Core Insights - Affirm Holdings, Inc. reported a record-breaking fourth quarter for fiscal 2025, with stock surging significantly [1] - The company achieved earnings of 20 cents per share, nearly double analysts' expectations, and quarterly revenue increased by 33% year-over-year to $876 million, exceeding forecasts [2] Company Performance - CEO Max Levchin highlighted the exceptional growth, stating that the company set new records across most metrics, which is atypical for the fourth quarter [3] - A key factor in Affirm's success is the high rate of repeat customers, which constituted 95% of transactions in the fourth quarter [4] - The company maintains a strong focus on credit performance, with regular updates to the executive team regarding credit metrics [5] Market Expansion - Affirm is expanding into new markets using a reusable technology platform and global partnerships, with a pilot program for its Shopify model in the U.K. [6] - The company anticipates further international growth, particularly in Europe [6] - At the time of publication, Affirm's stock price increased by 13.01% to $90.40 [6]

Core Insights - Affirm Holdings (AFRM.US) experienced a significant increase of over 16%, reaching a three-and-a-half-year high of $93.33 following the release of its Q4 earnings report [1] Financial Performance - Q4 revenue grew by 33% year-over-year to $876 million, surpassing market expectations of $837 million [1] - The company reported a net profit of $69.2 million, a turnaround from a loss of $45.1 million in the same quarter last year [1] - Earnings per share (EPS) were 20 cents, exceeding market expectations of 11 cents [1] Transaction Metrics - The total gross merchandise volume (GMV) for Q4 increased by 43% year-over-year, reaching $10.4 billion [1] Strategic Outlook - The company stated in its shareholder letter that its consistent execution has led to achieving operating profit in Q4 of fiscal year 2025, aligning with the timeline promised a year ago [1]

Core Insights - Affirm Holdings (AFRM.US) experienced a significant increase of over 16%, reaching a three-and-a-half-year high of $93.33 following the release of its Q4 earnings report which exceeded expectations [1] Financial Performance - Q4 revenue grew by 33% year-over-year to $876 million, surpassing market expectations of $837 million [1] - The company reported a net profit of $69.2 million, a turnaround from a loss of $45.1 million in the same quarter last year [1] - Earnings per share (EPS) were $0.20, exceeding market expectations of $0.11 [1] Transaction Metrics - The total gross merchandise volume (GMV) for Q4 increased by 43% year-over-year, reaching $10.4 billion [1] Strategic Outlook - The company communicated to shareholders that its sustained execution has led to achieving operating profit in Q4 of fiscal year 2025, aligning with the timeline promised a year ago [1]

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Core Viewpoint - Affirm Holdings reported better-than-expected Q4 revenue and profit, leading to an 18% surge in stock price during after-hours trading [1] Financial Performance - Q4 revenue increased by 33% year-over-year to $876 million, surpassing market expectations of $837 million [1] - Net profit reached $69.2 million, a significant improvement from a loss of $45.1 million in the same period last year [1] - Earnings per share were $0.20, exceeding market expectations of $0.11 [1] Transaction Metrics - Total Gross Merchandise Volume (GMV) for Q4 grew by 43% year-over-year, reaching $10.4 billion [1] Future Guidance - Affirm projects Q1 FY2026 revenue to be between $855 million and $885 million, with GMV expected to be between $10.1 billion and $10.4 billion [1] Stock Performance - Affirm's stock has risen 31% year-to-date, outperforming the Nasdaq index, which has increased by 12% [1] Competitive Landscape - Affirm faces increasing competition in the e-commerce sector, having established partnerships with Amazon and Shopify, while Walmart has shifted to competitor Klarna [1] - The company announced a partnership with Apple last year [1]

Core Insights - Affirm's shares increased by 15% in extended trading following better-than-expected earnings and revenue for the fiscal fourth quarter [1] - The company reported a revenue increase of 33%, reaching $876 million compared to $659 million in the same quarter last year [1][3] - Gross merchandise volume rose by 43% to $10.4 billion from $7.2 billion year-over-year [1] Financial Performance - Affirm achieved a net income of $69.2 million, or 20 cents per share, a significant turnaround from a loss of $45.1 million, or 14 cents per share, in the previous year [2] - The company indicated that it reached operating income profitability in FQ4'25, aligning with its previous commitments [2] - For the upcoming first quarter, Affirm projects revenue between $855 million and $885 million, with gross merchandise volume expected to be between $10.1 billion and $10.4 billion [2] Market Position and Competition - Affirm's shares have risen 31% this year, outperforming the Nasdaq's 12% gain [3] - The company faces increasing competition in the e-commerce sector, with notable partnerships with Amazon and Shopify, while Walmart has shifted to competitor Klarna [3] - Affirm announced a deal with Apple last year, indicating its strategic partnerships in the market [3]

