Affirm Holdings (AFRM) risk factors, FY2026 10-K

Risks Related to Our Business and Industry

1. 01We derive a significant portion of our revenue from our relationships with commercial partners and the transactions they process through our platform, and as more commercial partners are integrated into our network, there are more reasons for consumers to shop with us
2. 02If we are unable to attract new consumers and retain and grow our relationships with our existing consumers, our business, results of operations, financial condition, and future prospects would be materially and adversely affected
3. 03We operate in a highly competitive industry, and our inability to compete successfully would materially and adversely affect our business, results of operations, financial condition, and future prospects
4. 04We rely on a small number of commercial partners, and the loss of any of these significant relationships would adversely affect our business, results of operations, financial condition, and future prospects89% rewritten
5. 05Form 10-Q or Annual Report on Form 10-K, we will disclose the respective percentage contribution in our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for that periodNew
6. 06In addition, upon the occurrence of certain early termination events, either we or any of our Primary Originating Banks or Card Issuing Banks may terminate the respective agreement immediately upon the occurrence of certain termination eventsNew
7. 07We may not be able to sustain our revenue and GMV growth rates, or our growth rate of related key operating metrics, in the future
8. 08The success and growth of our business depends upon our ability to continuously innovate and develop new products and technologies
9. 09The success of our business depends on our ability to work with an originating bank partner to enable effective underwriting of loans facilitated through our platform and accurately price credit risk39% rewritten
10. 10partners, which could have a material and adverse effect on our business, results of operations, financial condition, and future prospectsNew
11. 11Our use and provision of generative AI-powered solutions could lead to operational or reputational damage, competitive harm, legal and regulatory risk and additional costs
12. 12Any acquisitions, strategic investments, new businesses, alliances, divestitures and other transactions could fail to achieve strategic objectives, disrupt our ongoing operations or result in operating difficulties, liabilities and expenses, harm our business, and negatively impact our results of operations25% rewritten
13. 13Any delay or failure on our part to identify, negotiate, finance on favorable terms, consummate, and integrate any acquisition or other strategic investment opportunity could impede our growth
14. 14Further expansion of our operations internationally will subject us to new challenges and risks38% rewritten
15. 15The loss of the services of our Founder and Chief Executive Officer could materially and adversely affect our business, results of operations, financial condition, and future prospects
16. 16Our business benefits from our ability to attract and retain highly skilled employees49% rewritten
17. 17We may not achieve sustained profitability if we are unable to generate sufficient revenue to support the costs of operating and growing our businessNew
18. 18Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business
19. 19We have experienced in the past, and expect to continue to experience, seasonal fluctuations in our business72% rewritten
20. 20Negative publicity about us or our industry could adversely affect our business, results of operations, financial condition, and future prospects21% rewritten
21. 21Litigation, regulatory actions, and compliance issues could subject us to fines, penalties, judgments, remediation costs, and/or other requirements resulting in increased expenses and reputational harm43% rewritten
22. 22or adverse judgment, in connection with any formal or informal proceeding or investigation by a government agency, may prompt litigation or additional investigations or proceedings as other litigants or other government agencies begin independent reviews of the same or similar activitiesNew
23. 23Determining our allowance for credit losses requires many assumptions and complex analyses. If our estimates prove incorrect, we may incur net charge-offs in excess of our reserves, or we may be required to increase our provision for credit losses, either of which would adversely affect our results of operations
24. 24Increases in market interest rates have had and could continue to have an adverse effect on our business
25. 25Our revenue is impacted, to a significant extent, by the general economy, the creditworthiness of the U.S. consumer and the financial performance of our commercial partners72% rewritten
26. 26Borrowers may not view the loans facilitated through our platform as having the same significance as other credit obligations arising under more traditional circumstances
27. 27If our collection efforts on delinquent loans are ineffective or unsuccessful, the performance of the loans would be adversely affected
28. 28While we take precautions to prevent consumer identity fraud, we have observed fraudulent activity on our platform and additional identity fraud may occur in the future, which may adversely affect the performance of the loans facilitated through our platform
29. 29If we fail to maintain effective internal control over financial reporting or disclosure controls and procedures, we may be unable to report our financial results on a timely and accurate basis, and our business, operating results and market price of our Class A common stock may be adversely affected
30. 30Our results depend on prominent presentation, integration, and support of our platform by our commercial partners
31. 31If our commercial partners fail to fulfill their obligations to consumers or comply with applicable law, we may incur remediation costs
32. 32Our business could be adversely affected by any unsoundness of our financial institution counterparties

Risks Related to Our Intellectual Property and Platform Development

1. 33Real or perceived software errors, failures, bugs, defects, or outages could adversely affect our business, results of operations, financial condition, and future prospects
2. 34Our ability to protect our confidential, proprietary, or sensitive information, including the confidential information of consumers on our platform, may be adversely affected by cyber-attacks, employee or other internal misconduct, computer viruses, physical or electronic break-ins, or similar disruptions
3. 35If we are unable to protect our intellectual property, or if third parties are successful in claiming that we are infringing, misappropriating, or violating the intellectual property of others, we may incur significant expense and our business may be adversely affected
4. 36We may be subject to claims brought by third parties for alleged infringement, misappropriation, or other violation of their intellectual property or other proprietary rights
5. 37Some aspects of our platform include open source software, and our use of open source software could negatively affect our business, results of operations, financial condition, and future prospects

Risks Related to Our Regulatory Environment

1. 38We are subject to various international, federal and state consumer protection laws80% rewritten
2. 39which may require us to implement certain changes to our business practices, provide remediation to certain individuals or make a settlement payment to a given party or regulatory body
3. 40If our originating bank partner model is successfully challenged or deemed impermissible, we could be found to be in violation of licensing, interest rate limit, lending, or brokering laws and face penalties, fines, litigation, or regulatory enforcement63% rewritten
4. 41We have applied to establish Affirm Bank as an industrial loan company to be chartered in the State of Nevada, and there can be no assurance that our application will be approved, or that we will realize the expected benefits of obtaining a bank charter and federal deposit insuranceNew
5. 42The highly regulated environment in which our originating bank partners operate could have an adverse effect on our business, results of operations, financial condition, and future prospects
6. 43Our use of vendors and our other ongoing third-party business relationships expose us to risks that may adversely impact our businessNew
7. 44Stringent and changing laws and regulations relating to privacy and data protection could result in claims, harm our results of operations, financial condition, and future prospects, or otherwise harm our business
8. 45We have an obligation to comply with anti-money laundering and anti-terrorism financing laws, and failure to comply with this obligation could have significant adverse consequences for us
9. 46If we fail to comply with applicable requirements for our high-yield savings account product, our consumers’ deposits may not qualify for FDIC insurance and they may withdraw their funds, which could adversely affect our brand, business, results of operations, financial condition, and future prospects
10. 47States and consumer advocacy groups are highly focused on potential discrimination resulting from the use of machine learning and "black-box" algorithms

Risks Related to our Class A Common Stock

1. 48The market price of our Class A common stock has been and may continue to be volatile, which could cause the value of your investment to decline28% rewritten
2. 49The issuance by us of additional equity securities may dilute your ownership and adversely affect the market price of our Class A common stock
3. 50Our bylaws contain exclusive forum provisions for certain claims, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees

Risks Related to Our Indebtedness

1. 51Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt