prosper-20260630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2026


Commission File Number	Exact Name of Registrant as Specified in its Charter	I.R.S. Employer Identification Number
333-179941-01 333-204880 333-225797-01 333-257739-01 333-280336	PROSPER MARKETPLACE, INC. a Delaware corporation 221 Main Street, 3rd Floor San Francisco, CA 94105 Telephone: (415) 593-5426	73-1733867

333-179941 333-204880-01 333-225797 333-257739 333-280336-01	PROSPER FUNDING LLC a Delaware limited liability company 221 Main Street, 3rd Floor San Francisco, CA 94105 Telephone: (415) 593-5426	45-4526070

Securities registered pursuant to Section 12(b) of the Act:

Registrant

Title of Each Class

Name of Each Exchange on Which Registered

Prosper Marketplace, Inc.

None

Prosper Funding LLC

None

Securities registered pursuant to Section 12(g) of the Act:

Registrant

Title of Each Class

Name of Each Exchange on Which Registered

Prosper Marketplace, Inc.

None

Prosper Funding LLC

None

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Prosper Marketplace, Inc.			Yes x No ¨
Prosper Funding LLC			Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Prosper Marketplace, Inc.			Yes x No ☐
Prosper Funding LLC			Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large

Accelerated

Filer

Accelerated

Filer

Non-accelerated Filer

Smaller

Reporting

Company

Emerging Growth Company

Prosper Marketplace, Inc.

☐

Prosper Funding LLC

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Prosper Marketplace, Inc.			Yes ☐ No x
Prosper Funding LLC			Yes ☐ No x

Prosper Funding LLC meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and is therefore filing this Form 10-Q with the reduced disclosure format specified in General Instruction H(2) of Form 10-Q.

As of August 11, 2026, there were 79,935,949 shares of Prosper Marketplace, Inc. common stock outstanding. Prosper Funding LLC does not have any common stock outstanding.

THIS COMBINED FORM 10-Q IS SEPARATELY FILED BY PROSPER MARKETPLACE, INC. AND PROSPER FUNDING LLC. INFORMATION CONTAINED HEREIN RELATING TO ANY INDIVIDUAL REGISTRANT IS FILED BY SUCH REGISTRANT ON ITS OWN BEHALF. EACH REGISTRANT MAKES NO REPRESENTATION AS TO INFORMATION RELATING TO THE OTHER REGISTRANT.

TABLE OF CONTENTS

Page No.

Forward-Looking Statements

PART I.

FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements

Prosper Marketplace, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Statements of Operations (Unaudited)

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit

Condensed Consolidated Statements of Cash Flows (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Prosper Funding LLC

Condensed Consolidated Balance Sheets (Unaudited)

Condensed Consolidated Statements of Operations (Unaudited)

Condensed Consolidated Statements of Member’s Equity

Condensed Consolidated Statements of Cash Flows (Unaudited)

Notes to Condensed Consolidated Financial Statements (Unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

101

Item 4.

Controls and Procedures

PART II.

Item 1.

Item 1A.

Item 2.

Unregistered Sale of Equity Securities and Use of Proceeds

102

Item 3.

Defaults upon Senior Securities

103

Item 4.

Mine Safety Disclosures

Item 5.

Item 6.

Except as the context requires otherwise, as used herein, “Registrants” refers to Prosper Marketplace, Inc. (“PMI”), a Delaware corporation, and its wholly owned subsidiary, Prosper Funding LLC (“PFL”), a Delaware limited liability company; “we,” “us,” “our,” “Prosper,” and the “Company” refers to (i) PMI, (ii) its wholly owned subsidiaries, PFL, BillGuard, Inc. (“BillGuard”), a Delaware corporation, and Prosper Healthcare Lending LLC (“PHL”), a Delaware limited liability company, and (iii) its variable interest entities, Prosper Warehouse I Trust (“PWIT,” terminated March 28, 2024), a Delaware statutory trust, Prosper Warehouse II Trust (“PWIIT,” terminated September 25, 2023), a Delaware statutory trust, Prosper Marketplace Issuance Trust, Series 2023-1 (“PMIT 2023-1”), a Delaware statutory trust, Prosper Marketplace Issuance Trust, Series 2024-1 (“PMIT 2024-1”), a Delaware statutory trust, Prosper Credit Card Issuer LLC (“PMCC 2024-1”), a Delaware limited liability company and Prosper Grantor Trust (“PGT”), a Delaware statutory trust, on a consolidated basis; and “Prosper Funding” refers to PFL and its wholly owned subsidiary, Prosper Depositor LLC, a Delaware limited liability company, on a consolidated basis. In addition, the unsecured personal loans originated through our marketplace are referred to as “Borrower Loans,” and the borrower payment dependent notes issued through our marketplace, whether issued by PMI or PFL, are referred to as “Notes.” Investors currently invest in Borrower Loans through two channels: (i) the “Note Channel,” which allows investors to purchase Notes from PFL, the payments of which are dependent on the payments made on the corresponding Borrower Loan; and (ii) the “Whole Loan Channel,” which allows accredited and institutional investors to purchase Borrower Loans in their entirety directly from PFL. The Notes available to Note Channel investors are distinguishable from notes held by certain third party investors pursuant to Prosper’s securitization transactions, which are referred to herein as “Notes Issued by Securitization Trust.”

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include all statements that do not relate solely to historical or current facts, and can generally be identified by the use of words such as “may,” “believe,” “expect,” “project,” “estimate,” “intend,” “anticipate,” “plan,” “continue” or similar expressions. These statements may appear throughout this Quarterly Report on Form 10-Q, including the sections titled “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements inherently involve many risks and uncertainties that could cause actual results to differ materially from those projected in these statements. Where, in any forward-looking statement, PFL or PMI expresses an expectation or belief as to future results or events, such expectation or belief is based on the current plans and expectations of their respective managements, expressed in good faith and is believed to have a reasonable basis. Nevertheless, there can be no assurance that the expectation or belief will result or be achieved or accomplished.

The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:

•the performance of the Notes, which, in addition to being speculative investments, are special, limited obligations that are not guaranteed or insured;

•PFL’s ability to make payments on the Notes, including in the event that borrowers fail to make payments on the corresponding Borrower Loans;

•our ability to attract potential borrowers and investors to our personal loan marketplace, and borrowers to our unsecured credit card (“Credit Card”) product;

•the reliability of the information about borrowers that is supplied by borrowers including actions by some borrowers to defraud investors;

•our ability to service the Borrower Loans, and our ability or the ability of a third-party debt collector to pursue collection against any borrower, including in the event of fraud or identity theft;

•credit risks posed by the credit worthiness of borrowers of our Personal Loan and Credit Card products and the effectiveness of our credit rating systems;

•potential efforts by state regulators or litigants to impose liability that could affect PFL’s (or any subsequent assignee’s) ability to continue to charge to borrowers the interest rates that they agreed to pay at origination of their loans;

•the impact of future economic conditions on the performance and the loss rates for the Borrower Loans and the Credit Card product;

•our ability to manage loss rates associated with our Credit Card product;

•our compliance with applicable local, state and federal law, including the Investment Advisers Act of 1940, the Investment Company Act of 1940 and other laws;

•our compliance with applicable regulations and regulatory developments or court decisions affecting our business;

•potential efforts by state regulators or litigants to characterize PFL or PMI, rather than WebBank, as the lender of the loans originated through our marketplace;

•the application of federal and state bankruptcy and insolvency laws to borrowers and to PFL and PMI;

•the impact of borrower delinquencies, defaults and prepayments on the returns on the Notes;

•the impact of rising interest rates and inflation on our business, results of operations, financial condition and future prospects;

•the lack of a public trading market for the Notes and the current lack of any trading platform on which investors can resell the Notes;

•the federal income tax treatment of an investment in the Notes and the PMI Management Rights;

•our ability to prevent security breaches, disruptions in service, and comparable events that could compromise the personal and confidential information held on our data systems, reduce the attractiveness of the platform or adversely impact our ability to service Borrower Loans; and

•the potential adverse legal, reputational, and financial effects on the Company resulting from the cybersecurity incident that we reported in September 2025 (the “September 2025 Incident”), and

•the other risks discussed under the “Risk Factors” section of our Annual Report on Form 10-K.

There may be other factors that may cause actual results to differ materially from the forward-looking statements in this Quarterly Report on Form 10-Q. We can give no assurances that any of the events anticipated by the forward-looking statements will occur or, if any of them does occur, what impact they will have on our results of operations and financial condition. You should carefully read the factors described in the “Risk Factors” section of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025 for a description of certain risks that could, among other things, cause our actual results to differ from these forward-looking statements.

All forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report on Form 10-Q. We undertake no obligation to update or revise forward-looking statements that may be made to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events, other than as required by law.

Where You Can Find More Information

The following filings are available for download free of charge at www.prosper.com as soon as reasonably practicable after such filings are electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”): Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports. Our SEC filings are also available to the public on the SEC’s website at www.sec.gov. The information contained on our website is not incorporated into this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

Prosper Marketplace, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except for share and per share amounts)


	June 30, 2026		December 31, 2025
Assets:
Cash and Cash Equivalents	$	55,064	$	46,755
Restricted Cash (1)	160,323		94,363
Accounts Receivable	12,994		11,947
Prepaid and Other Assets (1)	36,375		30,263
Borrower Loans, at Fair Value	258,205		309,737
Receivable from Credit Card Partner, at Fair Value (1)	99,328		99,865
Property and Equipment, Net	44,416		45,097
Credit Card Derivative	56,027		48,290
Servicing Assets	19,659		17,402
Goodwill	36,368		36,368
Total Assets	$	778,759	$	740,087
Liabilities, Convertible Preferred Stock and Stockholders' Deficit:
Accounts Payable and Accrued Liabilities	$	76,921	$	73,692
Payable to Investors	148,189		77,604
Notes, at Fair Value	221,070		243,900
Notes Issued by Securitization Trust (1)	122,518		149,902
Term Loan	74,778		74,759
Other Liabilities	34,264		34,778
Convertible Preferred Stock Warrant Liability	696		230,060
Total Liabilities	$	678,436	$	884,695
Commitments and Contingencies (Note 17)
Convertible Preferred Stock – $0.01 par value; 444,760,848 shares authorized as of June 30, 2026 and December 31, 2025; 421,983,987 issued and outstanding as of June 30, 2026, and 261,227,694 issued and outstanding as of December 31, 2025. Aggregate liquidation preference of $549,861 as of June 30, 2026 and $414,019 as of December 31, 2025.	$	569,371	$	396,556
Less: Convertible Preferred Stock Held by Consolidated VIE (Note 13), 51,361,475 shares issued and outstanding as of June 30, 2026, and 51,247,915 shares issued and outstanding as of December 31, 2025	(2,450)		(2,381)
Stockholders' Deficit:
Common Stock – $0.01 par value; 625,000,000 shares authorized; 80,871,884 shares issued and 79,935,949 shares outstanding, as of June 30, 2026; 79,138,710 shares issued and 78,202,775 shares outstanding, as of December 31, 2025	323		307
Additional Paid-In Capital	165,023		164,240
Less: Treasury Stock	(23,417)		(23,417)
Accumulated Deficit	(608,527)		(679,913)
Total Stockholders' Deficit	$	(466,598)	$	(538,783)
Total Liabilities, Convertible Preferred Stock and Stockholders' Deficit	$	778,759	$	740,087

(1) Includes amounts in consolidated variable interest entities (“VIEs”) presented separately in the table below.`

The following table presents the assets and liabilities of consolidated VIEs, which are included in the condensed consolidated balance sheets above. The assets in the table below may only be used to settle obligations of consolidated VIEs and are in excess of those obligations. Additionally, the assets and liabilities in the table below include third-party assets and liabilities of consolidated VIEs only and exclude intercompany balances that eliminate in consolidation. Refer to Note 7, Securitizations, and Note 11, Debt, within the notes to the condensed consolidated financial statements for additional information.


	June 30, 2026		December 31, 2025
Assets of consolidated VIEs, included in total assets above:
Restricted Cash	$	9,280	$	11,892
Accounts Receivable	1,255		1,376
Borrower Loans, at Fair Value	35,439		64,400
Receivable from Credit Card Partner, at Fair Value	99,328		99,865

Total assets of consolidated VIEs	$	145,302	$	177,533
Liabilities of consolidated VIEs, included in total liabilities above:
Notes Issued by Securitization Trust	$	122,518	$	149,902
Other Liabilities	1,900		2,163
Total liabilities of consolidated VIEs	$	124,418	$	152,065

The accompanying notes are an integral part of these condensed consolidated financial statements.

Prosper Marketplace, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except for share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenues:
Operating Revenues:
Transaction Fees, Net	$	71,054	$	61,252	$	133,143	$	113,330
Servicing Fees, Net	7,816		7,385		16,297		14,742
Loss on Sale of Borrower Loans	(13,684)		(15,671)		(30,959)		(29,247)
Other Revenues	1,810		2,807		3,465		4,996
Total Operating Revenues	66,996		55,773		121,946		103,821
Interest Income (Expense):
Interest Income on Financial Instruments	15,719		21,066		31,968		44,367
Interest Expense on Financial Instruments	(11,779)		(15,432)		(24,145)		(31,761)
Total Interest Income, Net	3,940		5,634		7,823		12,606
Change in Fair Value of Financial Instruments	422		(9,757)		(43)		(22,113)
Total Net Revenue	71,358		51,650		129,726		94,314
Expenses:
Origination and Servicing	13,472		11,967		27,850		23,642
Sales and Marketing	21,262		14,517		40,281		27,949
General and Administrative	22,954		21,386		46,131		43,480
Change in Fair Value of Convertible Preferred Stock Warrants	5,941		59,359		(58,008)		2,133
Interest Expense on Term Loan	1,995		2,979		3,977		6,055
Other Income, Net	(947)		(859)		(1,875)		(1,649)
Total Expenses	64,677		109,349		58,356		101,610
Net Income (Loss) Before Taxes	6,681		(57,699)		71,370		(7,296)
Income Tax Expense	(300)		(28)		(338)		(56)
Net Income (Loss)	$	6,381	$	(57,727)	$	71,032	$	(7,352)
Plus: Return on Share Purchase and Forfeiture	355		—		355		—
Less: Net Income Allocated to Participating Securities	(5,356)		—		(54,653)		—
Net Income (Loss) Attributable to Common Stockholders	$	1,380	$	(57,727)	$	16,734	$	(7,352)
Net Income (Loss) Per Share – Basic	$	0.02	$	(0.74)	$	0.21	$	(0.09)
Net Income (Loss) Per Share – Diluted	$	0.01	$	(0.74)	$	0.07	$	(0.09)
Weighted Average Shares – Basic	78,924,011		77,698,227		78,589,166		77,603,124
Weighted Average Shares – Diluted	185,183,626		77,698,227		237,292,019		77,603,124

The accompanying notes are an integral part of these condensed consolidated financial statements.

