increased by $267.3 million, or 30%, for the year ended June 30, 2026, compared to the same period in 2025. The increase is primarily attributed to an increase in GMV of $13.5 billion, or 37%, for the year ended June 30, 2026, compared to the same period in 2025. The volume-driven increase in merchant network revenue was offset by an increase in the loss on loan originations by $56.1 million, or 61%, for the year ended June 30, 2026. Additionally, merchant incentives, recorded as a reduction of revenue, increased by $9.5 million for the year ended June 30, 2026, compared to the same period in 2025.
Merchant network revenue as a percentage of GMV decreased to 2.3% for the year ended June 30, 2026 from 2.4% for the year ended June 30, 2025. The portion of GMV attributed to 0% APR loans, including Pay-in-X, increased by 48% for the year ended June 30, 2026, compared to the same period in 2025; however, the impact of a higher percentage of GMV attributed to 0% APR loans was offset by an increase in direct to consumer transactions as a percentage of GMV, led by the growth of Affirm Card.
Card Network Revenue
Card network revenue increased by $62.7 million, or 27%, for the year ended June 30, 2026, compared to the same period in 2025. Card network revenue growth is correlated with the growth of GMV processed by our card-issuing partners. As such, the increase is primarily driven by $17.5 billion of GMV processed through our card-issuing partners, an increase of approximately 47% for the year ended June 30, 2026, as compared to the same period in 2025. This was driven by increased card activity primarily through Affirm Card and our virtual debit cards, as well as GMV generated by 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.
The volume-driven increase in card network revenue was partially offset by an increase in merchant incentives, which are recorded as a reduction to card network revenue. For the year ended June 30, 2026, merchant incentives increased by $18.4 million, or 144%, compared to the same period in 2025.
Interest Income
Interest income increased by $439.3 million, or 27%, for the year ended June 30, 2026, compared to the same period in 2025. Generally, interest income is correlated with the changes in the average balance of loans held for investment, which increased by 27% to $8.2 billion for the year ended June 30, 2026, compared to the same period in 2025.
The increase was primarily driven by contractual interest income for interest-bearing loans, which grew approximately $373.9 million for the year ended June 30, 2026, compared to the same period in 2025, comprising 85% of the total increase. Interest income from the amortization of the discount on 0% and below market APR loans grew approximately $77.9 million over the same period, comprising 18% of the total increase.
Although the average balance of interest bearing loans held for investment increased during the year ended June 30, 2026, compared to the same period in 2025, growth in average loan balances varied by product type. In particular, the average balance of 0% APR loans grew more on a percentage basis than the average balance of interest bearing loans. As a result, interest income from the amortization of the loan discount grew at a higher rate than contractual interest income.
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Gain on Sale of Loans
Gain on sales of loans increased by $214.9 million, or 56%, for the year ended June 30, 2026, compared to the same period in 2025. The increase is driven by higher loan sale volume to third-party loan buyers and favorable transaction economics, which are primarily driven by market conditions. We sold loans with an unpaid principal balance of $21.9 billion for the year ended June 30, 2026, compared to $15.8 billion for the same period in 2025, an increase of 39%.
The volume-driven increase in gain on sales of loans, for the year ended June 30, 2026, was further accelerated by a decrease in our estimated recourse liability for loans sold to third-party investors of $12.2 million, or 38%, compared to the same period in 2025.
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 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 of the notes to our consolidated financial statements.
Servicing income increased by $52.5 million, or 44%, for the year ended June 30, 2026, compared to the same period in 2025. 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 for the year ended June 30, 2026, compared to the same period in 2025, an increase of 42%.
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 consolidated statements of operations and comprehensive income (loss). These costs are incurred on a per loan basis.
Loss on loan purchase commitment increased by $69.6 million, or 29%, for the year ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in total volume of loans purchased. During the year ended June 30, 2026, we purchased $40.2 billion of loans from our originating bank partners, compared to $30.0 billion in the same period in 2025, representing an increase of 34%. Of the total loans purchased, 0% APR installment loans represented $6.3 billion during the year ended June 30, 2026, and $4.4 billion for the same period in 2025, an increase of 41%. The impact of higher loan purchase volume period over period was partially offset by a decrease in the average loan discount percentage period over period, primarily due to lower benchmark interest rates.
