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Fair Value of Financial Assets and Liabilities | 6 Months Ended
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Dec. 31, 2024
Fair Value Disclosures [Abstract] |
Fair Value of Financial Assets and Liabilities | Fair Value of Financial Assets and Liabilities Financial Assets and Liabilities Recorded at Fair Value The following tables present information about our assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2024 and June 30, 2024 (in thousands):
|  | December 31, 2024
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |  |
Money market funds |  | $ | 115,063 |  |  | $ | — |  |  | $ | — |  |  | $ | 115,063 |
Commercial paper |  | — |  |  | — |  |  | — |  |  | — |
Securities, available for sale: |  |  |  |  |  |  |  |
Certificates of deposit |  | — |  |  | 17,347 |  |  | — |  |  | 17,347 |
Corporate bonds |  | — |  |  | 204,294 |  |  | — |  |  | 204,294 |
Commercial paper |  | — |  |  | 51,293 |  |  | — |  |  | 51,293 |
Agency bonds |  | — |  |  | 13,319 |  |  | — |  |  | 13,319 |
Municipal bonds |  | — |  |  | 5,195 |  |  | — |  |  | 5,195 |
Government bonds: |  |  |  |  |  |  |  |
Non-US |  | — |  |  | 3,156 |  |  | — |  |  | 3,156 |
US |  | — |  |  | 303,029 |  |  | — |  |  | 303,029 |
Securitization notes receivable and residual trust certificates |  | — |  |  | — |  |  | 69,051 |  |  | 69,051 |
Servicing assets |  | — |  |  | — |  |  | 806 |  |  | 806 |
Derivative instruments |  | — |  |  | 7,676 |  |  | — |  |  | 7,676 |
Risk sharing asset |  | — |  |  | — |  |  | 44,969 |  |  | 44,969 |
Total assets |  | $ | 115,063 |  |  | $ | 605,309 |  |  | $ | 114,826 |  |  | $ | 835,198 |
Liabilities: |  |  |  |  |  |  |  |
Servicing liabilities |  | $ | — |  |  | $ | — |  |  | $ | 237 |  |  | $ | 237 |
Performance fee liability |  | — |  |  | — |  |  | 1,773 |  |  | 1,773 |
Profit share liability |  | — |  |  | — |  |  | 6,111 |  |  | 6,111 |
Risk sharing liability |  | — |  |  | — |  |  | 1,498 |  |  | 1,498 |
Derivative instruments |  | — |  |  | 186 |  |  | — |  |  | 186 |
Total liabilities |  | $ | — |  |  | $ | 186 |  |  | $ | 9,619 |  |  | $ | 9,805 |
|  | June 30, 2024
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents: |  |  |  |  |  |  |  |
Money market funds |  | $ | 63,389 |  |  | $ | — |  |  | $ | — |  |  | $ | 63,389 |
Commercial paper |  | — |  |  | 57,964 |  |  | — |  |  | 57,964 |
Government bonds- US |  | — |  |  | 3,492 |  |  | — |  |  | 3,492 |
Securities, available for sale: |  |  |  |  |  |  |  |
Certificates of deposit |  | — |  |  | 34,473 |  |  | — |  |  | 34,473 |
Corporate bonds |  | — |  |  | 242,660 |  |  | — |  |  | 242,660 |
Commercial paper |  | — |  |  | 239,882 |  |  | — |  |  | 239,882 |
Agency bonds |  | — |  |  | 15,159 |  |  | — |  |  | 15,159 |
Municipal bonds |  | — |  |  | 3,953 |  |  | — |  |  | 3,953 |
Government bonds: |  |  |  |  |  |  |  |
Non-US |  | — |  |  | 5,275 |  |  | — |  |  | 5,275 |
US |  | — |  |  | 538,556 |  |  | — |  |  | 538,556 |
Securitization notes receivable and residual trust certificates |  | — |  |  | — |  |  | 51,670 |  |  | 51,670 |
Servicing assets |  | — |  |  | — |  |  | 574 |  |  | 574 |
Derivative instruments |  | — |  |  | 17,207 |  |  | — |  |  | 17,207 |
Risk sharing asset |  | — |  |  | — |  |  | 33,884 |  |  | 33,884 |
Total assets |  | $ | 63,389 |  |  | $ | 1,158,621 |  |  | $ | 86,128 |  |  | $ | 1,308,138 |
Liabilities: |  |  |  |  |  |  |  |
Servicing liabilities |  | $ | — |  |  | $ | — |  |  | $ | 743 |  |  | $ | 743 |
Performance fee liability |  | — |  |  | — |  |  | 1,503 |  |  | 1,503 |
Profit share liability |  | — |  |  | — |  |  | 1,974 |  |  | 1,974 |
Risk sharing liability |  | — |  |  | — |  |  | 918 |  |  | 918 |
Derivative Instruments |  | — |  |  | 38 |  |  | — |  |  | 38 |
Total liabilities |  | $ | — |  |  | $ | 38 |  |  | $ | 5,138 |  |  | $ | 5,176 |
