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We currently rely on Celtic Bank and Lead Bank to originate substantially all of the loans facilitated through our platform.
−Removed: In addition, we currently rely on a single card issuing bank partner, Evolve Bank & Trust, to issue the Affirm Card.
−Removed: If any of our agreements with Celtic Bank, Lead Bank and/or Evolve Bank & Trust are terminated, and we are unable to replace such agreements, our business, results of operations, financial condition, and future prospects would be materially and adversely affected.
+Added: In addition, we have relationships with a small number of card issuing bank partners to issue the Affirm Card.
+Added: If any of our agreements with Celtic Bank, Lead Bank and/or our card issuing bank partners are terminated, and we are unable to replace such agreements, our business, results of operations, financial condition, and future prospects would be materially and adversely affected.
• We may not be able to sustain our revenue and GMV growth rates, or our growth rate of related key operating metrics, in the future.
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• To the extent we seek to execute acquisitions, strategic investments, alliances, divestitures or other transactions, we may be unable to achieve the strategic objectives of these transactions, and such transactions may be disruptive to our ongoing operations.
−Removed: • Expansion into new international geographies, including the U.K., presents a variety of challenges and risks.
+Added: • Expansion into new international geographies presents a variety of challenges and risks.
• The loss of the services of our Founder and Chief Executive Officer, as well as our inability to attract and retain highly skilled employees, could materially and adversely affect our business, results of operations, financial condition, and future prospects.
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the attractiveness to commercial partners of our technology and data-driven platform;
−Removed: services and products offered by competitors;
+Added: services, products and financial terms offered by competitors;
and our ability to perform under, and maintain, our commercial agreements.
Furthermore, having a diversified mix of commercial partners is important to mitigate risk associated with changing consumer spending behavior, economic conditions and other factors that may affect a particular type of commercial partner or industry.
−Removed: Our continued success also is dependent on our ability to successfully grow and develop relationships with our commercial partners, particularly early-stage relationships with large e-commerce retailers and platforms such as Amazon and Apple Pay.
+Added: Our continued success also is dependent on our ability to successfully grow and develop relationships with our commercial partners, particularly early-stage relationships with large e-commerce retailers and platforms such as Apple Pay.
The pace of development, integration and rollout of these early-stage relationships is often unpredictable and is generally not within our control.
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Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to products and services and led to the expansion of competition in digital payment options such as pay-over-time solutions.
−Removed: Our pay-over-time offerings are increasingly be presented alongside competitor options, including merchants’ proprietary pay-over-time options, at checkout, and we expect this trend to continue.
+Added: Our pay-over-time offerings are increasingly presented alongside competitor options, including merchants’ proprietary pay-over-time options, at checkout, and we expect this trend to continue.
Some of our competitors, particularly the credit card issuing banks set forth above, are substantially larger than we are and have longer operating histories than we do, which gives those competitors advantages we do not have, such as more diversified products, a broader consumer and merchant base, greater brand recognition and brand loyalty, the ability to reach more consumers, the ability to cross sell their products, operational efficiencies, the ability to cross-subsidize their offerings through their other business lines, more versatile technology platforms, broad-based local distribution capabilities, and lower-cost funding.
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To the extent that any commercial partner constitutes a material portion of our total revenue or GMV for a fiscal period for which financial results are being reported in a Quarterly Report on Form 10-Q or Annual Report on Form 10-K, we will disclose the respective percentage contribution in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for that period.
−Removed: The concentration of a significant portion of our business and transaction volume with a limited number of commercial partners, or type of partner or industry, exposes us disproportionately to any of those commercial
−Removed: partners choosing to no longer partner with us or choosing to partner with a competitor, to the economic performance of those partners or industry or to any events, circumstances, or risks affecting such partners or industry.
−Removed: In addition, a material modification in the production levels (including supply chain issues impacting component parts of products sold by our commercial partners) and/or financial operations of any significant commercial partner could affect the results of our operations, financial condition, and future prospects.
+Added: The concentration of a significant portion of our business and transaction volume with a limited number of commercial partners, or type of partner or industry, exposes us disproportionately to any of those commercial partners choosing to no longer partner with us or choosing to partner with a competitor, to the economic performance of those partners or industry or to any events, circumstances, or risks affecting such partners or industry.
+Added: In addition, a material modification in the production levels (including supply chain issues impacting component parts of products sold by our commercial partners), the imposition of tariffs on global trade and/or financial operations of any significant commercial partner could affect the results of our operations, financial condition, and future prospects.
We currently rely on a small number of originating bank partners, including Celtic Bank and Lead Bank (“Primary Originating Banks”), to originate substantially all of the loans facilitated through our platform, and a single issuing bank partner, Evolve Bank & Trust (“Card Issuing Bank”), to issue the Affirm Card.
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Our Primary Originating Banks originate substantially all partner bank originated loans facilitated through our platform.
−Removed: In addition, as of the end of fiscal 2024, we relied on a single Card Issuing Bank to issue the Affirm Card.
−Removed: During the fourth quarter of fiscal 2024, we began accelerating the execution of an existing strategy of identifying and engaging new card issuing bank partners in order to diversify our sources of card issuances.
+Added: In addition, as of the end of fiscal 2025, we relied on a single Card Issuing Bank to issue the Affirm Card, and we had entered into a payments program partnership with Stride Bank to be an additional issuing bank of the Affirm Card upon launch of the program.
Each of our Primary Originating Banks and our Card Issuing Bank handles a variety of consumer and commercial financing programs.
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The term automatically renewed for an additional one-year term and will continue to automatically renew in one-year terms thereafter unless either party provides notice of its intent not to renew.
+Added: The Stride Bank loan program agreement has an initial five-year term which will expire in calendar year 2030.
+Added: The term will automatically renew in one-year terms thereafter unless either party provides notice of its intent not to renew.
In addition, upon the occurrence of certain early termination events, either we or any of our Primary Originating Banks or Card Issuing Bank may terminate the respective agreement immediately upon the occurrence of certain termination events.
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We could in the future have disagreements or disputes with our Primary Originating Banks or Card Issuing Bank, which could negatively impact or threaten our relationship with other banks with whom we may seek to partner.
−Removed: For a further discussion of our relationship with our Primary Originating Banks, particularly the regulations applicable to this relationship, see “ Business — Regulatory Environment .”
+Added: For a further discussion of our relationship with our Primary Originating Banks, particularly the regulations applicable to this relationshi p, see “ Business — Regulatory Environment .”
If any of our Primary Originating Banks or our Card Issuing Bank were to suspend, limit, or cease its operations or loan origination activities, as applicable, for any reason, or if our relationship with any Primary Originating Bank or our Card Issuing Bank were to otherwise terminate for any reason (including, but not limited to, its failure to comply with regulatory actions), we may need to implement an additional substantially similar arrangement with another bank, obtain additional state licenses, or curtail our operations.
−Removed: If we need to enter into alternative arrangements with a different bank to replace our existing arrangement, we may not be able to negotiate a
−Removed: comparable alternative arrangement in a timely manner or at all.
+Added: If we need to enter into alternative arrangements with a different bank to replace our existing arrangement, we may not be able to negotiate a comparable alternative arrangement in a timely manner or at all.
In addition, with respect to our Primary Originating Banks, transitioning loan originations to a new bank may result in delays in the issuance of loans or, if our platform becomes inoperable, may result in the inability to facilitate loans through our platform.
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Our solution is a technology-driven platform that relies on innovation to remain competitive.
−Removed: The process of developing new technologies and products, such as the Affirm Card, which offers pay-over-time functionality in the Affirm App, is complex, and we seek to build our own technology using the latest in artificial intelligence and machine learning (“AI/ML”), cloud-based technologies, and other tools to differentiate our products and technologies.
