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FAIR VALUE MEASUREMENT
 6 Months Ended
Jun. 30, 2026
Fair Value Disclosures [Abstract]  
FAIR VALUE MEASUREMENT FAIR VALUE MEASUREMENT
FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and requires certain disclosures about fair value
measurements. In general, fair values of financial instruments are based upon quoted market prices, when available. If such quoted market prices are not available, fair value is based upon a discounted cash flow model that uses, as inputs, observable market-based parameters to the greatest extent possible.

The Company determines the fair value of its financial instruments and conducts an ongoing assessment of the techniques used to ensure their appropriateness, consistent application and the reasonableness of the assumptions. In determining the fair value of each investment security and loan, the Company reviews performance characteristics of the underlying loan pool including origination vintage, borrower credit quality, and macroeconomic environment, among other factors. The Company determines the fair value for each investment security and loan by then estimating significant assumptions including discount rates, cumulative net loss rates, expected prepayment rates and consideration of any optional redemption features which are reviewed and approved by management.

The Company also engages a third-party valuation service provider to estimate a range of fair values for all significant investments in loans and securities. The Company reviews and validates its significant assumptions with reference to historical performance and expectations of future performance including: discount rate, cumulative net loss rates and prepayment rates. Finally, the Company reviews and validates that the fair value used for financial reporting falls within the range of fair value estimates by the third-party service provider for its significant investment in loans and securities.

Financial instruments are categorized in the fair value hierarchy based on the significance of unobservable inputs and assumptions in the overall fair value measurement. Financial instruments classified as Level 3 within the fair value hierarchy do not trade in an active market with readily observable prices. Accordingly, the Company uses significant unobservable inputs to measure the fair value of these assets. The Company has determined that its certificates, loans and certain subordinated notes meet the definition of Level 3 assets, as their fair value measurements are characterized by a lack of observable market data and a reliance on management's assumptions.

Financial Assets and Liabilities Recorded at Fair Value

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair values (in thousands):

June 30, 2026
Level 1Level 2Level 3Total
Assets:
Investments in loans and securities (Notes)$— $153,400 $351,107 $504,507 
Investments in loans and securities (Certificates)— — 523,771 523,771 
Investments in loans and securities (Loans)— — 11,840 11,840 
Liabilities:
Warrant liability$775 $— $— $775
Other liabilities (1)— — 21,115 21,115 

December 31, 2025
Level 1Level 2Level 3Total
Assets:
Investments in loans and securities (Notes)
$— $67,715 $340,475 $408,190 
Investments in loans and securities (Certificates)
— — 532,501 532,501 
Investments in loans and securities (Loans)— — 4,578 4,578 
Liabilities:
Warrant liability$4,723$—$—$4,723
Other liabilities (1)— — 13,112 13,112 
(1) Included in “accrued expenses and other liabilities” on the unaudited condensed consolidated balance sheets. Refer to Note 9, “Commitment and Contingencies," for additional information.

Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 1)
Warrant Liability (Level 1)

The following tables summarize the warrant liability activity for the three and six months ended June 30, 2026 and 2025 (in thousands):
Three Months Ended June 30,
20262025
Balance, beginning of period$561 $1,992 
Change in fair value214 479 
Balance, end of period$775 $2,471 

Six Months Ended June 30,
20262025
Balance, beginning of period
$4,723 $893 
Change in fair value(3,948)1,578 
Balance, end of period
$775 $2,471 
Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 3)

Investments in Loans and Securities (Level 3)

As of June 30, 2026, investments in loans and securities categorized as Level 3 investments include loans and securities under the fair value option and securities classified as available for sale which are measured at fair value on a recurring basis. These assets are measured at fair value using a discounted cash flow model, and presented within investments in loans and securities on the unaudited condensed consolidated balance sheets.

AFS securities under ASC 325-40 are held at fair value. Credit related changes in fair value are recognized in earnings, while non-credit related changes are recorded in other comprehensive income. Separately, investments in loans and securities held at fair value under the fair value option are measured at fair value, with all changes in fair value recognized in earnings.

