10-Q 1 afrm-20220331.htm 10-Q afrm-20220331
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022

OR

 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from  __________ to __________

Commission file number 001-39888

Affirm Holdings, Inc.
(Exact name of registrant as specified in its charter)
Delaware
84-2224323
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
650 California Street
San Francisco, California
94108
(Address of principal executive offices)
(Zip Code)
(415) 984-0490
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A common stock, par value $0.00001 per shareAFRMThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes     No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
  
Non-accelerated filer  
Smaller reporting company
  
Emerging growth company
  
                
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes        No  

As of May 10, 2022, the number of shares of the registrant’s Class A common stock outstanding was 226,270,872 and the number of shares of the registrant's Class B common stock outstanding was 60,159,497.




TABLE OF CONTENTS
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2

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (“Form 10-Q”), as well as information included in oral statements or other written statements made or to be made by us, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) , and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this report, including statements regarding our future results of operations and financial condition, business strategy, and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other similar expressions. These forward-looking statements include, but are not limited to, statements concerning the following:

our expectations regarding our future revenue, expenses, and other operating results and key operating metrics;
our ability to attract additional merchants and retain and grow our relationships with our existing merchant and commerce partners;
our ability to compete successfully in a highly competitive industry;
our ability to attract new consumers and retain and grow our relationships with our existing consumers;
our expectations regarding the development, innovation, introduction of, and demand for, our products;;
our ability to successfully engage new originating bank partners;
the availability of funding sources to support our business model;
our ability to effectively price and score credit risk using our proprietary risk model;
the performance of loans facilitated and originated through our platform;
the future growth rate of our revenue and related key operating metrics;
our ability to achieve or sustain profitability in the future;
our ability to remain in compliance with laws and regulations that currently apply or become applicable to our business;
our ability to protect our confidential, proprietary, or sensitive information;
past and future acquisitions, investments, and other strategic investments;
our ability to maintain, protect, and enhance our brand and intellectual property;
litigation, investigations, regulatory inquiries, and proceedings;
the impact of macroeconomic conditions on our business, including the impact of the COVID-19 pandemic; and
the size and growth rates of the markets in which we compete.

Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this Form 10-Q and our most recently filed Annual Report on Form 10-K. Other sections of this Form 10-Q may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.
3


You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, achievements, events, or circumstances. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. You should read this Form 10-Q and the documents that we have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance, and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.

In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (investors.affirm.com), our filings with the Securities and Exchange Commission (“SEC”), webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with investors and the general public about our company, our products, and other issues. It is possible that the information that we make available on our website may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website. The contents of our website are not incorporated into this filing. We have included our investor relations website address as an inactive textual reference and for convenience only, and do not intend it to be an active link to our website.

4

Part I - Financial Information

Item 1. Unaudited Financial Statements

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except shares and per share amounts)
March 31, 2022June 30, 2021
Assets
Cash and cash equivalents$2,261,937 $1,466,558 
Restricted cash413,628 226,074 
Securities available for sale at fair value617,023 16,170 
Loans held for sale3,618 13,030 
Loans held for investment2,502,860 2,022,320 
Allowance for credit losses(159,475)(117,760)
Loans held for investment, net2,343,385 1,904,560 
Accounts receivable, net124,614 91,575 
Property, equipment and software, net141,658 62,499 
Goodwill547,393 516,515 
Intangible assets60,890 67,930 
Commercial agreement assets287,129 227,377 
Other assets230,451 274,679 
Total Assets$7,031,726 $4,866,967 
Liabilities and Stockholders’ Equity
Liabilities:
Accounts payable$48,985 $57,758 
Payable to third-party loan owners35,962 50,079 
Accrued interest payable2,992 2,751 
Accrued expenses and other liabilities313,307 323,577 
Convertible senior notes, net1,705,624  
Notes issued by securitization trusts1,447,568 1,176,673 
Funding debt901,233 680,602 
Total liabilities4,455,671 2,291,440 
Commitments and contingencies (Note 8)
Stockholders’ equity:
    Class A common stock, par value $0.00001 per share: 3,030,000,000 shares authorized, 225,617,857 shares issued and outstanding as of March 31, 2022; 3,030,000,000 shares authorized, 181,131,728 shares issued and outstanding as of June 30, 2021
2 2 
    Class B common stock, par value $0.00001 per share: 140,000,000 shares authorized, 60,160,468 shares issued and outstanding as of March 31, 2022; 140,000,000 authorized, 88,226,376 shares issued and outstanding as of June 30, 2021
1 1 
Additional paid in capital3,987,881 3,467,236 
Accumulated deficit(1,419,506)(898,485)
Accumulated other comprehensive gain (loss)7,677 6,773 
Total stockholders’ equity2,576,055 2,575,527 
Total Liabilities and Stockholders’ Equity $7,031,726 $4,866,967 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
5


AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS, CONT.
(Unaudited)
(in thousands, except shares and per share amounts)