+Added: The process of developing new technologies and products, such as the Affirm Card, which offers pay-over-time functionality in the Affirm App, is complex, and we seek to build our own technology using the latest in artificial intelligence (“AI”) and machine learning (together, “AI/ML”), cloud-based technologies, and other tools to differentiate our products and technologies.
In addition, our dedication to incorporating technological advancements into our platform requires significant financial and personnel resources and talent.
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We may not be able to make technological improvements as quickly as demanded by our consumers and commercial partners, or we may not be able to accurately predict the demand or growth of our technological investments, which could harm our ability to attract consumers and commercial partners and have a material and adverse effect on our business, results of operations, financial condition, and future prospects.
−Removed: In addition, we may not be able to effectively implement new technology-driven products and services, including the Affirm Card, as quickly as competitors or be successful in marketing these products and services to consumers and commercial partners.
−Removed: Moreover, the profile of potential consumers using our new products and technologies also may not be as attractive as the profile of the consumers that we currently serve or have served in the past, which may lead to higher levels of delinquencies or defaults than we have historically experienced.
+Added: For example, our competitors or other third parties may incorporate AI into their products and services more quickly or more successfully than us, which could impair our ability to compete effectively.
+Added: In addition, we may not be able to effectively implement new technology-driven products and services, including the Affirm Card or AdaptAI (Affirm’s AI-powered personalized promotion platform), as quickly as competitors or be successful in marketing these products and services to consumers and commercial partners.
+Added: Moreover, the profile of potential consumers
+Added: using our new products and technologies also may not be as attractive as the profile of the consumers that we currently serve or have served in the past, which may lead to higher levels of delinquencies or defaults than we have historically experienced.
If we are unable to successfully and timely innovate and continue to deliver a superior commercial partner and consumer experience, we could experience reputational damage and decreased demand for our products and technologies and our growth, business, results of operations, financial condition, and future prospects could be materially and adversely affected.
−Removed: Further, we use AI/ML in many aspects of our business, including fraud, credit risk analysis, consumer support and product personalization.
−Removed: The AI/ML models that we use are trained using various data sets.
−Removed: If the AI/ML models are incorrectly designed, the data we use to train them is incomplete, inadequate, or biased in some way, or we do not have sufficient rights to use the data on which our AI/ML models rely, the performance of our products, services, and business, as well as our reputation, could suffer or we could incur liability through the
−Removed: violation of laws, third-party privacy, or other rights, or contracts to which we are a party.
−Removed: For instance, discrepancies between the data signals used in the AI/ML model training data set and our online decisioning environment for our risk model may lead to incorrect decisions and errors in certain scenarios.
−Removed: Steps taken to prevent errors in the future may not be sufficient to prevent other discrepancies from arising in the future.
Our failure to accurately predict the demand or growth of our new products and technologies also could have a material and adverse effect on our business, results of operations, financial condition, and future prospects.
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Our high-velocity, capital efficient funding model is integral to the success of our commerce platform.
−Removed: To support this model and the growth of our business, we must maintain a variety of funding arrangements, including warehouse credit facilities, securities repurchase agreements, securitization trusts, and forward flow arrangements with a diverse set of funding sources.
+Added: To support this model and the growth of our business, we must maintain a variety of funding arrangements, including warehouse credit facilities, securities repurchase agreements, securitization trusts, pass-through securitizations, master trust facilities, and forward flow arrangements with a diverse set of funding sources.
If we are unable to maintain access to, or to expand, our network and diversity of funding arrangements, our business, results of operations, financial condition, and future prospects could be materially and adversely affected.
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Disruptions in the credit markets or other factors, such as the current inflationary environment, elevated interest rates and increasing recessionary concerns, could adversely affect the availability, diversity, cost, and terms of our funding arrangements.
−Removed: Since the beginning of March 2023, there have been public reports of instability at certain financial institutions.
−Removed: Despite the steps taken to date by U.S.
−Removed: and foreign agencies and institutions, the follow-on effects of this instability and the potential impact of further instability are unknown and may lead to disruptions to the businesses and operations of our funding sources.
−Removed: Although we are not substantially dependent on a single financing source, if multiple financing sources were to be unable to fulfill their funding obligations to us, it could have a material adverse effect on our financial condition, results of operations and cash flows.
In addition, our funding sources may reassess their exposure to our industry and either curtail access to uncommitted financing capacity, fail to renew or extend facilities, or impose higher costs to access our funding.
+Added: While most of our facilities are committed capital, some facilities are uncommitted, which may allow such funding providers to, among other things, reduce available funding limits, subject to certain structural protections (including penalty fees in certain transactions).
Further, our debt financing and loan sale forward flow facilities are generally fixed term in nature, with term lengths ranging between one to three years, during which we have access to committed and uncommitted capital pursuant to such facilities.
−Removed: If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, we would need to secure additional
−Removed: sources of funding or reduce our operations significantly.
+Added: If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, we would need to secure additional sources of funding or reduce our operations significantly.
The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control.
The agreements governing our funding arrangements require us to comply with certain covenants.
−Removed: A breach of such covenants or other events of default under our funding agreements could result in the reduction or termination of our access to such funding, could increase our cost of such funding or, in some cases, could give our lenders the right to require repayment of the loans prior to their scheduled maturity.
+Added: A breach of such covenants or other events of default under our funding agreements could result in the reduction or termination of our access to such funding, could increase our cost of such funding or, in some cases, could give our lenders the right to require repayment of such funding prior to its scheduled maturity.
Certain of these covenants are tied to our consumer default rates, which may be significantly affected by factors, such as economic downturns, inflationary conditions, elevated interest rates and/or general economic conditions, that are beyond our control and beyond the control of individual consumers.
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However, these inputs may be inaccurate or may not accurately reflect a consumer’s creditworthiness or credit risk.
−Removed: In addition, our ability to enable the effective underwriting of the loans we originate directly or purchase from our originating bank partners and accurately price credit risk (and, as a result, the performance of such loans) is significantly dependent on the
−Removed: ability of our proprietary, learning-based scoring system, and the underlying data, to quickly and accurately evaluate a consumer’s credit profile and risk of default.
+Added: In addition, our ability to enable the effective underwriting of the loans we originate directly or purchase from our originating bank partners and accurately price credit risk (and, as a result, the performance of such loans) is significantly dependent on the ability of our proprietary, learning-based scoring system, and the underlying data, to quickly and accurately evaluate a consumer’s credit profile and risk of default.
The information we use in developing the risk model and price risk may be inaccurate or incomplete as a result of error or fraud, both of which may be difficult to detect and avoid.
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If loans facilitated through our platform do not perform, or significantly underperform, we may incur financial losses on the loans we purchase, we hold on our balance sheet, or that are subject to certain risk sharing agreements, which may adversely impact our financial condition and results of operations as well as result in the loss of confidence of our funding sources.
−Removed: Since fiscal 2023, we have retained more loans on our balance sheet than we have historically, and these loans are funded through our consolidated securitizations and warehouse lines.
+Added: In recent fiscal years, we have retained more loans on our balance sheet than we have historically, and these loans are funded through our consolidated securitizations and warehouse lines.
For these loans and any future loans facilitated through our platform that we purchase from our originating bank partners that may be held for investment on our balance sheet, we bear the entire credit risk in the event of consumer default with respect to these loans.
In addition, non-performance, or even significant underperformance, of the loan receivables that we own could have an adverse effect on our business.
−Removed: Additionally, our funding model relies on a variety of funding arrangements, including warehouse credit facilities, securitization trusts, and forward flow arrangements with a variety of funding sources.
−Removed: Any significant underperformance of the loans facilitated through our platform may adversely impact our relationship with such funding sources and result in their loss of confidence in us, which could lead to the termination of our existing funding arrangements, which would have a material adverse effect on our business, results of operations, financial condition, and future prospects.