As of December 31, 2024 and June 30, 2024, there were no transfers between levels. Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 2) Marketable Securities As of December 31, 2024, we held marketable securities classified as cash and cash equivalents and securities available for sale. Management obtains pricing from one or more third-party pricing services for the purpose of determining fair value. Whenever available, the fair value is based on quoted bid prices as of the end of the trading day. When quoted prices are not available, other methods may be utilized including evaluated prices provided by third-party pricing services. Derivative Instruments As of December 31, 2024 and June 30, 2024, we used a combination of interest rate cap agreements and interest rate swaps to manage interest costs and the risks associated with variable interest rates. These derivative instruments are classified as Level 2 within the fair value hierarchy, and the fair value is estimated by using third-party pricing models, which contain certain assumptions based on readily observable market-based inputs. We validate the valuation output on a monthly basis. Refer to Note 11. Derivative Financial Instruments in the notes to the interim condensed consolidated financial statements for further details on our derivative instruments. Assets and Liabilities Measured at Fair Value on a Recurring Basis using Significant Unobservable Inputs (Level 3) We evaluate our assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level at which to classify them each reporting period. Since our servicing assets and liabilities, performance fee liability, securitization notes and residual trust certificates, profit share liability, and risk sharing arrangements do not trade in an active market with readily observable prices, we use significant unobservable inputs to measure fair value and have classified as level 3 within the fair value hierarchy. This determination requires significant judgments to be made. Servicing Assets and Liabilities We sold loans with an unpaid principal balance of $4.6 billion and $7.4 billion for the three and six months ended December 31, 2024, respectively, $3.1 billion and $5.2 billion for the three and six months ended December 31, 2023, respectively, for which we retained servicing rights. As of December 31, 2024 and June 30, 2024, we serviced loans which we sold with a remaining unpaid principal balance of $6.9 billion and $5.1 billion, respectively. We use discounted cash flow models to arrive at an estimate of fair value. Significant assumptions used in the valuation of our servicing rights are as follows: Adequate Compensation We estimate adequate compensation as the rate a willing market participant would require for servicing loans with similar characteristics as those in the serviced portfolio. Discount Rate Estimated future payments to be received under servicing agreements are discounted as a part of determining the fair value of the servicing rights. For servicing rights on loans, the discount rate reflects the time value of money and a risk premium intended to reflect the amount of compensation market participants would require. Gross Default Rate We estimate the timing and probability of early loan payoffs, loan defaults and write-offs, thus affecting the projected unpaid principal balance and expected term of the loan, which are used to project future servicing revenue and expenses. We earned $28.7 million and $54.7 million of servicing income for the three and six months ended December 31, 2024, respectively, and $22.4 million and $42.6 million for the three and six months ended December 31, 2023, respectively. As of December 31, 2024 and June 30, 2024, the aggregate fair value of the servicing assets was measured at $0.8 million and $0.6 million, respectively, and presented within other assets in the interim condensed consolidated balance sheets. As of December 31, 2024 and June 30, 2024, the aggregate fair value of the servicing liabilities was measured at $0.2 million and $0.7 million, respectively, and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets. The following table summarizes the activity related to the aggregate fair value of our servicing assets (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 435 |  |  | $ | 569 |  |  | $ | 574 |  |  | $ | 880 |