Prosper Marketplace, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit (Unaudited)

(in thousands, except for share amounts)



	Convertible Preferred Stock		Convertible Preferred Stock Held by Consolidated VIE		Common Stock		Treasury Stock		Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Balance as of January 1, 2026	261,227,694	396,556	(51,247,915)	(2,381)	83,380,010	307	(5,177,235)	(23,417)	164,240	(679,913)	(538,783)
Exercise of vested stock options	—	—	—	—	1,229,353	11	—	—	22	—	33
Exercise of Series E-1 and F convertible preferred stock warrants (Note 13)	161,045,853	172,967	—	—	—	—	—	—	—	—	—
Cashless exercise of common stock warrants (Note 13)	—	—	—	—	503,821	5	—	—	(5)	—	—
Purchase of Convertible Preferred Stock and Common Stock by consolidated VIE Prosper Grantor Trust (Note 13)	—	—	(113,560)	(69)	(244,130)	—	—	—	(133)	202	69
Return of Convertible Preferred Stock from investor (Note 13)	(289,560)	(152)	—	—	—	—	—	—	—	152	152
Stock-based compensation expense	—	—	—	—	—	—	—	—	899	—	899
Net income	—	—	—	—	—	—	—	—	—	71,032	71,032
Balance as of June 30, 2026	421,983,987	569,371	(51,361,475)	(2,450)	84,869,054	323	(5,177,235)	(23,417)	165,023	(608,527)	(466,598)



	Convertible Preferred Stock		Convertible Preferred Stock Held by Consolidated VIE		Common Stock		Treasury Stock		Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Balance as of January 1, 2025	209,613,570	322,748	(51,247,915)	(2,381)	82,642,684	300	(5,177,235)	(23,417)	162,643	(644,211)	(504,685)
Exercise of vested stock options	—	—	—	—	318,106	3	—	—	14	—	17
Stock-based compensation expense	—	—	—	—	—	—	—	—	846	—	846
Net loss	—	—	—	—	—	—	—	—	—	(7,352)	(7,352)
Balance as of June 30, 2025	209,613,570	322,748	(51,247,915)	(2,381)	82,960,790	303	(5,177,235)	(23,417)	163,503	(651,563)	(511,174)

The accompanying notes are an integral part of these consolidated financial statements.



	Convertible Preferred Stock		Convertible Preferred Stock Held by Consolidated VIE		Common Stock		Treasury Stock		Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Balance as of January 1, 2026	261,227,694	396,556	(51,247,915)	(2,381)	83,380,010	307	(5,177,235)	(23,417)	164,240	(679,913)	(538,783)
Exercise of vested stock options	—	—	—	—	96,580	—	—	—	2	—	2
Exercise of Series E-1 and F convertible preferred stock warrants (Note 13)	77,378,045	81,770	—	—	—	—	—	—	—	—	—
Stock-based compensation expense	—	—	—	—	—	—	—	—	521	—	521
Net income	—	—	—	—	—	—	—	—	—	64,651	64,651
Balance as of March 31, 2026	338,605,739	478,326	(51,247,915)	(2,381)	83,476,590	307	(5,177,235)	(23,417)	164,763	(615,262)	(473,609)
Exercise of vested stock options	—	—	—	—	1,132,773	11	—	—	20	—	31
Exercise of Series F convertible preferred stock warrants (Note 13)	83,667,808	91,197	—	—	—	—	—	—	—	—	—
Cashless exercise of common stock warrants (Note 13)	—	—	—	—	503,821	5	—	—	(5)	—	—
Purchase of Convertible Preferred Stock and Common Stock by consolidated VIE Prosper Grantor Trust (Note 13)	—	—	(113,560)	(69)	(244,130)	—	—	—	(133)	202	69
Return of Convertible Preferred Stock from investor (Note 13)	(289,560)	(152)	—	—	—	—	—	—	—	152	152
Stock-based compensation expense	—	—	—	—	—	—	—	—	378	—	378
Net income	—	—	—	—	—	—	—	—	—	6,381	6,381
Balance as of June 30, 2026	421,983,987	569,371	(51,361,475)	(2,450)	84,869,054	323	(5,177,235)	(23,417)	165,023	(608,527)	(466,598)



	Convertible Preferred Stock		Convertible Preferred Stock Held by Consolidated VIE		Common Stock		Treasury Stock		Additional Paid-In Capital	Accumulated Deficit	Total
	Shares	Amount	Shares	Amount	Shares	Amount	Shares	Amount
Balance as of January 1, 2025	209,613,570	322,748	(51,247,915)	(2,381)	82,642,684	300	(5,177,235)	(23,417)	162,643	(644,211)	(504,685)
Exercise of vested stock options	—	—	—	—	127,206	1	—	—	6	—	7
Exercise of Series E-1 and F convertible preferred stock warrants (Note 13)	—	—	—	—	—	—	—	—	—	—	—
Stock-based compensation expense	—	—	—	—	—	—	—	—	416	—	416
Net income	—	—	—	—	—	—	—	—	—	50,375	50,375
Balance as of March 31, 2025	209,613,570	322,748	(51,247,915)	(2,381)	82,769,890	301	(5,177,235)	(23,417)	163,065	(593,836)	(453,887)
Exercise of vested stock options	—	—	—	—	190,900	2	—	—	8	—	10
Exercise of Series E-1 and F convertible preferred stock warrants (Note 13)	—	—	—	—	—	—	—	—	—	—	—
Stock-based compensation expense	—	—	—	—	—	—	—	—	430	—	430
Net loss	—	—	—	—	—	—	—	—	—	(57,727)	(57,727)
Balance as of June 30, 2025	209,613,570	322,748	(51,247,915)	(2,381)	82,960,790	303	(5,177,235)	(23,417)	163,503	(651,563)	(511,174)

Prosper Marketplace, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)


	Six Months Ended June 30,
	2026		2025
Cash flows from Operating Activities:
Net Income (Loss)	$	71,032	$	(7,352)
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Change in Fair Value of Financial Instruments	43		22,113
Depreciation and Amortization	7,854		5,964
Amortization of Operating Lease Right-of-use Asset	1,214		1,020
Gain on Sale of Borrower Loans	(9,006)		(6,185)
Change in Fair Value of Servicing Rights	7,473		4,483
Stock-Based Compensation Expense	795		676
Change in Fair Value of Convertible Preferred Stock Warrants	(58,008)		2,133
Amortization of Debt Discount and Debt Issuance Costs	893		1,612
Other, Net	431		372
Changes in Operating Assets and Liabilities:
Purchase of Loans Held for Sale, at Fair Value	(1,467,833)		(1,194,264)
Proceeds from Sales and Principal Payments of Loans Held for Sale, at Fair Value	1,494,287		1,254,924
Accounts Receivable	(1,047)		(2,239)
Prepaid and Other Assets	(6,112)		(813)
Credit Card Derivative	2,785		(7,351)
Accounts Payable and Accrued Liabilities	4,493		10,804
Payable to Investors	70,585		18,810
Other Liabilities	(1,220)		929
Interest payable	(102)		(212)
Net Cash Provided by Operating Activities	118,557		105,424
Cash Flows from Investing Activities:
Purchase of Borrower Loans, at Fair Value	(73,639)		(85,833)
Proceeds from Principal Payments and Sales of Borrower Loans, at Fair Value	84,487		95,670
Purchases of Credit Card Receivables from Credit Card Partner	(33,176)		(39,249)
Principal Payments on Credit Card Receivable from Credit Card Partner	25,738		34,198
Purchases of Property and Equipment	(9,547)		(6,524)
Net Cash Used in Investing Activities	(6,137)		(1,738)
Cash Flows from Financing Activities:
Proceeds from Issuance of Notes, at Fair Value	71,984		84,582
Payments of Notes, at Fair Value	(83,623)		(94,781)
Principal Payments on Notes Issued by Securitization Trusts	(28,156)		(65,915)
Principal Payments on Term Loan	—		(5,000)
Proceeds from Exercises of Stock Options	33		17
Proceeds from Exercises of Series E-1 and Series F Convertible Preferred Stock Warrants (Note 13)	1,611		—
Net Cash Used in Financing Activities	(38,151)		(81,097)
Net Increase in Cash, Cash Equivalents and Restricted Cash	74,269		22,589
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period	141,118		145,087
Cash, Cash Equivalents and Restricted Cash at End of the Period	$	215,387	$	167,676

Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest, Net	$	27,757	$	37,206


	Six Months Ended June 30,
	2026		2025
Cash Paid for Income Taxes	29		365
Cash Paid for Operating Leases Included in the Measurement of Lease Liabilities	2,313		2,148
Non-Cash Investing Activity - Accrual for Property and Equipment, Net	1,323		4,070

Reconciliation to Amounts on Condensed Consolidated Balance Sheets:
Cash and Cash Equivalents	$	55,064	$	38,154
Restricted Cash	160,323		129,522
Total Cash, Cash Equivalents and Restricted Cash	$	215,387	$	167,676

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROSPER MARKETPLACE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Prosper Marketplace, Inc. (“PMI” or the “Company”) was incorporated in the state of Delaware on March 22, 2005. Except as the context requires otherwise, as used in these notes to the condensed consolidated financial statements of PMI, “Prosper,” “we,” “us,” and “our” refer to PMI and its wholly-owned subsidiaries, on a consolidated basis.

The unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and disclosure requirements for interim financial information and the requirements of Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2025. The balance sheet at December 31, 2025 has been derived from the audited financial statements at that date. Management believes these unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

PMI did not have any items of other comprehensive income or loss for any of the periods presented in the condensed consolidated financial statements as of and for the six months ended June 30, 2026 and 2025.

The preparation of Prosper’s condensed consolidated financial statements and related disclosures in conformity with US GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in Prosper’s financial statements and accompanying notes. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of certain assets and liabilities. These judgments, estimates and assumptions are inherently subjective in nature and actual results may differ from these estimates and assumptions.

The accompanying interim condensed consolidated financial statements include the accounts of PMI, its wholly-owned subsidiaries and consolidated VIEs. All intercompany balances have been eliminated in consolidation.

Notes Issued by Securitization Trust are notes held by certain third-party investors pursuant to Prosper’s securitization transactions, and are distinguishable from the borrower payment dependent Notes available to investors through the Company’s Note Channel.

2. Summary of Significant Accounting Policies

Prosper’s significant accounting policies are included in Note 2, Summary of Significant Accounting Policies, in Prosper’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no changes to these accounting policies during the first six months of 2026.

Fair Value Measurements

Financial instruments measured at fair value consist principally of Borrower Loans and Notes (Notes 4 and 7), Servicing Assets (Note 6), Receivable from Credit Card Partner (Notes 5 and 7), Credit Card Derivative and servicing obligation (Note 5), loan trailing fee liability (Note 10), Debt (Note 11) and Convertible Preferred Stock Warrant Liability (Note 13). The estimated fair values of other financial instruments, including Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable and Accrued Liabilities, and Payable to Investors approximate their carrying values because of their short-term nature. The estimated fair value of the Term Loan (Note 11) does not approximate its carrying value primarily due to differences in the stated and market rates associated with that instrument.

Refer to Note 8, Fair Value of Assets and Liabilities, for additional fair value disclosures.

Restricted Cash

Restricted cash consists primarily of cash deposits, money market funds and short-term certificate of deposit accounts held as collateral as required for loan funding and servicing activities, and cash that investors or Prosper have on the marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

Consolidation of Variable Interest Entities

The determination of whether to consolidate a VIE in which the Company has a variable interest requires a significant amount of analysis and judgment regarding whether the Company is the primary beneficiary of a VIE due to its holding a controlling financial interest in the VIE. A controlling financial interest in a VIE exists if the Company has both the power to direct the VIE’s activities that most significantly affect the VIE’s economic performance and a potentially significant economic interest in the VIE. The determination of whether an entity is a VIE considers factors, such as (i) whether the entity’s equity investment at risk is insufficient to allow the entity to finance its activities without additional subordinated financial support and (ii) whether a holder’s equity investment at risk lacks any of the following characteristics of a controlling financial interest: the direct or indirect ability through voting rights or similar rights to make decisions about a legal entity’s activities that have a significant effect on the entity’s success, the obligation to absorb the expected losses of the entity or the right to receive the expected residual returns of the legal entity.

Management regularly reviews and reconsiders its previous conclusions regarding the status of an entity as a VIE and whether the Company is required to consolidate or deconsolidate such VIE in the condensed consolidated financial statements.

Transfers of Financial Assets

Prosper sells Borrower Loans through its Whole Loan Channel, as discussed below. In accordance with Accounting Standards Codification (“ASC”) 860, Transfers and Servicing, the Company accounts for transfers of financial assets as sales when it has surrendered control over the transferred assets. Control is generally considered to have been surrendered when (i) the transferred assets have been legally isolated from Prosper, (ii) the transferee has the right to pledge or exchange the assets without any significant constraints, and (iii) Prosper has not entered into a repurchase agreement, does not hold unconditional call options and has not written put options on the transferred assets. In assessing whether control has been surrendered, Prosper considers whether the transferee would be a consolidated affiliate and the impact of all arrangements or agreements made contemporaneously with, or in contemplation of the transfer, even if they were not entered into at the time of transfer. Prosper measures gain or loss on sale of financial assets as the net proceeds received on the sale less the carrying amount of the loans sold. The net proceeds of the sale include the fair value of any assets obtained or liabilities incurred as part of the transaction, including, but not limited to Servicing Assets, retained securities, and recourse obligations.

In November 2024, Prosper completed the PMCC 2024-1 Credit Card securitization transaction, which is more fully described in Note 7, Securitizations. Based on an analysis of the terms of that transaction, it was determined that the transfers of the underlying Credit Card receivables from the Company’s Credit Card banking partner, Coastal Community Bank (“Coastal”) to PMCC 2024-1 do not meet sale accounting requirements under ASC 860. In particular, as cardholders make additional draws on the Credit Cards associated with PMCC 2024-1, they lose their identity and become part of a larger outstanding balance. Further, the interests in the Credit Card receivables do not meet the definition of a participating interest given their lack of stated maturity dates, among other requirements. As a result, the Company derecognizes cash paid to Coastal for the transfer of the underlying Credit Card receivables, and has recorded an offsetting Receivable from Credit Card Partner on its condensed consolidated balance sheets. Receivable from Credit Card Partner is secured by and effectively mirrors the value of the underlying Credit Card receivables.