+Added: Additionally, our funding model relies on a variety of funding arrangements, including warehouse credit facilities, securitization trusts, master trust facilities, and forward flow arrangements with a variety of funding sources.
+Added: Any significant underperformance of the loans facilitated through our platform may adversely impact our relationship with such funding sources and result in their loss of confidence in us, which could lead to the
+Added: termination of our existing funding arrangements, which would have a material adverse effect on our business, results of operations, financial condition, and future prospects.
In addition, 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 if actual losses on the loans sold exceed agreed-upon expected losses, subject to a cap based on a percentage of the principal balance of loans sold.
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If the loans subject to any existing or future risk sharing agreements underperform the expectations set forth in those agreements, we would be required to make payments under the agreements in proportion to the loan underperformance, which may have a material adverse effect on our business, results of operations, financial condition, and our relationships with existing and prospective third-party loan buyers.
+Added: Our use and provision of generative AI-powered solutions could lead to operational or reputational damage, competitive harm, legal and regulatory risk and additional costs.
+Added: We currently use and expect to continue to use generative AI, a relatively new and emerging technology in the early stages of commercial use, in certain aspects of our business, including our customer service chatbot, which could expose us to additional risks.
+Added: Generative AI may create inaccurate, incomplete or misleading outputs, reflect unintended biases, or produce other discriminatory or unexpected results, errors or inadequacies, any of which may not be easily detectable.
+Added: While we have processes and controls in place designed to mitigate the risks associated with using generative AI, including human involvement in the training and monitoring of our AI tools and the alignment of our AI development policies and procedures with guidelines for secure development practices, if the content, analyses, or recommendations that generative AI assists in producing or our products and services are, or are perceived to be, deficient, inaccurate, biased, unethical or otherwise flawed, our reputation, competitive position and business may be adversely affected and we may incur additional costs, including in the form of damages or fines.
+Added: To the extent that we do not have sufficient rights to use the data used in, or produced by, the AI tools employed in our business and operations, we may be subject to litigation by the owners of the content or other materials that comprise such data.
+Added: Further, any content or other output created by us using AI-powered tools may not be subject to copyright protection, which may adversely affect our ability to enforce the intellectual property rights in such content.
+Added: We have implemented policies and procedures designed to mitigate these risks, including reviewing vendor terms and monitoring AI outputs for potential infringement.
+Added: However, these measures may not be sufficient to prevent all instances of infringement or loss of IP rights, The rapidly evolving regulatory landscape surrounding AI technologies presents additional risks.
+Added: New or proposed legislation and regulations across various jurisdictions may impose significant compliance burdens, restrict certain AI applications, or require specific governance frameworks for AI systems.
+Added: The cost to comply with such laws or regulations could be significant and may increase our operating expenses.
+Added: Our failure to comply with current or future AI regulations could result in significant penalties, reputational damage, and limitations on our ability to deploy AI-powered solutions.
+Added: Additionally, we may face challenges in ensuring our AI systems provide sufficient transparency to satisfy regulatory requirements and consumer expectations.
+Added: Further, public and regulatory focus on ethical use and data privacy concerns regarding AI could lead to reputational damage if we fail, or are perceived to fail, to align with societal expectations or regulatory standards relating to the use of AI.
+Added: Such scrutiny may result in financial or other penalties and may also erode customer trust, which is crucial for our brand and long-term success.
+Added: Although we have taken, and continue to take, steps designed to mitigate the risks associated with the use of AI in our business, including, among other things, engaging with regulatory bodies, investing in AI governance, and fostering transparent and ethical use of AI in our products, solutions and services, our use of AI may present ethical, reputational, technical, operational, legal, competitive and regulatory risks, any of which could adversely affect our business, financial condition, results of operations and future prospects.
Any acquisitions, strategic investments, alliances, divestitures and other transactions could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations.
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Further expansion of our operations internationally will subject us to new challenges and risks.
−Removed: We currently operate in the United States, Canada, the United Kingdom, Spain and Poland (we do not currently facilitate loans in the United Kingdom, Spain or Poland, though we expect to begin facilitating loans in the
−Removed: United Kingdom during fiscal 2025) and may further expand our business internationally in the future.
−Removed: Managing new and existing international operations, including our planned commencement of facilitating loans in the U.K., requires us to comply with new regulatory frameworks and additional resources and controls.
+Added: We currently operate in the United States, Canada, the U.K., Spain and Poland (we do not currently facilitate loans in Spain or Poland) and plan to further expand our business internationally in the future.
+Added: Managing new and existing international operations, including our planned expansion into the Netherlands, France, Germany and Australia, requires us to comply with new regulatory frameworks and additional resources and controls.
International expansion subjects our business to risks associated with international operations, including:
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• difficulties in staffing and managing foreign operations in an environment of diverse culture, laws, and consumers and merchants, and the increased travel, infrastructure, and legal and compliance costs associated with international operations;
−Removed: • compliance with multiple, potentially conflicting, and changing governmental laws and regulations, including banking, anti-money laundering, securities, employment, tax, privacy, data protection laws and regulations, such as the EU General Data Protection Regulation (GDPR), and climate disclosure frameworks, such as the Corporate Sustainability Reporting Directive (CSRD);
+Added: • difficulties in obtaining required licenses and/or authorizations to do business in new countries and territories;
+Added: • compliance with multiple, potentially conflicting, and changing governmental laws and regulations, including those relating to banking, anti-money laundering, securities, employment, tax, privacy, data protection, such as the EU General Data Protection Regulation (GDPR), artificial intelligence, such as the EU Artificial Intelligence Act, and climate disclosure, such as the Corporate Sustainability Reporting Directive (CSRD);
• compliance with financial system regulations, including the U.K.
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• difficulties in collecting payments in multiple foreign currencies and associated foreign currency exposure;
+Added: • challenges in obtaining capital in international markets on the same or similar terms as with our U.S.
+Added: capital markets facilities;
• potential restrictions on repatriation of earnings;
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However, this may change as other countries enact similar legislation and further guidance is released.
−Removed: As a result of these risks, we may not be successful in managing our existing international operations, and our future international expansion efforts, including our planned commencement of facilitating loans in the U.K., also may not be successful.
+Added: As a result of these risks, we may not be successful in managing our existing international operations, and our future international expansion efforts also may not be successful.
The loss of the services of our Founder and Chief Executive Officer could materially and adversely affect our business, results of operations, financial condition, and future prospects.
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We have a history of operating losses and may not achieve sustained profitability.
−Removed: We incurred net losses of approximately $517.8 million, $985.3 million and $707.4 million for the fiscal years ended June 30, 2024, 2023, and 2022 respectively.
−Removed: As of June 30, 2024 and June 30, 2023, our accumulated deficit was approximately $3.1 billion and $2.6 billion, respectively.
+Added: We incurred net income of approximately $52.2 million for the fiscal year ended June 30, 2025 and net losses of approximately $517.8 million and $985.3 million for the fiscal years ended June 30, 2024 and 2023 respectively.
+Added: As of June 30, 2025 and June 30, 2024, our accumulated deficit was approximately $3.1 billion for both years.
Our operating expenses may increase in the future as we seek to continue to grow our business, attract consumers, merchants, funding sources, and additional originating bank partners, and further enhance and develop our products and platform.
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These efforts may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses.
−Removed: We have been profitable on a non-GAAP adjusted operating income basis each completed fiscal quarter since the fourth quarter of fiscal 2023.
−Removed: In August 2024, we announced that, based on our then-current forecast, we
−Removed: expected to achieve operating income profitability on a GAAP basis in our fourth quarter of fiscal 2025.
+Added: In August 2025, we announced that we achieved GAAP operating income profitability in the fourth quarter of fiscal 2025.
Our ability to operate our business profitably on a GAAP operating income basis is subject to many risks and uncertainties, including the potential for incurring operating expense increases and/or other charges and expenses not reflected in that forecast.