Initial transfers of financial assets |  | 230 |  |  | — |  |  | 230 |  |  | — |
Subsequent changes in fair value |  | 141 |  |  | (204) |  |  | 2 |  |  | (515) |
Fair value at end of period |  | $ | 806 |  |  | $ | 365 |  |  | $ | 806 |  |  | $ | 365 |
The following table summarizes the activity related to the aggregate fair value of our servicing liabilities (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 438 |  |  | $ | 1,851 |  |  | $ | 743 |  |  | $ | 1,392 |
Initial transfers of financial liabilities |  | — |  |  | 1,702 |  |  | — |  |  | 3,091 |
Subsequent changes in fair value |  | (201) |  |  | (1,022) |  |  | (506) |  |  | (1,952) |
Fair value at end of period |  | $ | 237 |  |  | $ | 2,531 |  |  | $ | 237 |  |  | $ | 2,531 |
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of servicing assets and liabilities as of December 31, 2024 and June 30, 2024:
|  |  |  | December 31, 2024
|  | Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (3)
Servicing assets |  | Discount rate |  | 30.00 | % |  | 30.00 | % |  | 30.00 | %
|  | Adequate compensation (1) |  | 2.00 | % |  | 2.00 | % |  | 2.00 | %
|  | Gross default rate (2) |  | 9.20 | % |  | 15.20 | % |  | 11.32 | %
Servicing liabilities |  | Discount rate |  | 30.00 | % |  | 30.00 | % |  | 30.00 | %
|  | Adequate compensation (1) |  | 2.00 | % |  | 2.00 | % |  | 2.00 | %
|  | Gross default rate (2) |  | 3.22 | % |  | 4.65 | % |  | 3.89 | %
|  |  |  | June 30, 2024
|  | Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (3)
Servicing assets |  | Discount rate |  | 30.00 | % |  | 30.00 | % |  | 30.00 | %
|  | Adequate compensation (1) |  | 2.00 | % |  | 2.00 | % |  | 2.00 | %
|  | Gross default rate (2) |  | 9.89 | % |  | 22.72 | % |  | 10.84 | %
Servicing liabilities |  | Discount rate |  | 30.00 | % |  | 30.00 | % |  | 30.00 | %
|  | Adequate compensation (1) |  | 2.00 | % |  | 2.00 | % |  | 2.00 | %
|  | Gross default rate (2) |  | 2.58 | % |  | 4.12 | % |  | 3.00 | %
(1)Estimated annual cost of servicing a loan as a percentage of unpaid principal balance. (2)Annualized estimated gross charge-offs as a percentage of unpaid principal balance. (3)Unobservable inputs were weighted by relative fair value. The following table summarizes the effect that adverse changes in estimates would have on the fair value of the servicing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):
|  | December 31, 2024 |  | June 30, 2024
Servicing assets |  |  |  |
Gross default rate assumption: |  |  |  |
Gross default rate increase of 25% |  | $ | 1 |  |  | $ | 1 |
Gross default rate increase of 50% |  | $ | 2 |  |  | $ | 1 |
Adequate compensation assumption: |  |  |  |
Adequate compensation increase of 10% |  | $ | (1,367) |  |  | $ | (980) |
Adequate compensation increase of 20% |  | $ | (2,734) |  |  | $ | (1,961) |
Discount rate assumption: |  |  |  |
Discount rate increase of 25% |  | $ | (32) |  |  | $ | (23) |
Discount rate increase of 50% |  | $ | (62) |  |  | $ | (44) |
Servicing liabilities |  |  |  |
Gross default rate assumption: |  |  |  |
Gross default rate increase of 25% |  | $ | — |  |  | $ | (1) |
Gross default rate increase of 50% |  | $ | — |  |  | $ | (1) |
Adequate compensation assumption: |  |  |  |
Adequate compensation increase of 10% |  | $ | 3,820 |  |  | $ | 3,153 |
Adequate compensation increase of 20% |  | $ | 7,639 |  |  | $ | 6,305 |
Discount rate assumption: |  |  |  |
Discount rate increase of 25% |  | $ | (5) |  |  | $ | (19) |
Discount rate increase of 50% |  | $ | (9) |  |  | $ | (37) |
Performance Fee Liability In accordance with our agreements with our originating bank partners, we pay a fee for each loan that is fully repaid by the consumer, due at the end of the period in which the loan is fully repaid. We recognize a liability upon the purchase of a loan for the expected future payment of the performance fee. This liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets. Any changes in the fair value of the liability are reflected in other income, net, in the interim condensed consolidated statements of operations and comprehensive income (loss). The following table summarizes the activity related to the fair value of the performance fee liability (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 1,541 |  |  | $ | 1,427 |  |  | $ | 1,503 |  |  | $ | 1,581 |
