Company: AFRM
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0001820953-25-000012
Chunk: 147

Company: Affirm Holdings, Inc.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 2
Chunk 147
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 December 31, 2024. The increase in the allowance rate from December 31, 2023 is primarily driven by adjustments in our credit criteria in light of increasing interest income generated by our loans and changes in the loan mix.

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 $23.1 million, or 27%, and $53.4 million, or 34%, for the three and six months ended December 31, 2024, respectively, compared to the same periods in 2023. The increase is primarily due to an increase of funding debt and notes issued by securitization trusts during the three and six months ended December 31, 2024. The average total of funding debt from warehouses and securitizations for the three and six months ended December 31, 2024 was $5.9 billion and $5.7 billion, respectively, compared to $4.4 billion and $4.2 billion, respectively, during the same period in 2023, an increase of $1.6 billion, or 36%, and $1.4 billion, or 34%, 

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respectively. The increase was also attributable to a larger volume of on-balance sheet loans being retained during the period. The average on-balance sheet loan balance was $6.6 billion and $6.3 billion for the three and six months ended December 31, 2024, respectively, an increase of 34% and 32% compared to $4.9 billion and $4.7 billion during the same period in 2023, respectively.

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 $25.8 million, or 29%, and $45.2 million,