−Removed: If we are not able to achieve operating income profitability on a GAAP basis by that date, or if we do not operate the business on a consistently profitable basis thereafter, our reputation may be harmed and the market price of our Class A common stock could be materially and adversely impacted.
+Added: If we do not operate the business while maintaining GAAP operating income profitability, our reputation may be harmed and the market price of our Class A common stock could be materially and adversely impacted.
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business.
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Litigation, regulatory actions, and compliance issues could subject us to fines, penalties, judgments, remediation costs, and/or other requirements resulting in increased expenses and reputational harm.
−Removed: Our business is subject to increased risks of litigation and regulatory actions as a result of a number of factors and from various sources, including as a result of the highly regulated nature of the financial services
−Removed: industry and the focus of state and federal enforcement agencies on the financial services industry in general and consumer financial services in particular.
+Added: Our business is subject to increased risks of litigation and regulatory actions as a result of a number of factors and from various sources, including as a result of the highly regulated nature of the financial services industry and the focus of state and federal enforcement agencies on the financial services industry in general and consumer financial services in particular.
In the ordinary course of business, we have been named as a defendant in various legal actions, including arbitrations and other litigation.
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Levchin, et al.
−Removed: For more information, see Note 8.
−Removed: Commitments and Contingencies of the accompanying notes to our consolidated financial statements.
+Added: For more information, refer to Note 8.
+Added: Commitments and
+Added: Contingencies of the accompanying notes to our consolidated financial statements.
+Added: On July 1, 2025, we reincorporated from the State of Delaware to the State of Nevada (the “Nevada Reincorporation”).
+Added: It is possible that our decision to pursue the Nevada Reincorporation could result in additional litigation, which, regardless of merit, could cause us to incur additional expense and divert management attention from operating the business.
+Added: Further, if a court determines that any such litigation has merit, we may be required to pay substantial monetary damages or attorneys’ fees.
While certain of our consumer agreements contain arbitration provisions with class action waiver provisions that may limit our exposure to consumer class action litigation, there can be no assurance that we will be successful in enforcing these arbitration provisions, including the class action waiver provisions, in the future or in any given case.
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There is no assurance that these regulatory matters or other factors will not, in the future, affect how we conduct our business and, in turn, have an adverse effect on our business.
−Removed: In particular, legal proceedings brought under state consumer protection statutes or under several of the various federal consumer financial services statutes subject to the jurisdiction of the CFPB and FTC may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages in excess of the amounts we earned from the underlying activities.
+Added: In particular, legal proceedings brought under state consumer protection statutes enforceable by state regulatory agencies or attorneys general or under several of the various federal consumer financial services statutes subject to the jurisdiction of the CFPB and FTC may result in a separate fine for each violation of the statute, which, particularly in the case of class action lawsuits, could result in damages in excess of the amounts we earned from the underlying activities.
See “— Risks Related to Our Regulatory Environment.”
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We maintain an allowance for credit losses at a level sufficient to estimate expected credit losses based on evaluating known and inherent risks in our loan portfolio.
−Removed: This estimate is highly dependent upon the reasonableness
−Removed: of our assumptions and the predictability of the relationships that drive the results of our valuation methodologies.
−Removed: Management has processes in place to monitor these judgments and assumptions, including review by our credit committee and our asset-liability committee, but these processes may not ensure that our judgments and assumptions are correct.
+Added: This estimate is highly dependent upon the reasonableness of our assumptions and the predictability of the relationships that drive the results of our valuation methodologies.
+Added: Management has processes in place to monitor these judgments and assumptions, including review by our credit committee and our asset-liability committee, but these processes may not ensure that our judgments and assumptions
The method for calculating the best estimate of expected credit losses takes into account our historical experience, adjusted for current conditions, and our judgment concerning the probable effects of relevant observable data, trends, and market factors.
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In March 2022, in response to inflationary conditions, the U.S.
−Removed: Federal Reserve began raising the federal funds interest rate and continued to do so through July 2023, with the federal funds interest rate remaining elevated compared to March 2022 rates as of August 2024.
+Added: Federal Reserve began raising the federal funds interest rate and continued to do so through July 2023.
+Added: While the U.S.
+Added: Federal Reserve lowered the federal funds interest rate in the second half of 2024, as of August 2025, the federal funds interest rate remains elevated compared to March 2022 rates, and the timing of additional interest rate cuts, if any, is uncertain.
Elevated interest rates have had, and may continue to have, an adverse impact on the spending levels of consumers and their ability and willingness to borrow money.
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To reduce our exposure to broad changes in prevailing interest rates, we maintain an interest rate hedging program which eliminates some, but not all, of the interest rate risk.
−Removed: In connection with our securitizations, warehouse credit facilities, and forward flow agreements, we make representations and warranties concerning the loans financed pursuant to such agreements.
+Added: Across our diverse funding sources, we make representations and warranties concerning the loans financed pursuant to such agreements.
If those representations and warranties are not correct, we could be required to repurchase certain of such loans.
Any significant required repurchases would have an adverse effect on our ability to operate and fund our business.
−Removed: In our asset-backed securitizations, warehouse credit facilities, and forward flow agreements, we make numerous representations and warranties concerning the characteristics of the loans we pledge and/or sell (depending on the type of facility), including representations and warranties that the loans meet certain eligibility requirements of those facilities and investors.
+Added: Across our diverse funding sources, including our asset-backed securitizations, warehouse credit facilities, master trust facilities, and forward flow agreements, we make numerous representations and warranties concerning the characteristics of the loans we pledge and/or sell (depending on the type of facility), including representations and warranties that the loans meet certain eligibility requirements of those facilities and investors.
If those representations and warranties are incorrect, we may be required to repurchase certain of the financed loans.
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Our business, the consumer financial services industry, and our commercial partners’ businesses are sensitive to macroeconomic conditions.
−Removed: Economic factors such as interest rates, changes in monetary and related policies, market volatility, inflationary conditions, student loan obligations, consumer confidence, and unemployment rates are among the most significant factors that impact consumer spending behavior.
−Removed: Weak economic conditions or a significant deterioration in economic conditions, including the current inflationary environment and possibility of a recession, reduce the amount of disposable income consumers have, which in turn
−Removed: reduces consumer spending and the willingness of qualified consumers to take out loans.
−Removed: Such conditions are also likely to affect the ability and willingness of consumers to pay amounts owed under the loans facilitated through our platform, each of which would have an adverse effect on our business, results of operations, financial condition, and future prospects.
+Added: Economic factors such as interest rates, changes in monetary and related policies, market volatility, inflationary conditions, the imposition of tariffs on global trade, student loan obligations, consumer confidence, and unemployment rates are among the most significant factors that impact consumer spending behavior.
+Added: Weak economic conditions or a significant deterioration in economic conditions, including the current inflationary environment, the possibility of a recession, and uncertainty relating to the magnitude, duration and impact of tariffs on global trade, reduce the amount of disposable income consumers have, which in turn reduces consumer spending and the willingness of qualified consumers to take out loans.
+Added: Such conditions are also likely to
+Added: affect the ability and willingness of consumers to pay amounts owed under the loans facilitated through our platform, each of which would have an adverse effect on our business, results of operations, financial condition, and future prospects.
The generation of new loans facilitated through our platform, and the transaction fees and other fee income due to us associated with such loans, depends upon sales of products and services by our commercial partners.
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Therefore, if we purchase the loans from our originating bank partners after they are originated, we are limited in our ability to collect on these loans if a consumer is unwilling or unable to repay them.
−Removed: A consumer’s ability to repay their loans can be negatively impacted by increases in their payment obligations to other lenders under mortgage, credit card, and other loans resulting from
−Removed: increases in base lending rates or structured increases in payment obligations.