Purchases of loans |  | 566 |  |  | 493 |  |  | 1,089 |  |  | 869 |
Settlements paid |  | (501) |  |  | (508) |  |  | (978) |  |  | (992) |
Subsequent changes in fair value |  | 167 |  |  | 182 |  |  | 159 |  |  | 136 |
Fair value at end of period |  | $ | 1,773 |  |  | $ | 1,594 |  |  | $ | 1,773 |  |  | $ | 1,594 |
Significant unobservable inputs used for our Level 3 fair value measurement of the performance fee liability are the discount rate, refund rate, and default rate. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement. The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the performance fee liability as of December 31, 2024 and June 30, 2024:
|  | December 31, 2024
Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Discount rate |  | 7.75% |  | 10.00% |  | 9.53%
Refund rate |  | 1.50% |  | 1.50% |  | 1.50%
Default rate |  | 1.18% |  | 4.65% |  | 3.02%
|  | June 30, 2024
Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Discount rate |  | 8.50% |  | 10.00% |  | 9.81%
Refund rate |  | 1.50% |  | 1.50% |  | 1.50%
Default rate |  | 1.38% |  | 4.65% |  | 2.94%
(1)Unobservable inputs were weighted by remaining principal balances. Retained Beneficial Interests in Unconsolidated VIEs As of December 31, 2024, we held notes receivable and residual trust certificates with an aggregate fair value of $69.1 million in connection with unconsolidated securitizations. The balances correspond to the 5% economic risk retention we are required to maintain as the securitization sponsor. These assets are measured at fair value using a discounted cash flow model, and presented within securities available for sale at fair value in the interim condensed consolidated balance sheets. Changes in the fair value, other than declines in fair value due to credit recognized as an allowance, are reflected in other comprehensive income in the interim condensed consolidated statements of operations and comprehensive income (loss). Declines in fair value due to credit are reflected in other income, net in the interim condensed consolidated statements of operations and comprehensive income (loss). The following table summarizes the activity related to the fair value of the notes and residual trust certificates (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 38,926 |  |  | $ | 13,983 |  |  | $ | 51,670 |  |  | $ | 18,913 |
Additions |  | 41,943 |  |  | 22,187 |  |  | 41,943 |  |  | 22,187 |
Cash received (due to payments) |  | (12,036) |  |  | (4,094) |  |  | (26,419) |  |  | (9,355) |
Change in unrealized gain (loss) |  | (510) |  |  | 80 |  |  | (541) |  |  | 265 |
Accrued interest |  | 931 |  |  | 439 |  |  | 2,976 |  |  | 611 |
Reversal of (impairment on) securities available for sale |  | (203) |  |  | (184) |  |  | (578) |  |  | (210) |
Fair value at end of period |  | $ | 69,051 |  |  | $ | 32,411 |  |  | $ | 69,051 |  |  | $ | 32,411 |
Significant unobservable inputs used for our Level 3 fair value measurement of the notes and residual trust certificates are the discount rate, loss rate, and prepayment rate. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement. The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the notes receivable and residual trust certificates as of December 31, 2024 and June 30, 2024:
|  | December 31, 2024
Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Discount rate |  | 4.73% |  | 30.29% |  | 6.84%
Loss rate |  | 1.17% |  | 9.47% |  | 7.53%
Prepayment rate |  | 13.58% |  | 23.00% |  | 20.94%
|  | June 30, 2024
Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Discount rate |  | 5.73% |  | 41.41% |  | 8.93%
Loss rate |  | 0.95% |  | 6.98% |  | 6.17%
Prepayment rate |  | 12.40% |  | 27.70% |  | 23.33%
(1)Unobservable inputs were weighted by relative fair value The following table summarizes the effect that adverse changes in estimates would have on the fair value of the notes receivable and residual trust certificates given hypothetical changes in significant unobservable inputs (in thousands):