Company Performance - Affirm Holdings reported quarterly earnings of $0.20 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and compared to a loss of $0.14 per share a year ago, representing an earnings surprise of +81.82% [1] - The company posted revenues of $876.42 million for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 4.35%, and showing an increase from $659.18 million in the same quarter last year [2] - Over the last four quarters, Affirm Holdings has surpassed consensus EPS estimates four times and topped consensus revenue estimates three times [2] Stock Performance - Affirm Holdings shares have increased approximately 27.4% since the beginning of the year, outperforming the S&P 500's gain of 10.2% [3] - The current consensus EPS estimate for the upcoming quarter is $0.08 on revenues of $862.88 million, and for the current fiscal year, it is $0.76 on revenues of $3.92 billion [7] Industry Outlook - The Zacks Industry Rank indicates that the Internet - Software sector is currently in the top 33% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this industry [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5]

Financial Data and Key Metrics Changes - The company reported exceptionally strong results, setting new records in most metrics for the fourth quarter, which is unusual for this period [6] - The growth is accelerating, with significant improvements in key performance indicators [6] Business Line Data and Key Metrics Changes - The demand for the company's services is reflected in the acceleration of Gross Merchandise Volume (GMV), which reached new records [12][13] - The 0% APR offerings have attracted a substantial number of first-time users, with 50% of new users taking advantage of this promotion [17] Market Data and Key Metrics Changes - The company is experiencing strong momentum in the U.S. and Canada, with positive consumer performance noted [11][12] - The company is in the process of testing its services in the UK, indicating potential for international expansion [69] Company Strategy and Development Direction - The company is focused on enhancing its card offerings and plans to introduce new features to make the card more compelling [43][44] - The strategy includes leveraging 0% APR products to drive consumer engagement and merchant participation, with expectations that nearly all merchants will eventually adopt these offerings [88][90] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage credit performance despite potential macroeconomic shifts, emphasizing that credit remains a top priority [28][31] - The company is closely monitoring the impact of student loan repayments on consumer behavior and is prepared to adjust underwriting practices as necessary [26][27] Other Important Information - The company has seen a significant increase in the number of merchants funding 0% APR offerings, doubling year over year [88] - The integration with payment service providers (PSPs) is viewed as a critical growth area, particularly for offline transactions [104] Q&A Session Summary Question: How has the operating environment changed since the last report? - Management noted improvements in consumer performance and optimism regarding future growth, particularly in the U.S. and Canada [10][11] Question: What are the repeat rates for first-time users attracted by 0% APR? - First-time users do repeat their usage, and many convert to interest-bearing loans over time, indicating strong customer retention [19][20] Question: How does the company view the current funding environment? - The company is mindful of the health of capital markets and partners with long-term investors, ensuring disciplined lending practices [36][37] Question: What is the strategy for the Affirm card? - The card is growing well, and the company is focused on making it more compelling with new features and increased merchant adoption [43][44] Question: How is the company approaching international expansion? - The company is testing its services in the UK and plans to expand into other European markets, leveraging existing technology and partnerships [69][73]

Financial Data and Key Metrics Changes - The company reported exceptionally strong results, setting new records in most metrics for the quarter, which is unusual for Q4 [6][7] - The growth is accelerating, indicating strong momentum in the U.S. and Canadian markets [15][16] Business Line Data and Key Metrics Changes - The 0% APR offerings have attracted a significant number of new users, with 50% of first-time users opting for this rate [20][21] - Repeat usage rates for users acquired through 0% APR promotions are comparable to traditional users, with many converting to interest-bearing loans over time [25][26] Market Data and Key Metrics Changes - The company has seen a strong performance in the consumer segment, with a focus on maintaining high credit performance despite macroeconomic shifts [31][36] - 95% of transactions in the quarter came from repeat borrowers, indicating a solid customer base [37] Company Strategy and Development Direction - The company is focusing on expanding its international presence, particularly in the UK, with plans to leverage partnerships like Shopify [75][76] - The strategy includes enhancing the Affirm card offerings and increasing the attach rate, which is currently at 10% [46][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to manage credit performance and maintain strong results despite potential consumer stress from factors like student loan repayments [32][36] - The funding environment remains favorable, with a 55% year-over-year increase in funding capacity, allowing for continued growth [40][41] Other Important Information - The company is actively investing in the Affirm card, which has shown significant growth and is expected to continue expanding [48][50] - The 0% APR product is seen as a competitive advantage, with the company emphasizing its unique underwriting capabilities [55][59] Q&A Session Summary Question: Insights on consumer stress and optimism - Management noted that consumer performance continues to be strong, with positive momentum in the U.S. and Canada [14][15] Question: Repeat rates for first-time users with 0% APR - Management confirmed that users attracted by 0% APR promotions do repeat their usage and often convert to interest-bearing loans [25][26] Question: Concerns about consumer credit quality - Management reassured that credit performance remains a top priority, with consistent monitoring and adjustments as needed [31][36] Question: Impact of funding environment on competition - Management acknowledged the favorable funding conditions but emphasized their focus on maintaining high credit quality and long-term partnerships [40][41] Question: Strategy for the Affirm card and its growth - Management highlighted the card's strong performance and ongoing investments to enhance its appeal and functionality [48][50] Question: International expansion strategy - Management confirmed ongoing testing in the UK and plans for careful expansion into other European markets [75][76]

PART I [ITEM 1. BUSINESS](index=6&type=section&id=ITEM%201.%20BUSINESS) Affirm builds a next-gen payment network, offering point-of-sale, merchant commerce, and a consumer app, leveraging proprietary technology - Affirm's mission is to deliver honest financial products, reinventing payments and commerce through trust and transparency, including charging **$0 in late fees**[16](index=16&type=chunk)[18](index=18&type=chunk) - Proprietary technology, underwriting, and risk management are key competitive advantages, utilizing data from approximately **343 million loans** to assess risk, leading to lower fraud and higher approval rates[19](index=19&type=chunk)[20](index=20&type=chunk) GMV Contribution by Loan Product (FY2024-FY2025) | Loan Product | FY2025 GMV % | FY2024 GMV % | | :------------- | :------------ | :------------ | | Pay-in-X | 14% | 15% | | 0% APR Loans | 13% | 11% | | Interest-Bearing Loans | 72% | 74% | - As of June 30, 2025, Affirm had approximately **377 thousand active merchants** and facilitated **$36.7 billion in GMV**, with **94% of transactions** driven by repeat consumers[21](index=21&type=chunk)[27](index=27&type=chunk)[37](index=37&type=chunk) - Growth strategy includes expanding consumer transaction frequency (**5.8 transactions per active consumer** in FY2025, up **20% YoY**), innovating AI-powered solutions, and increasing merchant penetration[48](index=48&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) - Affirm operates in the U.S., Canada, and the U.K., with plans for further international expansion into Western Europe and Australia, navigating complex regulatory environments[53](index=53&type=chunk)[67](index=67&type=chunk) [ITEM 1A. Risk Factors](index=23&type=section&id=ITEM%201A.%20Risk%20Factors) This section outlines significant risks that could materially and adversely affect Affirm's business, financial condition, and future prospects - Affirm's success is highly dependent on attracting and retaining commercial partners and consumers; failure to do so would materially and adversely affect the business[107](index=107&type=chunk)[111](index=111&type=chunk) - The company operates in a highly competitive industry against larger financial institutions and other pay-over-time solutions, which may have advantages such as diversified products, larger customer bases, and lower-cost funding[113](index=113&type=chunk)[114](index=114&type=chunk) - Reliance on a small number of originating bank partners (Celtic Bank, Lead Bank) and a single card issuing bank (Evolve Bank & Trust) poses a significant risk; termination could severely impact operations[118](index=118&type=chunk)[119](index=119&type=chunk)[121](index=121&type=chunk) - The ability to accurately price credit risk and ensure loan performance is crucial; errors in proprietary risk models or unexpected losses could lead to financial losses and loss of confidence from funding sources[133](index=133&type=chunk)[135](index=135&type=chunk)[138](index=138&type=chunk) - Use of generative AI-powered solutions introduces risks such as inaccurate or biased outputs, potential intellectual property litigation, significant compliance burdens, and reputational damage[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - International expansion subjects Affirm to new challenges, including adapting risk algorithms, complying with diverse regulatory frameworks, and managing foreign currency exposure[149](index=149&type=chunk)[155](index=155&type=chunk) - Affirm has a history of operating losses, though it achieved GAAP operating income profitability in Q4 FY2025; sustaining profitability is subject to risks like increased operating expenses and market conditions[159](index=159&type=chunk)[160](index=160&type=chunk) - The dual-class common stock structure concentrates voting control with Class B stockholders, potentially depressing Class A common stock trading price and limiting minority stockholder influence[243](index=243&type=chunk)[246](index=246&type=chunk) [ITEM 1B. Unresolved Staff Comments](index=57&type=section&id=ITEM%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments to report - No unresolved staff comments[262](index=262&type=chunk) [ITEM 1C. Cybersecurity](index=57&type=section&id=ITEM%201C.