Company: AFRM
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001820953-25-000052
Chunk: 57

Company: Affirm Holdings, Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 1
Chunk 57
---
 our interim condensed consolidated statements of operations and comprehensive income (loss). For each counterparty, we have recognized a net asset or net liability based on the estimated fair value of future payments we expect to receive from or make to the counterparty. As of March 31, 2025 and June 30, 2024, we held assets related to these arrangements of $43.7 million and $33.9 million, respectively, and liabilities of $0.4 million and $0.9 million, respectively.As of March 31, 2025, we estimated the fair value of future settlements using a discounted cash flow model. Significant assumptions used in the valuation of our risk sharing assets and liabilities are as follows:Discount RateWe estimate future cash flows to be received or paid under the agreements are discounted as a part of determining the fair value of the risk sharing arrangements. The discount rate reflects the time value of money and a risk premium intended to reflect the amount of compensation market participants would require.Loss RateWe estimate the loss rate as the probability of loan defaults and write-offs, which are used to project future risk-sharing cash flows.

49

Prepayment RateWe estimate the annualized prepayment rate as the expected 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.The following table summarizes the activity related to the fair value of the risk sharing assets (in thousands):Three Months Ended March 31,Nine Months Ended March 31,2025202420252024Fair value at beginning of period$44,969 $16,690 $33,884 $— Initial transfers of financial assets3,605 6,317 19,173 20,880 Cash settlements(7,665)— (13,489)— Subsequent changes in fair value2,830 2,019 4,171 4,146 Fair value at end of period$43,739 $25,026 $43,739 $25,026 The following table summarizes the activity related to the fair value of the risk sharing liabilities (in thousands):Three Months Ended March 31,Nine Months Ended March 31,2025202420252024Fair value at beginning of period$1,498 $512 $918 $— Cash settlements(909)— (1,354)— Subsequent changes in fair value(176)95 849 607 Fair value at end of