|  | December 31, 2024 |  | June 30, 2024
Discount rate assumption: |  |  |  |
Discount rate increase of 25% |  | $ | (723) |  |  | $ | (623) |
Discount rate increase of 50% |  | $ | (1,421) |  |  | $ | (1,223) |
Loss rate assumption: |  |  |  |
Loss rate increase of 25% |  | $ | (1,761) |  |  | $ | (705) |
Loss rate increase of 50% |  | $ | (2,665) |  |  | $ | (1,321) |
Prepayment rate assumption: |  |  |  |
Prepayment rate decrease of 25% |  | $ | 124 |  |  | $ | 58 |
Prepayment rate decrease of 50% |  | $ | 249 |  |  | $ | 116 |
Profit Share Liability On January 1, 2021, we entered into a commercial agreement with an enterprise partner, in which we are obligated to share in the profitability of transactions facilitated by our platform. Upon capture of a loan under this program, we record a liability associated with the estimated future profit to be shared over the life of the loan based on estimated program profitability levels. This liability is measured using a discounted cash flow model and recorded at fair value and presented within accrued expenses and other liabilities in the interim condensed consolidated balance sheets. The following table summarizes the activity related to the fair value of the profit share liability (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 2,015 |  |  | $ | 1,079 |  |  | $ | 1,974 |  |  | $ | 1,832 |
Facilitation of loans |  | 4,238 |  |  | 1,160 |  |  | 5,465 |  |  | 2,088 |
Actual performance |  | (3,271) |  |  | (1,166) |  |  | (6,299) |  |  | 506 |
Subsequent changes in fair value |  | 3,129 |  |  | 471 |  |  | 4,971 |  |  | (2,882) |
Fair value at end of period |  | $ | 6,111 |  |  | $ | 1,544 |  |  | $ | 6,111 |  |  | $ | 1,544 |
Significant unobservable inputs used for our Level 3 fair value measurement of the profit share liability are the discount rate and estimated program profitability. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement. The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the profit sharing liability as of December 31, 2024 and June 30, 2024:
|  | December 31, 2024
Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Discount rate |  | 30.00% |  | 30.00% |  | 30.00%
Program profitability |  | 0.97% |  | 2.02% |  | 1.94%
|  | June 30, 2024
Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Discount rate |  | 30.00% |  | 30.00% |  | 30.00%
Program profitability |  | 0.32% |  | 1.01% |  | 0.96%
(1)Unobservable inputs were weighted by relative fair value. Risk Sharing Arrangements 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 or are entitled to receive a payment from the loan buyer, depending on the actual versus expected loan performance as contractually agreed to with the counterparty, and subject to a cap based on a percentage of the principal balance of loans sold. Loan performance is evaluated at a cohort level based on the month loans were sold. As of December 31, 2024 and June 30, 2024, we have sold $6.8 billion and $4.2 billion, respectively, unpaid principal balance of loans under these risk sharing arrangements, of which our maximum exposure to losses is $85.1 million and $81.2 million, respectively. This amount includes our maximum potential loss with respect to risk sharing liabilities of $40.1 million and the fair value of risk sharing assets of $45.0 million, as of December 31, 2024. We account for these arrangements as derivatives measured at fair value with gains and losses recognized in gain on sales of loans in our interim condensed consolidated statements of operations and comprehensive income (loss). For each counterparty, we have recognized a net asset or net liability based on the estimated fair value of future payments we expect to receive from or make to the counterparty. As of December 31, 2024 and June 30, 2024, we held assets related to these arrangements of $45.0 million and $33.9 million, respectively, and liabilities of $1.5 million and $0.9 million, respectively. As of December 31, 2024, we estimated the fair value of future settlements using a discounted cash flow model. Significant