+Added: A consumer’s ability to repay their loans can be negatively impacted by increases in their payment obligations to other lenders under mortgage, credit card, and other loans resulting from increases in base lending rates or structured increases in payment obligations.
If a consumer neglects his or her payment obligations on a loan facilitated through our platform or chooses not to repay his or her loan entirely, it will have an adverse effect on our business, results of operations, financial condition, future prospects, and cash flows.
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Furthermore, the application of various federal and state laws, including federal and state bankruptcy and debtor relief laws, may limit the amount that can be recovered on the loans.
−Removed: It is possible that a higher percentage of consumers will seek protection under bankruptcy or debtor relief laws as a result of the current inflationary environment, the possibility of a recession and market volatility.
+Added: It is possible that a higher percentage of consumers will seek protection under bankruptcy or debtor relief laws as a result of macroeconomic factors, including the current inflationary environment, the possibility of a recession and market volatility.
Federal, state, or other restrictions could impair our ability to collect amounts owed and due on the loans facilitated through our platform, reduce income received from the loans facilitated through our platform, or negatively affect our ability to comply with our current financing arrangements or obtain financing with respect to the loans facilitated through our platform.
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Significant amounts of fraudulent cancellations or chargebacks could adversely affect our business or financial condition.
−Removed: High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity, and the erosion of trust from our consumers and commercial partners, and could
−Removed: materially and adversely affect our business, results of operations, financial condition, future prospects, and cash flows.
+Added: High profile fraudulent activity or significant increases in fraudulent activity could also lead to regulatory intervention, negative publicity, and the erosion of trust from our consumers and commercial partners, and could materially and adversely affect our business, results of operations, financial condition, future prospects, and cash flows.
If we fail to maintain effective internal control over financial reporting or disclosure controls and procedures, we may be unable to report our financial results on a timely and accurate basis, and our business, operating results and market price of our Class A common stock may be adversely affected.
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We also could become subject to investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
−Removed: Increased scrutiny from regulators, investors and other stakeholders regarding our environmental, social, governance, or sustainability responsibilities, strategy and related disclosures could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of consumers and merchants to do business with us.
−Removed: Regulators, investor advocacy groups, certain institutional investors, investment funds, stockholders, consumers and other market participants have focused increasingly on the environmental, social and governance (“ESG”) or “sustainability” practices of companies.
+Added: Increased scrutiny from regulators, investors and other stakeholders regarding our sustainability responsibilities, strategy and related disclosures could result in additional costs or risks and adversely impact our reputation, employee retention, and willingness of consumers and merchants to do business with us.
+Added: Regulators, investor advocacy groups, certain institutional investors, investment funds, stockholders, consumers and other market participants have focused increasingly on the “sustainability” practices of companies, and companies are facing increasing and evolving scrutiny from customers, regulators, investors, employees, and other stakeholders, as well as from the media (including social media), related to their sustainability practices and disclosure.
These parties have placed increased importance on the implications of the social cost of their investments.
−Removed: We may incur additional costs and require additional resources as we prepare for enhanced climate disclosure requirements from regulators, such as California and the SEC, and as we otherwise evolve our ESG strategy, practices and related disclosures.
−Removed: If our ESG strategy, practices and related disclosures, including the impact of our business on climate change, do not meet (or are viewed as not meeting) regulator, investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and employee retention may be negatively impacted.
+Added: We may incur additional costs and require additional resources as we prepare for enhanced climate disclosure requirements from regulators, such as California, and as we otherwise evolve our sustainability strategy, practices and related disclosures.
+Added: If our sustainability strategy, practices and related disclosures, including the impact of our business on climate change, do not meet (or are viewed as not meeting) regulator, investor or other industry stakeholder expectations and standards, which continue to evolve, our brand, reputation and employee retention may be negatively impacted, and we may face negative impacts from consumers who do not support our sustainability strategy, practices and disclosure.
Additional Risks Related to Our Reliance on Third Parties
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We may not have any recourse against commercial partners if they do not prominently present our platform as a payment option or if they more prominently present solutions offered by our competitors.
−Removed: In addition, as we add new commercial partners, it could take a significant amount of time for these commercial partners, particularly larger platforms such as Apple Pay, to fully integrate our platform and for these commercial partners’ consumers to accept our pay-over-time
+Added: In addition, as we add new commercial partners, it could take a significant amount of time for these commercial partners, particularly larger platforms such as Apple Pay, to fully integrate our platform and for these commercial partners’ consumers to accept our pay-over-time solution.
The failure by our commercial partners to effectively present, integrate, and support our platform would have a material and adverse effect on our business, results of operations, financial condition, and future prospects.
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We have significant third-party partners that, among other things, provide us with financial, technology, and other services to support our products and other activities, including, for example, credit ratings and reporting, cloud-based data storage and other IT solutions, and payment processing.
−Removed: The CFPB has issued guidance stating that institutions under its supervision may be held responsible for the actions of the companies with which they contract.
+Added: The CFPB and prudential regulators have issued guidance stating that institutions under their supervision may be held responsible for the actions of the companies with which they contract.
Accordingly, we could be adversely impacted to the extent our third-party partners fail to comply with the legal requirements applicable to the particular products or services being offered.
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Further, we may incur significant costs to resolve any such disruptions in service, which could adversely affect our business.
−Removed: For example, certain installment loans are originated by our originating bank partners and then disbursed to merchants via single-use virtual cards facilitated through our partnership with an issuer processor.
−Removed: This issuer processor issues single-use virtual cards through Evolve Bank & Trust, its issuing bank partner, which allow loans facilitated through our platform to be processed over the card network.
−Removed: Such loans facilitated through our platform can be used at merchants where we are not integrated at checkout, allowing consumers to complete purchases with
−Removed: virtual cards just as they would with a standard credit or debit card.
+Added: For example, certain installment loans are originated by our originating bank partners and then disbursed to merchants via one-time-use virtual cards facilitated through our partnership with an issuer processor.
+Added: This issuer processor issues one-time-use virtual cards through an issuing bank partner, which allow loans facilitated through our platform to be processed over the card network.
+Added: Such loans facilitated through our platform can be used at merchants where we are not integrated at checkout, allowing consumers to complete purchases with virtual cards just as they would with a standard credit or debit card.
In the event that our issuer processor becomes unable or unwilling to facilitate the disbursements to merchants and we are unable to reach an agreement with another third-party partner, such loans would no longer be able to be facilitated through our platform.
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Our business could be adversely affected by any unsoundness of our financial institution counterparties.
−Removed: Since the beginning of March 2023, there have been public reports of instability at various financial institutions, with certain financial institutions being severely impacted.
+Added: Instability at financial institutions, such as those publicly reported in 2023, may have an adverse effect on our business.
Financial services institutions are interrelated with our business as a result of trading, clearing, counterparty or other relationships.
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In such an event, we may be required, or may choose, to expend significant additional resources in order to correct the problem.
+Added: For example, in the second half of fiscal year 2025, we reallocated significant resources to prioritize system stability and reduce outages, which may delay certain strategic objectives, including the launch of products or services and our launch in certain international jurisdictions, and adversely affect our business, results of operations, financial condition, and future prospects.
Any significant disruption in, or errors in, service on our platform or relating to vendors, including events beyond our control, could prevent us from processing transactions on our platform or posting payments and have a material and adverse effect on our business, results of operations, financial condition, and future prospects.
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In addition, our remote working environment may exacerbate these risks.
−Removed: While we and our third-party partners have taken steps to protect the confidential, proprietary, and sensitive information to which we have access and to prevent data loss, our security measures or those of our third-party partners could be breached, such as the Evolve Bank & Trust cybersecurity incident reported in June 2024, resulting in the loss of, or unauthorized access to, our or our consumers’ data, our intellectual property, or other confidential,
−Removed: proprietary, or sensitive business information and could expose us to liability related to the loss of the information, time-consuming and expensive litigation, potential regulatory scrutiny and negative publicity.
