Company: AFRM
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0001820953-25-000012
Chunk: 56

Company: Affirm Holdings, Inc.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 1
Chunk 56
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 respectively, $3.1 billion and $5.2 billion for the three and six months ended December 31, 2023, respectively, for which we retained servicing rights. As of December 31, 2024 and June 30, 2024, we serviced loans which we sold with a remaining unpaid principal balance of $6.9 billion and $5.1 billion, respectively.We use discounted cash flow models to arrive at an estimate of fair value. Significant assumptions used in the valuation of our servicing rights are as follows:Adequate CompensationWe estimate adequate compensation as the rate a willing market participant would require for servicing loans with similar characteristics as those in the serviced portfolio. Discount RateEstimated future payments to be received under servicing agreements are discounted as a part of determining the fair value of the servicing rights. For servicing rights on loans, the discount rate reflects the time value of money and a risk premium intended to reflect the amount of compensation market participants would require.Gross Default RateWe estimate the timing and probability of early loan payoffs, loan defaults and write-offs, thus affecting the projected unpaid principal balance and expected term of the loan, which are used to project future servicing revenue and expenses.We earned $28.7 million and $54.7 million of servicing income for the three and six months ended December 31, 2024, respectively, and $22.4 million and $42.6 million for the three and six months ended December 31, 2023, respectively.

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As of December 31, 2024 and June 30, 2024, the aggregate fair value of the servicing assets was measured at $0.8 million and $0.6 million, respectively, and presented within other assets in the interim condensed consolidated balance sheets. As of December 31, 2024 and June 30, 2024, the aggregate fair value of the servicing liabilities was measured at $0.2 million and $0.7 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 December 31,Six Months Ended December 31,2024202320242023Fair value at beginning of period$435 $569 $574 $880 Initial transfers of financial assets230 — 230 — Subsequent changes in fair value141 (204)2 (515)Fair value at end of