v3.25.4
Fair Value of Financial Assets and Liabilities
 6 Months Ended
Dec. 31, 2025
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, 2025 and June 30, 2025 (in thousands):
December 31, 2025
Level 1Level 2Level 3Total
Assets:
Cash and cash equivalents:
Money market funds$63,182 $— $— $63,182 
Securities, available for sale:
Certificates of deposit— 36,552 — 36,552 
Corporate bonds— 242,177 — 242,177 
Commercial paper— 63,943 — 63,943 
Agency bonds— 5,051 — 5,051 
Municipal bonds— 8,435 — 8,435 
Government bonds:
Non-US— 2,181 — 2,181 
US— 274,274 — 274,274 
Securitization notes receivable and residual trust certificates— — 80,080 80,080 
Residual interests in structured transactions— — 5,436 5,436 
Other— — 5,246 5,246 
Servicing assets— — 965 965 
Interest rate derivatives— 1,222 — 1,222 
Risk sharing asset— — 38,992 38,992 
Total assets$63,182 $633,835 $130,719 $827,736 
Liabilities:
Servicing liabilities$— $— $2 $2 
Performance fee liability— — 2,377 2,377 
Profit share liability— — 4,713 4,713 
Interest rate derivatives— 389 — 389 
Total liabilities$— $389 $7,092 $7,481 
June 30, 2025
Level 1Level 2Level 3Total
Assets:
Cash and cash equivalents:
Money market funds$70,920 $— $— $70,920 
Agency Bonds— 3,493 — 3,493 
Commercial paper— 12,564 — 12,564 
Government bonds- US— 4,995 — 4,995 
Securities, available for sale:
Certificates of deposit— 39,008 — 39,008 
Corporate bonds— 264,199 — 264,199 
Commercial paper— 126,761 — 126,761 
Agency bonds— 7,854 — 7,854 
Municipal bonds— 6,076 — 6,076 
Government bonds:
Non-US— 5,340 — 5,340 
US— 344,434 — 344,434 
Securitization notes receivable and residual trust certificates— — 75,469 75,469 
Residual interests in structured transactions— — 2,284 2,284 
Servicing assets— — 906 906 
Interest rate derivatives— 2,644 — 2,644 
Risk sharing asset— — 43,179 43,179 
Total assets$70,920 $817,368 $121,838 $1,010,126 
Liabilities:
Servicing liabilities$— $— $41 $41 
Performance fee liability— — 1,870 1,870 
Profit share liability— — 9,323 9,323 
Risk sharing liability— — 90 90 
Interest rate derivatives— 15 — 15 
Total liabilities$— $15 $11,324 $11,339 

As of December 31, 2025 and June 30, 2025, there were no transfers between levels.

Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 2)

Cash and Cash Equivalents and Securities Available for Sale

As of December 31, 2025, we held level 2 debt 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, 2025 and June 30, 2025, 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, residual interests in structured transactions, 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.

The following significant unobservable inputs, as applicable, were used in the fair value measurement of the Company’s Level 3 assets and liabilities:

•Adequate Compensation - The compensation rate is expressed as a percentage of the outstanding loan balance that a willing market participant would require for servicing loans with similar characteristics.
•Discount Rate - The rate used to discount estimated future cash flows to present value in determining fair value. It reflects the rate of return market participants would require to compensate for time value of money plus a premium based on relative risk, liquidity and other market based factors.
•Default Rate - The estimated annualized rate of charge-offs affecting the projected unpaid principal balance and expected term of the loan portfolio.
•Loss Rate - The estimated lifetime rate of loan charge-offs as a percentage of the initial settled principal balance.
•Prepayment Rate - The estimated annualized 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.
•Refund Rate - The rate of refunded transactions as a percentage of the outstanding loan balance over the remaining life of the loan portfolio.
•Program Profitability - The estimated future profit to be shared with enterprise partners as a percentage of total loans outstanding, based on the terms of the respective commercial agreements.
Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.

Servicing Assets and Liabilities

We sold loans with an unpaid principal balance of $6.0 billion and $10.9 billion for the three and six months ended December 31, 2025, respectively, and $4.6 billion and $7.4 billion for the three and six months ended December 31, 2024, respectively, for which we retained servicing rights.

As of December 31, 2025 and June 30, 2025, we serviced loans which we sold with a remaining unpaid principal balance of $9.7 billion and $7.8 billion, respectively. We earned $42.7 million and $82.4 million of
servicing income for the three and six months ended December 31, 2025, respectively, and $28.7 million and $54.7 million for the three and six months ended December 31, 2024, respectively.

We use discounted cash flow models to arrive at an estimate of fair value. As of December 31, 2025 and June 30, 2025, the aggregate fair value of the servicing assets was measured at $1.0 million and $0.9 million, respectively, and presented within other assets in the interim condensed consolidated balance sheets. The aggregate fair value of the servicing liabilities was immaterial as of December 31, 2025 and June 30, 2025.

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,
2025202420252024
Fair value at beginning of period$667 $435 $906 $574 
Initial transfers of financial assets254 230 254 230 
Subsequent changes in fair value44 141 (195)2 
Fair value at end of period$965 $806 $965 $806 

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,
2025202420252024
Fair value at beginning of period$13 $438 $41 $743 
Initial transfers of financial liabilities— — — — 
Subsequent changes in fair value(11)(201)(39)(506)
Fair value at end of period$2 $237 $2 $237 

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, 2025 and June 30, 2025:

December 31, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Servicing assetsDiscount Rate30.00 %30.00 %30.00 %
Adequate Compensation2.00 %2.00 %2.00 %
Default Rate10.65 %16.39 %13.24 %
Servicing liabilitiesDiscount Rate30.00 %30.00 %30.00 %
Adequate Compensation2.00 %2.00 %2.00 %
Default Rate6.43 %6.43 %6.43 %
June 30, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Servicing assetsDiscount Rate30.00 %30.00 %30.00 %
Adequate Compensation2.00 %2.00 %2.00 %
Default Rate10.24 %15.68 %12.04 %
Servicing liabilitiesDiscount Rate30.00 %30.00 %30.00 %
Adequate Compensation2.00 %2.00 %2.00 %
Default Rate3.71 %7.89 %5.26 %
(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 servicing assets and liabilities given hypothetical changes in significant unobservable inputs (in thousands):
December 31, 2025June 30, 2025
Servicing assets
Default Rate assumption:
Default Rate increase of 25%$1 $1 
Default Rate increase of 50%$2 $2 
Adequate Compensation assumption:
Adequate Compensation increase of 10%$(1,511)$(1,439)
Adequate Compensation increase of 20%$(3,021)$(2,879)
Discount Rate assumption:
Discount Rate increase of 25%$(37)$(35)
Discount Rate increase of 50%$(70)$(66)
Servicing liabilities
Default Rate assumption:
Default Rate increase of 25%$— $— 
Default Rate increase of 50%$— $— 
Adequate Compensation assumption:
Adequate Compensation increase of 10%$5,891 $4,593 
Adequate Compensation increase of 20%$11,781 $9,186 
Discount Rate assumption:
Discount Rate increase of 25%$— $(1)
Discount Rate increase of 50%$— $(1)

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,
2025202420252024
Fair value at beginning of period$1,975 $1,541 $1,870 $1,503 
Purchases of loans916 566 1,639 1,089 
Settlements paid(689)(501)(1,281)(978)
Subsequent changes in fair value175 167 149 159 
Fair value at end of period$2,377 $1,773 $2,377 $1,773 

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, 2025 and June 30, 2025:

December 31, 2025
Unobservable InputMinimumMaximum
Weighted Average (2)
Discount Rate7.00%10.00%8.89%
Refund Rate1.50%1.50%1.50%
Loss Rate(1)
0.84%4.65%3.15%
June 30, 2025
Unobservable InputMinimumMaximum
Weighted Average (2)
Discount Rate7.25%10.00%9.23%
Refund Rate1.50%1.50%1.50%
Loss Rate(1)
0.87%4.65%3.07%
(1)The Loss Rate is net of recoveries
(2)Unobservable inputs were weighted by remaining principal balances

Securitization Notes Receivable and Residual Trust Certificates

As of December 31, 2025, we held notes receivable and residual trust certificates with an aggregate fair value of $80.1 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 receivable and residual trust certificates (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2025202420252024
Fair value at beginning of period$54,263 $38,926 $75,469 $51,670 
Additions44,611 41,943 44,611 41,943 
Cash received (due to payments)(19,758)(12,036)(42,325)(26,419)
Change in unrealized gain (loss)(267)(510)(305)(541)
Accrued interest1,048 931 2,258 2,976 
Reversal of (impairment on) securities available for sale183 (203)372 (578)
Fair value at end of period$80,080 $69,051 $80,080 $69,051 

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, 2025 and June 30, 2025:

December 31, 2025
Unobservable InputMinimumMaximum
Weighted Average (2)
Discount Rate3.47%55.11%6.04%
Default Rate(1)
0.99%9.38%8.01%
Prepayment Rate14.81%26.00%23.63%
June 30, 2025
Unobservable InputMinimumMaximum
Weighted Average (2)
Discount Rate2.86%30.29%6.89%
Default Rate0.94%8.40%7.65%
Prepayment Rate21.46%24.85%23.14%
(1)The cumulative loss relative to the outstanding balance as of December 31, 2025
(2)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, 2025June 30, 2025
Discount Rate Assumption:
Discount Rate increase of 25%$(709)$(727)
Discount Rate increase of 50%$(1,409)$(1,427)
Default Rate assumption:
Default Rate increase of 25%$(3,214)$(2,688)
Default Rate increase of 50%$(4,026)$(3,698)
Prepayment Rate assumption:
Prepayment Rate change of 25%$(164)$(130)
Prepayment Rate change of 50%$(331)$(259)

Residual Interests in Structured Transactions

As of December 31, 2025, we held residual interests in structured transactions with an aggregate fair value of $5.4 million in connection with certain forward flow loan sale transactions.

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, except for credit impairments, are reflected in other comprehensive income 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 assets (in thousands):
Three Months Ended December 31, 2025Six Months Ended December 31, 2025
Fair value at beginning of period$4,017 $2,284 
Capital contribution1,124 2,703 
Subsequent changes in fair value294 448 
Fair value at the end of period5,436 5,436 

Significant unobservable inputs used for our Level 3 fair value measurement of the residual interests 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 residual interests in structured transactions as of December 31, 2025 and June 30, 2025:

December 31, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Discount Rate20.00%20.00%20.00%
Default Rate9.31%9.31%9.31%
Prepayment Rate47.89%47.89%47.89%
June 30, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Discount Rate20.00%20.00%20.00%
Default Rate8.88%8.88%8.88%
Prepayment Rate48.85%48.85%48.85%
(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 residual interests in structured transactions given hypothetical changes in significant unobservable inputs (in thousands):

December 31, 2025June 30, 2025
Discount Rate assumption:
Discount Rate increase of 20%$(374)$(181)
Discount Rate increase of 40%$(712)$(343)
Default Rate assumption:
Default Rate increase of 20%$(25)$(28)
Default Rate increase of 40%$(57)$(50)
Prepayment Rate assumption:
Prepayment Rate increase of 20%$(73)$(35)
Prepayment Rate increase of 40%$(134)$(64)

Profit Share Liability

We have commercial agreements with certain enterprise partners, in which we are obligated to share in the profitability of transactions facilitated by our platform. Upon capture of a loan under these programs, we record a liability associated with the estimated future profit to be shared over the life of the loan based on estimated profitability levels of each program. The 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,
2025202420252024
Fair value at beginning of period$7,592 $2,015 $9,323 $1,974 
Facilitation of loans675 4,238 3,822 5,465 
Actual performance(4,500)(3,271)(9,596)(6,299)
Subsequent changes in fair value946 3,129 1,164 4,971 
Fair value at end of period$4,713 $6,111 $4,713 $6,111 
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, 2025 and June 30, 2025:

December 31, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Discount Rate30.00%30.00%30.00%
Program Profitability1.00%3.28%2.81%
June 30, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Discount Rate30.00%30.00%30.00%
Program Profitability0.23%3.28%2.86%
(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.

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, 2025, we estimated the fair value of future settlements using a discounted cash flow model.