assumptions used in the valuation of our risk sharing assets and liabilities are as follows: Discount Rate We estimate future cash flows to be received or paid under the agreements are discounted as a part of determining the fair value of the risk sharing arrangements. The discount rate reflects the time value of money and a risk premium intended to reflect the amount of compensation market participants would require. Loss Rate We estimate the loss rate as the probability of loan defaults and write-offs, which are used to project future risk-sharing cash flows. Prepayment Rate We estimate the annualized prepayment rate as the expected excess loan payment received in a given month as a percentage of the outstanding principal balance at the beginning of the month minus the scheduled principal payment. The following table summarizes the activity related to the fair value of the risk sharing assets (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 45,330 |  |  | $ | 3,814 |  |  | $ | 33,884 |  |  | $ | — |
Initial transfers of financial assets |  | 5,191 |  |  | 10,749 |  |  | 15,568 |  |  | 14,563 |
Cash settlements |  | (5,824) |  |  | — |  |  | (5,824) |  |  | — |
Subsequent changes in fair value |  | 272 |  |  | 2,127 |  |  | 1,341 |  |  | 2,127 |
Fair value at end of period |  | $ | 44,969 |  |  | $ | 16,690 |  |  | $ | 44,969 |  |  | $ | 16,690 |
The following table summarizes the activity related to the fair value of the risk sharing liabilities (in thousands):
|  | Three Months Ended December 31, |  | Six Months Ended December 31,
|  | 2024 |  | 2023 |  | 2024 |  | 2023
Fair value at beginning of period |  | $ | 1,801 |  |  | $ | 471 |  |  | $ | 918 |  |  | $ | — |
Cash settlements |  | (445) |  |  | — |  |  | (445) |  |  | — |
Subsequent changes in fair value |  | 142 |  |  | 41 |  |  | 1,025 |  |  | 512 |
Fair value at end of period |  | $ | 1,498 |  |  | $ | 512 |  |  | $ | 1,498 |  |  | $ | 512 |
The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the risk sharing arrangements as of December 31, 2024:
|  |  |  | December 31, 2024
|  | Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Risk sharing assets |  | Discount rate |  | 20.00% |  | 20.00% |  | 20.00%
|  | Loss rate |  | 3.28% |  | 4.87% |  | 4.01%
|  | Prepayment rate |  | 20.81% |  | 27.21% |  | 24.73%
Risk sharing liabilities |  | Discount rate |  | 20.00% |  | 20.00% |  | 20.00%
|  | Loss rate |  | 3.39% |  | 5.17% |  | 4.37%
|  |  |  | June 30, 2024
|  | Unobservable Input |  | Minimum |  | Maximum |  | Weighted Average (1)
Risk sharing assets |  | Discount rate |  | 20.00% |  | 20.00% |  | 20.00%
|  | Loss rate |  | 3.00% |  | 4.69% |  | 3.66%
|  | Prepayment rate |  | 23.36% |  | 33.29% |  | 28.48%
Risk sharing liabilities |  | Discount rate |  | 20.00% |  | 20.00% |  | 20.00%
|  | Loss rate |  | 3.25% |  | 5.29% |  | 4.28%
(1)Unobservable inputs were weighted by principal balance of loans sold under each cohort. The following table summarizes the effect that adverse changes in estimates would have on the fair value of the risk sharing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):
|  | December 31, 2024 |  | June 30, 2024
Risk sharing assets (1) |  |  |  |
Prepayment rate assumption: |  |  |  |
Prepayment rate increase of 25% |  | $ | 1,235 |  |  | $ | 572 |
Prepayment rate increase of 50% |  | $ | 2,364 |  |  | $ | 1,131 |
Loss rate assumption: |  |  |  |
Loss rate increase of 25% |  | $ | (11,331) |  |  | $ | (7,315) |
Loss rate increase of 50% |  | $ | (22,585) |  |  | $ | (14,528) |
Discount rate assumption: |  |  |  |
Discount rate increase of 25% |  | $ | (1,120) |  |  | $ | (1,211) |
Discount rate increase of 50% |  | $ | (2,156) |  |  | $ | (2,323) |
Risk sharing liabilities (1) |  |  |  |
Loss rate assumption: |  |  |  |
Loss rate increase of 25% |  | $ | 28,276 |  |  | $ | 22,333 |
Loss rate increase of 50% |  | $ | 40,334 |  |  | $ | 41,677 |
Discount rate assumption: |  |  |  |
Discount rate increase of 25% |  | $ | (7) |  |  | $ | (19) |
Discount rate increase of 50% |  | $ | (13) |  |  | $ | (37) |