    The following table presents the assets and liabilities of consolidated variable interest entities (“VIEs”), which are included in the interim condensed consolidated balance sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. The liabilities in the table below include liabilities for which creditors do not have recourse to the general credit of the Company. Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs only and exclude intercompany balances that eliminate upon consolidation.
March 31, 2022June 30, 2021
Assets of consolidated VIEs, included in total assets above
Restricted cash$290,661 $142,385 
Loans held for investment2,214,932 1,743,810 
Allowance for credit losses(125,115)(94,463)
Loans held for investment, net2,089,817 1,649,347 
Accounts receivable, net8,195 8,209 
Other assets12,398 3,683 
Total assets of consolidated VIEs$2,401,071 $1,803,624 
Liabilities of consolidated VIEs, included in total liabilities above
Accounts payable$2,960 $2,927 
Accrued interest payable2,941 2,613 
Accrued expenses and other liabilities12,433 3,820 
Notes issued by securitization trusts1,447,568 1,176,673 
Funding debt734,430 607,394 
Total liabilities of consolidated VIEs2,200,332 1,793,427 
Total net assets$200,739 $10,197 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
6


AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended March 31,Nine Months Ended March 31,
2022202120222021
Revenue
Merchant network revenue$121,054 $97,999 $340,385 $290,894 
Virtual card network revenue23,169 13,809 69,122 30,587 
Total network revenue144,223 111,808 409,507 321,481 
Interest income134,599 94,530 390,256 222,624 
Gain on sales of loans52,484 16,350 141,153 47,344 
Servicing income23,456 7,977 44,242 17,235 
Total Revenue, net$354,762 $230,665 $985,158 $608,684 
Operating Expenses
Loss on loan purchase commitment$46,853 $62,054 $163,796 $195,690 
Provision for credit losses66,294 (1,063)182,581 40,389 
Funding costs15,824 14,665 50,277 37,077 
Processing and servicing43,371 21,368 110,421 51,668 
Technology and data analytics110,291 104,806 283,293 180,208 
Sales and marketing156,214 58,184 363,650 119,878 
General and administrative142,466 179,999 419,962 253,188 
Total Operating Expenses581,313 440,013 1,573,980 878,098 
Operating Loss$(226,551)$(209,348)$(588,822)$(269,414)
Other (expense) income, net172,139 (77,773)68,507 (48,088)
Loss Before Income Taxes$(54,412)$(287,121)$(520,315)$(317,502)
Income tax expense (benefit)259 (70)706 105 
Net Loss$(54,671)$(287,051)$(521,021)$(317,607)
Other Comprehensive Income (Loss)
Foreign currency translation adjustments$5,406 $2,829 $3,945 $5,048 
Unrealized gain (loss) on securities available for sale, net(2,105) (3,041) 
Net Other Comprehensive Income (Loss)3,301 2,829 904 5,048 
Comprehensive Loss$(51,370)$(284,222)$(520,117)$(312,559)
Per share data:
Net loss per share attributable to common stockholders for Class A and Class B
Basic$(0.19)$(1.23)$(1.86)$(2.60)
Diluted$(0.19)$(1.23)$(1.86)$(2.80)
Weighted average common shares outstanding
Basic285,641,820 233,309,590 279,570,015 122,161,508 
Diluted285,641,820 233,309,590 279,570,015 123,329,359 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
7

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
(in thousands, except share amounts)

Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity (Deficit)
SharesAmount
Balance as of June 30, 2021269,358,104 $3 $3,467,236 $(898,485)$6,773 $2,575,527 
Issuance of common stock upon exercise of stock options7,403,503 — 37,470 — — 37,470 
Issuance of common stock in acquisition183,733 — 10,000 — — 10,000 
Vesting of restricted stock units772,653 — — — — — 
Repurchases of common stock(821)— (4)— — (4)
Stock-based compensation— — 104,879 — — 104,879 
Tax withholding on stock-based compensation— — (39,817)— — (39,817)
Foreign currency translation adjustments— — — — (3,802)(3,802)
Unrealized gain (loss) on securities available for sale— — — — (279)(279)
Net Loss— — — (306,615)— (306,615)
Balance as of September 30, 2021277,717,172 $3 $3,579,764 $(1,205,100)$2,692 $2,377,359 
Issuance of common stock upon exercise of stock options4,689,973 — 21,674 — — 21,674 
Vesting of restricted stock units803,263 — — — — — 
Vesting of warrants for common stock— — 198,383 — — 198,383 
Stock-based compensation— — 101,920 — — 101,920 
Tax withholding on stock-based compensation— — (72,963)— — (72,963)
Foreign currency translation adjustments— — — — 2,341 2,341 
Unrealized gain (loss) on securities available for sale— — — — (657)(657)
Net Loss— — — (159,735)— (159,735)
Balance as of December 31, 2021283,210,408 $3 $3,828,778 $(1,364,835)$4,376 $2,468,322 
Issuance of common stock upon exercise of stock options1,258,865 — 8,171 — — 8,171 
Repurchases of Common Stock(9,472)— (80)— — (80)
Vesting of restricted stock units1,318,524 — — — — — 
Vesting of warrants for common stock — — 92,169 — — 92,169 
Stock-based compensation— — 113,005 — — 113,005 
Tax withholding on stock-based compensation— — (54,162)— — (54,162)
Foreign currency translation adjustments— — — — 5,406 5,406 
Unrealized gain (loss) on securities available for sale— — — — (2,105)(2,105)
Net Loss— — — (54,671)— (54,671)
Balance as of March 31, 2022285,778,325 $3 $3,987,881 $(1,419,506)$7,677 $2,576,055 