%20Cybersecurity) Affirm's cybersecurity program, informed by NIST CSF, manages risks through testing, monitoring, and incident response, with Board oversight - Affirm's cybersecurity program is based on the NIST CSF, incorporating processes and tools for risk assessment, identification, and management, including automated/manual testing and incident response[263](index=263&type=chunk)[264](index=264&type=chunk) - The Board of Directors' Audit Committee oversees cybersecurity risks, receiving periodic updates from the CISO on identified risks, mitigation strategies, incidents, and key initiatives[268](index=268&type=chunk)[269](index=269&type=chunk) - As of the report date, cybersecurity threats have not materially affected Affirm's business, but future impacts cannot be assured[267](index=267&type=chunk) [ITEM 2. Properties](index=58&type=section&id=ITEM%202.%20Properties) Affirm leases office space in various locations, including its San Francisco headquarters, and does not own any real property - Affirm leases office space, with its corporate headquarters in San Francisco, California, and additional offices in New York, Pittsburgh, Chicago, and Toronto[270](index=270&type=chunk) - The company does not own any real property and considers its current facilities sufficient for its needs[270](index=270&type=chunk) [ITEM 3. Legal Proceedings](index=58&type=section&id=ITEM%203.%20Legal%20Proceedings) Affirm is involved in securities class action and shareholder derivative lawsuits, with reincorporation potentially leading to more litigation, but estimable losses are not material - Affirm is a defendant in a putative securities class action (Kusnier v. Affirm Holdings, Inc.) and three related shareholder derivative lawsuits alleging false/misleading statements and breaches of fiduciary duty[165](index=165&type=chunk)[166](index=166&type=chunk)[578](index=578&type=chunk)[579](index=579&type=chunk)[580](index=580&type=chunk)[581](index=581&type=chunk) - The company's reincorporation from Delaware to Nevada on July 1, 2025, could potentially result in additional litigation[166](index=166&type=chunk) - Management has determined that the aggregate estimable losses from legal proceedings would not have a material adverse effect on the consolidated financial position, results of operations, or cash flows[582](index=582&type=chunk) [ITEM 4. Mine Safety Disclosures](index=57&type=section&id=ITEM%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Affirm Holdings, Inc - Not applicable[274](index=274&type=chunk) PART II [ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=60&type=section&id=ITEM%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Affirm's Class A common stock trades on Nasdaq (AFRM); Class B is not public, and the company has never paid cash dividends, retaining earnings for operations - Affirm's Class A common stock trades on the Nasdaq Global Select Market (AFRM); Class B common stock is not publicly traded[276](index=276&type=chunk) Common Stock Outstanding and Holders of Record (as of August 22, 2025) | Class | Shares Outstanding | Holders of Record | | :---- | :----------------- | :---------------- | | Class A | 284,917,717 | 205 | | Class B | 40,732,597 | 124 | - The company has never paid cash dividends and plans to retain future earnings for business operations and expansion[278](index=278&type=chunk) - No equity securities were repurchased by the issuer during the fourth quarter of 2025[279](index=279&type=chunk) [ITEM 6. [Reserved]](index=61&type=section&id=ITEM%206.%20%5BReserved%5D) This item is reserved and contains no information [ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=62&type=section&id=ITEM%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Affirm's financial condition and results, driven by merchant fees, interest income, and card network revenue, achieving **$52.2 million net income** in FY2025 - Affirm's business model is built on simplicity, transparency, and consumer-first principles, offering 0% APR and interest-bearing loans without deferred interest, late fees, or penalties[288](index=288&type=chunk)[289](index=289&type=chunk) - The company's revenue model includes merchant fees (higher for 0% APR products), interest income from consumer loans, and a portion of interchange fees from Affirm Card and virtual card transactions[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) - Affirm relies on originating bank partners (Celtic Bank, Lead Bank) for a majority of loans, while also directly originating loans under its own licenses in the U.S., Canada, and the U.K[296](index=296&type=chunk)[298](index=298&type=chunk) Net Income (Loss) (FY2023-FY2025) | Fiscal Year | Net Income (Loss) (in thousands) | | :---------- | :------------------------------- | | 2025 | $52,186 | | 2024 | $(517,757) | | 2023 | $(985,345) | [Overview](index=62&type=section&id=Overview) Affirm aims to redefine payments and commerce by offering honest, transparent financial products through its platform and consumer app, leveraging proprietary technology - Affirm's mission is to deliver honest financial products that improve lives, reinventing payments and commerce through modern technology and a mission-driven approach[287](index=287&type=chunk) - The platform offers point-of-sale payment solutions for consumers, merchant commerce solutions, and a consumer app (Affirm Card, high-yield savings, personalized marketplace)[288](index=288&type=chunk) - Key competitive advantages include proprietary technology, machine learning, AI, and cloud-based solutions for data aggregation, risk pricing, and product differentiation[290](index=290&type=chunk) [Our Financial Model](index=63&type=section&id=Our%20Financial%20Model) Affirm's financial model combines diverse revenue from merchants and consumers with a flexible loan origination and servicing model, supported by proprietary risk assessment - Affirm's revenue model includes merchant fees (higher for 0% APR products), interest income from interest-bearing loans, and interchange fees from Affirm Card and virtual card transactions[293](index=293&type=chunk)[294](index=294&type=chunk)[295](index=295&type=chunk) GMV