QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
−Removed: We have operations within the United States and Canada, and we are exposed to market risks in the ordinary course of our business.
+Added: We have operations within the United States, Canada and U.K., and we are exposed to market risks in the ordinary course of our business.
Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and interest rates.
6 unchanged sentences
Continued volatility in interest rates and inflation, which may persist longer than previously expected, may adversely impact our consumers’ spending levels, and ability and willingness to pay outstanding amounts owed to us.
−Removed: Higher interest rates may lead to higher payment obligations on our future credit products but also for consumers’ other financial commitments, including their mortgages, credit cards, and other types of loans.
−Removed: Therefore, higher interest rates may lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our operating results.
+Added: Elevated interest rates may lead to higher payment obligations on our future credit products but also for consumers’ other financial commitments, including their mortgages, credit cards, and other types of loans.
+Added: Therefore, elevated interest rates may lead to increased delinquencies, charge-offs, and allowances for loans and interest receivable, which could have an adverse effect on our operating results.
We rely on a variety of funding sources with varying degrees of interest rate sensitivities.
20 unchanged sentences
To monitor portfolio performance, we utilize a wide range of internal and external metrics to review user and loan populations.
−Removed: Each week, management reviews performance for each consumer segment, typically split by ITACs model score, financial product originated, age of loan, and delinquency status.
+Added: Each week, management reviews performance for each consumer segment, typically split by ITACs model score at the time of origination, financial product originated, age of loan, and delinquency status.
Internal performance trendlines are measured against external factors such as unemployment, CPI, and consumer sentiment to determine what changes, if any, in risk strategy is warranted.
−Removed: As of June 30, 2024 and June 30, 2023, we were exposed to credit risk on $5.7 billion and $4.4 billion, respectively, of loans held on our consolidated balance sheet.
+Added: As of June 30, 2025 and June 30, 2024, we were exposed to credit risk on $7.0 billion and $5.7 billion, respectively, of loans held within our consolidated balance sheet.
Loan receivables are diversified geographically.
As of both June 30, 2025 and June 30, 2024, approximately 11% of loan receivables related to consumers residing in the state of California.
+Added: Approximately 10% of loan receivables related to customers residing in the state of Texas as of June 30, 2025 but did not exceed 10% as of June 30, 2024.
No other states or provinces exceeded 10%.
−Removed: In addition, we have credit risk exposure in relation to certain off balance sheet loans sold to third parties where we have entered into risk sharing arrangements and through our retained interests in unconsolidated securitization trusts.
−Removed: As of June 30, 2024 and June 30, 2023, we have sold $4.2 billion and $0.4 billion, respectively, unpaid principal balance of loans which are subject to risk
−Removed: sharing arrangements, of which our maximum exposure to losses was $81.2 million and $8.2 million, respectively.
+Added: In addition, we have credit risk exposure related to certain off-balance sheet loans sold to third parties where we have entered into risk sharing arrangements, retained interests in unconsolidated securitization trusts and our residual interests in structured transactions.
+Added: As of June 30, 2025 and June 30, 2024, we have sold $8.6 billion and $4.2 billion, respectively, in unpaid principal balance loans which are subject to risk sharing arrangements, of which our maximum exposure to losses was $91.1 million and $81.2 million, respectively.
This amount includes our maximum potential loss with respect to risk sharing liabilities of $24.5 million and the fair value of risk sharing assets of $66.6 million, as of June 30, 2025.
−Removed: The fair value of notes receivable and residual trust certificate retained interests in unconsolidated securitization trusts was $51.7 million and $18.9 million as of June 30, 2024 and June 30, 2023, respectively.
+Added: The fair value of notes receivable and residual trust certificate retained interests in unconsolidated securitization trusts was $75.5 million and $51.7 million as of June 30, 2025 and June 30, 2024, respectively, of which our maximum exposure to losses was $76.9 million and $51.9 million, respectively.
+Added: The fair value of residual interests in structured transactions was $2.3 million as of June 30, 2025, of which our maximum exposure to losses was $15.6 million.
We are also exposed to credit risk in the event of nonperformance by the financial institutions holding our cash and the issuers of our cash equivalents and available for sale securities.
1 unchanged sentence
We manage this risk by conducting business with well-established financial institutions, diversifying our counterparties and having guidelines regarding credit rating and investment maturities to safeguard liquidity.
−Removed: Although, we are not substantially dependent on a single financing source and have not historically experienced any credit losses related to these financial institutions, since the beginning of March 2023, there have been public reports of instability at certain financial institutions.
−Removed: 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.
+Added: Although, we are not substantially dependent on a single financing source and have not historically experienced any credit losses related to these financial institutions, 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.
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.