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Provision for Credit Losses
Provision for credit losses generally represents the amount of expense required to maintain the allowance for credit losses within our consolidated balance sheet, which represents management’s estimate of future losses 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 $180.0 million, or 29%, for the year ended June 30, 2026 compared to the same period in 2025. 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 year ended June 30, 2026, the provision expense for loans held for investment increased by $189.4 million, or 32%. Additionally, the average balance of loans held for investment increased by $1.7 billion, or 27%, for the year ended June 30, 2026, compared to the same period in 2025.
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 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 $28.6 million or 7%, for the year ended June 30, 2026, compared to the same period in 2025. The increase is primarily due to an increase of funding debt and notes issued by securitization trusts during the year ended June 30, 2026, partially offset by favorable pricing terms. The average total of funding debt from warehouses and securitizations for the year ended June 30, 2026 was $7.5 billion, compared to $5.9 billion during the same period in 2025, an increase of $1.6 billion, or 27%.
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 $155.7 million, or 34%, for the year ended June 30, 2026, compared to the same period in 2025. This increase is driven partially by an increase in payment processing fees of $100.5 million, or 38%, related to an increase of $12.3 billion, or 38%, in payment volume for the year ended June 30, 2026, compared to the same period in 2025. Platform fees increased by $46.3 million, or 43%, primarily due to an increase in volume with a large enterprise partner. Additionally, our customer service and collection costs increased by $25.7 million, or 36%, compared to the same period in 2025. Our average total platform portfolio increased by $4.6 billion, or 35%, for the year ended June 30, 2026, compared to the same period in 2025.
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 $157.4 million or 27%, for the year ended June 30, 2026, compared to the same period in 2025. The increase is partially driven by amortization of internally-developed software which increased by $76.0 million, or 35%, for the year ended June 30, 2026, compared to the same period
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in 2025, as a result of an increase in the number of capitalized projects. Capitalized projects in service grew by 19% from approximately 1,470 projects as of June 30, 2025 to 1,750 projects as of June 30, 2026. Data infrastructure and hosting costs, including data provider costs, increased by $52.2 million, or 33%, for the year ended June 30, 2026, compared to the same period in 2025. The increase in data infrastructure and hosting costs was primarily driven by an increase in the number of consumer transactions. For the year ended June 30, 2026, the number of consumer transactions increased by 45% from continued growth at our merchants and platform partners when compared to the same period in 2025. Payroll and personnel-related expenses increased by $22.3 million, or 11%, for the year ended June 30, 2026, compared to the same period in 2025, 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.
Sales and marketing expense decreased by $92.3 million or 21%, for the year ended June 30, 2026, compared to the same period in 2025. During the year ended June 30, 2026, the decrease was primarily driven by a $92.4 million, or 32%, decrease in Amazon warrant expense compared to the same period in 2025, primarily due to a portion of the warrants becoming fully vested as of December 2024. Additionally, the decrease was also driven by a $15.4 million, or 58%, decrease in Shopify warrant expense during the year ended June 30, 2026, compared to the same period in 2025, primarily due to an amendment made in our partnership agreement, which extended the period of benefit over which we amortize the commercial agreement asset from six to nine years. The decrease in sales and marketing expense was partially offset by an increase in marketing and promotional expenses, including the cost of co-marketing arrangements. For the year ended June 30, 2026, marketing and promotional expenses, including the cost of co-marketing arrangements, increased by $13.8 million, or 36%, compared to the same period in 2025.
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 $33.3 million or 6%, for the year ended June 30, 2026, compared to the same period in 2025. The increase is primarily due to growth in payroll and other employee-related costs, and software and subscription expense, partially offset by a decrease in stock-based compensation expense.
Other Income, net
Other income, net includes interest earned on 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 at cost, gains and losses on derivative agreements not designated within a hedging relationship, interest expense related to convertible debt as well as any gains (losses) on extinguishment, revolving credit facility issuance costs, fair value adjustments related to liabilities, and other income or expense arising from activities that are unrelated to our primary business.
Other income, net decreased by $73.0 million, or 49%, for the year ended June 30, 2026, compared to the same period in 2025. The decrease was primarily driven by a $80.9 million, or 98%, reduction in the gain recognized on the early extinguishment of convertible debt, reflecting fewer repurchases compared to the same period in 2025.
Income Tax Expense (Benefit)
The income tax benefit for the year ended June 30, 2026 was $1.4 billion, compared to an income tax expense of $9.3 million for the same period in 2025. The income tax benefit was primarily attributable to the release
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of a significant portion of the valuation allowance against our domestic deferred tax assets during the year ended June 30, 2026.