8


AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENT OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ EQUITY (DEFICIT), CONT.
(Unaudited)
(in thousands, except share amounts)

Redeemable Convertible
Preferred Stock
Common StockAdditional Paid-In CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity (Deficit)
SharesAmountSharesAmount
Balance as of June 30, 2020122,115,971 $804,170 47,684,427  80,373 (447,167)(302)$(367,096)
Issuance of common stock upon exercise of stock option— — 388,246 — 1,741 — — 1,741 
Repurchases of common stock— — (115,625)— (584)— — (584)
Issuance of redeemable convertible preferred stock, net of issuance costs of $440
21,824,141 434,434 — — — — — — 
Vesting and exercise of warrants for common stock— — 5,074,398 — 67,645 — — 67,645 
Stock-based compensation— — — — 7,175 — — 7,175 
Conversion of convertible debt4,444,321 88,559 — — (42,124)— — (42,124)
Effects of adoption of new accounting standards— — — — — (9,980)— (9,980)
Foreign currency translation adjustments— — — — — — 405 405 
Net Loss— — — — — (3,946)— (3,946)
Balance as of September 30, 2020148,384,433 1,327,163 53,031,446 $ $114,226 $(461,093)$103 $(346,764)
Issuance of common stock upon exercise of stock option— — 6,220,024 — 21,676 — — 21,676 
Repurchases of common stock— — (12,100)— (199)— — (199)
Issuance of preferred stock, net of issuance costs of $143
12,546 108 — — — — — — 
Stock-based compensation— — — — 6,774 — — 6,774 
Foreign currency translation adjustments— — — — — — 1,814 1,814 
Net Loss— — — — — (26,610)— (26,610)
Balance as of December 31, 2020148,396,979 1,327,271 59,239,370 $ $142,477 $(487,703)$1,917 $(343,309)
Issuance of common stock upon initial public offering, net  28,290,000 1 1,305,301 — — 1,305,302 
Issuance of common stock upon exercise of stock options  4,721,033 — 19,819 — — 19,819 
Issuance of common stock upon exercise of warrants  15,577,185 — 203,511 — — 203,511 
Issuance of common stock in acquisition  6,209,806 — 117,023 — — 117,023 
Vesting of restricted stock units  2,225,411 — — — — — 
Repurchases of common stock  (1,666)— (3)— — (3)
Conversion of redeemable convertible preferred stock(148,396,979)(1,327,271)148,396,979 2 1,327,269 (11)— 1,327,260 
Stock-based compensation  — — 187,883 — — 187,883 
Tax withholding on stock-based compensation  — — (127,566)— — (127,566)
Foreign currency translation adjustments  — — — — 2,829 2,829 
Net Loss— — — — — (287,051)— (287,051)
Balance as of March 31, 2021  264,658,118 $3 $3,175,714 $(774,765)$4,746 $2,405,698 

The accompanying notes are an integral part of these interim condensed consolidated financial statements.
9

AFFIRM HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
Nine Months Ended March 31,
20222021
Cash Flows from Operating Activities
Net Loss$(521,021)$(317,607)
Adjustments to reconcile net loss to net cash used in operating activities:
Provision for credit losses182,581 40,389 
Amortization of premiums and discounts on loans, net(129,714)(60,705)
Gain on sales of loans(141,153)(47,344)
Changes in fair value of assets and liabilities(38,821)45,310 
Amortization of commercial agreement assets72,804 50,097 
Amortization of debt issuance costs13,215 3,675 
Amortization of discount on securities available for sale968  
Commercial agreement warrant expense157,023  
Stock-based compensation280,113 192,363 
Depreciation and amortization35,607 12,092 
Other(5,725)18,163 
Purchases of loans held for sale(3,869,327)(1,640,672)
Proceeds from the sale of loans held for sale3,868,919 1,599,554 
Change in operating assets and liabilities:
Accounts receivable, net(42,467)(6,461)
Other assets28,018 (208,798)
Accounts payable(8,773)4,064 
Payable to third-party loan owners(14,117)11,526 
Accrued interest payable240 2,535 
Accrued expenses and other liabilities28,545 128,602 
Net Cash Used in Operating Activities(103,085)(173,217)
Cash Flows from Investing Activities
Purchases and origination of loans held for investment(7,529,324)(4,313,834)
Proceeds from the sale of loans held for investment1,330,341 348,195 
Principal repayments and other loan servicing activity5,867,583 3,002,351 
Acquisition, net of cash and restricted cash acquired(5,999)(104,776)
Acquisition of commercial agreement assets (25,900)
Additions to property, equipment and software(59,254)(12,414)
Purchases of securities available for sale(770,047) 
Proceeds from maturities and repayments of securities available for sale