Borrower Loans and Notes

Borrower Loans are funded either through the Note Channel or through the Whole Loan Channel. Through the Note Channel, Prosper purchases Borrower Loans from WebBank, then issues Notes and holds the Borrower Loans until maturity. The obligation to repay a series of Notes issued through the Note Channel is dependent upon the repayment of the associated Borrower Loan. Borrower Loans funded and Notes issued through the Note Channel are carried on Prosper’s condensed consolidated balance sheets as assets and liabilities, respectively. Borrower Loans funded through the Whole Loan Channel are sold to unrelated third-party buyers and the outstanding balances of these loans are not presented on the Company’s consolidated balance sheets.

Prosper previously used Warehouse Lines to purchase personal loans that could be subsequently contributed to securitization transactions or sold to investors. These personal loans were included in “Loans Held for Sale, at Fair Value” on the condensed consolidated balance sheets. In September 2023 and March 2024, in connection with the securitization transactions discussed below, the Loans Held for Sale in these Warehouse Lines were fully contributed to the securitization entities or purchased by Prosper, and the outstanding balances of the Warehouse Lines were fully paid down. See Note 11, Debt for more details on the termination of the Warehouse Lines.

In September 2023 and March 2024, Prosper closed two separate securitization transactions, PMIT 2023-1 and PMIT 2024-1, respectively, with personal loans previously funded through its PWIIT Warehouse Line and PWIT Warehouse Line, respectively. These newly formed securitization entities issued notes acquired by third parties and residual certificates acquired by PMI (the wholly owned parent of PFL, the sole sponsor of the securitizations). PMIT 2023-1 and PMIT 2024-1 are deemed consolidated VIEs, and as a result the Borrower Loans they hold are presented in “Borrower Loans, at Fair Value,” and the notes sold to third-party investors are included in Notes Issued by Securitization Trusts on the accompanying condensed consolidated balance sheets. See Note 7, Securitizations, for additional disclosures related to these securitizations.

Prosper has elected the fair value option for Borrower Loans and Notes. Changes in the fair value of Borrower Loans funded through the Note Channel are largely offset by the changes in fair value of Notes due to the borrower payment-dependent design of the Notes. Changes in the fair value of Borrower Loans are recorded through Prosper's earnings and Prosper collects interest on Borrower Loans. Changes in the fair values of Borrower Loans and Notes are included in Change in Fair Value of Financial Instruments on the accompanying consolidated statements of operations. See Note 4, Borrower Loans and Notes, at Fair Value, for further details on the methodologies utilized to value these financial instruments.

Credit Card Derivative

The Company evaluated the terms of the Credit Card Program Agreement with Coastal and determined that it contained features that met the definition of derivatives under ASC 815, Derivatives and Hedging. These features are freestanding financial instruments (as defined under ASC 480, Distinguishing Liabilities from Equity), and have been valued separately as derivatives. A right of offset exists between the derivatives, and they are presented net, at fair value, on the accompanying condensed consolidated balance sheets. Prosper uses a discounted cash flow model to estimate the fair value of the Credit Card Derivative. The key assumptions used in the valuation include average portfolio interest rates, as well as default and prepayment rates derived primarily from relevant market data and historical performance, adjusted as necessary based on the perceived credit risk of the underlying cardholders. In addition, a single discount rate based on the estimate of the rate of return that investors would require when investing in similar credit card portfolios, is applied to the individual freestanding derivatives. Changes in the fair value of the Credit Card Derivative, as well as settled transactions from the Credit Card portfolio, are recorded in Change in Fair Value of Financial Instruments on the accompanying consolidated statements of operations.

In accordance with the Credit Card Program Agreement, as amended, new customer accounts are designated as Prosper Allocations and Coastal Allocations on a 95% and 5% basis, respectively. Coastal may adjust the Coastal Allocation percentage between 0% and 5% at its discretion and with advance notice. The maximum outstanding Credit Card principal balance for Prosper Allocations is $375 million. On August 7, 2026, the Company entered into a Fourth Amendment to the Credit Card Program Agreement which, among other things, (i) provides for a rewards card program, which may provide cashback, points, rewards or similar incentive benefits to certain eligible customers; (ii) sets the minimum outstanding Credit Card principal balance of Prosper Allocations to $100 million; and (iii) upon the closing of certain conditions precedent, modifies the maximum outstanding Credit Card principal balances of Prosper Allocations to $275 million. The Credit Card Program Agreement term is scheduled to end on December 31, 2027, but will automatically renew for one-year periods thereafter, unless terminated by either party in accordance with the agreement.

Refer to Note 5, Credit Card, for additional details on revenues and expenses related to the Credit Card product, and to Note 8, Fair Value of Assets and Liabilities, for additional details related to the valuation methodology for the Credit Card Derivative.

Receivable from Credit Card Partner

In November 2024, Prosper closed a securitization transaction, PMCC 2024-1, with Credit Card receivables previously included within the Prosper Allocations on Coastal’s balance sheet. This securitization entity issued notes acquired by third parties, and a residual certificate to PMI, the sole sponsor of the securitization. PMCC 2024-1 is structured as a limited liability company in which PMI is the sole member, but was determined to be a VIE due to its lack of equity at risk. As PMI is considered the primary beneficiary of the VIE, it fully consolidates PMCC 2024-1 and all transactions between the two entities are eliminated. As discussed above, because the transfers of the underlying Credit Card receivables do not meet the requirements for sale accounting treatment under ASC 860, Transfers and Servicing, the Company has recorded a Receivable from Credit Card Partner on the condensed consolidated balance sheets. Notes sold to third-party investors are included in Notes Issued by Securitization Trusts on the accompanying condensed consolidated balance sheets.

The Company elected to carry the Receivable from Credit Card Partner at fair value, effectively consisting of the fair value of the underlying Credit Card receivables, in order to align with the measurement and presentation of the Borrower Loans and Credit Card Derivative. Prosper uses a discounted cash flow model to estimate the fair value of the securitization residual interest, given that the Company is the sole sponsor of the securitization and is entitled to all residual cash flows it generates. This involves utilizing certain assumptions similar to those used to value the Credit Card Derivative, including the discount and prepayment rates. Additional assumptions are adjusted to reflect the specific characteristics of the securitized Credit Card receivables, including the average portfolio interest rate and the default rate. The residual interest fair value is then added to the applicable securitization advance rate applied to the outstanding balance of the Credit Card receivables to calculate the estimated fair value of Receivable from Credit Card Partner. Changes in the fair value of the Receivable from Credit Card Partner are recorded in Changes in Fair Value of Financial Instruments on the consolidated statements of operations. See Note 5, Credit Card, and Note 7, Securitizations, for additional disclosures related to this securitization.

Transaction Fee Refunds

Prosper assumed WebBank’s obligation under Utah law to refund the pro-rated amount of any Transaction Fees collected in excess of 5% of Borrower Loan principal, in the event the underlying borrower prepaid the loan in full before maturity. Liabilities under this obligation were estimated upon the origination of Borrower Loans, and reassessed each period. They are recorded within Accounts Payable and Accrued Liabilities on the accompanying condensed consolidated balance sheets. The key assumptions used in the estimated refund liability include prepayment rates and default rates derived primarily from historical performance. Changes in the liability are recorded within Transaction Fees, Net on the accompanying consolidated Statements of Operations. Refer to Note 17, Commitments and Contingencies, for details on the amounts recorded under this obligation.

On March 23, 2026, Utah signed into law Senate Bill 230, Consumer Credit Amendments (“S.B. 230”), which eliminates the requirement to refund Transaction Fees in excess of 5% of Borrower Loan principal upon prepayment. The law became effective on May 6, 2026. Accordingly, the Company no longer accrues or remits Transaction Fee refunds under this requirement for Borrower Loans originated on or after that effective date. Borrower Loans originated prior to May 6, 2026, remain subject to the prior refund requirements.

Term Loans

Prosper entered into a Credit Agreement, which provided for a Term Loan, with a third-party financial institution in November 2022. That Credit Agreement was terminated and the related Term Loan fully repaid in November 2025, when the Company entered into a new Credit Agreement and underlying Term Loan with a separate third-party financial institution. These agreements are fully described in Note 11, Debt. These Term Loans are carried at amortized cost, net of discounts, issuance costs and modification costs, which are subsequently amortized to Interest Expense on Term Loans over the life of the underlying agreements. Interest Expense on Term Loans is presented as a component of Expenses on the accompanying condensed consolidated statements of operations.

Leases

Management determines if an arrangement is a lease at inception. Operating lease right-of-use (“ROU”) assets and operating lease liabilities are included on the Condensed Consolidated Balance Sheets in Property and Equipment, Net and in Other Liabilities, respectively. For certain leases with original terms of twelve months or less, PMI recognizes the lease expense as incurred and does not record ROU assets and lease liabilities.

If a contract contains a lease, management evaluates whether it should be classified as an operating or finance lease. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As most of PMI's leases do not provide an implicit rate, management uses an incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The operating lease ROU assets are evaluated for impairment utilizing the same impairment model used for Property and Equipment.

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In April 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Practical Expedient for Estimating Expected Credit Losses on Current Receivables,” which provides a practical expedient for measuring expected credit losses on current accounts receivable and contract assets. The expedient allows an entity to assume that current economic conditions will remain unchanged for the remaining life of the asset when developing forecasts. The standard is effective for fiscal years beginning after December 15, 2025. The Company adopted this guidance as of January 1, 2026, and elected this practical expedient for its short-term fee receivables. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Issued, to be Adopted by the Company in Future Periods

In October 2023, the FASB issued ASU No. 2023-06, “Disclosure Improvements: Codification Amendments in Response to the Securities and Exchange Commission’s Disclosure Update and Simplification Initiative.” The amendments in this update modify the disclosure or presentation requirements of a variety of Topics in the ASC in response to the SEC’s Release No. 33-10532, “Disclosure Update and Simplification Initiative,” and align the ASC’s requirements with the SEC’s regulations. The effective date for each amendment will be the date on which the SEC's removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The Company does not expect the adoption of this ASU to have a material impact on the Company’s condensed Consolidated Financial Statements and related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures,” that requires more detailed disclosure about certain costs and expenses presented in the income statement, including inventory purchases, employee compensation, selling expense and depreciation expense. The guidance is effective for annual periods beginning after December 15, 2026. Early adoption is permitted. The Company is currently evaluating this ASU to determine its impact on the Company’s disclosures.

In May 2025, the FASB issued ASU No. 2025-03, “Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity.” This standard clarifies the guidance in determining the accounting acquirer in a business combination effected primarily by exchanging equity interests when the acquiree is a VIE that meets the definition of a business. The standard is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted, and the standard is to be applied prospectively to acquisitions after the adoption date. The Company is currently evaluating this ASU to determine its impact on the Company’s condensed consolidated financial statements and related disclosures.

In September 2025, the FASB issued ASU No. 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which modernizes the capitalization criteria for internal-use software costs by removing references to project stages. The amendments are effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods, with early adoption permitted. The amendments in this update should be applied on a prospective basis. The Company is currently evaluating this ASU to determine its impact on the condensed consolidated financial statements, and expects to adopt it for the year ending December 31, 2028.

In December 2025, the FASB issued ASU No. 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements,” which clarifies the requirements for interim financial statements and notes. The amendments compile existing interim disclosure requirements into a comprehensive list within Topic 270 and introduce a disclosure principle requiring an entity to disclose events or changes occurring since the end of the most recent annual reporting period that have a material effect on the entity. For public business entities, the standard is effective for interim reporting periods within fiscal years beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating this ASU to determine its impact on the Company’s interim financial statements and related disclosures.

In December 2025, the FASB issued ASU No. 2025-12, “Codification Improvements,” which clarifies, corrects errors in, and makes minor improvements to a variety of Topics in the ASC. Key amendments include clarifications to the calculation of diluted earnings per share during loss periods, explicit permission for certain treasury stock retirement accounting methods, and refinements to disclosure requirements for lease receivables. The amendments are effective for all entities for annual periods beginning after December 15, 2026, and interim periods within those years. Early adoption is permitted on an issue-by-

issue basis. The Company is currently evaluating this ASU, but does not expect the adoption to have a material impact on its condensed consolidated financial statements or related disclosures.

Other recent accounting pronouncements issued by the FASB did not, or are not believed by management to, have a material impact on the Company’s present or future financial statements.

3. Property and Equipment, Net

Property and Equipment consists of the following at the dates presented (in thousands):


	June 30, 2026		December 31, 2025
Internal-use software and website development costs	$	81,621	$	87,842
Operating lease right-of-use assets	22,690		22,690
Computer equipment	5,373		4,805
Leasehold improvements	7,184		7,183
Office equipment and furniture	3,077		3,067
Assets not yet placed in service	9,654		5,172
Property and equipment	129,599		130,759
Less: Accumulated depreciation and amortization	(85,183)		(85,662)
Total Property and Equipment, Net	$	44,416	$	45,097

Depreciation and amortization expense for Property and Equipment, Net for the three months ended June 30, 2026 and 2025 was $3.6 million and $3.0 million, respectively. Depreciation and amortization expense for Property and Equipment, Net for the six months ended June 30, 2026 and 2025 was $7.9 million and $6.0 million, respectively. These charges are included in Origination and Servicing and General and Administrative expenses on the condensed consolidated statements of operations. PMI capitalized internal-use software and website development costs in the amount of $4.1 million and $3.9 million for the three months ended June 30, 2026 and 2025, respectively. PMI capitalized internal-use software and website development costs in the amount of $7.8 million and $7.9 million for the six months ended June 30, 2026 and 2025, respectively. Additionally, disclosures around the operating lease right-of-use assets are included in Note 16, Leases.

4. Borrower Loans and Notes, at Fair Value

The aggregate principal balances outstanding and fair values of Borrower Loans and Notes, at Fair Value as of June 30, 2026 and December 31, 2025, are presented in the following table (in thousands):


	Borrower Loans				Notes
	June 30, 2026		December 31, 2025		June 30, 2026		December 31, 2025
Aggregate principal balance and interest outstanding	$	270,738	$	324,505	$	233,817	$	256,929
Fair value adjustments	(12,533)		(14,768)		(12,747)		(13,029)
Fair value	$	258,205	$	309,737	$	221,070	$	243,900

Borrower Loans

As of June 30, 2026, outstanding Borrower Loans had original terms to maturity of 24, 36, 48 or 60 months, had monthly payments with fixed interest rates ranging from 6.30% to 33.00%, and had various original maturity dates through June 2031. As of December 31, 2025, outstanding Borrower Loans had original terms to maturity of 24, 36, 48 or 60 months, had monthly payments with fixed interest rates ranging from 6.00% to 33.00%, and had various original maturity dates through December 2030.