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,
2025202420252024
Fair value at beginning of period$41,565 $45,330 $43,179 $33,884 
Initial transfers of financial assets4,761 5,191 11,269 15,568 
Cash settlements(9,126)(5,824)(17,466)(5,824)
Subsequent changes in fair value1,792 272 2,010 1,341 
Fair value at end of period$38,992 $44,969 $38,992 $44,969 
The following table summarizes the activity related to the fair value of the risk sharing liabilities (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2025202420252024
Fair value at beginning of period$— $1,801 $90 $918 
Cash settlements— (445)(90)(445)
Subsequent changes in fair value— 142 — 1,025 
Fair value at end of period$— $1,498 $— $1,498 

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, 2025 and June 30, 2025:

December 31, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Risk sharing assetsDiscount Rate6.88%20.00%17.68%
Loss Rate3.34%4.94%4.15%
Prepayment Rate18.34%20.96%19.68%
Risk sharing liabilitiesDiscount Rate20.00%20.00%20.00%
Loss Rate3.48%5.27%4.46%

June 30, 2025
Unobservable InputMinimumMaximum
Weighted Average (1)
Risk sharing assetsDiscount Rate20.00%20.00%20.00%
Loss Rate3.32%4.91%4.13%
Prepayment Rate19.84%22.89%21.34%
Risk sharing liabilitiesDiscount Rate20.00%20.00%20.00%
Loss Rate3.47%5.35%4.42%
(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, 2025June 30, 2025
Risk sharing assets
Prepayment Rate assumption:
Prepayment Rate decrease of 25%$(1,813)$(1,896)
Prepayment Rate decrease of 50%$(3,751)$(3,923)
Loss Rate assumption:
Loss Rate increase of 25%$(14,821)$(15,150)
Loss Rate increase of 50%$(29,640)$(30,277)
Discount Rate assumption:
Discount Rate increase of 25%$(583)$(903)
Discount Rate increase of 50%$(1,130)$(1,745)
Risk sharing liabilities
Loss Rate assumption:
Loss Rate increase of 25%$5,384 $16,946 
Loss Rate increase of 50%$10,534 $24,676 
Discount Rate assumption:
Discount Rate increase of 25%$— $— 
Discount Rate increase of 50%$— $— 

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, 2025 and June 30, 2025 (in thousands):
December 31, 2025
Carrying AmountLevel 1Level 2Level 3Balance at Fair Value
Assets:
Loans held for sale$6 $— $6 $— $6 
Loans held for investment, net8,295,439 — — 8,970,675 8,970,675 
Total assets$8,295,445 $— $6 $8,970,675 $8,970,681 
Liabilities:
Convertible senior notes, net (1)
$1,127,658 $— $1,241,762 $— $1,241,762 
Notes issued by securitization trusts4,834,736 — — 4,866,377 4,866,377 
Funding debt3,046,846 — — 3,064,040 3,064,040 
Total liabilities$9,009,240 $— $1,241,762 $7,930,417 $9,172,179 
June 30, 2025
Carrying AmountLevel 1Level 2Level 3Balance at Fair Value
Assets:
Loans held for investment, net6,628,606 — — 7,085,840 7,085,840 
Total assets$6,628,606 $— $— $7,085,840 $7,085,840 
Liabilities:
Convertible senior notes, net (1)
$1,153,000 $— $1,205,287 $— $1,205,287 
Notes issued by securitization trusts4,833,855 — — 4,868,980 4,868,980 
Funding debt1,622,808 — — 1,640,765 1,640,765 
Total liabilities$7,609,663 $— $1,205,287 $6,509,745 $7,715,032 
(1)As of December 31, 2025, includes convertible senior notes due 2026 with a carrying amount and fair value of $220.9 million and $211.4 million, respectively, and convertible senior notes due 2029 with a carrying amount and fair value of $906.8 million and $1.0 billion, respectively. As of June 30, 2025, includes convertible senior notes due 2026 with a carrying amount and fair value of $247.9 million and $232.7 million, respectively, and convertible senior notes due 2029 with a carrying amount and fair value of $905.1 million and $972.6 million, 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.