+Added: While we and our third-party partners have taken steps to protect the confidential, proprietary, and sensitive information to which we have access and to prevent data loss, our security measures or those of our third-party partners could be breached, such as the Evolve Bank & Trust cybersecurity incident reported in June 2024, resulting in the loss of, or unauthorized access to, our or our consumers’ data, our intellectual property, or other confidential, proprietary, or sensitive business information and could expose us to liability related to the loss of the information, time-consuming and expensive litigation, potential regulatory scrutiny and negative publicity.
As is common in our industry, and with technology-focused companies more broadly, unauthorized parties regularly attempt to gain access to our systems and facilities through various means, including, among others, hacking into our or our partners’ or consumers’ systems or facilities, or attempting to fraudulently induce our employees, partners, consumers or others into disclosing usernames, passwords, or other sensitive information, which may in turn be used to access our information technology systems and gain access to our or our consumers’ data or other confidential, proprietary, or sensitive information.
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Moreover, our contractual arrangements may be breached or may otherwise not effectively prevent disclosure of, or control access to, our confidential or otherwise proprietary information or provide an adequate remedy in the event of an unauthorized disclosure.
−Removed: The measures we have put in place may not prevent misappropriation, infringement, or other violation of our intellectual property or other proprietary rights or information and any resulting loss of competitive advantage, and we may be required to litigate to protect our intellectual property or other proprietary rights or information from misappropriation, infringement, or other violation by others, which is expensive, could cause a diversion of resources, and may not be successful, even when
−Removed: our rights have been infringed, misappropriated, or otherwise violated.
+Added: The measures we have put in place may not prevent misappropriation, infringement, or other violation of our intellectual property or other proprietary rights or information and any resulting loss of competitive advantage, and we may be required to litigate to protect our intellectual property or other proprietary rights or information from misappropriation, infringement, or other violation by others, which is expensive, could cause a diversion of resources, and may not be successful, even when our rights have been infringed, misappropriated, or otherwise violated.
Our efforts to enforce our intellectual property and other proprietary rights may be met with defenses, counterclaims, and countersuits attacking the validity and enforceability of our intellectual property and other proprietary rights, and if such defenses, counterclaims, or countersuits are successful, it could diminish or we could otherwise lose valuable intellectual property and other proprietary rights.
−Removed: Additionally, the laws of some foreign countries may not be as protective of intellectual property and other proprietary rights as those in the United States, and the mechanisms for enforcement of intellectual property and other proprietary rights may be inadequate.
+Added: Additionally, the laws of some foreign countries may not be as protective of
+Added: intellectual property and other proprietary rights as those in the United States, and the mechanisms for enforcement of intellectual property and other proprietary rights may be inadequate.
Furthermore, third parties may challenge, invalidate, or circumvent our intellectual property and proprietary rights, including through administrative processes or litigation.
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In addition to the previously mentioned impacts of intellectual property-related litigation, while in some cases a third-party may have agreed to indemnify us for costs associated with intellectual property-related litigation, such indemnifying third-party may refuse or be unable to uphold its contractual obligations.
−Removed: In other cases, our insurance may not cover
−Removed: potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.
+Added: In other cases, our insurance may not cover potential claims of this type adequately or at all, and we may be required to pay monetary damages, which may be significant.
Some aspects of our platform include open source software, and our use of open source software could negatively affect our business, results of operations, financial condition, and future prospects.
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federal consumer protection requirements .”
−Removed: In addition, the U.S., Canadian and other international governments (including the U.K.
−Removed: upon our commencement of facilitating loans in that jurisdiction), states, and provinces may pass new laws, or may amend
−Removed: existing laws, to further regulate the consumer finance industry or loans of the type provided through our platform, or to reduce the finance charges or other fees that may be imposed with respect to consumer loans.
+Added: In addition, the U.S., Canadian, U.K.
+Added: and other international governments, states, and provinces may pass new laws, or may amend existing laws, to further regulate the consumer finance industry or loans of the type provided through our platform, or to reduce the finance charges or other fees that may be imposed with respect to consumer loans.
This could make the provision and collection of consumer loans more difficult or costly, which may negatively impact our business.
While we have developed policies and procedures designed to assist in compliance with these laws and regulations, no assurance is given that our compliance policies and procedures will be effective.
−Removed: Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation of licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business.
+Added: Failure to comply with these laws and with regulatory requirements applicable to our business could subject us to damages, revocation
+Added: of licenses, class action lawsuits, administrative enforcement actions, and civil and criminal liability, which may harm our business.
Our business is subject to extensive regulation, supervision, examination, and oversight in a variety of areas, all of which are subject to change and uncertain interpretation.
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New laws or regulations could also require us to incur significant expenses and devote significant management attention to ensure compliance.
−Removed: For example, in May 2024, the CFPB issued an interpretive rule that extended certain provisions of Subpart B and Subpart G of Regulation Z to “lenders that issue digital user accounts used to access credit, including to those lenders that market loans as ‘Buy Now, Pay Later’ (BNPL).” However, the interpretive rule is an interpretation of existing law that “does not impose any new or revise any existing recordkeeping, reporting, or disclosure requirements,” thereby applying to past operations.
Our failure to comply (or to ensure that our agents and third-party service providers comply) with these laws or regulations may result in litigation or enforcement actions, the penalties for which could include:
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The CFPB’s supervision of us enables it, among other things, to conduct comprehensive and rigorous examinations to assess our compliance with consumer financial protection laws, which could result in investigations, enforcement actions, regulatory fines and mandated changes to our business products, policies and procedures.
−Removed: The CFPB, through its supervision and enforcement authority, could increase our compliance costs, potentially hinder our ability to respond to marketplace changes, impose requirements to alter products and services that would make them less attractive to consumers and impair our ability
−Removed: to offer products and services profitably.
+Added: The CFPB, through its supervision and enforcement authority, could increase our compliance costs, potentially hinder our ability to respond to marketplace changes, impose requirements to alter products and services that would make them less attractive to consumers and impair our ability to offer products and services profitably.
For further discussion on the CFPB's enforcement authority, see “ Business — Regulatory Environment — U.S.
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In addition, investigations and other regulatory actions could result in penalties and reputational harm to us and a loss of consumers participating in our platform, and our compliance costs and litigation exposure could increase if the CFPB, for instance, or other regulatory agencies enact new regulations, change regulations that were previously adopted, modify, through supervision or enforcement, past regulatory guidance, or interpret existing regulations in a manner different or stricter than have been previously interpreted, any of which could adversely affect our ability to perform.
−Removed: Further, in some cases, regardless of fault, it may be less time-consuming or costly to settle these matters, which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body.
+Added: Further, in some cases, regardless of fault, it may be less time-consuming or costly to settle these matters,
+Added: which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body.
Further, we may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business.
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For example, from time to time, regulatory agencies for our bank partners may re-evaluate the information we are required to collect from consumers in order to facilitate loans through our platform.
−Removed: Any change in the nature or amount of personal information that we are required to collect from consumers may cause some consumers to choose not to complete their purchases — or purchase less frequently — with us, which may adversely impact our conversion rates, and, as a result, adversely impact our revenue, GMV, and other of our key operating metrics.
+Added: Any change in the nature or amount of personal information that we are required to collect from consumers may cause some consumers to choose not to complete their purchases — or purchase less frequently — with us, which
+Added: may adversely impact our conversion rates, and, as a result, adversely impact our revenue, GMV, and other of our key operating metrics.
These requirements may constrain the operations of our originating bank partners, and the adoption of new laws and changes to, or repeal of, existing laws may have a further impact on our business.
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We have in the past, and may in the future, receive complaints or notifications from third parties alleging that we have violated applicable privacy and data protection laws and regulations.
