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Securitization and Variable Interest Entities | 12 Months Ended
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Jun. 30, 2023
Debt Disclosure [Abstract] |
Securitization and Variable Interest Entities | Securitization and Variable Interest Entities Consolidated VIEs Warehouse Credit Facilities We established certain entities, deemed to be VIEs, to enter into warehouse credit facilities for the purpose of purchasing loans from our originating bank partners and funding directly originated loans. Refer to Note 9. Debt for additional information. The creditors of the VIEs have no recourse to the general credit of Affirm and the liabilities of the VIEs can only be settled by the respective VIEs’ assets; however, as the servicer of the loans pledged to our warehouse funding facilities, we have the power to direct the activities that most significantly impact the VIEs' economic performance. In addition, we retain significant economic exposure to the pledged loans and therefore, we are the primary beneficiary. Securitizations In connection with our asset-backed securitization program, we sponsor and establish trusts (deemed to be VIEs) to ultimately purchase loans facilitated by our platform. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. For these VIEs, the creditors have no recourse to the general credit of Affirm and the liabilities of the VIEs can only be settled by the respective VIEs’ assets. Additionally, the assets of the VIEs can be used only to settle obligations of the VIEs. We consolidate securitization VIEs when we are deemed to be the primary beneficiary and therefore have the power to direct the activities that most significantly affect the VIEs’ economic performance and a variable interest that could potentially be significant to the VIE. Through our role as the servicer, we have the power to direct the activities that most significantly affect the VIEs’ economic performance. In evaluating whether we have a variable interest that could potentially be significant to the VIE, we consider our retained interests. We also earn a servicing fee which has a senior distribution priority in the payment waterfall. In evaluating whether we are the primary beneficiary, management considers both qualitative and quantitative factors regarding the nature, size and form of our involvement with the VIEs. Management assesses whether we are the primary beneficiary of the VIEs on an ongoing basis. Where we consolidate the securitization trusts, the loans held in the securitization trusts are included in loans held for investment, and the notes sold to third-party investors are recorded in notes issued by securitization trusts in the consolidated balance sheets. For each securitization, the residual certificates represent the right to receive excess cash on the loans each collection period after all fees and required distributions have been made to the note holders on the related payment date. For the majority of consolidated securitization VIEs, we retain 100% of the residual certificates issued by the securitization trust. Any portion of the residual trust certificates sold to third-party investors are measured at fair value, using a discounted cash flow model, and presented within accrued expenses and other liabilities on the consolidated balance sheets. In addition to the retained residual certificates, our continued involvement includes loan servicing responsibilities over the life of the underlying loans. We defer and amortize debt issuance costs for consolidated securitization trusts on a straight-line basis over the expected life of the notes. The following tables present the aggregate carrying value of financial assets and liabilities from our involvement with consolidated VIEs (in thousands).
|  | June 30, 2023
|  | Assets |  | Liabilities |  | Net Assets
Warehouse credit facilities |  | $ | 1,930,641 |  |  | $ | 1,686,359 |  |  | $ | 244,282 |
Securitizations |  | 2,272,991 |  |  | 2,169,835 |  |  | 103,156 |
Total consolidated VIEs |  | $ | 4,203,632 |  |  | $ | 3,856,194 |  |  | $ | 347,438 |
|  | June 30, 2022
|  | Assets |  | Liabilities |  | Net Assets
Warehouse credit facilities |  | $ | 563,207 |  |  | $ | 534,422 |  |  | $ | 28,785 |
Securitizations |  | 1,679,062 |  |  | 1,632,107 |  |  | 46,955 |
Total consolidated VIEs |  | $ | 2,242,269 |  |  | $ | 2,166,529 |  |  | $ | 75,740 |
Unconsolidated VIEs Our transactions with unconsolidated VIEs include securitization trusts where we did not retain significant economic exposure through our variable interests and therefore we determined that we are not the primary beneficiary as of June 30, 2023. The following information pertains to unconsolidated VIEs where we hold a variable interest but are not the primary beneficiary (in thousands):
|  | June 30, 2023
|  | Assets |  | Liabilities |  | Net Assets |  | Maximum Exposure to Losses
Securitizations |  | $ | 380,547 |  |  | $ | 367,788 |  |  | $ | 12,759 |  |  | $ | 19,149 |
Total unconsolidated VIEs |  | $ | 380,547 |  |  | $ | 367,788 |  |  | $ | 12,759 |  |  | $ | 19,149 |
|  | June 30, 2022
|  | Assets |  | Liabilities |  | Net Assets |  | Maximum Exposure to Losses
Securitizations |  | $ | 996,242 |  |  | $ | 965,909 |  |  | $ | 30,333 |  |  | $ | 51,248 |
Total unconsolidated VIEs |  | $ | 996,242 |  |  | $ | 965,909 |  |  | $ | 30,333 |  |  | $ | 51,248 |
Maximum exposure to losses represents our exposure through our continuing involvement as servicer and through our retained interests. For unconsolidated VIEs, this includes $18.9 million in retained notes and residual certificates disclosed within securities available for sale at fair value in our consolidated balance sheets and $0.2 million related to our servicing assets disclosed within other assets in our consolidated balance sheets as of June 30, 2023. Additionally, we may experience a loss due to future repurchase obligations resulting from breaches in representations and warranties in our securitization and third-party sale agreements. This amount was not material as of June 30, 2023. Retained Beneficial Interests in Unconsolidated VIEs The investors of the securitizations have no direct recourse to the assets of Affirm, and the timing and amount of beneficial interest payments is dependent on the performance of the underlying loan assets held within each trust. We have classified our retained beneficial interests in unconsolidated securitization trusts as “available for sale” and as such they are disclosed at fair value in our consolidated balance sheets. See Note 13. Fair Value of Financial Assets and Liabilities for additional information on the fair value sensitivity of the notes receivable and residual certificates. Additionally, as of June 30, 2023, we have pledged each of our ret ained beneficial interests as collateral in a sale and repurchase agreement as described in Note 9. Debt.

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- Definition The entire disclosure for a variable interest entity (VIE), including but not limited to, judgments and assumptions in determining whether to consolidate and in identifying the primary beneficiary, gain (loss) recognized on the initial consolidation of the VIE, terms of arrangements, amounts and classification of the VIE's assets and liabilities, and the entity's maximum exposure to loss. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 810 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//810/tableOfContent + Details
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