Company: AFRM
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050295
Chunk: 45

Company: Affirm Holdings, Inc.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 45
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 discount estimated future cash flows to present value in determining fair value. It reflects the rate of return market participants would require to compensate for time value of money plus a premium based on relative risk, liquidity and other market based factors.•Default Rate - The estimated annualized rate of charge-offs affecting the projected unpaid principal balance and expected term of the loan portfolio.•Loss Rate - The estimated lifetime rate of loan charge-offs as a percentage of the initial settled principal balance.•Prepayment Rate - The estimated annualized excess loan payment received in a given month as a percentage of the outstanding principal balance at the beginning of the month minus the scheduled principal payment.•Refund Rate - The rate of refunded transactions as a percentage of the outstanding loan balance over the remaining life of the loan portfolio.•Program Profitability - The estimated future profit to be shared with enterprise partners as a percentage of total loans outstanding, based on the terms of the respective commercial agreements.Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.Servicing Assets and LiabilitiesWe sold loans with an unpaid principal balance of $4.9 billion and $2.8 billion for the three months ended September 30, 2025 and 2024, respectively, for which we retained servicing rights. As of September 30, 2025 and June 30, 2025, we serviced loans which we sold with a remaining unpaid principal balance of $8.5 billion and $7.8 billion, respectively. We earned $39.7 million and $26.0 million of servicing income for the three months ended September 30, 2025 and 2024, respectively.

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We use discounted cash flow models to arrive at an estimate of fair value. As of September 30, 2025 and June 30, 2025, the aggregate fair value of the servicing assets was measured at $0.7 million and $0.9 million and presented within other assets in the interim condensed consolidated balance sheets. As of September 30, 2025 and June 30, 2025, the aggregate fair value of the servicing liabilities was measured at $0.01 million and $0.04 million, respectively, and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets.The following table summarizes the activity related to the aggregate fair value of our servicing assets (in thousands):Three Months Ended September 30,20252024Fair value at beginning of period$906 $574 Initial transfers