Company: AFRM
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0001820953-25-000012
Chunk: 61

Company: Affirm Holdings, Inc.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 1
Chunk 61
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116 Profit Share LiabilityOn January 1, 2021, we entered into a commercial agreement with an enterprise partner, in which we are obligated to share in the profitability of transactions facilitated by our platform. Upon capture of a loan under this program, we record a liability associated with the estimated future profit to be shared over the life of the loan based on estimated program profitability levels. This liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets. The following table summarizes the activity related to the fair value of the profit share liability (in thousands):Three Months Ended December 31,Six Months Ended December 31,2024202320242023Fair value at beginning of period$2,015 $1,079 $1,974 $1,832 Facilitation of loans4,238 1,160 5,465 2,088 Actual performance(3,271)(1,166)(6,299)506 Subsequent changes in fair value3,129 471 4,971 (2,882)Fair value at end of period$6,111 $1,544 $6,111 $1,544 Significant unobservable inputs used for our Level 3 fair value measurement of the profit share liability are the discount rate and estimated program profitability. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.

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The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the profit sharing liability as of December 31, 2024 and June 30, 2024:December 31, 2024Unobservable InputMinimumMaximumWeighted Average (1)Discount rate30.00%30.00%30.00%Program profitability0.97%2.02%1.94%June 30, 2024Unobservable InputMinimumMaximumWeighted Average (1)Discount rate30.00%30.00%30.00%Program profitability0.32%1.01%0.96%(1)Unobservable inputs were weighted by relative fair value.Risk Sharing Arrangements In connection with certain capital funding 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