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. Despite ongoing macroeconomic uncertainty, including recent reports of stress to certain private credit funds and other institutional investors, we believe 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.
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 June 30, 2026, we had $2.6 billion in cash and cash equivalents and available for sale securities, $5.3 billion in available funding debt capacity, excluding our purchase commitments from third-party loan buyers, and $675.0 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):
June 30, 2026 June 30, 2025
Cash and cash equivalents (1) $ 1,630,038 $ 1,354,455
Investments in short-term debt securities (2) 647,811 652,491
Investments in long-term debt securities (2) 324,831 218,934
Cash, cash equivalent and investments in debt securities $ 2,602,680 $ 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, government bonds, and securitization notes receivable and certificates. 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.
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Debt
Debt as of June 30, 2026 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 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 securitization trusts as of June 30, 2026.
Maturity Fiscal Year Borrowing Capacity Principal Outstanding
(in thousands)
2028 1,450,000 823,665
2029 1,982,361 1,003,629
2030 1,622,720 1,132,952
2031 231,814 179,487
Thereafter 8,725,000 5,569,282
Total $ 14,011,895 $ 8,709,015
Refer to “Convertible Senior Notes” below for the maturities of our convertible senior notes.
Warehouse Credit Facilities
Our U.S. warehouse credit facilities allow us to borrow up to an aggregate of $6.1 billion, and mature between 2028 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 June 30, 2026, we have drawn an aggregate of $2.4 billion on our warehouse credit facilities.
We use various credit facilities to finance the origination of loan receivables in Canada and the U.K. 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 and British loan receivables pledged to the respective facility as collateral, maturing between fiscal years 2029 and 2031. As of June 30, 2026, the aggregate commitment amount of these facilities was $1.2 billion on a revolving basis, of which $586.7 million was drawn.
As we continue to expand in new geographies, we intend to add the necessary funding capacity to support our growth objectives. As of June 30, 2026, we were in compliance with all applicable covenants in the agreements.
Variable Funding Note
We entered into a syndicated revolving loan agreement through a securitization master trust which funds loans. In connection with the loan agreement, the master trust issued a variable funding note (“VFN”), where borrowings are secured by loan collateral sold to the master trust. Throughout the reinvestment period of the VFN, the master trust periodically issues asset-backed securities, where securitization note proceeds affect the level of utilization of the VFN. Our VFN allows us to borrow up to an aggregate of $1.4 billion and matures in fiscal year 2032. As of June 30, 2026, we have drawn an aggregate of $356.9 million on our VFN. As of June 30, 2026, we were in compliance with all applicable covenants in the agreements.
Sale and Repurchase Agreements
We entered into certain 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
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future date and price. These repurchase agreements have a term equaling the contractual life of the securitization notes pledged. We had $4.7 million in debt outstanding under our sale and repurchase agreements disclosed within funding debt in the consolidated balance sheets as of June 30, 2026.
Securitizations
We finance the origination and purchase of loans through our asset-backed securitization program using a combination of term, amortizing, revolving and variable funding structures. In connection with our program, we sponsor and establish trusts (deemed to be variable interest entities (“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. For each securitization, the residual trust certificates represent the right to receive excess cash from the loan repayments each collection period after all fees and required distributions have been made to the note holders. In addition to the retained residual trust certificates, our continued involvement includes loan servicing responsibilities over the life of the underlying loans. Refer to Note 9. Securitization and Variable Interest Entities in the notes to the consolidated financial statements for further details.
Revolving Credit Facility
We have a Revolving Credit Agreement with a syndicate of banks for a $675.0 million unsecured revolving credit facility, with a final maturity date of June 18, 2029. Proceeds from the borrowings under this facility will be used for general corporate purposes in the ordinary course of business. As of June 30, 2026, there are no borrowings outstanding under the facility. The facility contains certain covenants and restrictions, including certain financial maintenance covenants. As of June 30, 2026, we were in compliance with all applicable covenants in the agreements. Refer to Note 8. Debt in the notes to the consolidated financial statements for further details on our revolving credit facility.
Convertible Senior Notes
As of June 30, 2026, we had outstanding: (i) $221.3 million aggregate principal amount of our 0.00% convertible senior notes due November 15, 2026 (the “2026 Notes”) and (ii) $920.0 million principal amount of our 0.75% convertible senior notes due December 15, 2029 (the “2029 Notes”), in each case unless earlier converted, redeemed, or repurchased in accordance with their terms. Refer to Note 8. Debt in the notes to the 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.