As of June 30, 2026, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $1.9 million and a fair value of $0.3 million. As of December 31, 2025, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $2.9 million and a fair value of $0.6 million. Prosper places loans on non-accrual status when they are over 120 days past due. As of June 30, 2026 and December 31, 2025, Borrower Loans in non-accrual status had a fair value of $0.3 million and $0.4 million, respectively.

5. Credit Card

Credit Card Derivative

Prosper recognizes unrealized and settled gains and losses on the Credit Card Derivative within Change in Fair Value of Financial Instruments on the accompanying consolidated statements of operations. These settled gains and losses primarily consist of interest income and debt sales on charged off balances, less Coastal program fees, credit losses and fraud losses.

For the three months ended June 30, 2026 and 2025, the Company recognized $3.3 million of unrealized gains and $0.5 million of unrealized losses, respectively, from estimated fair value changes on the Credit Card Derivative. For the six months ended June 30, 2026 and 2025, the Company recognized $7.7 million of unrealized gains and $2.3 million of unrealized losses, respectively, from estimated fair value changes on the Credit Card Derivative. Changes from settled transactions underlying the Credit Card Derivative were gains of $1.6 million and losses of $3.0 million for the three months ended June 30, 2026 and 2025, respectively, and gains of $2.8 million and losses of $7.8 million for the six months ended June 30, 2026 and 2025, respectively.

Receivable from Credit Card Partner

Fair value gains and losses on the Receivable from Credit Card Partner, which effectively consists of the underlying Credit Card receivables securitized through PMCC 2024-1 (as discussed at Note 7, Securitizations), are also recognized within Change in Fair Value of Financial Instruments. These gains and losses include changes related to estimated future cash flows, as well as actual charge-offs and debt sale recoveries. For the three months ended June 30, 2026, and 2025, the Company recognized fair value losses of $3.8 million and $4.9 million, respectively, related to the Receivable from Credit Card Partner, which primarily consisted of net charge-offs. For the six months ended June 30, 2026, and 2025, the Company recognized fair value losses of $7.9 million and $7.0 million, respectively, related to the Receivable from Credit Card Partner, which primarily consisted of net charge-offs.

As of June 30, 2026 and December 31, 2025, the outstanding principal balance of Credit Card receivables held by PMCC 2024-1 was $89.8 million and $90.1 million, respectively.

Program Fees

The Company records revenue from various fees generated from the Credit Card program and PMCC 2024-1, including interchange fees, annual fees and late fees, net of a portion of the interchange fees that must be remitted to Coastal. These fees are included in Transaction Fees, Net on the accompanying consolidated statements of operations. For the three months ended June 30, 2026 and 2025, these fees totaled $7.4 million and $5.7 million, respectively, and for the six months ended June 30, 2026 and 2025, these fees totaled $14.2 million and $11.5 million, respectively.

Servicing Obligation and Fees

Under the program agreement, Prosper is responsible for servicing the entire underlying Credit Card portfolio. Coastal pays the Company a 1% per annum servicing fee on the daily outstanding principal balance of receivables designated as Coastal Allocations, which is approximately 5% of the portfolio. To the extent these servicing fees do not exceed the market servicing rate a market participant would require to service the entire Credit Card portfolio, the Company records a servicing obligation liability and measures it at fair value through the servicing period. The net balance of this servicing obligation liability is included in Other Liabilities on the accompanying condensed consolidated balance sheets (see Note 10, Other Liabilities). Changes in the fair value of the servicing obligation liability are recorded in Servicing Fees, Net on the accompanying condensed consolidated statements of operations, and totaled a loss of $0.7 million and a gain of $0.5 million for the three months ended June 30, 2026 and 2025, respectively, and a loss of $0.7 million and a gain of $1.0 million for the six months ended June 30, 2026 and 2025, respectively. No servicing asset or obligation is recognized for the Credit Card receivables securitized within PMCC 2024-1, which is a consolidated entity.

6. Servicing Assets

Prosper accounts for Servicing Assets at their estimated fair values with changes in fair values recorded in Servicing Fees, Net on the accompanying condensed consolidated statement of operations. The initial asset or liability is recognized in Gain (Loss) on the Sale of Borrower Loans on the condensed consolidated statements of operations when the Company sells Borrower Loans to unrelated third-party buyers through the Whole Loan Channel and the servicing rights are retained. The Servicing Assets are measured at fair value throughout the servicing period. The Company recognized gains from the initial recognition of Servicing Assets on the sale of Borrower Loans in the amounts of $4.7 million and $3.4 million for the three months ended June 30, 2026 and 2025, respectively, and $9.0 million and $6.2 million for the six months ended June 30, 2026

and 2025, respectively. These amounts are recorded in Loss on Sale of Borrower Loans on the condensed consolidated statements of operations, and are offset primarily by incentives provided to loan buyers at the time of sale.

As of June 30, 2026, Borrower Loans that were sold but for which Prosper retained servicing rights had a total outstanding principal balance of $4.1 billion, original terms to maturity of 24, 36, 48, 60 or 72 months, monthly payments with fixed interest rates ranging from 5.75% to 33.00%, and various original maturity dates through June 2032. As of December 31, 2025, Borrower Loans that were sold but for which Prosper retained servicing rights had a total outstanding principal balance of $3.8 billion, original terms to maturity of either 24, 36, 48 or 60 months, monthly payments with fixed interest rates ranging from 5.75% to 33.00%, and various original maturity dates through December 2030.

Contractually-specified personal loan servicing fees and ancillary fees totaling $11.8 million and $9.4 million for the three months ended June 30, 2026 and 2025, respectively, and $23.3 million and $19.5 million for the six months ended June 30, 2026 and 2025, respectively, are included in the condensed consolidated statements of operations in Servicing Fees, Net.

Fair Value Valuation Method

Prosper uses a discounted cash flow valuation methodology generally consisting of developing an estimate of future cash flows that are expected to occur over the life of a financial instrument and then discounts those cash flows at a rate of return that results in the fair value amount.

Significant unobservable inputs presented in the table within Note 8 below are those that Prosper considers significant to the estimated fair values of the Level 3 Servicing Assets. The following is a description of the significant unobservable inputs provided in the table.

Market Servicing Rate

Prosper estimates adequate market servicing rates that would fairly compensate a substitute servicer should one be required, which includes the profit that would be demanded in the marketplace. This rate is stated as a fixed percentage of outstanding principal balance on a per annum basis. With the assistance of a valuation specialist, Prosper estimates these market servicing rates based on observable market rates for other loan types in the industry and bids from subservicing providers, adjusted for the unique loan attributes that are present in the specific loans that Prosper sells and services and information from backup service providers.

In September 2025, as a result of an updated assessment of market rates, the Company lowered the estimated base market servicing rate used to value its Servicing Asset from 63.3 basis points to 59.3 basis points.

Discount Rate

The discount rate is a rate of return used to discount future expected cash flows to arrive at a present value, which represents the fair value of the loan servicing rights. We use a range of discount rates for the Servicing Assets based on comparable observed valuations of similar assets and publicly available disclosures related to servicing valuations, with comparability adjustments made to account for differences with Prosper’s servicing assets.

Default Rate

The default rate presented in Note 8 is an annualized, average estimate considering all Borrower Loan categories (i.e., risk ratings and duration), and represents an aggregate of conditional default rate curves for each credit grade or Borrower Loan category. Each point on a particular Borrower Loan category’s curve represents the percentage of principal expected to default per period based on the term and age of the underlying Borrower Loans. The assumption regarding defaults directly reduces servicing revenues because the amount of servicing revenues received is based on the amount collected each period.

Prepayment Rate

The prepayment rate presented in Note 8 is an annualized, average estimate considering all Borrower Loan categories (i.e., risk ratings and duration), and represents an aggregate of conditional prepayment rate curves for each credit grade or Borrower Loan category. Each point on a particular Borrower Loan category’s curve represents the percentage of principal expected to prepay per period based on the term and age of the underlying Borrower Loans. Prepayments reduce servicing revenues as they shorten the period over which we expect to collect fees on the Borrower Loans, which is used to project future servicing revenues.

7. Securitizations

Personal Loan Securitizations

Prosper served as the sole sponsor of two securitizations of unsecured personal whole loans facilitated through the Company’s marketplace that were previously held in consolidated warehouse trusts: PMIT 2023-1 in September 2023 and PMIT 2024-1 in March 2024, respectively. These transactions benefit the Company by reducing the financing costs associated with the underlying Borrower Loans. Both securitizations issued senior notes and residual certificates to finance the purchase of Borrower Loans. The notes were sold to third-party investors and a majority-owned affiliate of the sole sponsor of the securitizations, PFL, retained the residual certificates. In addition to the residual certificates, Prosper’s continued involvement includes servicing responsibilities over the life of the underlying loans.

PMIT 2023-1 and PMIT 2024-1 (together, the “PMITs”) are deemed VIEs, and the Company consolidates them as the primary beneficiary. Through Prosper’s role as the servicer, it has the power to direct the activities that most significantly affect the PMITs’ economic performance. Additionally, because the Company holds the residual certificates, it has a variable interest that could potentially be significant to the PMITs. In evaluating whether Prosper is the primary beneficiary, management considers both qualitative and quantitative factors regarding the nature, size and form of the Company’s involvement with the PMITs. Management assesses whether Prosper is the primary beneficiary of the PMITs on an on-going basis. For the PMITs, the creditors have no recourse to the general credit of Prosper and the liabilities of the PMITs can only be settled by their respective assets. Additionally, the assets of the PMITs can be used only to settle obligations of the PMITs. Because Prosper consolidates the PMITs’ securitization trusts, the Borrower Loans held in those trusts are included in Borrower Loans, at Fair Value, and the notes sold to third-party investors are presented in Notes Issued by Securitization Trusts on the condensed consolidated balance sheets. Because Prosper holds 100% of the residual certificates issued by the PMITs, they eliminate through consolidation and are thus not presented on the condensed consolidated balance sheets.

PMIT 2023-1

In September 2023, Prosper closed the PMIT 2023-1 securitization. Based on the terms of the underlying agreements, the PWIIT Warehouse Line (see Note 11, Debt) agreed to contribute Borrower Loans with an aggregate outstanding principal balance of $275.9 million as of the established cutoff date of August 31, 2023, to the PMIT 2023-1 securitization. On September 25, 2023, these Borrower Loans, with an updated aggregate outstanding principal balance of $266.1 million, were contributed to the PMIT 2023-1 securitization.

The notes under PMIT 2023-1 were issued in five classes: Class A in the amount of $165.5 million, Class B in the amount of $25.4 million, Class C in the amount of $25.1 million, Class D in the amount of $22.3 million and Class E in the amount of $13.1 million (collectively, the “2023-1 Notes”). The Class A, Class B, Class C, Class D and Class E notes bear interest at fixed rates of 7.06%, 7.48%, 8.29%, 11.24% and 15.49%, respectively. Principal and interest payments began in October 2023 and are payable monthly. The 2023-1 Notes are recorded at amortized cost, net of original issue discounts totaling approximately $0.8 million. These discounts, along with debt issuance costs incurred of $2.7 million, are deferred and amortized into interest expense over the contractual lives of the 2023-1 Notes using the effective interest method.

As of June 30, 2026 the outstanding principal and accrued interest of the 2023-1 Notes was $26.1 million, secured by an aggregate outstanding principal balance of $24.0 million of borrower loans included in Borrower Loans, at Fair Value on the condensed consolidated balance sheets, and $4.1 million in cash collections held in collateral and reserve accounts included in Restricted Cash on the condensed consolidated balance sheets. As of December 31, 2025, the outstanding principal and accrued interest of the 2023-1 Notes was $43.3 million, secured by an aggregate outstanding principal balance of $43.1 million of borrower loans included in Borrower Loans, at Fair Value on the condensed consolidated balance sheets, and $5.4 million in cash collections held in collateral and reserve accounts included in Restricted Cash on the condensed consolidated balance sheets.

On July 15, 2026, the Company, in its capacity as servicer, exercised its optional clean-up call rights to terminate PMIT 2023-1 after the outstanding principal balance of Borrower Loans fell below the contractual threshold of 10% of the original outstanding principal balance. In connection with the clean-up call, performing Borrower Loans with an aggregate principal balance of $20.2 million were sold to an unaffiliated third-party investor for proceeds of $20.0 million, while $2.7 million of non-performing loans were retained by the Company’s wholly-owned subsidiary, PFL. The outstanding principal and interest on the Notes of $26.3 million was fully repaid using proceeds from the loan sale, existing restricted cash and a $1.4 million cash contribution from the Company. Following the clean-up call, the PMIT 2023-1 securitization trust was dissolved, and will be deconsolidated from the Company’s financial statements in the third quarter of 2026.

PMIT 2024-1

In March 2024, Prosper closed the PMIT 2024-1 securitization. Based on the terms of the underlying agreements, the PWIT Warehouse Line (see Note 11, Debt) agreed to contribute Borrower Loans with an aggregate outstanding principal balance of $148.9 million as of the established cutoff date of February 14, 2024, to the PMIT 2024-1 securitization. On March 28, 2024, these Borrower Loans, with an updated aggregate outstanding principal balance of $138.0 million, were contributed to the PMIT 2024-1 securitization.

The notes under PMIT 2024-1 were issued in four classes: Class A in the amount of $105.2 million, Class B in the amount of $10.8 million, Class C in the amount of $10.3 million and Class D in the amount of $10.2 million (collectively, the “2024-1 Notes”). The Class A, Class B, Class C and Class D notes bear interest at fixed rates of 6.12%, 6.13%, 6.96%, 10.98%, respectively. The 2024-1 Notes are recorded at amortized cost, net of debt issuance costs incurred of $1.5 million. These debt issuance costs are deferred and amortized into interest expense over the contractual lives of the 2024-1 Notes using the effective interest method.

As of June 30, 2026, the outstanding principal and accrued interest of the 2024-1 Notes was $14.0 million, secured by an aggregate outstanding principal balance of $13.6 million of borrower loans included in Borrower Loans, at Fair Value on the condensed consolidated balance sheets, and $2.4 million in cash collections held in collateral and reserve accounts included in Restricted Cash on the condensed consolidated balance sheets. As of December 31, 2025, the outstanding principal and accrued interest of the 2024-1 Notes was $25.1 million, secured by an aggregate outstanding principal balance of $25.4 million of borrower loans included in Borrower Loans, at Fair Value on the condensed consolidated balance sheets, and $3.4 million in cash collections held in collateral and reserve accounts included in Restricted Cash on the condensed consolidated balance sheets.