Contribution by Loan Product (FY2023-FY2025) | Loan Product | FY2025 GMV % | FY2024 GMV % | FY2023 GMV % | | :------------- | :------------ | :------------ | :------------ | | Pay-in-X | 14% | 15% | 19% | | 0% APR Loans | 13% | 11% | 13% | | Interest-Bearing Loans | 72% | 74% | 68% | - Loans are underwritten using a proprietary risk model and are either funded by originating bank partners (Celtic Bank, Lead Bank) and then purchased by Affirm, or directly originated by Affirm's subsidiaries[296](index=296&type=chunk)[297](index=297&type=chunk)[298](index=298&type=chunk) - Affirm acts as the servicer for all loans it originates directly or purchases, earning servicing fees on loans held by third parties[299](index=299&type=chunk) [Factors Affecting Our Performance](index=64&type=section&id=Factors%20Affecting%20Our%20Performance) Affirm's performance is influenced by funding, product mix, seasonality, macroeconomic conditions, credit optimization, and evolving regulatory and tax environments - Maintaining a diverse and capital-efficient funding model (warehouse facilities, securitization trusts, forward flow arrangements) is crucial for supporting GMV growth[301](index=301&type=chunk) - Shifts in merchant volumes and product mix (e.g., low AOV products like Affirm Card) impact GMV and revenue as a percentage of GMV, potentially leading to increased transactions per active consumer but lower revenue per transaction[302](index=302&type=chunk)[305](index=305&type=chunk) - Seasonal fluctuations are expected, with strongest GMV in the fiscal second quarter (holiday season) and lowest loan delinquencies in the fiscal third and fourth quarters (tax refunds)[306](index=306&type=chunk) - Macroeconomic conditions (elevated interest rates, inflation, recession concerns) impact consumer demand, borrowing costs, and capital market volatility, though Affirm leverages diverse funding channels for resilience[307](index=307&type=chunk)[309](index=309&type=chunk) - Loan modification programs (payment deferrals, re-amortizations) are used to manage consumer loan repayment and minimize losses, impacting delinquency rates[308](index=308&type=chunk)[310](index=310&type=chunk)[311](index=311&type=chunk) - The company is subject to CFPB supervision and enforcement, which could lead to increased compliance costs or mandated changes to business practices[312](index=312&type=chunk) - U.S. income tax developments, including the One Big Beautiful Bill Act, are being evaluated for their impact on financial statements, with potential for valuation allowance release if pretax earnings continue[313](index=313&type=chunk)[314](index=314&type=chunk) [Key Operating Metrics](index=66&type=section&id=Key%20Operating%20Metrics) Affirm tracks GMV, Active Consumers, and Transactions per Active Consumer, reporting **38% GMV growth** to **$36.7 billion** and **23% active consumer growth** in FY2025 Gross Merchandise Volume (GMV) (FY2023-FY2025) | Fiscal Year | GMV (in billions) | | :---------- | :---------------- | | 2025 | $36.7 | | 2024 | $26.6 | | 2023 | $20.2 | - GMV increased by **38% in FY2025**, driven by growth in top five merchants/platform partners (**47% of total GMV**), direct-to-consumer products, and increases in active merchants and consumers[318](index=318&type=chunk)[319](index=319&type=chunk)[321](index=321&type=chunk) Active Consumers and Transactions per Active Consumer (as of June 30) | Metric | June 30, 2025 | June 30, 2024 | June 30, 2023 | | :------------------------ | :------------ | :------------ | :------------ | | Active consumers (millions) | 23.0 | 18.7 | 16.5 | | Transactions per active consumer | 5.8 | 4.9 | 3.9 | - Active consumers grew by **23% in FY2025**, primarily due to high retention, Affirm Card adoption, and expansion of active merchants and partnerships[324](index=324&type=chunk) - Transactions per active consumer increased by **20% in FY2025**, driven by platform growth, repeat usage, and Affirm Card activity (representing **10% of total transactions** in FY2025)[326](index=326&type=chunk) [Results of Operations](index=68&type=section&id=Results%20of%20Operations) Affirm achieved **$52.2 million net income** in FY2025, a significant improvement from prior losses, with total revenue increasing **39% to $3.22 billion** driven by interest income and loan sales Consolidated Statements of Operations and Comprehensive Income (Loss) Data (FY2023-FY2025) | Metric | FY2025 (in thousands) | FY2024 (in thousands) | FY2023 (in thousands) | 2025 vs 2024 % Change | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | :-------------------- | | Total revenue, net | $3,224,412 | $2,322,999 | $1,587,985 | 39% | | Total operating expenses | $3,311,685 | $2,938,846 | $2,788,847 | 13% | | Operating loss | $(87,273) | $(615,847) | $(1,200,862) | 86% | | Other income, net | $148,737 | $100,320 | $211,617 | 48% | | Income (loss) before income taxes | $61,464 | $(515,527) | $(989,245) | 112% | | Income tax expense (benefit) | $9,279 | $2,230 | $(3,900) | 316% | | Net income (loss) | $52,186 | $(517,757) | $(985,345) | 110% | [Comparison of the Years Ended June 30, 2025 and 2024](index=69&type=section&id=Comparison%20of%20the%20Years%20Ended%20June%2030,%202025%20and%202024) Affirm experienced substantial financial growth in FY2025, with merchant network revenue up **31%**, card network revenue up **53%**, interest income up **34%**, and gain on sales of loans up **94%** Revenue Growth (FY2025 vs FY2024) | Revenue Stream | FY2025 (in thousands) | FY2024 (in thousands) | Change ($) | Change (%) | | :--------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Merchant network revenue | $882,658 | $674,607 | $208,051 | 31% | | Card network revenue | $231,308 | $151,401 | $79,907 | 53% | | Interest income | $1,608,221 | $1,204,355 | $403,866 | 34% | | Gain on sales of loans | $381,622 | $197,153 | $184,469 | 94% | | Servicing income | $120,602 | $95,483 | $25,119 | 26% | | **Total revenue, net** | **$3,224,412** | **$2,322,999** | **$901,413** | **39%** | - Merchant network revenue increased by **31%** due to a **38% increase in GMV**, reaching **$36.7 billion** in FY2025, with active merchants growing to **377 thousand** and active consumers to **23.0 million**[330](index=330&type=chunk) - Card network revenue grew by **53%**, driven by a **45% increase in GMV** processed through issuer processors, reflecting higher Affirm Card and one-time-use virtual debit card activity[332](index=332&type=chunk) - Interest income rose by **34%**, correlated with a **28% increase** in the average balance of loans held for investment to **$6.5 billion**[334](index=334&type=chunk) - Gain on sales of loans increased by **94%**, attributed to a **54% higher loan sale volume** to third-party buyers (**$15.8 billion** in FY2025) and favorable transaction economics[335](index=335&type=chunk) Operating Expense Changes (FY2025 vs FY2024) | Expense Category | FY2025 (in thousands) | FY2024 (in thousands) | Change ($) | Change (%) | | :----------------- | :-------------------- | :-------------------- | :--------- | :--------- | | Loss on loan purchase commitment | $242,264 | $180,395 | $61,869 | 34% | | Provision for credit losses | $616,683 | $460,628 | $156,055 | 34% | | Funding costs | $425,451 | $344,253 | $81,198 | 24% | | Processing and servicing | $457,849 | $343,249 | $114,600 | 33% | | Technology and data analytics | $589,723 | $501,857 | $87,866 | 18% | | Sales and marketing | $434,847 | $576,405 | $(141,558) | (25)% | | General and administrative | $545,053 | $525,291 | $19,762 | 4% | - Sales and marketing expense decreased by **25%**, primarily due to a **$135.2 million decrease** in Amazon warrant expense as a portion of warrants fully vested[351](index=351&type=chunk) - Other income, net, increased by **48%**, mainly driven by an **$82.4 million gain** on the early extinguishment of convertible debt in FY2025, compared to **$12.6 million** in FY2024[355](index=355&type=chunk) [Liquidity and Capital Resources](index=73&type=section&id=Liquidity%20and%20Capital%20Resources) Affirm maintains a capital-efficient model with diverse funding, holding **$2.2 billion in cash** and **$5.2 billion in available funding debt capacity** as of June 30, 2025 - Affirm's liquidity is supported by cash and cash equivalents, available-for-sale securities, and capacity from warehouse/revolving credit facilities, securitization trusts, and forward flow loan sale arrangements[358](index=358&type=chunk)[359](index=359&type=chunk) Cash, Cash Equivalents, and Investments in Debt Securities (as of June 30) | Metric | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :---------------------------------------- | :--------------------------- | :--------------------------- | | Cash and cash equivalents | $1,354,455 | $1,013,106 | | Investments in short-term debt securities | $652,491 | $865,766 | | Investments in long-term debt securities | $218,934 | $265,862 | | **Total** | **$2,225,880** | **$2,144,734** | Debt Maturity Profile (as of June 30, 2025) | Maturity Fiscal Year | Borrowing Capacity (in thousands) | Principal Outstanding (in thousands) | | :------------------- | :-------------------------------- | :----------------------------------- | | 2026 | $500,000 | $183,181 | | 2027 | $1,850,000 | $349,798 | | 2028 | $802,053 | $592,214 | | 2029 | $2,354,613 | $2,383,583 | | 2030 | $951,026 | $892,562 | | Thereafter | $5,200,000 | $2,089,176 | | **Total** | **$11,657,692** | **$6,490,514** | - Affirm's revolving credit facility has an aggregate commitment of **$330.0 million**, with no outstanding borrowings as of June 30, 2025[372](index=372&type=chunk)[596](index=596&type=chunk) - The company issued **$920.0 million** in 0.75% convertible senior notes due 2029 and repurchased **$1.1 billion** of 0% convertible senior notes due 2026, resulting in an **$82.4 million gain** on early extinguishment of debt[597](index=597&type=chunk)[608](index=608&type=chunk) Cash Flow Summary (FY2023-FY2025) | Cash Flow Activity | FY2025 (in thousands) | FY2024 (in thousands) | FY2023 (in thousands) | | :----------------- | :-------------------- | :-------------------- | :-------------------- | | Operating activities | $793,909 | $450,138 | $12,181 | | Investing activities | $(1,083,064) | $(1,325,149) | $(1,653,070) | | Financing activities | $751,425 | $913,149 | $1,349,945 | - Off-balance sheet arrangements include unconsolidated securitization and forward flow transactions, with Affirm retaining variable interests and potential exposure to losses up to **5% of senior notes** and residual trust certificates[383](index=383&type=chunk)[384](index=384&type=chunk) [Critical Accounting Policies and Estimates](index=78&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Affirm's financial statements rely on critical accounting policies and estimates, particularly for the allowance for credit losses and the loss on loan purchase commitment - Critical estimates include the allowance for credit losses, capitalized internal-use software, valuation allowance for deferred tax assets, loss on loan purchase commitment, and fair value of available-for-sale debt securities[390](index=390&type=chunk)[449](index=449&type=chunk) - Loss on loan purchase commitment arises when Affirm is required to purchase loans from originating bank partners at a price exceeding their fair market value, or directly