XML 23 R12.htm IDEA: XBRL DOCUMENT
v3.24.0.1

Notes Receivable and Allowance for Credit Losses | 12 Months Ended
--- | ---
Dec. 31, 2023
Receivables [Abstract] |
Notes Receivable and Allowance for Credit Losses | Notes Receivable and Allowance for Credit Losses As of December 31, 2023 and 2022, our notes receivable at amortized cost was comprised of the following:
| 2023 | 2022
Notes receivable, gross | $ | 146,225,832 |  | $ | 107,650,187 |
Deferred transaction income | (3,340,150) |  | (4,068,332) |
Notes receivable, amortized cost | $ | 142,885,682 |  | $ | 103,581,855 |
Deferred transaction income is comprised of unrecognized merchant fees and consumer reschedule fees net of direct note origination costs, which are recognized over the duration of the note with the consumer and are recorded as an offset to transaction income on the consolidated statements of operations and comprehensive income (loss). Our notes receivable had a weighted average days outstanding of 34 days, consistent with the prior year’s duration. We closely monitor credit quality for our notes receivable to manage and evaluate our related exposure to credit risk. When assessing the credit quality and risk of our portfolio, we monitor a variety of internal risk indicators and consumer attributes that are shown to be predictive of ability and willingness to repay, and combine these factors to establish an internal, proprietary score as a credit quality indicator (the “Prophet Score”). We evaluate the credit risk of our portfolio by grouping Prophet Scores into three buckets that range from A to C, with receivables having an “A” rating representing the highest credit quality and lowest likelihood of loss. Our risk and fraud team closely monitors the distribution of Prophet Scores for signs of changes in credit risk exposure and portfolio performance. The risk and fraud team also regularly evaluates the integrity of the Prophet Score machine learning model and updates it as necessary, but at least annually. We last updated the Prophet Score model in October 2023. The amortized cost basis of our notes receivable by Prophet Score and year of origination as of December 31, 2023 is as follows:
| 2023 |  |
| Amortized cost basis by year of origination
| 2023 | 2022 | Total |  |  |  |
A | $ | 47,752,196 |  | $ | — |  | $ | 47,752,196 |  |  |  |  |
B | 58,815,920 |  | 257 |  | 58,816,177 |  |  |  |  |
C | 35,832,476 |  | 2,708 |  | 35,835,184 |  |  |  |  |
No score | 482,125 |  | — |  | 482,125 |  |  |  |  |
Total amortized cost | $ | 142,882,717 |  | $ | 2,965 |  | $ | 142,885,682 |  |  |  |  |
The amortized cost basis of our notes receivable by delinquency status as of December 31, 2023 is as follows:
| 2023 |
Current | $ | 129,681,699 |  |
1–28 days past due | 6,808,467 |  |
29–56 days past due | 3,015,612 |  |
57–90 days past due | 3,379,904 |  |
Total amortized cost | $ | 142,885,682 |  |
The following table summarizes our gross notes receivable and related allowance for uncollectible accounts as of December 31, 2022 prior to the adoption of ASU 2016-13:
| 2022
| Gross Receivables | Less Allowance | Net Receivables
Current | $ | 96,923,113 |  | $ | (3,348,558) |  | $ | 93,574,555 |
Days past due: |  |  |
1–28 | 5,516,812 |  | (2,146,103) |  | 3,370,709 |
29–56 | 2,513,755 |  | (2,063,131) |  | 450,624 |
57–90 | 2,696,507 |  | (2,665,659) |  | 30,848 |
Total | $ | 107,650,187 |  | $ | (10,223,451) |  | $ | 97,426,736 |
We maintain an allowance for credit losses at a level necessary to absorb expected credit losses on principal and reschedule fee receivables from consumers. The allowance for credit losses is determined based on our current estimate of expected credit losses over the remaining contractual term and incorporates evaluations of known and inherent risks in our portfolio, historical credit losses, consumer payment trends, estimates of recoveries, current economic conditions, and reasonable and supportable forecasts. We regularly assess the adequacy of our allowance for credit losses and adjust the allowance as necessary to reflect changes in the credit risk of our notes receivable. Any adjustment to the allowance for credit losses is recognized in net income (loss) through the provision for credit losses on our consolidated statements of operations and comprehensive income (loss). While we believe our allowance for credit losses is appropriate based on the information available, actual losses could differ from the estimate. Effective January 1, 2023, we adopted accounting guidance which replaces the incurred loss impairment methodology with an expected credit loss methodology and requires consideration of a broader range of reasonable and supportable information to determine credit loss estimates. Upon adoption, we decreased our allowance for credit losses and increased retained earnings through a cumulative-effect adjustment. In estimating the allowance for credit losses, we utilize a roll rate analysis of delinquent and current notes receivable. Roll rate analysis is a technique used to estimate the likelihood that a loan progresses through various stages of delinquency and eventually charges off. We segment our notes receivable into delinquency statuses and semi-monthly vintages for the purpose of evaluating historical performance and determining the future likelihood of default. The activity in the allowance for credit losses, including the provision for credit losses, charge-offs, and recoveries for the year ended December 31, 2023 and 2022 is as follows:
| For the years ended December 31,
| 2023 | 2022
Balance at beginning of period | $ | 10,223,451 |  | $ | 23,114,173 |
Adoption of Accounting Standards Update No. 2016-13 | (878,577) |  | — |
Provision for credit losses | 23,186,973 |  | 29,437,179 |
Charge-offs | (24,006,322) |  | (47,367,942) |
Recoveries of charged-off receivables | 3,727,516 |  | 5,040,041 |
Balance at end of period | $ | 12,253,041 |  | $ | 10,223,451 |
Net charge-offs by year of origination for the year ended December 31, 2023 is as follows:
| 2023 | 2022 | 2021 | 2020 | 2019 | Total
Current period gross charge-offs | $ | (15,425,979) |  | $ | (8,561,426) |  | $ | (18,060) |  | $ | (650) |  | $ | (207) |  | $ | (24,006,322) |
Current period recoveries | 604,292 |  | 1,964,853 |  | 853,901 |  | 231,876 |  | 72,594 |  | 3,727,516 |
Current period net charge-offs | $ | (14,821,687) |  | $ | (6,596,573) |  | $ | 835,841 |  | $ | 231,226 |  | $ | 72,387 |  | $ | (20,278,806) |

X
- Definition The entire disclosure for financing receivable. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Subparagraph (a)(2) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481962/310-10-50-42 Reference 2: http://www.xbrl.org/2003/role/exampleRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 12A -Publisher FASB -URI https://asc.fasb.org//1943274/2147481933/310-10-55-12A Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 44 -Subparagraph (a)(1) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481962/310-10-50-44 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 310 -SubTopic 10 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-10/tableOfContent Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 310 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//310-20/tableOfContent + Details
Name: | us-gaap_FinancingReceivablesTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_ReceivablesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration