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Acquisitions | 12 Months Ended
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Jun. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
Acquisitions | Acquisitions Fast On April 19, 2022, Affirm completed the closing of the transaction contemplated by a Release and Waiver Agreement entered into with Fast AF, Inc., (“Fast”) relating to the hiring of certain of its employees or service providers and an option to acquire certain of its assets. The purchase price was comprised of (i) $10.0 million in cash and (ii) forgiveness of a $15.0 million senior secured note issued to Fast in April 2022 prior to the closing. The acquisition was accounted for as an asset acquisition in accordance with ASC Topic 805, “Business Combinations” (“ASC 805”) since the assets acquired do not meet the definition of a business. The acquired identifiable intangible assets have been recorded at a total cost of $25.4 million, which includes approximately $0.4 million of transaction costs associated with the acquisition. The excess of the total cost of the assets over their total fair value was allocated between the assets on the basis of their relative fair values. The fair values of the intangible assets were determined by applying the replacement cost method. The fair value measurements are based on significant unobservable inputs, including management estimates and assumptions, and thus represent Level 3 measurements. The following table sets forth the identifiable intangible assets acquired and the cost allocated to each asset as of the date of acquisition (in thousands):
Assembled workforce |  | $ | 12,490 |
Option to purchase developed technology |  | $ | 12,925 |
Total |  | $ | 25,415 |
The assembled workforce intangible asset has an expected useful life of 1.5 years. The developed technology asset will be amortized over its expected useful life if the associated assets are purchased and entered into service. ShopBrain On July 1, 2021, Affirm completed the acquisition of technology and intellectual property from Yroo, Inc. and entered into employment arrangements with certain of its employees (“the ShopBrain acquisition”). Yroo, Inc. is a data aggregation and cataloging technology company based in Canada (“ShopBrain”). The purchase price was comprised of (i) $30.0 million in cash and (ii) 151,745 shares of our Class A common stock issued to the shareholders of ShopBrain at closing. The acquisition date fair value of the consideration transferred was approximately $40.0 million, which consisted of the following (in thousands):
Cash |  | $ | 30,000 |
Fair value of Class A common stock transferred |  | 10,000 |
Total acquisition date fair value of the consideration transferred |  | $ | 40,000 |
The acquisition was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805. The acquired identifiable intangible assets have been recorded at their estimated fair values with the excess purchase price assigned to goodwill. The goodwill was primarily attributed to future synergies from integration and the value of the assembled workforce. The goodwill is expected to be deductible for income tax purposes. The following table summarizes the allocation of the consideration paid of approximately $40.0 million to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Intangible assets |  | $ | 9,488 |
Total net assets acquired |  | 9,488 |
Goodwill |  | 30,512 |
Total purchase price |  | $ | 40,000 |
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):
|  | Fair Value |  | Useful Life (in years)
Developed technology |  | $ | 9,488 |  |  | 3.0
The fair values of the intangible assets were determined by applying the replacement cost method. The fair value measurements are based on significant unobservable inputs, including management estimates and assumptions, and thus represents Level 3 measurements. The transaction costs associated with the acquisition were approximately $0.2 million for the year ended June 30, 2022, which are included in general and administrative expense within the consolidated statements of operations and comprehensive loss. Pro forma adjustments would only include the additional amortization that would have been charged assuming the intangible assets had been recorded as of July 1, 2020. Such adjustments would not be material to the consolidated statements of operations and comprehensive loss for the year ended June 30, 2021. Kite On June 1, 2021, Affirm completed the acquisition of technology and intellectual property from Manhattan Engineering, Inc. and entered into employment arrangements with certain of its employees (“the Kite acquisition”). The purchase price was comprised of $26.0 million in cash, including $9.0 million held in escrow and subject to forfeiture if certain employees terminate within a stipulated time period. The acquisition date fair value of the consideration transferred was approximately $24.8 million which consisted of the following (in thousands):
Cash |  | $ | 26,000 |
Less: Fair value of contingent consideration asset |  | $ | (1,241) |
Total acquisition date fair value of consideration transferred |  | $ | 24,759 |
The acquisition was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805. The acquired identifiable intangible assets have been recorded at their estimated fair values with the excess purchase price assigned to goodwill. The goodwill was primarily attributed to the value of assembled workforce. The goodwill is expected to be deductible for income tax purposes. The following table summarizes the allocation of the consideration paid of approximately $24.8 million to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Intangible assets |  | $ | 6,975 |
Net assets acquired |  | 6,975 |
Goodwill |  | $ | 17,784 |
Total purchase price |  | $ | 24,759 |
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):
|  | Fair Value |  | Useful Life (in years)