originates loans with par value exceeding fair value[391](index=391&type=chunk)[392](index=392&type=chunk)[393](index=393&type=chunk) - The allowance for credit losses is management's estimate of expected credit losses over the remaining contractual term, based on migration analysis of delinquent and current loan receivables, historical performance, and future economic expectations[395](index=395&type=chunk)[396](index=396&type=chunk) [Recent Accounting Pronouncements](index=79&type=section&id=Recent%20Accounting%20Pronouncements) Affirm adopted ASU 2023-07 on Segment Reporting effective June 30, 2025, and is evaluating other ASUs on Income Taxes, Expense Disaggregation, and Debt with Conversion Options - Affirm adopted ASU 2023-07, 'Segment Reporting,' effective June 30, 2025, which modifies annual and interim segment reporting disclosures to enhance understanding of overall performance and future cash flows[516](index=516&type=chunk) - The company is evaluating the impact of ASU 2023-09, 'Income Taxes,' effective for fiscal years beginning after December 15, 2024, which aims to increase transparency of income tax disclosures[517](index=517&type=chunk) - Affirm is also evaluating ASU 2024-03, 'Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, and ASU 2024-04, 'Debt with Conversion and Other Options,' effective for fiscal years beginning after December 15, 2025[518](index=518&type=chunk)[519](index=519&type=chunk) [ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk](index=80&type=section&id=ITEM%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Affirm is exposed to interest rate risk, impacting fair value of securities, interest margins, and loan sale economics, managed through hedging and proprietary credit risk models - Affirm's primary market risk exposure is from interest rate fluctuations, which can impact the fair value of fixed-rate securities, reduce interest margins on variable-rate debt, and affect loan sale economics[400](index=400&type=chunk)[401](index=401&type=chunk)[403](index=403&type=chunk) - Elevated interest rates may adversely affect consumer spending, borrowing willingness, and ability to repay, potentially leading to increased delinquencies, defaults, and charge-offs[402](index=402&type=chunk) - The company uses an interest rate hedging program, including interest rate derivatives (caps and swaps), to mitigate interest rate risk, with some designated as cash flow hedges[404](index=404&type=chunk) - Affirm estimates a hypothetical **100 basis point upward parallel shock** to interest rates would have a less than **$65.0 million adverse impact** on cash flows over the next 12 months[404](index=404&type=chunk) - Credit risk on consumer loans is managed using proprietary underwriting models (ITACs score) that assess credit risk at origination and monitor portfolio performance against external factors[405](index=405&type=chunk)[406](index=406&type=chunk) - As of June 30, 2025, Affirm was exposed to credit risk on **$7.0 billion of loans** held on its balance sheet, with loan receivables diversified geographically (California and Texas each representing approximately **10-11%**)[407](index=407&type=chunk) - The company also has credit risk exposure from off-balance sheet loans subject to risk sharing arrangements and retained interests in unconsolidated securitization trusts, with maximum exposure to losses of **$91.1 million** and **$76.9 million** respectively as of June 30, 2025[408](index=408&type=chunk) [ITEM 8. Financial Statements and Supplementary Data](index=81&type=section&id=ITEM%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Affirm's audited consolidated financial statements for FY2023-2025, with an unqualified opinion from Deloitte & Touche LLP on financial statements and internal controls - The independent registered public accounting firm, Deloitte & Touche LLP, issued an unqualified opinion on Affirm's consolidated financial statements for the period ended June 30, 2025, and on the effectiveness of its internal control over financial reporting[414](index=414&type=chunk)[415](index=415&type=chunk) - The Allowance for Credit Losses (ACL) for U.S. and Canada loans was identified as a critical audit matter due to its subjective nature and the significant judgment required in its estimation[419](index=419&type=chunk)[420](index=420&type=chunk) Consolidated Balance Sheet Highlights (as of June 30, 2025 and 2024) | Asset/Liability | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------- | :--------------------------- | :--------------------------- | | Total assets | $11,154,929 | $9,519,619 | | Loans held for investment, net | $6,628,606 | $5,360,959 | | Total liabilities | $8,085,919 | $6,787,630 | | Convertible senior notes, net | $1,153,000 | $1,341,430 | | Notes issued by securitization trusts | $4,833,855 | $3,236,873 | | Total stockholders' equity | $3,069,009 | $2,731,989 | Consolidated Statements of Operations Highlights (FY2023-FY2025) | Metric | FY2025 (in thousands) | FY2024 (in thousands) | FY2023 (in thousands) | | :-------------------------- | :-------------------- | :-------------------- | :-------------------- | | Total revenue, net | $3,224,412 | $2,322,999 | $1,587,985 | | Operating loss | $(87,273) | $(615,847) | $(1,200,862) | | Net income (loss) | $52,186 | $(517,757) | $(985,345) | | Basic EPS | $0.16 | $(1.67) | $(3.34) | | Diluted EPS | $0.15 | $(1.67) | $(3.34) | Consolidated Statements of Cash Flows Highlights (FY2023-FY2025) | Cash Flow Activity | FY2025 (in thousands) | FY2024 (in thousands) | FY2023 (in thousands) | | :----------------- | :-------------------- | :-------------------- | :-------------------- | | Operating activities | $793,909 | $450,138 | $12,181 | | Investing activities | $(1,083,064) | $(1,325,149) | $(1,653,070) | | Financing activities | $751,425 | $913,149 | $1,349,945 | [ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=153&type=section&id=ITEM%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There are no changes in or disagreements with accountants on accounting and financial disclosure to report - No changes in or disagreements with accountants on accounting and financial disclosure[712](index=712&type=chunk) [ITEM 9A. Controls and Procedures](index=153&type=section&id=ITEM%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of June 30, 2025, a conclusion affirmed by Deloitte & Touche LLP - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of June 30, 2025[713](index=713&type=chunk) - Management assessed and concluded that internal control over financial reporting was effective as of June 30, 2025, based on COSO criteria[714](index=714&type=chunk)[718](index=718&type=chunk) - Deloitte & Touche LLP audited and expressed an unqualified opinion on the effectiveness of Affirm's internal control over financial reporting as of June 30, 2025[719](index=719&type=chunk)[722](index=722&type=chunk)[723](index=723&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[720](index=720&type=chunk) [ITEM 9B. Other Information](index=156&type=section&id=ITEM%209B.%20Other%20Information) CFO Rob O'Hare adopted a Rule 10b5-1 trading plan on June 12, 2025, for exercising stock options and selling Class A common stock and vested RSUs - Rob O'Hare, CFO, adopted a Rule 10b5-1 trading arrangement on June 12, 2025[729](index=729&type=chunk) - The plan provides for the exercise of up to **66,591 employee stock options** and the sale of underlying Class A common stock, along with shares from vested RSUs[729](index=729&type=chunk) - Transactions under the plan are scheduled from October 1, 2025, to March 31, 2026[729](index=729&type=chunk) [ITEM 9C. Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=156&type=section&id=ITEM%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to Affirm Holdings, Inc - Not applicable[730](index=730&type=chunk) PART III [ITEM 10. Directors, Executive Officers and Corporate Governance](index=158&type=section&id=ITEM%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from Affirm's 2025 Annual Meeting of Stockholders Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[732](index=732&type=chunk) - Affirm has a Code of Ethics and Business Conduct and an Insider Trading Policy, available on its investor relations website[733](index=733&type=chunk)[734](index=734&type=chunk) [ITEM 11. Executive Compensation](index=158&type=section&id=ITEM%2011.%20Executive%20Compensation) Executive compensation information is incorporated by reference from Affirm's 2025 Annual Meeting of Stockholders Proxy Statement - Executive compensation information is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[735](index=735&type=chunk) [ITEM 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=158&type=section&id=ITEM%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details regarding security ownership of certain beneficial owners and management are incorporated by reference from Affirm's 2025 Annual Meeting of Stockholders Proxy Statement - Information on security ownership of certain beneficial owners and management, and related stockholder matters, is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[736](index=736&type=chunk) [ITEM 13. Certain Relationships and Related Transactions and Director Independence](index=158&type=section&id=ITEM%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from Affirm's 2025 Annual Meeting of Stockholders Proxy Statement - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[737](index=737&type=chunk) [ITEM 14. Principal Accountant Fees and Services](index=158&type=section&id=ITEM%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from Affirm's 2025 Annual Meeting of Stockholders Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the 2025 Annual Meeting of Stockholders Proxy Statement[738](index=738&type=chunk) PART IV [ITEM 15. Exhibits and Financial Statement Schedules](index=159&type=section&id=ITEM%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements, schedules, and exhibits filed as part of the Form 10-K, with some portions omitted for confidentiality - Consolidated financial statements are listed in the 'Index to Consolidated Financial Statements' under Part II, Item 8[740](index=740&type=chunk) - All financial statement schedules are omitted because the required information is either not present or included in Part II, Item 8[741](index=741&type=chunk) - A detailed list of exhibits, including corporate documents, agreements (e.g., Amazon, Shopify), and certifications, is provided, with some portions omitted for confidentiality[742](index=742&type=chunk)[746](index=746&type=chunk) [ITEM 16. Form 10-K Summary](index=162&type=section&id=ITEM%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided - No Form 10-K Summary is provided[748](index=748&type=chunk) [Signatures](index=163&type=section&id=Signatures) The Annual Report on Form 10-K is duly signed by the CEO, Max Levchin, and other key officers and directors, with a Power of Attorney granted for amendments - The report is signed by Max Levchin, Chief Executive Officer (Principal Executive Officer), on August 28, 2025[753](index=753&type=chunk) - A Power of Attorney is granted to Max Levchin, Rob O'Hare, and Katherine Adkins to sign and file amendments to the Annual Report[754](index=754&type=chunk) - Other signatories include the Chief Financial Officer, Chief Accounting Officer, and various directors[757](index=757&type=chunk)