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Cash Flow Analysis
The following table provides a summary of cash flow data during the periods indicated:
June 30, 2026 June 30, 2025
(in thousands)
Net cash provided by operating activities $ 1,230,974 $ 793,909
Net cash used in investing activities $ (2,553,427) $ (1,083,064)
Net cash provided by financing activities $ 2,009,688 $ 751,425
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 $1.2 billion for the year ended June 30, 2026, 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, deferred income tax benefit, and changes in operating assets and liabilities. Total adjustments and changes in operating assets and liabilities collectively resulted in a net decrease in operating cash flows of $698.8 million.
Net cash provided by operating activities was $793.9 million for the year ended June 30, 2025, 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 $741.7 million.
Cash Flows from Investing Activities
Net cash used in investing activities was $2.6 billion for the year ended June 30, 2026. Cash outflows were primarily driven by purchases and origination of loans held for investment of $46.7 billion, purchases of securities available for sale of $1.0 billion, and property, equipment and software additions of $238.3 million. Cash inflows included $24.7 billion from principal repayments and other loan servicing activity, $19.7 billion in proceeds from the sale of loans held for investment, and $1.0 billion of proceeds from maturities and repayments of securities available for sale.
Net cash used in investing activities was $1.1 billion for the year ended June 30, 2025. Cash outflows were primarily driven by purchases and origination of loans held for investment of $32.5 billion, purchases of securities available for sale of $823.9 million, and property, equipment and software additions of $192.2 million. Cash inflows included $18.7 billion of principal repayments and other loan servicing activity, $12.6 billion in proceeds from the sale of loans held for investment, and $1.2 billion of proceeds from maturities and repayments of securities available for sale.
Cash Flows from Financing Activities
Net cash provided by financing activities was $2.0 billion for the year ended June 30, 2026. Cash inflows were driven by $40.9 billion in proceeds from the issuance of secured debt, including funding debt and securitization notes and certificates, and $158.9 million from the exercise of common stock options and warrants and employee contributions to our Employee Stock Purchase Plan (“ESPP”). Cash outflows included $38.7 billion related to principal repayments of secured debt and $325.2 million for taxes paid on vested equity awards.
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Net cash provided by financing activities was $751.4 million for the year ended June 30, 2025. Cash inflows were primarily driven by $23.7 billion in proceeds from the issuance of secured debt, including funding debt and securitization notes and certificates, as well as $920.0 million from proceeds related to the issuance of the 2029 Notes. Cash outflows included $22.3 billion related to principal repayments on secured debt, $1.0 billion related to the extinguishment of a portion of our 2026 Notes, $250.0 million related to the repurchase of shares of our Class A common stock in connection with the issuance of the 2029 Notes, and $303.8 million related to taxes paid on vested equity awards.
Contractual Obligations
Payments Due By Period
Total (4) Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years
(in thousands)
Funding debt $ 3,359,015 $ — $ 1,827,293 $ 562,439 $ 969,282
Notes issued by securitization trusts 5,349,505 — — 749,993 4,599,511
Operating lease commitments (1) 37,076 5,505 9,568 9,829 12,174
Purchase obligations (2) 543,063 141,287 298,727 99,782 3,267
Convertible senior notes (3) 1,141,321 221,321 — 920,000 —
Total $ 10,429,979 $ 368,113 $ 2,135,588 $ 2,342,044 $ 5,584,235
(1)Operating lease amounts include minimum rental payments under our leases for office facilities. The amounts presented are consistent with contractual terms and are not expected to differ significantly from actual results under our existing leases.
(2)Purchase obligations amounts primarily include minimum purchase commitments for cloud computing web services entered into in the ordinary course of business.
(3)The 2026 and 2029 Notes have net carrying amounts of $221.3 million and $920.0 million, respectively. The 2026 Notes do not bear interest and the 2029 Notes will bear interest at a fixed rate of 0.75% per year, payable semiannually in arrears on June 15 and December 15 of each year. The 2026 and 2029 Notes mature on November 15, 2026 and December 15, 2029, respectively.
(4)Amounts presented represent contractual principal obligations and exclude unamortized debt issuance costs.
The commitment amounts in the table above are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, and the approximate timing of the actions under the contracts.
Off-Balance Sheet Arrangements
In the ordinary course of business, we engage in activities that are not reflected within our consolidated balance sheets, generally referred to as off-balance sheet arrangements. These activities involve transactions with unconsolidated VIEs, including securitization and forward flow transactions. 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; accordingly, 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 contributed to the securitization reserve accounts may be depleted.