Developed technology |  | $ | 6,900 |  |  | 3.0
Trademarks |  | 75 |  | 1.0
Total intangible assets |  | $ | 6,975 |  |  |
The fair values of the intangible assets were determined by applying the replacement cost method. The fair value measurements are based on significant unobservable inputs, including management estimates and assumptions, and thus represent Level 3 measurements. The transaction costs associated with the acquisition were approximately $0.2 million for the year ended June 30, 2021, which are included in general and administrative expense in the consolidated statements of operations and comprehensive loss. There were no transaction costs associated with the acquisition for the year ended June 30, 2022. Pro forma adjustments would only include the additional amortization that would have been charged assuming the intangible assets had been recorded as of July 1, 2019. Such adjustments would not be material to the consolidated statements of operations and comprehensive loss for the year ended June 30, 2021 and 2020. Returnly On May 1, 2021, Affirm completed a merger transaction with Returnly Technologies, Inc. (“Returnly”), a leading provider of online return experiences for direct-to-consumer brands. Prior to the merger transaction, Affirm owned approximately 1% of the outstanding shares of Returnly. By effect of the merger transaction, Affirm acquired all of the remaining outstanding shares, increasing its equity interest from approximately 1% to 100%. We have included the financial results of Returnly in our consolidated financial statements from the date of acquisition. The purchase price for the remaining interest was comprised of (i) approximately $71.5 million in cash and (ii) 2,989,697 shares of our common stock issued to the shareholders of Returnly at closing. We also issued 304,364 shares of our common stock, which are held in escrow and subject to forfeiture upon the termination of certain employees or if certain revenue milestones are not met. Because the future payment of the escrowed shares is contingent on continued employment, the arrangement represents stock-based compensation in the post combination period. Refer to Note 16. Equity Incentive Plans for additional information on the escrowed share arrangement. The acquisition date fair value of the consideration transferred for Returnly was approximately $286.0 million, which consisted of the following (in thousands):
Cash |  | $ | 71,484 |
Fair value of common stock transferred |  | 214,475
Total acquisition date fair value of consideration transferred |  | $ | 285,959 |
The acquisition date fair value of the equity interest in Returnly held by Affirm immediately before the acquisition date was $2.1 million, resulting in the recognition of a $1.6 million gain included in other (expense) income, net in the consolidated statements of operations and comprehensive loss. The acquisition of Returnly was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805. The acquired Returnly assets, including identifiable intangible assets and liabilities assumed, have been recorded at their estimated fair values with the excess purchase price assigned to goodwill. The goodwill was primarily attributed to future synergies from integration, new customer acquisitions, and the value of assembled workforce. Goodwill is not expected to be deductible for income tax purposes. The following table summarizes the allocation of the fair value of the consideration paid and the previously held equity interest of approximately $288.1 million to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Cash and cash equivalents |  | $ | 3,788 |
Accounts receivable, net |  | 9,585 |
Property, equipment and software |  | 127 |
Intangible assets |  | 45,900 |
Other assets |  | 1,830 |
Total assets acquired |  | $ | 61,230 |
Accounts payable |  | 594 |
Accrued expenses and other liabilities |  | 6,205 |
Total liabilities assumed |  | $ | 6,799 |
Net assets acquired |  | $ | 54,431 |
Goodwill |  | 233,623 |
Total fair value of consideration transferred and previously held investment |  | $ | 288,054 |
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands):
|  | Fair Value |  | Useful Life (in years)
Developed technology |  | $ | 16,200 |  |  | 3.0
Merchant relationships |  | 29,200 |  | 5.0
Trade name |  | 500 |  | 1.0
Total intangible assets |  | $ | 45,900 |  |  |
The fair value of the merchant relationship intangible asset was estimated by applying the income approach, which is based upon the discounted projected future cash flows attributable to the existing merchant relationships. The fair value of the developed technology intangible asset was determined by applying the replacement cost method. The fair value measurements are based on significant unobservable inputs, including management estimates and assumptions, and thus represent Level 3 measurements. The transaction costs associated with the acquisition were approximately $1.8 million for the year ended June 30, 2021, which are included in general and administrative expense in the consolidated statements of operations and comprehensive loss. There were no transaction costs associated with the acquisition for the year ended June 30, 2022. Unaudited Pro Forma Information The following table reflects the pro forma consolidated total revenue and net loss for the periods presented as if the acquisition of Returnly had occurred on July 1, 2019 and combines the historical results of Affirm and Returnly. This supplemental unaudited pro forma information is based upon accounting estimates and judgments that we believe are reasonable and includes certain adjustments to conform accounting standards to U.S. GAAP. This supplemental unaudited pro forma financial information has been prepared for illustrative purposes only and is not necessarily indicative of what actual results would have occurred, or of results that may occur in the future.
