Affirm Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
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5. Balance Sheet Components
- Balance Sheet Components
Accounts Receivable, net
Our accounts receivable consist primarily of amounts due from payment processors, merchant partners, affiliate network partners and servicing fees due from third-party loan owners. For each of these groups, we evaluate accounts receivable to determine management’s current estimate of expected credit losses based on historical experience and future expectations and record an allowance for credit losses. Our allowance for credit losses with respect to accounts receivable was $17.2 million and $14.9 million as of September 30, 2024 and June 30, 2024, respectively.
Property, Equipment and Software, net
Property, equipment and software, net consisted of the following (in thousands):
| September 30, 2024 | June 30, 2024 | |
|---|---|---|
| Internally developed software | $719,971 | $630,129 |
| Leasehold improvements | 21,072 | 21,023 |
| Computer equipment | 10,311 | 9,827 |
| Furniture and equipment | 8,991 | 8,913 |
| Total property, equipment and software, at cost | $760,345 | $669,892 |
| Less: Accumulated depreciation and amortization | (287,326) | (242,206) |
| Total property, equipment and software, net | $473,019 | $427,686 |
Depreciation and amortization expense on property, equipment and software was $46.1 million and $26.0 million for the three months ended September 30, 2024 and 2023, respectively.
No impairment losses related to property, equipment and software were recorded during the three months ended September 30, 2024 and 2023.
Goodwill and Intangible Assets
The changes in the carrying amount of goodwill during the three months ended September 30, 2024 were as follows (in thousands):
| Balance as of June 30, 2024 | $533,439 |
|---|---|
| Adjustments (1) | 3,306 |
| Balance as of September 30, 2024 | $536,745 |
(1)Adjustments to goodwill during the three months ended September 30, 2024 primarily pertained to foreign currency translation adjustments.
No impairment losses related to goodwill were recorded during the three months ended September 30, 2024 or during the three months ended September 30, 2023.
Intangible assets consisted of the following (in thousands):
| Gross | Accumulated Amortization | Net | Weighted Average Remaining Useful Life (in years) | |
|---|---|---|---|---|
| Merchant relationships | $37,949 | $(37,389) | $560 | 0.1 |
| Developed technology | 39,510 | (39,392) | 118 | 0.0 |
| Assembled workforce | 12,490 | (12,490) | — | 0.0 |
| Trademarks and domains, definite | 1,461 | (1,221) | 240 | 0.9 |
| Trademarks, licenses and domains, indefinite | 12,191 | — | 12,191 | Indefinite |
| Other intangibles | 350 | — | 350 | Indefinite |
| Total intangible assets | $103,951 | $(90,492) | $13,459 |
| Gross | Accumulated Amortization | Net | Weighted AverageRemaining Useful Life(in years) | |
|---|---|---|---|---|
| Merchant relationships | $37,847 | $(36,741) | $1,106 | 0.1 |
| Developed technology | 39,444 | (39,311) | 133 | 0.0 |
| Assembled workforce | 12,490 | (12,490) | — | 0.0 |
| Trademarks and domains, definite | 1,450 | (1,165) | 285 | 1.0 |
| Trademarks, licenses and domains, indefinite | 11,628 | — | 11,628 | Indefinite |
| Other intangibles | 350 | — | 350 | Indefinite |
| Total intangible assets | $103,209 | $(89,707) | $13,502 |
Amortization expense for intangible assets was $0.6 million and $14.2 millionfor thethree months ended September 30, 2024 and 2023, respectively. No impairment losses related to intangible assets were recorded during the three months ended September 30, 2024 and 2023.
The expected future amortization expense of these intangible assets as of September 30, 2024 is as follows (in thousands):
| 2025 (remaining nine months) | $748 |
| 2026 | 155 |
| 2027 | 15 |
| 2028 | — |
| 2029 and thereafter | — |
| Total amortization expense | $918 |
Commercial Agreement Assets
In November 2021, we granted warrants in connection with our commercial agreements with certain subsidiaries of Amazon.com, Inc. (“Amazon”). The warrants were granted in exchange for certain performance provisions and the benefit of acquiring new users. We recognized an asset of $133.5 million associated with the portion of the warrants that were fully vested upon grant. The asset was valued based on the fair value of the warrants and represents the probable future economic benefit to be realized over the expected benefit period offour years. For the three months ended September 30, 2024 and 2023, we recognized amortization expense of $5.2 million and $10.4 million, respectively, in our interim condensed consolidated statements of operations and comprehensive loss as a component of sales and marketing expense. Refer to Note 13. Stockholders’ Equity for further discussion of the warrants.
In July 2020, we recognized an asset in connection with a commercial agreement with Shopify Inc. (“Shopify”), in which we granted warrants in exchange for the opportunity to acquire new merchant partners. This asset represents the probable future economic benefit to be realized over the expected benefit period and is valued based on the fair value of the warrants on the grant date. We recognized an asset of $270.6 million associated with the fair value of the warrants, which were fully vested as of September 30, 2024. During fiscal year 2022, the expected benefit period was extended from four tosix years upon the execution of the commercial agreement term. The benefit period is reevaluated each reporting period. During the three months ended September 30, 2024 and 2023, we recorded amortization expense related to the commercial agreement asset of $9.0 million for both periods in our interim condensed consolidated statements of operations and comprehensive loss as a component of sales and marketing expense.
Other Assets
Other assets consisted of the following (in thousands):
| September 30, 2024 | June 30, 2024 | |
|---|---|---|
| Processing reserves | $70,361 | $55,754 |
| Risk sharing asset | 45,330 | 33,884 |
| Prepaid expenses | 40,332 | 28,799 |
| Equity securities, at cost | 35,806 | 37,806 |
| Foreign deferred tax asset | 20,149 | 21,206 |
| Fixed term deposit | 21,076 | 35,203 |
| Operating lease right-of-use assets | 19,699 | 21,863 |
| Other receivables | 16,635 | 18,263 |
| Prepaid payroll taxes for stock-based compensation | 14,774 | 21,395 |
| Derivative instruments | 7,587 | 17,207 |
| Other assets | 6,912 | 7,960 |
| Total other assets | $298,661 | $299,340 |
Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands)
| September 30, 2024 | June 30, 2024 | |
|---|---|---|
| Accrued expenses | $54,022 | $59,613 |
| Operating lease liability | 35,830 | 39,493 |
| Other liabilities | 39,841 | 30,680 |
| Collateral held for derivative instruments | 7,770 | 17,643 |
| Total accrued expenses and other liabilities | $137,464 | $147,429 |
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.