−Removed: Non-compliance could result in proceedings against us by governmental entities, consumers, data subjects, or others.
+Added: Non-compliance could result in proceedings against us by governmental
+Added: entities, consumers, data subjects, or others.
We may also experience difficulty retaining or obtaining new consumers in these jurisdictions due to the legal requirements, compliance cost, potential risk exposure, and uncertainty for these entities, and we may experience significantly increased liability with respect to these consumers pursuant to the terms set forth in our engagements with them.
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We offer an FDIC-insured, interest-bearing savings account, which is provided by Cross River Bank, on the Affirm App.
−Removed: Under the terms of our program agreement with Cross River Bank as well as the deposit account
−Removed: agreements between participating consumers and Cross River Bank, the savings account is opened and maintained by Cross River Bank.
+Added: Under the terms of our program agreement with Cross River Bank as well as the deposit account agreements between participating consumers and Cross River Bank, the savings account is opened and maintained by Cross River Bank.
We act as the service provider to, among other things, facilitate communication between consumers and Cross River Bank via the Affirm App.
−Removed: We believe our savings account program, including applicable records maintained by us and Cross River Bank, complies with all applicable requirements for each participating consumer’s deposits to be covered by FDIC insurance, up to the applicable maximum deposit insurance amount.
+Added: We are not an FDIC-insured bank;
+Added: however, we believe our savings account program, including applicable records maintained by us and Cross River Bank, complies with all applicable requirements for each participating consumer’s deposits to be covered by FDIC insurance, up to the applicable maximum deposit insurance amount.
However, if the FDIC were to disagree (e.g., because we and Cross River Bank have not adequately evidenced participating consumers’ ownership of each account), the FDIC might not recognize consumers’ claims as covered by deposit insurance in the event Cross River Bank fails and enters receivership proceedings under the Federal Deposit Insurance Act (“FDIA”).
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If Cross River Bank terminated our savings account program and we were unable to find another bank partner, we may have to close our savings account program, which could adversely affect our brand, business, results of operations, financial condition, and future prospects.
−Removed: Regulatory agencies and consumer advocacy groups are highly focused on potential discrimination resulting from the use of machine learning and "black-box" algorithms.
−Removed: We face the risk that one or more of the variables included in our loan decisioning model may be deemed a proxy for a protected characteristic such as race, ethnicity, or sex in violation of the ECOA or other anti-discrimination laws, and therefore need to be revised or eliminated to ensure compliance with ECOA, which could result in lower approval rates or higher credit losses.
+Added: States and consumer advocacy groups are highly focused on potential discrimination resulting from the use of machine learning and "black-box" algorithms.
+Added: We face the risk that one or more of the variables included in our loan decisioning model may be deemed a proxy for a protected characteristic such as race, ethnicity, or sex in violation of anti-discrimination laws, and therefore need to be revised or eliminated to ensure compliance with ECOA and recent state legislation related to AI/ML decisions.
We may also be required to support the variables used in our loan decisioning model with documented, legitimate business justifications in the event the model results in a disproportionate effect on applicants or consumers of certain demographic groups.
−Removed: In addition, our use of machine learning in our models could inadvertently result in a “disparate impact” on protected groups, which would require a review of the model’s underlying data and algorithms.
−Removed: Although we may review our models for potential disparate impact, we may be unable to identify and eliminate all practices or variables causing the disparate impact, resulting in residual fair lending risk.
+Added: In addition, our use of machine learning in our models could inadvertently discriminate against protected groups, which could result in private or state litigation.
+Added: Although we may review our models for potential discrimination, we may be unable to identify and eliminate all practices or variables causing the discrimination, resulting in residual fair lending risk.
Risks Related to our Class A Common Stock
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In addition, this may prevent or discourage unsolicited acquisition proposals or offers for our capital stock.
−Removed: Holders of our Class B common stock may have interests that differ from those of the holders of our Class A common stock and may vote in a way with which the Class A holders
−Removed: disagree or which may be adverse to the Class A holders' interests.
+Added: Holders of our Class B common stock may have interests that differ from those of the holders of our Class A common stock and may vote in a way with which the Class A holders disagree or which may be adverse to the Class A holders' interests.
This control may adversely affect the trading price of our Class A common stock.
−Removed: Further, as of June 30, 2024, Max Levchin, our Founder, Chairman and Chief Executive Officer, had voting control over approximately 43.1% of the voting power of our outstanding capital stock.
+Added: Further, as of June 30, 2025, Max Levchin, our Founder, Chairman and Chief Executive Officer, held substantial voting power of our outstanding capital stock.
As a stockholder, Mr.
Levchin is entitled to vote his shares, and shares over which he has voting control, in his own interests, which may not always be in the interests of our stockholders generally.
−Removed: Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, except certain transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and certain other transfers described in our amended and restated certificate of incorporation.
−Removed: In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock upon the occurrence of certain events described in our amended and restated certificate of incorporation.
+Added: Transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, except certain transfers to entities, to the extent the transferor retains sole dispositive power and exclusive voting control with respect to the shares of Class B common stock, and certain other transfers described in our articles of incorporation.
+Added: In addition, all shares of Class B common stock will automatically convert into shares of Class A common stock upon the occurrence of certain events described in our articles of incorporation.
Conversions of Class B common stock to Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.
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adverse economic conditions resulting in decreased consumer demand;
−Removed: the growth and development of key commercial partner relationships, including our relationship with Amazon;
+Added: the growth and development of key commercial partner relationships, including our relationship with Amazon and Apple Pay;
material cybersecurity incidents;
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Certain of our stockholders have rights, subject to some conditions, to require us to file registration statements covering their shares that we may file for ourselves or our stockholders.
−Removed: In addition, as of June 30, 2024, we had stock options and restricted stock units outstanding that, if fully exercised or settled, would result in the
−Removed: issuance of an aggregate of 47,622,117 shares of our Class A common stock.
+Added: In addition, as of June 30, 2025, we had stock options and restricted stock units outstanding that, if fully exercised or settled, would result in the issuance of an aggregate of 39,122,013 shares of our Class A common stock.
All of the shares of our Class A common stock issuable upon the exercise of stock options and settlement of restricted stock units, and the shares reserved for future issuance under our equity incentive plans, are registered for public resale under the Securities Act.
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The issuance by us of additional equity securities may dilute your ownership and adversely affect the market price of our Class A common stock.
−Removed: Our amended and restated certificate of incorporation authorizes us to issue additional shares of Class A common stock and rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise.
+Added: Our articles of incorporation authorize us to issue additional shares of Class A common stock and rights relating to Class A common stock for the consideration and on the terms and conditions established by our board of directors in its sole discretion, whether in connection with acquisitions or otherwise.
Any Class A common stock or securities convertible into shares of our Class A common stock that we issue from time to time, including in connection with a financing, acquisition, investment or under any equity incentive plans or otherwise that we may adopt in the future, will dilute your percentage ownership.
−Removed: In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our Class A common stock or securities convertible into shares of our Class A common stock or offering debt or other securities.
+Added: In the future, we may attempt to obtain financing or to further increase our capital resources by issuing additional shares of our Class A common stock or securities convertible into shares of our Class A common stock or
+Added: offering debt or other securities.
We could also issue shares of our Class A common stock or securities convertible into our Class A common stock or debt or other securities in connection with acquisitions or other strategic transactions.
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As a result, holders of our Class A common stock bear the risk that our future offerings may reduce the market price of our Class A common stock and dilute their stockholdings in us.
−Removed: Delaware law and certain provisions of our amended and restated certificate of incorporation and amended and restated bylaws could make a merger, tender offer, or proxy contest difficult, thereby adversely affecting the market price of our common stock.
−Removed: Our status as a Delaware corporation and the anti-takeover provisions of the Delaware General Corporation Law (the “DGCL”) may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our stockholders.
−Removed: In addition, our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following:
+Added: Nevada law and certain provisions of our articles of incorporation and bylaws could make a merger, tender offer, or proxy contest difficult, thereby adversely affecting the market price of our common stock.
+Added: Our status as a Nevada corporation and the anti-takeover provisions of the Nevada Revised Statutes (the “NRS”) may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of two years after the person becomes an interested stockholder, even if a change of control would be beneficial to our stockholders.
+Added: In addition, our articles of incorporation and bylaws contain provisions that may make the acquisition of our company more difficult, including the following:
• our dual class common stock structure, which provides holders of our Class B common stock with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding common stock;
• our board of directors is classified into three classes of directors with staggered three-year terms and directors may only able to be removed from office for cause;
−Removed: • certain amendments to our amended and restated certificate of incorporation require the approval of 66 2/3% of the then-outstanding voting power of our capital stock;
−Removed: • our amended and restated bylaws provide that the affirmative vote of 66 2∕3% of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws;
+Added: • certain amendments to our articles of incorporation require the approval of 66 2/3% of the then-outstanding voting power of our capital stock;
+Added: • our bylaws provide that the affirmative vote of 66 2∕3% of the then-outstanding voting power of our capital stock, voting as a single class, is required for stockholders to amend or adopt any provision of our bylaws;
• our stockholders may only take action at a meeting of stockholders and not by written consent;
• vacancies on our board of directors may be filled only by our board of directors and not by stockholders;
−Removed: • no provision in our amended and restated certificate of incorporation or amended and restated bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates;
−Removed: • only our chairman of the board of directors, our lead independent director, our chief executive officer, or a majority of the board of directors are authorized to call a special meeting of stockholders;
−Removed: • our amended and restated bylaws provide that certain litigation against us can only be brought in Delaware;
−Removed: • nothing in our amended and restated certificate of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our Class A common stock;
−Removed: • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock;
+Added: • no provision in our articles of incorporation or bylaws provides for cumulative voting, which limits the ability of minority stockholders to elect director candidates;
+Added: • only our chairman of the board of directors, our chief executive officer, or a majority of the board of directors are authorized to call a special meeting of stockholders;
+Added: • our bylaws provide that certain litigation against us can only be brought in Nevada;
+Added: • nothing in our articles of incorporation precludes future issuances without stockholder approval of the authorized but unissued shares of our Class A common stock;
+Added: • our articles of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued, without the approval of the holders of our capital stock;
• advance notice procedures apply for stockholders to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders;
1 unchanged sentence
These anti-takeover defenses could discourage, delay or prevent a transaction involving a change in control of our company.
−Removed: These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our
−Removed: Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
−Removed: Our amended and restated bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
−Removed: Our amended and restated bylaws, to the fullest extent permitted by law, provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a claim of breach of a duty (including any fiduciary duty) owed by any of our current or former directors, officers, stockholders, employees or agents to us or our stockholders, (iii) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents arising out of or relating to any provision of the DGCL or our amended and restated certificate of incorporation or our amended and restated bylaws, or (iv) any action asserting a claim against us or any of our current or former directors, officers, stockholders, employees or agents governed by the internal affairs doctrine of the State of Delaware.
+Added: These provisions could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
+Added: Our bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.
+Added: Our bylaws, to the fullest extent permitted by law, provide that, unless we consent in writing to the selection of an alternative forum, the Eighth Judicial District Court of the State of Nevada is the sole and exclusive forum for any actions, suits or proceedings, whether civil, administrative or investigative (i) brought in our name or right or on our behalf, (ii) asserting a claim of breach of a fiduciary duty owed by any of our current or former directors, officers, stockholders, employees or agents or fiduciaries to us or our stockholders, (iii) for any internal action (as defined in NRS 78.046), including any action asserting a claim pursuant to any provision of the NRS or our articles of incorporation or bylaws, (iv) to interpret, apply, enforce or determine the validity of our articles of incorporation or bylaws or (v) asserting a claim governed by the internal affairs doctrine of the State of Nevada.
This provision does not apply to suits brought to enforce any duty or liability created by the Securities Act, or rules and regulations thereunder.
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These provisions may limit our stockholders’ ability to bring a claim in a judicial forum they find favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees and agents.
−Removed: Alternatively, if a court were to find the choice of forum provision contained in our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
+Added: Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
Risks Related to Our Indebtedness
Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt.
−Removed: Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 0% convertible senior notes due 2026 (the “2026 Notes”), depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
−Removed: Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures.
+Added: Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including our 0% convertible senior notes due 2026 (the “2026 Notes”) and our 0.75% convertible senior notes due 2029 (the “2029 Notes”), depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control.
+Added: Our business may not continue to generate cash flow
+Added: from operations in the future sufficient to service our debt and make necessary capital expenditures.
If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly dilutive.
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We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
−Removed: We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes, to repay the 2026 Notes at maturity or to repurchase the 2026 Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2026 Notes.
−Removed: Holders will have the right to require us to repurchase their 2026 Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes to be repurchased, plus accrued and unpaid special interest, if any.
−Removed: In addition, upon conversion of the 2026 Notes, we will be required to make cash payments for each $1,000 in principal amount of 2026 Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the indenture governing the 2026 Notes.
−Removed: However, we may not have enough available cash or be able to obtain financing at the time we are
−Removed: required to make repurchases of notes surrendered therefore or pay cash with respect to the 2026 Notes being converted.
−Removed: In addition, our ability to repurchase the 2026 Notes or to pay cash upon conversions of the 2026 Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
−Removed: Our failure to repurchase 2026 Notes at a time when the repurchase is required or to pay any cash payable on future conversions of the 2026 Notes would constitute a default under the indenture governing the 2026 Notes.
−Removed: A default under the indenture governing the 2026 Notes or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
−Removed: If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2026 Notes or make cash payments upon conversions thereof.
+Added: We may not have the ability to raise the funds necessary to settle conversions of the 2026 Notes and/or the 2029 Notes, to repay the 2026 Notes and/or the 2029 Notes at maturity or to repurchase the 2026 Notes and/or the 2029 Notes upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion or repurchase of the 2026 Notes and/or the 2029 Notes.
+Added: Holders will have the right to require us to repurchase their 2026 Notes or 2029 Notes, as applicable, upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2026 Notes or the 2029 Notes, as applicable, to be repurchased, plus accrued and unpaid special interest in the case of the 2026 Notes, or accrued and unpaid interest in the case of the 2029 Notes, in each case, if any.
+Added: In addition, upon conversion of the 2026 Notes or the 2029 Notes, as applicable, we will be required to make cash payments for each $1,000 in principal amount of 2026 Notes or 2029 Notes, as applicable, converted of at least the lesser of $1,000 and the sum of the daily conversion values as described in the indenture governing the 2026 Notes or the indenture governing the 2029 Notes, as applicable.
+Added: However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefore or pay cash with respect to the 2026 Notes or the 2029 Notes, as applicable, being converted.
+Added: In addition, our ability to repurchase the 2026 Notes or the 2029 Notes, as applicable, or to pay cash upon conversions of the 2026 Notes or the 2029 Notes, as applicable, may be limited by law, by regulatory authority or by agreements governing our future indebtedness.
+Added: Our failure to repurchase 2026 Notes or the 2029 Notes, as applicable, at a time when the repurchase is required or to pay any cash payable on future conversions of the 2026 Notes or the 2029 Notes, as applicable, would constitute a default under the indenture governing the 2026 Notes or the indenture governing the 2029 Notes, as applicable.
+Added: A default under the indenture governing the 2026 Notes or the indenture governing the 2029 Notes, as applicable, or the fundamental change itself could also lead to a default under agreements governing our future indebtedness.
+Added: If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2026 Notes or the 2029 Notes, as applicable, or make cash payments upon conversions thereof.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.