|  | Year ended June 30, |  | Year ended June 30,
|  | 2021 |  | 2020
Revenue |  | $ | 880,603 |  |  | $ | 517,438 |
Net loss |  | $ | (465,875) |  |  | $ | (132,721) |
PayBright On January 1, 2021, Affirm Canada Holdings Ltd. (“Affirm Canada”), a subsidiary of Affirm, and Affirm acquired all outstanding stock of PayBright, Inc., one of Canada’s leading buy now, pay later providers, for approximately $288.8 million. We have included the financial results of PayBright in our consolidated financial statements from the date of acquisition. The purchase price was comprised of (i) approximately $114.5 million in cash, (ii) 3,622,445 shares of our common stock issued to the shareholders of PayBright at closing and (iii) 2,587,362 shares of our common stock held in escrow and subject to forfeiture if certain revenue milestones are not met. On January 12, 2021, these shares were reclassified into an aggregate of 1,811,222 shares of our Class A common stock and 1,811,222 shares of our Class B common stock issued to the shareholders of PayBright at closing and an aggregate of 1,293,681 shares of our Class A common stock and 1,293,681 shares of our Class B common stock held in escrow. The acquisition date fair value of the consideration transferred for PayBright was approximately $288.8 million, which consisted of the following (in thousands):
Cash |  | $ | 114,490 |
Fair value of common stock transferred |  | 116,989 |
Fair value of contingent consideration |  | 57,275 |
Total purchase price |  | $ | 288,754 |
For further details on our fair value methodology with respect to the contingent consideration, see Note 14. Fair Value of Financial Assets and Liabilities. The acquisition of PayBright was accounted for as a business combination and reflects the application of acquisition accounting in accordance with ASC 805. The acquired PayBright assets, including identifiable intangible assets and liabilities assumed, have been recorded at their estimated fair values with the excess purchase price assigned to goodwill. The goodwill was primarily attributed to future synergies from integration, new customer acquisitions, and the value of assembled workforce in Canada. Goodwill is not expected to be deductible for income tax purposes. The following table summarizes the allocation of the consideration paid of approximately $288.8 million to the fair values of the assets acquired and liabilities assumed at the acquisition date (in thousands):
Cash and cash equivalents |  | $ | 8,219 |
Restricted cash |  | 1,469 |
Loans held for investment |  | 89,570 |
Accounts receivable, net |  | 1,537 |
Property, equipment and software, net |  | 586 |
Intangible assets |  | 16,653 |
Other assets |  | 5,651 |
Total assets acquired |  | $ | 123,685 |
Accounts payable |  | 6,579 |
Accrued interest payable |  | 23 |
Accrued expenses and other liabilities |  | 193 |
Funding debt |  | 85,310 |
Total liabilities assumed |  | $ | 92,105 |
Net assets acquired |  | $ | 31,580 |
Goodwill |  | 257,174 |
Total purchase price |  | $ | 288,754 |
The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (in thousands)
|  | Fair Value |  | Useful Life (in years)
Developed technology |  | $ | 6,127 |  |  | 3.0
Merchant relationships |  | 9,505 |  |  | 4.0
Trade name |  | 1,021 |  |  | 5.0
Total intangible assets |  | $ | 16,653 |  |  |
The transaction costs associated with the acquisition were approximately $2.4 million for the year ended June 30, 2021, which are included in general and administrative expense in the consolidated statements of operations and comprehensive loss. There were no transaction costs associated with the acquisition for the year ended June 30, 2022. Unaudited Pro Forma Information The following table reflects the pro forma consolidated total revenue and net loss for the periods presented as if the acquisition of PayBright had occurred on July 1, 2019 and combines the historical results of Affirm and PayBright. This supplemental unaudited pro forma information is based upon accounting estimates and judgments that we believe are reasonable and includes certain adjustments to conform accounting standards to U.S. GAAP. This supplemental unaudited pro forma financial information has been prepared for illustrative purposes only and is not necessarily indicative of what actual results would have occurred, or of results that may occur in the future.
|  | Year ended June 30, |  | Year ended June 30,
|  | 2021 |  | 2020
Revenue |  | $ | 886,937 |  |  | $ | 524,657 |
Net loss |  | $ | (447,116) |  |  | $ | (128,244) |

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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