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Under certain 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.
In addition to risk sharing arrangements, under certain other forward flow arrangements with third-party loan buyers, we hold a beneficial interest representing our right to receive a portion of the residual cash flows from the underlying loans sold in connection with the structured transaction. The loans are held in an unconsolidated VIE that has been established by the third-party loan buyers.
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. While we may continue to hold variable interest in the unconsolidated VIEs, we determined that we are not the primary beneficiary. Factors we considered for this determination are that we hold an insignificant variable interest or that rights held by other variable interest holders convey power to direct the activities most significantly affecting the unconsolidated VIEs’ economic performance.
As of June 30, 2026, the aggregate outstanding balance of loans held by third-party investors and off-balance sheet securitizations was $10.0 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 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, which 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 significant estimates on an ongoing basis. We believe the estimates, discussed below, have the greatest potential effect on our consolidated financial statements and are therefore deemed critical in understanding and evaluating our financial results. For further information, our significant accounting policies are described in Note 2. Summary of Significant Accounting Policies within the notes to the consolidated financial statements.
Loss on Loan Purchase Commitment and Loss on Loan Origination
We purchase certain loans from our originating bank partners that are processed through our platform that our originating bank partner puts back to us. 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 within our consolidated statements of operations and comprehensive income (loss). These costs are incurred on a per loan basis.
Similarly, we may originate certain loans via our wholly-owned subsidiaries, with zero or below market interest rates. In these instances, the par value of the loans originated is in excess of the fair market value of such loans, resulting in a loss, which we record as a reduction to network revenue.
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For both loans originated by our bank partners and loans originated through our subsidiaries, the loss is measured as the difference between the estimated fair value of the loan and the par amount of the loan at origination.
The fair value of a loan is estimated based on the present value of expected future cash flows, using both observable and unobservable inputs, including the expected timing and amount of losses, the discount rate, and the recovery rate. These inputs are based on historical performance of loans facilitated through our platform, as well as the consideration of market participant requirements. While our estimate reflects assumptions we believe a market participant would use to calculate fair value, significant judgment is required.
Allowance for Credit Losses
The allowance for credit losses on loans held for investment is determined based on management’s current estimate of expected credit losses over the remaining contractual term, historical credit losses, consumer payment trends, estimates of recoveries, and future expectations on individual loans as of each balance sheet date. We immediately recognize an allowance for expected credit losses upon the origination of a loan. Adjustments to the allowance each period for changes in our estimate of lifetime expected credit losses are recognized in earnings through the provision for credit losses presented within our consolidated statements of operations and comprehensive income (loss). We have made an accounting policy election to not measure an allowance for credit losses for accrued interest receivables. Previously recognized interest receivable from charged-off loans that is accrued but not collected from the consumer is reversed.
In estimating the allowance for credit losses, management utilizes a migration analysis of delinquent and current loan receivables. Migration analysis is a technique used to estimate the likelihood that a loan receivable will progress through various stages of delinquency and to charge-off. The analysis focuses on the pertinent factors underlying the quality of the loan portfolio. These factors include historical performance, the age of the receivable balance, seasonality, customer credit-worthiness, changes in the size and composition of the loan portfolio, delinquency levels, bankruptcy filings and actual credit loss experience. We also take into consideration certain qualitative factors where we adjust our quantitative baseline using our best judgment to consider the inherent uncertainty regarding future economic conditions and consumer loan performance. For example, the Company considers the impact of current economic factors at the reporting date that did not exist over the period from which historical experience was used. As of June 30, 2026 , we have considered the impact of Federal Reserve monetary policy, labor market trends, tariffs and inflation.
When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged against the allowance for credit losses. Loans are charged-off in accordance with our charge-off policy, as the contractual principal becomes 120 days past due or meets other charge-off policy requirements. Subsequent recoveries of the unpaid principal balance, if any, are credited to the allowance for credit losses. Refer to Note 4. Loans Held for Investment and Allowance for Credit Losses for more information.
The underlying assumptions, estimates, and assessments we use to provide for losses are updated periodically to reflect our view of current conditions, which can result in changes to our assumptions. Changes in such estimates can significantly affect the allowance and provision for credit losses. It is possible that we will experience loan losses that are different from our current estimates.
Recent Accounting Pronouncements
Refer to Note 2. Summary of Significant Accounting Policies within the notes to the consolidated financial statements.
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