Financial Assets and Liabilities Not Recorded at Fair Value The following table presents the fair value and our assessment of the classification of this measurement within the fair value hierarchy for financial assets and liabilities held at amortized cost as of December 31, 2024 and June 30, 2024 (in thousands):
|  | December 31, 2024
|  | Carrying Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Balance at Fair Value
Assets: |  |  |  |  |  |  |  |  |  |
Loans held for investment, net |  | 6,432,336 |  |  | — |  |  | — |  |  | 6,828,132 |  |  | 6,828,132 |
Other assets (1) |  | 29,582 |  |  | — |  |  | 29,582 |  |  | — |  |  | 29,582 |
Total assets |  | $ | 6,461,918 |  |  | $ | — |  |  | $ | 29,582 |  |  | $ | 6,828,132 |  |  | $ | 6,857,714 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Convertible senior notes, net (2) |  | $ | 1,151,048 |  |  | $ | — |  |  | $ | 1,116,902 |  |  | $ | — |  |  | $ | 1,116,902 |
Notes issued by securitization trusts |  | 3,988,887 |  |  | — |  |  | — |  |  | 4,014,587 |  |  | 4,014,587 |
Funding debt (3) |  | 2,178,508 |  |  | — |  |  | — |  |  | 2,178,655 |  |  | 2,178,655 |
Total liabilities |  | $ | 7,318,443 |  |  | $ | — |  |  | $ | 1,116,902 |  |  | $ | 6,193,242 |  |  | $ | 7,310,144 |
|  | June 30, 2024
|  | Carrying Amount |  | Level 1 |  | Level 2 |  | Level 3 |  | Balance at Fair Value
Assets: |  |  |  |  |  |  |  |  |  |
Loans held for sale (1) |  | $ | 36 |  |  | $ | — |  |  | $ | 36 |  |  | $ | — |  |  | $ | 36 |
Loans held for investment, net |  | 5,360,959 |  |  | — |  |  | — |  |  | 5,616,973 |  |  | 5,616,973 |
Other assets (1) |  | 43,212 |  |  | — |  |  | 43,212 |  |  | — |  |  | 43,212 |
Total assets |  | $ | 5,404,207 |  |  | $ | — |  |  | $ | 43,248 |  |  | $ | 5,616,973 |  |  | $ | 5,660,221 |
Liabilities: |  |  |  |  |  |  |  |  |  |
Convertible senior notes, net (2) |  | $ | 1,341,430 |  |  | $ | — |  |  | $ | 1,124,773 |  |  | $ | — |  |  | $ | 1,124,773 |
Notes issued by securitization trusts |  | 3,236,873 |  |  | — |  |  | — |  |  | 2,506,929 |  |  | 2,506,929 |
Funding debt (3) |  | 1,851,699 |  |  | — |  |  | — |  |  | 1,851,685 |  |  | 1,851,685 |
Total liabilities |  | $ | 6,430,002 |  |  | $ | — |  |  | $ | 1,124,773 |  |  | $ | 4,358,614 |  |  | $ | 5,483,387 |
(1)Amortized cost approximates fair value for loans held for sale and other assets. (2)As of December 31, 2024, includes convertible senior notes due 2026 with a carrying amount and fair value of $247.6 million and $224.6 million, respectively, and convertible senior notes due 2029 with a carrying amount and fair value of $903.5 million and $892.3 million, respectively. As of June 30, 2024, includes convertible senior notes due 2026 with a carrying amount and fair value of $1.3 billion and $1.1 billion, respectively. The estimated fair value of the convertible senior notes is determined based on a market approach, using the estimated or actual bids and offers of the notes in an over-the-counter market on the last business day of the period. (3)As of December 31, 2024 and June 30, 2024, debt issuance costs in the amount of $11.7 million and $14.8 million, respectively, was included within funding debt.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 107 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-107 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 100 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482078/820-10-55-100 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (c)(3) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2E -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2E Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6A -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-6A Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (h) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 820 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 2 -Subparagraph (g) -Publisher FASB -URI https://asc.fasb.org/1943274/2147482106/820-10-50-2 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 940 -SubTopic 820 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147478119/940-820-50-1 + Details
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