Company: AFRM
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001820953-25-000052
Chunk: 53

Company: Affirm Holdings, Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 1
Chunk 53
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Gross default rate increase of 50%$— $(1)Adequate compensation assumption:Adequate compensation increase of 10%$4,358 $3,153 Adequate compensation increase of 20%$8,715 $6,305 Discount rate assumption:Discount rate increase of 25%$(2)$(19)Discount rate increase of 50%$(3)$(37) Performance Fee LiabilityIn accordance with our agreements with our originating bank partners, we pay a fee for each loan that is fully repaid by the consumer, due at the end of the period in which the loan is fully repaid. We recognize a liability upon the purchase of a loan for the expected future payment of the performance fee. 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. Any changes in the fair value of the liability are reflected in other income, net, in the interim condensed consolidated statements of operations and comprehensive income (loss). 

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The following table summarizes the activity related to the fair value of the performance fee liability (in thousands):Three Months Ended March 31,Nine Months Ended March 31,2025202420252024Fair value at beginning of period$1,773 $1,594 $1,503 $1,581 Purchases of loans520 424 1,609 1,293 Settlements paid(510)(493)(1,488)(1,485)Subsequent changes in fair value(13)(9)146 127 Fair value at end of period$1,770 $1,516 $1,770 $1,516 Significant unobservable inputs used for our Level 3 fair value measurement of the performance fee liability are the discount rate, refund rate, and default rate. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the performance fee liability as of March 31, 2025 and June 30, 2024:March 31, 2025Unobservable InputMinimumMaximumWeighted Average (1)Discount rate7.75%10.00%9.39%Refund rate1.50%1.50%1.50%Default rate0.92%4.