The following tables summarize the activity related to the fair value of the investments in loans and securities available for sale (Level 3 only) for the three and six months ended June 30, 2026 and 2025 (in thousands):

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
Balance, beginning of period$861,853 $641,617 $877,554 $663,189 
Transfer from Level 2(37,284)— (37,284)— 
Additions (1)210,081 182,259 368,204 248,978 
Cash received(148,922)(60,706)(300,906)(108,016)
Gain on sale of Investments in loans and securities48,764 2,699 114,678 8,593 
Loss on sale of Investments in loans and securities(60,500)— (146,203)— 
Change in accrued interest on investments20,563 5,659 38,210 8,937 
Non-cash transactions1,556 — (94)— 
Change in fair value (OCI)20,831 (5,849)43,379 (21,795)
Credit-related impairment loss, net of recoveries(30,224)(28,944)(70,820)(63,151)
Balance, end of period$886,718$736,735$886,718$736,735
(1) Exclude capitalized transaction costs which have been reclassified to OCI and are amortized to interest income over the average life of the investments.

Significant unobservable inputs used for our Level 3 fair value measurement of the securities are the discount rate, net credit loss rate, prepayment rate and consideration of any optional redemption features in our investment securities. The discount rate reflects management’s estimate of the market-required return for similar financial instruments, to convert estimated future cash flows to a present value. The net credit loss rate is management’s estimate of potential loan losses, net of recoveries, from
borrower defaults. The prepayment rate estimate is the proportion of principal received in advance of the contractual terms of the loan, which can impact the future interest cash flows of the investments and the investments expected duration. Because these inputs represent increased risk or accelerated capital return, they maintain an inverse relationship with valuation. Accordingly, an increase in the discount, credit risk, or prepayment rates, in isolation, would result in a lower fair value measurement.

The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the securities as of June 30, 2026 and December 31, 2025:

June 30, 2026
December 31, 2025
Unobservable InputMinimumMaximumWeighted AverageMinimumMaximumWeighted Average
Discount rate8.0 %17.2 %14.6 %5.0 %15.0 %15.0 %
Loss rate5.5 %35.2 %16.2 %4.9 %33.1 %17.0 %
Prepayment rate0.0 %44.0 %13.2 %0.0 %40.0 %14.2 %

Credit Support Liabilities (Level 3)

The Company entered into credit support agreements with certain strategic investors, which are accounted for as credit derivative liabilities at fair value under ASC 815, “Derivatives and Hedging.” These agreements, which are not designated as accounting hedges, obligate the Company to make payments to a limited number of investors if credit losses exceed predetermined thresholds, up to a specified maximum exposure. As of June 30, 2026 and December 31, 2025, the credit derivative liability amounted to $20.9 million and $12.9 million, which are recorded within accrued expenses and other liabilities on the unaudited condensed consolidated balance sheets.

The significant unobservable inputs used to estimate the fair value of the credit derivatives include probability weighted discount rates, which averaged 9.3% and 9.3%, loss rates, which averaged 19.6% and 19.1%, and prepayment rates, which averaged 13.3% and 12.8% as of June 30, 2026 and December 31, 2025, respectively. Refer to Note 9, “Commitment and Contingencies,” for additional information.

Financial Assets and Liabilities Not Recorded at Fair Value

The Company believes that the carrying amount of cash, cash equivalents and restricted cash, fee receivables, accounts payable and other current liabilities approximate their fair value due to the short-term maturities of these instruments.

The below tables contain information about assets that are not measured at fair value on a recurring basis as of June 30, 2026 and December 31, 2025 (in thousands):

June 30, 2026
Fair Value
Carrying
Value		Level 1Level 2Level 3Total
Assets:
Cash and cash equivalents, and restricted cash and cash equivalents
$304,423 $304,423 $— $— $304,423 
Fee receivables
190,470 — 82,763 107,707 190,470 
Liabilities:
Secured borrowing$252,995 $— $— $254,259$254,259
Exchangeable notes150,070 — 253,451 — 253,451 
Long-term debt471,866 — 413,647 — 413,647 
December 31, 2025
Fair Value
Carrying
Value		Level 1Level 2Level 3Total
Assets:
Cash and cash equivalents, and restricted cash and cash equivalents
$288,349 $288,349 $— $— $288,349 
Fee receivables
153,250 — 69,864 83,386 153,250 
Liabilities:
Secured borrowing$193,892 $— $— $191,983 $191,983 
Exchangeable notes148,782 — 292,445 — 292,445 
Long-term debt481,598 — 430,616 — 430,616