Credit Card Securitization

PMCC 2024-1

In November 2024, PMI closed the PMCC 2024-1 Transaction, a securitization of Credit Card receivables previously classified as Prosper Allocations on Coastal’s balance sheet. Based on the terms of the underlying agreements, PMI and Coastal agreed to transfer Credit Card receivables with an aggregate outstanding principal balance of $90.9 million as of the established cutoff date of September 30, 2024, to the PMCC 2024-1 Transaction. On November 1, 2024, these Credit Card receivables, with an updated aggregate outstanding principal balance of approximately $94.7 million, along with associated interest receivable of $2.2 million, were transferred to the PMCC 2024-1 Transaction. PMCC 2024-1 issued notes and a residual certificate to finance the payment to Coastal for the transfer of the Credit Card receivables. The notes were sold to third-party investors, and the residual certificate was acquired by PMI, as the sole sponsor of the PMCC 2024-1 Transaction. In addition to the residual certificate, PMI’s continued involvement includes servicing responsibilities over the life of the underlying Credit Card receivables, including curing any Asset Deficiency (see below).

PMCC 2024-1 is structured as a limited liability company and is wholly owned by PMI, but is considered a deemed VIE due to its lack of equity at risk. PMI consolidates it as the primary beneficiary, as through its role as the servicer, the Company has the power to direct the activities that most significantly affect the PMCC 2024-1 Transaction’s economic performance. Additionally, because the Company holds the residual certificate, it has a variable interest that could potentially be significant to PMCC 2024-1. In evaluating whether PMI is the primary beneficiary, management considers both qualitative and quantitative factors regarding the nature, size and form of the Company’s involvement with PMCC 2024-1. Management assesses whether PMI is the primary beneficiary of the VIE on an on-going basis. For PMCC 2024-1, the creditors have no recourse to the general credit of Prosper and the liabilities of the limited liability company can only be settled by PMCC 2024-1’s assets. Additionally, the assets of PMCC 2024-1 can be used only to settle obligations of PMCC 2024-1. Because the transfers of the underlying Credit Card receivables from Coastal to PMCC 2024-1 do not meet the requirements for sales accounting treatment under ASC 860, Transfers and Servicing, the Company has recorded on its condensed consolidated balance sheet a Receivable from Credit Card Partner that effectively consists of the underlying Credit Card receivables securitized through PMCC 2024-1. Notes sold to third-party investors are presented in Notes Issued by Securitization Trust on the condensed consolidated balance sheets. The only residual certificate issued by PMCC 2024-1 is held by PMI, and thus eliminates through consolidation and is not presented on the condensed consolidated balance sheets.

The notes under PMCC 2024-1 were issued in four classes: Class A in the amount of $46.3 million, Class B in the amount of $10.7 million, Class C in the amount of $11.1 million and Class D in the amount of $14.8 million (collectively, the “PMCC 2024-1 Notes”). The Class A, Class B, Class C and Class D notes bear interest at fixed rates of 6.15%, 7.15%, 10.05% and 14.64%, respectively. No principal payments will be due on the PMCC 2024-1 Notes for the first two years of the PMCC 2024-1 Transaction, through November 1, 2026, which is referred to as the revolving period. At the end of that two-year period, if the revolving period is not extended the PMCC 2024-1 Transaction enters the amortization period, whereby the PMCC 2024-1 Notes will be repaid in accordance with a waterfall calculation, generally tied to the collections of the associated Credit Card receivables. Interest is payable monthly. These notes are recorded at amortized cost, net of original issue discounts totaling $0.3 million. These discounts, along with debt issuance costs incurred of $2.2 million, are being deferred and amortized into interest expense over the two-year revolving period of the notes using the effective interest method. As of June 30, 2026, the outstanding principal and accrued interest of the PMCC 2024-1 Notes was $83.2 million, secured by a total outstanding balance of Credit Card receivables (inclusive of principal, interest and fees) of $93.8 million, and approximately $0.9 million in cash held in a reserve account and included in Restricted Cash on the condensed consolidated balance sheets. As of December 31, 2025, the outstanding principal and accrued interest of the PMCC 2024-1 Notes was $83.2 million, secured by a total outstanding balance of Credit Card receivables (inclusive of principal, interest and fees) of $94.3 million, and approximately $0.9 million in cash held in a reserve account and included in Restricted Cash on the condensed consolidated balance sheets.

The Company recorded Total Interest Income, Net related to the PMCC 2024-1 Credit Card receivables and Notes Issued by Securitization Trust in the amounts of $3.5 million and $4.2 million for the three months ended June 30, 2026 and 2025, respectively, and $6.8 million and $9.3 million for the six months ended June 30, 2026 and 2025, respectively.

Until the end of the amortization period, PMCC 2024-1 is required to cure any Asset Deficiency, which is deemed to have occurred if the ratio of (i) notes outstanding to (ii) the aggregate pool balance plus amounts in the excess funding account minus the dilutional balance, exceeds 89.5%. In order to maintain this ratio, PMI will purchase additional Credit Card receivables from the accounts designated as eligible for the securitization, and may designate additional eligible accounts from Prosper Allocations, as necessary.

8. Fair Value of Assets and Liabilities

Prosper measures the fair value of assets and liabilities in accordance with its fair value hierarchy which prioritizes information used to measure fair value and the effect of fair value measurements on earnings and provides for enhanced disclosures determined by the level within the hierarchy of information used in the valuation. The Company applies this framework whenever other standards require (or permit) assets or liabilities to be measured at fair value.

Assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value:

Level 1 — The valuation is based on quoted prices in active markets for identical instruments.

Level 2 — The valuation is based on observable inputs such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation methodologies for which all significant assumptions are observable in the market.

Level 3 — The valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the instrument. Level 3 valuations are typically performed using pricing models, discounted cash flow methodologies, or similar methodologies, which incorporate management’s own estimates of assumptions that market participants would use in pricing the instrument or valuations that require significant management judgment or estimation.

Fair values of assets or liabilities are determined based on the fair value hierarchy, which requires an entity to maximize the use of quoted prices and observable inputs and to minimize the use of unobservable inputs when measuring fair value. Various valuation methodologies are utilized, depending on the nature of the financial instrument, including the use of market prices for identical or similar instruments, or discounted cash flow models. When possible, active and observable market data for identical or similar financial instruments are utilized. Alternatively, fair value is determined using assumptions that management believes a market participant would use in pricing the asset or liability.

Financial Instruments Recorded at Fair Value

The fair value of the Borrower Loans, Notes, Servicing Assets and Liabilities and loan trailing fee liability are estimated using discounted cash flow methodologies based upon a set of valuation assumptions. The primary assumptions used in the discounted cash flow model include default and prepayment rates primarily derived from historical performance and discount rates applied to each credit grade based on the perceived credit risk of each credit grade.

The fair value of the Credit Card Derivative is also estimated using a discounted cash flow model using certain assumptions. The key assumptions used in the valuation include default and prepayment rates derived primarily from historical performance and relevant market data, adjusted as necessary based on the perceived credit risk of the underlying portfolio. In addition, discount rates based on estimates of the rates of return that investors would require when investing in similar credit card portfolios are applied to the individual freestanding derivatives.

In order to determine the fair value of the Receivable from Credit Card Partner, Prosper uses a discounted cash flow model to estimate the fair value of the securitization residual interest, given that the Company is the sole sponsor of the securitization and is entitled to all residual cash flows it generates. This involves utilizing certain assumptions similar to those used to value the Credit Card Derivative, including the discount and prepayment rates. Additional assumptions are adjusted to reflect the specific characteristics of the securitized Credit Card receivables, including the average portfolio interest rate and the default rate. The residual interest fair value is then added to the applicable securitization advance rate applied to the outstanding balance of the Credit Card receivables to calculate the estimated fair value of Receivable from Credit Card Partner.

The Convertible Preferred Stock Warrant Liability is valued using a Black-Scholes option pricing model. Refer to Note 13 for further details.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value (in thousands):


June 30, 2026	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans, at Fair Value (Notes 4 and 7)	$	—	$	—	$	258,205	$	258,205
Receivable from Credit Card Partner, at Fair Value (Notes 5 and 7)	—		—		99,328		99,328
Servicing Assets (Note 6)	—		—		19,659		19,659
Credit Card Derivative (Note 5)	—		—		56,027		56,027
Total Assets	$	—	$	—	$	433,219	$	433,219
Liabilities:
Notes, at Fair Value	$	—	$	—	$	221,070	$	221,070
Convertible Preferred Stock Warrant Liability	—		—		696		696
Loan Trailing Fee Liability (Note 10)	—		—		3,710		3,710
Credit Card servicing obligation liability (Note 5)	—		—		10,001		10,001
Total Liabilities	$	—	$	—	$	235,477	$	235,477


December 31, 2025	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans, at Fair Value (Notes 4 and 7)	$	—	$	—	$	309,737	$	309,737
Receivable from Credit Card Partner, at Fair Value (Notes 5 and 7)	—		—		99,865		99,865
Servicing Assets (Note 6)	—		—		17,402		17,402
Credit Card Derivative (Note 5)	—		—		48,290		48,290
Total Assets	$	—	$	—	$	475,294	$	475,294
Liabilities:
Notes, at Fair Value (Note 4)	$	—	$	—	$	243,900	$	243,900
Convertible Preferred Stock Warrant Liability (Note 13)	—		—		230,060		230,060
Loan Trailing Fee Liability (Note 10)	—		—		3,328		3,328
Credit Card servicing obligation liability (Note 5)	—		—		9,276		9,276
Total Liabilities	$	—	$	—	$	486,564	$	486,564

As PMI’s Borrower Loans, Receivable from Credit Card Partner, Credit Card Derivative, Servicing Assets, Notes, Credit Card servicing obligation liability, loan trailing fee liability and Convertible Preferred Stock Warrant Liability do not trade in an active market with readily observable prices, the Company uses significant unobservable inputs to measure the fair value of these assets and liabilities. Financial instruments are categorized in the Level 3 valuation hierarchy based on the significance of unobservable factors in the overall fair value measurement. These fair value estimates may also include observable, actively quoted components derived from external sources. As a result, gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable and unobservable inputs. Prosper did not transfer any assets or liabilities in or out of Level 3 for the six months ended June 30, 2026 and 2025.

Significant Unobservable Input Ranges

The following tables present quantitative information about the ranges of significant unobservable inputs used for the Company’s Level 3 fair value measurements at June 30, 2026 and December 31, 2025:


	Range
Borrower Loans and Notes:	June 30, 2026	December 31, 2025
Discount rate	5.2% - 16.8%	5.0% - 15.5%
Default rate	2.4% - 13.9%	1.9% - 14.5%

For Borrower Loans and Notes funded through the Note Channel, the Company utilizes the same projected cash flows to estimate the fair values of these financial instruments.


	Range
Servicing Assets:	June 30, 2026	December 31, 2025
Discount rate	15.0% - 25.0%	15.0% - 25.0%
Default rate	2.0% - 13.9%	2.0% - 15.0%
Prepayment rate	8.7% - 35.1%	13.3% - 35.6%
Market servicing rate (1) (2)	0.593% - 0.842%	0.593% - 0.842%

(1) Servicing assets associated with loans enrolled in a relief program offered by the Company as of June 30, 2026 and December 31, 2025 were measured using a market servicing rate assumption of 84.2 basis points. This rate was estimated using a multiplier consistent with observable market rates for other loan types, applied to the base market servicing rate assumption.

(2) Excludes collection fees that would be passed on to a hypothetical third-party servicer. As of June 30, 2026 and December 31, 2025, the market rate for collection fees and non-sufficient fund fees was assumed to be 11 basis points and 10 basis points, respectively, for a total market servicing rate range of 70.3 - 95.2 basis points and 69.3 - 94.2 basis points, respectively.


	Range
Loan Trailing Fee Liability:	June 30, 2026	December 31, 2025
Discount rate	15.0% - 25.0%	15.0% - 25.0%
Default rate	2.0% - 13.9%	2.0% - 15.0%
Prepayment rate	8.7% - 35.1%	13.3% - 35.6%

Ranges of inputs are not applied to the Credit Card Derivative and Credit Card servicing obligation liability, as they are valued at the portfolio level. Refer below for a summary of the significant unobservable inputs associated with those Level 3 fair value measurements.

Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis

The following tables present additional information about Level 3 Borrower Loans, Loans Held for Sale and Notes measured at fair value on a recurring basis (in thousands):


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held For Sale		Notes		Total
Balance as of January 1, 2026	$	309,737	$	—	$	(243,900)	$	65,837
Purchases of Borrower Loans/Issuance of Notes	73,639		1,467,833		(71,984)		1,469,488
Principal repayments	(108,802)		—		83,623		(25,179)
Borrower Loans sold to third parties	(2,139)		(1,467,833)		—		(1,469,972)
Other changes	(799)		—		408		(391)
Changes in fair value	(13,431)		—		10,783		(2,648)
Balance as of June 30, 2026	$	258,205	$	—	$	(221,070)	$	37,135


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance as of January 1, 2025	$	461,785	$	—	$	(283,030)	$	178,755
Purchases of Borrower Loans/Issuance of Notes	85,833		1,194,264		(84,582)		1,195,515
Principal repayments	(155,053)		—		94,781		(60,272)
Borrower Loans sold to third parties	(1,277)		(1,194,264)		—		(1,195,541)
Other changes	(1,046)		—		337		(709)
Changes in fair value	(13,948)		—		8,493		(5,455)
Balance as of June 30, 2025	$	376,294	$	—	$	(264,001)	$	112,293


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance at April 1, 2026	$	281,083	$	—	$	(230,283)	$	50,800
Purchase of Borrower Loans/Issuance of Notes	37,913		769,615		(37,638)		769,890
Principal repayments	(53,374)		—		41,680		(11,694)
Borrower Loans sold to third parties	(1,347)		(769,615)		—		(770,962)
Other changes	(363)		—		113		(250)
Change in fair value	(5,707)		—		5,058		(649)
Balance at June 30, 2026	$	258,205	$	—	$	(221,070)	$	37,135


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance at April 1, 2025	$	415,389	$	—	$	(272,500)	$	142,889
Purchase of Borrower Loans/Issuance of Notes	42,895		661,430		(42,443)		661,882
Principal repayments	(75,217)				46,917		(28,300)
Borrower Loans sold to third parties	(601)		(661,430)		—		(662,031)
Other changes	(558)		—		57		(501)
Change in fair value	(5,614)		—		3,968		(1,646)
Balance at June 30, 2025	$	376,294	$	—	$	(264,001)	$	112,293

The outstanding balance of Loans Held for Sale was reduced to zero following the contribution of loans held in consolidated warehouse trusts to the PMIT 2023-1 and PMIT 2024-1 securitization transactions, as more fully described in Note 7, Securitizations. The Company has not designated any new personal loans as Loans Held for Sale since these transactions, other than loans that are purchased and immediately sold through the Whole Loan Channel. This movement of loans through the Whole Loan Channel is reflected in the accompanying consolidated statements of cash flows and the Level 3 tables above. Details on the fair value of the Servicing Asset associated with loans sold through the Whole Loan Channel are discussed below.

The following table presents additional information about the Level 3 Receivable from Credit Card Partner, measured at fair value on a recurring basis for the three and six month period ending June 30, 2026 (in thousands):


	Receivable from Credit Card Partner
Balance as of January 1, 2026	$	99,865
Purchases of Credit Card principal receivables	33,176
Principal repayments on Credit Card receivables	(24,963)
Other changes	(833)
Change in fair value	(7,917)
Balance as of June 30, 2026	$	99,328


	Receivable from Credit Card Partner
Balance as of January 1, 2025	$	104,153
Purchases of Credit Card principal receivables	39,248
Principal repayments on Credit Card receivables	(34,198)
Other changes	299
Change in fair value	(7,011)
Balance as of June 30, 2025	$	102,491


	Receivable from Credit Card Partner
Fair value at April 1, 2026	$	99,393
Purchases of Credit Card principal receivables	16,819
Principal repayments on Credit Card receivables	(12,767)
Other changes	(290)
Change in fair value	(3,827)
Fair Value at June 30, 2026	$	99,328


	Receivable from Credit Card Partner
Fair value at April 1, 2025	$	103,201
Purchases of Credit Card principal receivables	18,039
Principal repayments on Credit Card receivables	(13,909)
Other changes	72
Change in fair value	(4,912)
Fair Value at June 30, 2025	$	102,491

The following tables present additional information about Level 3 Servicing Assets measured at fair value on a recurring basis for the three and six month periods ending June 30, 2026 and 2025 (in thousands):


	Servicing Assets
Balance as of January 1, 2026	$	17,402
Additions	9,006
Less: Changes in fair value	(6,749)
Balance as of June 30, 2026	$	19,659


	Servicing Assets
Balance as of January 1, 2025	$	13,718
Additions	6,186
Less: Changes in fair value	(5,466)
Balance as of June 30, 2025	$	14,438


	Servicing Assets
Fair Value at April 1, 2026	$	18,421
Additions	4,743
Less: Changes in fair value	(3,505)
Balance at June 30, 2026	$	19,659


	Servicing Assets
Balance at April 1, 2025	$	13,456
Additions	3,418
Less: Changes in fair value	(2,436)
Balance at June 30, 2025	$	14,438

The following tables present additional information about the Level 3 Credit Card Derivative measured at fair value on a recurring basis for the three and six month periods ending June 30, 2026 and 2025 (in thousands):


	Credit Card Derivative
Balance as of January 1, 2026	$	48,290
Change in fair value	7,737
Balance as of June 30, 2026	$	56,027


	Credit Card Derivative
Balance as of January 1, 2025	$	38,739
Change in fair value	(2,296)
Balance as of June 30, 2025	$	36,443


	Credit Card Derivative
Fair Value at April 1, 2026	$	52,718
Change in fair value	3,309


Balance at June 30, 2026	$	56,027


	Credit Card Derivative
Fair Value at April 1, 2025	$	36,903
Change in fair value	(460)


Balance at June 30, 2025	$	36,443

The following tables present additional information about the Level 3 Credit Card servicing obligation liability (a component of Other Liabilities on the condensed consolidated balance sheets) measured at fair value on a recurring basis for the three and six month periods ending June 30, 2026 and 2025 (in thousands):


	Credit Card Servicing Obligation Liability
Balance as of January 1, 2026	$	9,276
Change in fair value	725
Balance as of June 30, 2026	$	10,001


	Credit Card Servicing Obligation Liability
Balance as of January 1, 2025	$	8,947
Change in fair value	(983)
Balance as of June 30, 2025	$	7,964


	Credit Card Servicing Obligation Liability
Fair Value at April 1, 2026	$	9,276
Change in fair value	725
Balance at June 30, 2026	$	10,001


	Credit Card Servicing Obligation Liability
Fair Value at April 1, 2025	$	8,433
Change in fair value	(469)
Balance at June 30, 2025	$	7,964

The following tables present additional information about the Level 3 Convertible Preferred Stock Warrant Liability measured at fair value on a recurring basis for the three and six month periods ending June 30, 2026 and 2025 (in thousands):


	Convertible Preferred Stock Warrant Liability
Balance as of January 1, 2026	$	230,060
Reclassification to Convertible Preferred Stock upon exercise of Series E-1 and F Warrants (Note 13)	(171,356)
Change in fair value	(58,008)
Balance as of June 30, 2026	$	696


	Convertible Preferred Stock Warrant Liability
Balance as of January 1, 2025	$	261,249
Change in fair value	2,133
Balance as of June 30, 2025	$	263,382


	Convertible Preferred Stock Warrant Liability
Balance as of April 1, 2026	$	85,115
Reclassification to Convertible Preferred Stock upon exercise of Series F Warrants (Note 13)	(90,360)
Change in fair value	5,941
Balance as of June 30, 2026	$	696


	Convertible Preferred Stock Warrant Liability
Balance as of April 1, 2025	$	204,023
Change in fair value	59,359
Balance as of June 30, 2025	$	263,382

Loan Trailing Fee

The fair value of the Loan Trailing Fee represents the present value of the expected monthly Loan Trailing Fee payments, which takes into consideration certain assumptions related to expected prepayment rates and default rates using a discounted cash flow model. The assumptions used are the same as those used for the valuation of Servicing Assets, as described below.

The following tables present additional information about the Level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis for the three and six month periods ending June 30, 2026 and 2025 (in thousands):


	Loan Trailing Fee Liability
Balance as of January 1, 2026	$	3,328
Issuances	1,514
Cash Payment of Loan Trailing Fee	(1,424)
Change in Fair Value	292
Balance as of June 30, 2026	$	3,710


	Loan Trailing Fee Liability
Balance as of January 1, 2025	$	3,004
Issuances	1,172
Cash Payment of Loan Trailing Fee	(1,293)
Change in Fair Value	246
Balance as of June 30, 2025	$	3,129


	Loan Trailing Fee Liability
Fair Value at April 1, 2026	$	3,491
Issuances	806
Cash Payment of Loan Trailing Fee	(715)
Change in Fair Value	128
Fair Value at June 30, 2026	$	3,710


	Loan Trailing Fee Liability
Fair Value at April 1, 2025	$	2,933
Issuances	650
Cash Payment of Loan Trailing Fee	(641)
Change in Fair Value	187
Fair Value at June 30, 2025	$	3,129

Significant Recurring Level 3 Fair Value Input Sensitivity

Key economic assumptions and the sensitivity of the fair value to immediate changes in those assumptions at June 30, 2026 and December 31, 2025 for Borrower Loans and Loans Held for Sale are presented in the following table (in thousands, except percentages).


Borrower Loans	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	258,205		$	309,737
Weighted-average discount rate	9.25		%	8.53		%
Weighted-average default rate	11.37		%	11.79		%

Fair value resulting from:
100 basis point increase in discount rate	$	255,899		$	307,014
200 basis point increase in discount rate	253,648			304,354
Fair value resulting from:
100 basis point decrease in discount rate	$	260,567		$	312,526
200 basis point decrease in discount rate	262,988			315,384

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	256,134		$	307,253
Applying a 1.2 multiplier to default rate	254,061			304,767
Fair value resulting from:
Applying a 0.9 multiplier to default rate	$	260,275		$	312,219
Applying a 0.8 multiplier to default rate	262,347			314,699

Key economic assumptions and the sensitivity of the fair value to immediate changes in those assumptions at June 30, 2026 and December 31, 2025 for Notes are presented in the following table (in thousands, except percentages).


Notes	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	221,070		$	243,900
Weighted-average discount rate	9.39		%	8.67		%
Weighted-average default rate	11.17		%	11.48		%

Fair value resulting from:
100 basis point increase in discount rate	$	219,093		$	241,752
200 basis point increase in discount rate	217,163			239,655
Fair value resulting from:
100 basis point decrease in discount rate	$	223,093		$	246,096
200 basis point decrease in discount rate	225,171			248,352

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	219,297		$	241,944
Applying a 1.2 multiplier to default rate	217,523			239,987
Fair value resulting from:
Applying a 0.9 multiplier to default rate	$	222,842		$	245,853
Applying a 0.8 multiplier to default rate	224,615			247,806

Key economic assumptions and the sensitivity of the fair value to immediate changes in those assumptions at June 30, 2026 and December 31, 2025 for Servicing Assets is presented in the following table (in thousands, except percentages).


Servicing Assets	June 30, 2026			December 31, 2025
Fair value, using the following assumptions	$	19,659		$	17,402
Weighted-average market servicing rate	0.598		%	0.598		%
Weighted-average prepayment rate	21.68		%	21.65		%
Weighted-average default rate	11.16		%	11.84		%

Fair value resulting from:
Market servicing rate increase of 0.025%	$	18,534		$	16,398
Market servicing rate decrease of 0.025%	20,784			18,405

Fair value resulting from:
Applying a 1.1 multiplier to prepayment rate	$	19,352		$	16,949
Applying a 0.9 multiplier to prepayment rate	19,967			17,863

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	19,136		$	17,114
Applying a 0.9 multiplier to default rate	20,195			17,689

Key economic assumptions and the sensitivity of the fair value to immediate changes in those assumptions at June 30, 2026 and December 31, 2025 for Receivable from Credit Card Partner is presented in the following table (in thousands, except percentages).


Receivable from Credit Card Partner:	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	99,328		$	99,865
Discount rate on Credit Card receivable cash flows	24.56		%	23.15		%
Prepayment rate on Credit Card receivables	8.23		%	8.22		%
Default rate on Credit Card receivables	15.00		%	15.00		%

Fair value resulting from:
100 basis point increase in discount rate	$	99,160		$	99,689
200 basis point increase in discount rate	98,998			99,518
Fair value resulting from:
100 basis point decrease in discount rate	$	99,499		$	100,045
200 basis point decrease in discount rate	99,676			100,231

Fair value resulting from:
Applying a 1.1 multiplier to prepayment rate	$	99,147		$	99,676
Applying a 0.9 multiplier to prepayment rate	99,511			100,055

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	96,901		$	97,376
Applying a 0.9 multiplier to default rate	101,857			102,459

Key economic assumptions and the sensitivity of the fair value to immediate changes in those assumptions at June 30, 2026 and December 31, 2025 for the Credit Card Derivative is presented in the following table (in thousands, except percentages).


Credit Card Derivative	June 30, 2026			December 31, 2025
Fair value, based on the following notional amount and rate assumptions:	$	56,027		$	48,290
Outstanding Credit Card Principal Balance, Prosper and Coastal Allocations	358,860			330,409
Discount rate on Prosper Allocations	24.56		%	23.15		%
Discount rate on Coastal Program Fee	24.56		%	23.15		%
Prepayment rate applied to Credit Card portfolio	8.23		%	8.22		%
Default rate applied to Credit Card portfolio (1)	14.82		%	15.33		%

Fair value resulting from:
100 basis point increase in both discount rates	$	55,304		$	47,654
200 basis point increase in both discount rates	54,601			47,036
Fair value resulting from:
100 basis point decrease in both discount rates	$	56,771		$	48,945
200 basis point decrease in both discount rates	57,537			49,619

Fair value resulting from:
Applying a 1.1 multiplier to prepayment rate	$	55,263		$	47,625
Applying a 0.9 multiplier to prepayment rate	56,802			48,964

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	45,531		$	38,254
Applying a 0.9 multiplier to default rate	66,859			58,663
(1) Refer to Change in Estimate section below.

Key economic assumptions and the sensitivity of the fair value to immediate changes in those assumptions at June 30, 2026 and 2025 for the Credit Card servicing obligation liability is presented in the following table (in thousands, except percentages).


Credit Card servicing obligation liability:	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	10,001		$	9,276
Discount rate on Credit Card portfolio servicing obligation	24.56		%	23.15		%
Prepayment rate applied to Credit Card portfolio	8.23		%	8.22		%
Default rate applied to Credit Card portfolio (1)	14.82		%	15.33		%
Market servicing rate	2.00		%	2.00		%

Fair value resulting from:
Market servicing rate increase of 0.10%	$	10,523		$	9,761
Market servicing rate decrease of 0.10%	9,478			8,792

Fair value resulting from:
Applying a 1.1 multiplier to prepayment rate	$	9,890		$	9,174
Applying a 0.9 multiplier to prepayment rate	10,112			9,380

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	9,774		$	9,056
Applying a 0.9 multiplier to default rate	10,232			9,501
(1) Refer to Change in Estimate section below.

These sensitivities are hypothetical and should be evaluated with care. The effect on fair value of a variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects.

Change in Estimate

The Company periodically reviews the underlying assumptions and data sources that drive the fair values of its financial instruments. Accordingly, effective March 31, 2026, and on a prospective basis, the Company applied a default rate to the projected cash flows that comprise the Credit Card Derivative and Credit Card servicing obligation based solely on the recent credit performance of its underlying Credit Card portfolio. Previously, the default rate was estimated based on a combination of the Company’s recent credit performance, and the credit performance of comparable third-party credit card products. This change was made to better align with how management believes a market participant would estimate the fair value of these cash flows, given there is now more than four years of historical data available for the underlying Credit Card portfolio. The effect of this change in estimate increased the Credit Card Derivative by $5.2 million and increased the Credit Card servicing obligation by $0.7 million as of March 31, 2026.

Assets and Liabilities Not Recorded at Fair Value

The following table presents the fair value hierarchy for assets, and liabilities not recorded at fair value (in thousands):


June 30, 2026	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and Cash Equivalents	$	55,064	$	55,064	$	—	$	—	$	55,064
Restricted Cash - Cash and Cash Equivalents	158,813		158,813		—		—		158,813
Restricted Cash - Certificates of Deposit	1,510		—		1,510		—		1,510
Accounts Receivable	12,994		—		12,994		—		12,994
Total Assets	$	228,381	$	213,877	$	14,504	$	—	$	228,381
Liabilities:
Accounts Payable and Accrued Liabilities	$	58,948	$	—	$	58,948	$	—	$	58,948
Transaction Fee Refund Liability (Note 17)	17,973		—		—		17,973		17,973
Payable to Investors	148,189		—		148,189		—		148,189
Notes Issued by Securitization Trust	122,518		—		124,401		—		124,401
Term Loan (Note 11)	75,000		—		77,007		—		77,007
Total Liabilities	$	422,628	$	—	$	408,545	$	17,973	$	426,518


December 31, 2025	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and Cash Equivalents	$	46,755	$	46,755	$	—	$	—	$	46,755
Restricted Cash - Cash and Cash Equivalents	92,854		92,854		—		—		92,854
Restricted Cash - Certificates of Deposit	1,509		—		1,509		—		1,509
Accounts Receivable	11,947		—		11,947		—		11,947
Total Assets	$	153,065	$	139,609	$	13,456	$	—	$	153,065
Liabilities:
Accounts Payable and Accrued Liabilities	$	56,501	$	—	$	56,501	$	—	$	56,501
Transaction Fee Refund Liability (Note 17)	17,191		—		—		17,191		17,191
Payable to Investors	77,604		—		77,604		—		77,604
Notes Issued by Securitization Trust	149,902		—		151,325		—		151,325
Term Loan (Note 11)	75,000		—		76,089		—		76,089
Total Liabilities	$	376,198	$	—	$	361,519	$	17,191	$	378,710

The estimated fair values of Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable and Accrued Liabilities, Transaction Fee Refund Liability and Payable to Investors approximate their carrying values because of their short-term nature.

9. Goodwill

Prosper’s goodwill balance of $36.4 million at December 31, 2025 did not change during the six months ended June 30, 2026. The Goodwill is associated with the Company’s Personal Loan reporting unit, which has a negative carrying amount as of June 30, 2026. The Company recorded no goodwill impairment for the six months ended June 30, 2026 and 2025.

10. Other Liabilities

Other Liabilities consist of the following for the periods presented (in thousands):


	June 30, 2026		December 31, 2025
Deferred revenue	$	11,989	$	11,819
Credit Card servicing obligation liability (Notes 2 and 5)	10,001		9,276
Operating lease liabilities (Note 16)	7,419		9,193
Loan trailing fee liability	3,710		3,328
Deferred income tax liability	839		839
Other	306		323
Total Other Liabilities	$	34,264	$	34,778

Additionally, disclosures around the operating lease liabilities are included in Note 16.

11. Debt

Term Loans

On November 14, 2022, the Company entered into a Credit Agreement (the “2022 Credit Agreement”) with a third-party financial institution, which provided for a $75.0 million senior secured credit facility (the “2022 Term Loan”), originally set to mature on November 14, 2026. Prior to that maturity date, on November 14, 2025, the Company entered into a new Credit Agreement (the “2025 Credit Agreement”) with a separate third-party financial institution. The 2025 Credit Agreement provides for a $75.0 million senior unsecured credit facility (the “2025 Term Loan”), maturing on November 14, 2030. Proceeds received from the 2025 Term Loan were used to repay all of the outstanding principal and interest on the 2022 Term Loan, totaling $68.4 million, and the 2022 Credit Agreement was terminated at that time. Refer to the following section for a description of key terms and features of the 2025 Credit Agreement.

2025 Credit Agreement

Proceeds received from the 2025 Term Loan were net of $0.2 million in debt issuance costs, which are being amortized over the life of the 2025 Term Loan to Interest Expense on Term Loan using the effective interest method. The 2025 Credit Agreement also provides the option to upsize the credit facility by up to $25.0 million upon the Company’s request and subject to lender approval. As of June 30, 2026, the Company had not exercised this option, and no amount was due under this incremental facility.

Borrowings under the 2025 Term Loan accrue interest at SOFR plus 7.0% per annum, and interest is payable in cash on a quarterly basis. The 2025 Term Loan is a senior unsecured credit facility.

The 2025 Credit Agreement contains a number of covenants that, among other things and subject to certain exceptions and thresholds, restrict the Company’s ability to incur new indebtedness (including finance leases); incur certain liens; and make fundamental changes to the business. In addition, the 2025 Credit Agreement contains certain financial covenants with which the Company must remain in compliance as of the last business day of each quarter during the life of the 2025 Term Loan:

•a minimum tangible net worth

•a minimum net liquidity

•a maximum leverage ratio

The Company is in compliance with all covenants as of June 30, 2026, as well as prior quarterly periods. In addition, the Company believes it is in compliance with all covenants through the date of issuance of these condensed consolidated financial statements. The 2025 Credit Agreement also contains certain customary representations and warranties and affirmative covenants, and certain reporting obligations. The 2025 Term Loan lender will be permitted to accelerate all outstanding borrowings, terminate outstanding commitments and exercise other specified remedies upon the occurrence of certain events of

default (subject to certain grace periods and exceptions), which include, among other things, payment defaults, breaches of representations and warranties, covenant defaults, certain cross-defaults to other indebtedness, certain events of bankruptcy and insolvency, certain judgments and change of control.

Prosper Warehouse Trust Agreements

Prosper consolidated two warehouse VIEs, PWIT and PWIIT (together, the “Warehouse VIEs”), that each entered into an agreement (together, the “Warehouse Agreements”) with certain lenders for committed revolving lines of credit (“Warehouse Lines”) during 2018 and 2019, respectively.

In conjunction with the PMIT 2023-1 and PMIT 2024-1 securitizations (see Note 7, Securitizations), all outstanding loans held by the Warehouse VIEs were transferred to either the individual securitization transactions or PFL, with proceeds used to pay down the outstanding principal and interest on the Warehouse Lines. Both facilities are now terminated.

12. Net Income (Loss) Per Share

PMI computes its net income (loss) per share in accordance with ASC Topic 260, Earnings Per Share (“ASC Topic 260”). Under ASC Topic 260, basic net income (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period and excludes the effects of any potentially dilutive securities.

PMI’s net income (loss) per share is calculated using the two-class method in accordance with ASC Topic 260. The two-class method allocates earnings that otherwise would have been available to common shareholders to holders of participating securities. Management considers all series of our Convertible Preferred Stock to be participating securities due to their rights to participate in dividends with Common Stock. As such, earnings allocated to these participating securities, which include participation rights in undistributed earnings, are subtracted from net income to determine total undistributed earnings to be allocated to common stockholders.

All participating securities are excluded from basic weighted-average common shares outstanding. Prior to any conversion to common shares, each series of Prosper’s Convertible Preferred Stock is entitled to participate on an if-converted basis in distributions of earnings, when and if declared by the Board of Directors (the “Board”), that are made to common stockholders and consequently, these shares were considered participating securities. During the six months ended June 30, 2026 and 2025, certain shares issued as a result of the early exercise of stock options which are subject to a repurchase right by PMI were entitled to receive non-forfeitable dividends during the vesting period and consequently, are considered participating securities.

Basic and diluted net income (loss) per share were calculated as follows for the periods presented (in thousands, except share and per share amounts):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Numerator:
Net Income (Loss)	$	6,381	(57,727)		$	71,032	$	(7,352)
Plus: Return on Share Purchase and Forfeiture	355		—		355		—
Less: Net Income Allocated to Participating Securities	(5,356)		—		(54,653)		—
Net Income (Loss) Attributable to Common Stockholders	$	1,380	$	(57,727)	$	16,734	$	(7,352)
Denominator:
Weighted average shares used in computing basic net income (loss) per share	78,924,011		77,698,227		78,589,166		77,603,124
Effect of dilutive securities:
Stock options	49,917,681		—		52,542,572		—
Common stock warrants	111,765		—		284,572		—
Convertible preferred stock warrants	56,230,169		—		105,875,709		—
Weighted-average shares used in computing diluted net income (loss) per share	185,183,626		77,698,227		237,292,019		77,603,124
Net Income (Loss) Per Share – Basic	$	0.02	$	(0.74)	$	0.21	$	(0.09)
Net Income (Loss) Per Share – Diluted	$	0.01	$	(0.74)	$	0.07	$	(0.09)

The following common stock equivalents were excluded from the computation of diluted net income (loss) per share for the periods presented because including them would have been anti-dilutive:


	Three Months Ended June 30,		Six Months Ended June 30,
	2026	2025	2026	2025
	(shares)	(shares)	(shares)	(shares)
Excluded securities:
Convertible preferred stock issued and outstanding, excluding shares held by consolidated VIE	315,222,140	158,365,655	265,665,203	158,365,655
Stock options issued and outstanding	27,484,623	80,099,705	24,462,457	79,467,722
Common stock warrants issued and outstanding	89,763	330,163	167,475	330,163
Series E-1 convertible preferred stock warrants	—	35,544,141	—	35,544,141
Series F convertible preferred stock warrants	—	177,720,704	—	177,720,704
Total common stock equivalents excluded from diluted net income (loss) per common share computation	342,796,526	452,060,368	290,295,135	451,428,385

13. Convertible Preferred Stock, Convertible Preferred Stock Warrant Liability and Common Stock

Convertible Preferred Stock and Warrants

Under PMI’s amended and restated certificate of incorporation, preferred stock is issuable in series, and the Board is authorized to determine the rights, preferences, and terms of each series.

On July 13, 2020, the Company established Prosper Grantor Trust (“PGT”), a revocable grantor trust administered by an independent trustee, with the intention of contributing assets to PGT for the benefit of PMI employees in the event of a change in control through an Eligible Employee Retention Plan. PGT was determined to be a VIE and PMI was determined to be its primary beneficiary due to the fact that the Company, through its role as the grantor, has both (a) the power to direct the activities that most significantly affect the VIE’s economic performance, including its funding decisions and investment strategy, and (b) the obligation to absorb losses that could be potentially significant to the economic performance of the VIE by virtue of the Company’s requirement to fund PGT in the event that it is unable to meet its obligations to PMI’s employees. PMI also maintains a contingent call liability on PGT’s assets in the event of a bankruptcy. As a result, PGT is fully consolidated into PMI’s condensed consolidated financial statements.

On July 21, 2020, PGT entered into a Stock Transfer Agreement with a PMI investor to purchase 34,670,420 shares of Series A Convertible Preferred Stock and 16,577,495 shares of Series B Convertible Preferred Stock for nominal consideration. On June 30, 2026, PGT entered into a Stock Transfer Agreement with another PMI investor to purchase 55,395 shares of Series A Convertible Preferred Stock, 58,165 shares of Series A-1 Convertible Preferred Stock and 244,130 shares of Common Stock for nominal consideration. Upon execution of the Stock Transfer Agreements, these shares were purchased by a consolidated VIE of the Company, and thus the difference between the fair value of the repurchased preferred stock and the purchase price is included in Convertible Preferred Stock Held by Consolidated VIE on PMI’s accompanying condensed consolidated balance sheets. The difference between the fair value of the repurchased common stock and the purchase price is included in Common

Stock and Additional Paid-In Capital on PMI’s accompanying condensed consolidated balance sheets. These shares remain outstanding for legal purposes and retain their voting rights, but are excluded from the earnings per share calculation.

On May 5, 2026, one PMI investor forfeited 289,560 shares of Series A Convertible Preferred Stock to the Company for no consideration. These shares are no longer considered issued and outstanding, and are excluded from the earnings per share calculation.

The number of authorized, issued and outstanding shares, their par value and liquidation preference for each series of convertible preferred stock as of June 30, 2026 are disclosed in the table below (amounts in thousands except share and par value amounts):


Convertible Preferred Stock	Par Value		Authorized Shares	Outstanding and Issued Shares		Liquidation Preference, Outstanding Shares
Series A	$	0.01	68,558,220	66,138,625	*	$	19,076
Series A-1	$	0.01	24,760,915	22,515,315	*	45,031
Series B	$	0.01	35,775,880	35,127,160	*	21,190
Series C	$	0.01	24,404,770	24,404,770		70,075
Series D	$	0.01	23,888,640	23,888,640		165,000
Series E-1	$	0.01	35,544,141	35,544,141		30,000
Series E-2	$	0.01	16,858,078	—		—
Series F	$	0.01	177,720,707	177,115,839		149,489
Series G	$	0.01	37,249,497	37,249,497		50,000
Total			444,760,848	421,983,987		$	549,861

* Series A, Series A-1 and Series B Convertible Preferred Stock totals are inclusive of 34,725,815, 58,165 and 16,577,495 shares, respectively, held by PGT, a consolidated VIE.

Dividends

Dividends on shares of the Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F and Series G convertible preferred stock are payable only when, as, and if declared by the Board. No dividends will be paid with respect to the common stock until any declared dividends on the Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F, and Series G convertible preferred stock have been paid or set aside for payment to the Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F, and Series G convertible preferred stockholders. After payment of any such dividends, any additional dividends or distributions will be distributed among all holders of common stock and preferred stock in proportion to the number of shares of common stock that would be held by each such holder if all shares of preferred stock were converted to common stock at the then-effective conversion rate. The Series A-1 convertible preferred shares have no dividend rights. To date, no dividends have been declared on any of PMI’s preferred stock or common stock.

Conversion

Under the terms of PMI’s amended and restated certificate of incorporation, the holders of preferred stock have the right to convert such preferred stock into common stock at any time. In addition, all preferred stock automatically converts into common stock (i) immediately prior to the closing of an initial public offering that values Prosper at least at $2 billion and that results in aggregate proceeds to Prosper of at least $100 million or (ii) upon a written request from the holders of at least 60% of the voting power of the outstanding preferred stock (on an as-converted basis), provided that (i) the Series A-1 convertible preferred stock shall not be converted without at least 14% of the voting power of the outstanding Series A-1 convertible preferred stock; (ii) the Series D shall not be converted without at least 60% of the voting power of the outstanding Series D; (iii) the Series E-1 and Series E-2 shall not be converted without at least 60% of the voting power of the outstanding Series E-1 and Series E-2, voting together as a single class; (iv) the Series F shall not be converted without at least 60% of the voting power of the outstanding Series F, and (v) the shares of Series G Preferred Stock will not be automatically converted unless the holders of at least 60% of the outstanding shares of Series G Preferred Stock approve such conversion. In addition, if a holder of the Series A convertible preferred stock has converted any of the Series A convertible preferred stock, then all of such holder’s shares of Series A-1 convertible preferred stock also will be converted upon a liquidation event (as defined under the certificate of incorporation). In lieu of any fractional shares of common stock to which a holder would otherwise be entitled, PMI shall pay such holder cash in an amount equal to the fair market value of such fractional shares, as determined by the Board. At present, each of the Series A, Series B, Series C, Series D, Series E-1, Series E-2, and Series F convertible preferred stock converts into PMI common stock at a 1:1 ratio. The Series A-1 convertible preferred stock converts into common stock at

a 1,000,000:1 ratio and the Series G convertible preferred stock converts into common stock at a 1:1.36 ratio. The Series G convertible preferred stock conversion ratio reflects the Series G true-up that occurred at end of the vesting period for the Series E-2 and Series F Preferred Stock warrants.

For the Series G true-up, the conversion price of the Series G Convertible Preferred Stock was reduced to a number equal to the Series G Preferred Stock original issuance price, divided by the quotient obtained by dividing the Series G true-up amount by the total number of Series G Preferred Stock issued as of the Series G closing date. The Series G true-up amount means the aggregate number of shares of Series G Preferred Stock that would have been issued to the purchasers of the Series G Preferred Stock on the Series G closing date, if warrants to purchase shares of Series E-2 Preferred Stock or Series F Preferred Stock that were exercisable or exercised as of the true-up time (end of vesting period) had been exercisable or exercised as of such Series G closing date.

Liquidation Rights

PMI’s convertible preferred stock has been classified as temporary equity on the condensed consolidated balance sheets. The preferred stock is not redeemable; however, in the event of a voluntary or involuntary liquidation, dissolution, change in control or winding up of PMI, holders of the convertible preferred stock may have the right to receive its liquidation preference under the terms of PMI’s certificate of incorporation.

Each holder of Series E-1, Series E-2, and Series F convertible preferred stock is entitled to receive prior and in preference to any distribution of proceeds from a liquidation event (as defined under the certificate of incorporation) to the holders of Series A, Series B, Series C, Series D, Series G and Series A-1 convertible preferred stock or common stock, an amount per share for (i) each share of Series E-1 convertible preferred stock equal to the sum of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share, (ii) each share of Series E-2 convertible preferred stock equal to the sum of two-thirds the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share, and (iii) each share of Series F convertible preferred stock equal to the sum of two-thirds of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share.

After the payment or setting aside for payment to the holders of Series E-1, Series E-2, and Series F convertible preferred stock, each holder of Series A, Series B, Series C and Series D, Series E-2, Series F, and Series G convertible preferred stock is entitled to receive, on a pari passu basis, prior to and in preference to any distribution of proceeds from a liquidation event (as defined under the certificate of incorporation) to the holders of Series A-1 convertible preferred stock or common stock, (i) an amount per share for each share of Series E-2 and Series F convertible preferred stock equal to the sum of one-third of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share, and (ii) an amount per share for each share of Series A, Series B, Series C, Series D and Series G convertible preferred stock equal to the sum of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share.

After the payment or setting aside for payment to the holders of Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F, and Series G convertible preferred stock, the holders of Series A-1 convertible preferred stock are entitled to receive, prior and in preference to any distribution of proceeds to the holders of common stock, an amount per share for each such share of Series A-1 convertible preferred stock equal to the sum of the liquidation preference specified for such share and all declared but unpaid dividends, if any, on such share.

After the payment or setting aside for payment to the holders of Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F, Series G, and Series A-1 convertible preferred stock, the entire remaining proceeds legally available for distribution will be distributed pro rata to the holders of Series A convertible preferred stock and common stock in proportion to the number of shares of common stock held by them assuming the Series A convertible preferred stock has been converted into shares of common stock at the then effective conversion rate, provided that the maximum aggregate amount per share of Series A convertible preferred stock which the holders of Series A convertible preferred stock shall be entitled to receive is three times the original issue price for the Series A convertible preferred stock.

At present, the liquidation preferences are equal to $0.29 per share for the Series A convertible preferred stock, $2.00 per share for the Series A-1 convertible preferred stock, $0.60 per share for the Series B convertible preferred stock, $2.87 per share for the Series C convertible preferred stock, $6.91 per share for the Series D convertible preferred stock, $0.84 per share for the Series E-1 convertible preferred stock, $0.84 per share for the Series E-2 convertible preferred stock, $0.84 per share for the Series F convertible preferred stock and $1.34 per share for the Series G convertible preferred stock.

Voting

Each holder of shares of convertible preferred stock is entitled to the number of votes equal to the number of shares of common stock into which such shares of convertible preferred stock could be converted and has voting rights and powers equal

to the voting rights and powers of the common stock. The holders of convertible preferred stock and the holders of common stock vote together as a single class (except with respect to certain matters that require separate votes or as required by law), and are entitled to notice of any stockholders’ meeting in accordance with the by-laws of PMI.

Convertible Preferred Stock Warrant Liability

Series E-1 Warrants

In connection with the Settlement and Release Agreement dated November 17, 2016 among PMI, its wholly owned subsidiary Prosper Funding LLC (“PFL”) and Colchis, on December 16, 2016, PMI issued the First Series E-1 Warrant for 20,267,135 shares of Series E-1 convertible preferred stock. The Second Series E-1 Warrant for an additional 15,277,006 shares of Series E-1 convertible preferred stock was granted on the signing of the Consortium Purchase Agreement (as described in Note 13 of PMI’s 10-K for the year ended December 31, 2025) on February 27, 2017. On March 31, 2026, one warrant holder exercised all of the outstanding 35,544,141 shares of Series E-1 Warrants at the exercise price of $0.01 per share for total proceeds of $0.4 million. The estimated fair value of these warrants as of the date of the exercise was approximately $38.7 million, which was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock at that time.

For the three and six months ended June 30, 2026 (prior to the full exercise of the Series E-1 Warrants, as discussed above), the Company recognized $13.5 million of income from the re-measurement of the fair value of the warrants. For the three and six months ended June 30, 2025, the Company recognized $9.6 million and $0.4 million of expense, respectively, from the re-measurement of the fair value of the warrants. The income or expense resulting from the remeasurement of the fair value of the warrants is recorded in Change in Fair Value of Convertible Preferred Stock Warrants on the condensed consolidated statements of operations.

To determine the fair value of the Series E-1 Warrants, the Company first determined the value of a share of Series E-1 Convertible Preferred Stock. To determine the fair value of the Convertible Preferred Stock, the Company first derived the business equity value (“BEV”) of the Company using a variety of valuation methods, including discounted cash flow models and market based methods, as deemed appropriate under the circumstances applicable at the valuation date. Once the Company determined an estimated BEV, the option pricing method (“OPM”) was used to allocate the BEV to the various classes of equity, including the preferred stock. The concluded per share value for the Series E-1 Convertible Preferred Stock was utilized as an input to the Black-Scholes option pricing model.

Series F Warrants

In connection with the Consortium Purchase Agreement on February 27, 2017, PMI issued warrants to purchase up to 177,720,706 shares of PMI's Series F convertible preferred stock at $0.01 per share. The warrants expire ten years from the date of issuance, and the following is a listing of exercises of Series F Warrants as of June 30, 2026:

•On July 30, 2025, one warrant holder exercised 51,614,124 shares of Series F Warrants for cash proceeds of $0.5 million. On the exercise date, the aggregate fair value of these warrants was approximately $73.3 million, which was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

•On March 19, 2026, one warrant holder exercised 41,833,904 shares of Series F Warrants for total proceeds of $0.4 million. The estimated fair value of these warrants as of the date of exercise, totaling $42.3 million, was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

•On May 15, 2026, one warrant holder exercised 41,833,904 shares of Series F Warrants for total proceeds of $0.4 million. The estimated fair value of these warrants as of the date of exercise, totaling $42.7 million, was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

•On June 15, 2026, one warrant holder exercised 41,833,904 shares of Series F Warrants for total proceeds of $0.4 million. The estimated fair value of these warrants as of the date of exercise, totaling $47.7 million, was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

Following these exercises, a total of 604,868 Series F Warrants remain outstanding as of June 30, 2026. For the three months ended June 30, 2026 and 2025, Prosper recognized $5.9 million and $49.8 million of expense, respectively, from the re-measurement of the fair value of the warrants. For the six months ended June 30, 2026 and 2025, the Company recognized $44.5 million of income and $1.8 million of expense, respectively, from the re-measurement of the fair value of the warrants. The income or expense resulting from changes in the fair value of the warrant is recorded through Change in Fair Value of Convertible Preferred Stock Warrants on the condensed consolidated statements of operations.

To determine the fair value of the Series F Warrants, the Company first determines the value of a share of Series F Convertible Preferred Stock. To determine the fair value of the Convertible Preferred Stock, the Company first derives the BEV using valuation methods, including a combination of methods, as deemed appropriate under the circumstances applicable at the valuation date. Once the Company determines an estimated BEV, the OPM is used to allocate the BEV to the various classes of Prosper's equity, including its preferred stock. The concluded per share value for the Series F Convertible Preferred Stock warrants utilizes the Black-Scholes option pricing model.

The Company determined the fair value of the outstanding Series F Warrants utilizing the following assumptions as of the following dates:


	June 30, 2026		December 31, 2025
Volatility	54.0	%	57.0	%
Risk-free interest rate	4.10	%	3.50	%
Expected term (in years)	2.50		2.75
Dividend yield	—	%	—	%

These assumptions were determined using the same criteria described above for the Series E-1 warrants.

Common Stock

PMI, through its Amended and Restated Certificate of Incorporation, is the sole issuer of common stock and related options, RSUs and warrants. On February 16, 2016, PMI amended and restated its Certificate of Incorporation to, among other things, effect a 5-for-1 forward stock split. On September 20, 2017, PMI further amended its Amended and Restated Certificate of Incorporation to increase the number of shares of common stock authorized for issuance. PMI has the authority to issue is 1,069,760,848 total number of shares of stock, consisting of 625,000,000 shares of common stock, at $0.01 par value per share, and 444,760,848 shares of preferred stock, also at $0.01 par value per share. On December 23, 2019, the Company repurchased 2,196,665 shares of Common Stock from an investor. As of June 30, 2026, 80,871,884 shares of common stock were issued and 79,935,949 shares of common stock were outstanding. As of December 31, 2025, 79,138,710 shares of common stock were issued and 78,202,775 shares of common stock were outstanding. Each holder of common stock is entitled to one vote for each share of common stock held.

As disclosed above, on June 30, 2026, one PMI equity investor transferred 244,130 shares of Common Stock to PGT. Those shares remain legally issued and outstanding, but are held by a consolidated VIE.

Common Stock Issued upon Exercise of Stock Options

For the six months ended June 30, 2026, PMI issued 1,229,353 shares of Common Stock upon the exercise of vested options for cash proceeds of $33 thousand.

Common Stock Issued upon Exercise of Warrants

On April 26, 2026, one warrant holder exercised 503,821 shares of Common Stock warrants via a cashless exercise. Following this exercise, no Common Stock warrants remained outstanding.

14. Stock-Based Compensation

PMI grants equity awards primarily through the Company’s 2025 Equity Incentive Plan (the “2025 Plan”), which was approved by the Board on April 7, 2025, and was approved by a majority of the Company’s stockholders on April 25, 2025. As a result of the Board and stockholders’ respective approvals, the Company’s 2015 Equity Incentive Plan (as amended, the “2015 Plan”) was terminated, replaced and superseded by the 2025 Plan, except that any grants awarded under the 2015 Plan will remain in effect pursuant to their terms.

The 2025 Plan provides for grants in the form of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units, and unrestricted stock. The maximum number of shares of common stock which may be issued under the 2025 Plan as of the date of the Board’s approval is 6,344,184 shares of common stock, plus any shares of common stock returned to the 2025 Plan (which, together with the 6,344,184 shares, may not exceed 91,417,252 shares of common stock). Under the 2025 Plan, incentive stock options may be granted solely to the Company’s employees, including its officers. Awards other than incentive stock options may be granted to the Company’s directors, consultants or employees, including its officers. The 2025 Plan is administered by the Board, which in turn has delegated authority to administer the plans to the Compensation Committee of the Board. The 2025 Plan will remain in effect through April 7, 2035, unless sooner terminated under the terms of the 2025 Plan.

Stock Option Activity

Stock option activity under the 2015 Plan and 2025 Plan is summarized for the six months ended June 30, 2026 below:


	Options Issued and Outstanding	Weighted Average Exercise Price
Balance as of January 1, 2026	76,886,581	$	0.17
Options granted	4,243,880	$	0.71
Options exercised	(1,229,353)	$	0.03
Options forfeited	(2,661,316)	$	0.37
Options expired	(3,800,533)	$	0.02
Balance as of June 30, 2026	73,439,259	$	0.21
Options vested and expected to vest as of June 30, 2026	70,717,063	$	0.21
Options vested and exercisable as of June 30, 2026	64,342,024	$	0.15

Other Information Regarding Stock Options

The weighted-average remaining contractual term for options outstanding as of June 30, 2026 is 3.89 years.

The fair value of options granted to employees is estimated on the grant date using the Black-Scholes option valuation model. This valuation model for stock-based compensation expense requires PMI to make assumptions and judgments about the variables used in the calculation, including the fair value of PMI’s common stock, the expected term (the period of time that the options granted are expected to be outstanding), the volatility of PMI’s common stock, a risk-free interest rate, and expected dividends. Given the absence of a publicly traded market, the Company considered numerous objective and subjective factors to determine the fair value of PMI’s common stock at each grant date. These factors included, but were not limited to: (i) contemporaneous valuations of common stock performed by unrelated third-party specialists, (ii) the prices for PMI’s preferred stock sold to outside investors, (iii) the rights, preferences and privileges of PMI’s preferred stock relative to PMI’s common stock, (iv) the lack of marketability of PMI’s common stock, (v) developments in the business, (vi) secondary transactions of PMI’s common and preferred shares, and (vii) the likelihood of achieving a liquidity event, such as an initial public offering or a merger or acquisition of Prosper, given prevailing market conditions. As PMI’s stock is not publicly traded, volatility for stock options is based on an average of the historical volatilities of the common stock of several entities with characteristics similar to those of PMI. The expected term assumptions were determined based on the vesting terms, exercise terms and contractual lives of the options using the simplified method. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. PMI uses an expected dividend yield of zero as it does not anticipate paying any dividends in the foreseeable future.

PMI also estimates forfeitures of unvested stock options. Expected forfeitures are based on the Company’s historical experience. To the extent actual forfeitures differ from the estimates, the difference will be recorded as a cumulative adjustment in the period estimates are revised. No compensation cost is recorded for options that do not vest.

The fair values of PMI’s stock option awards granted were estimated at the dates of grant using the Black-Scholes model with the following average assumptions for the periods presented:


	Three Months Ended June 30,			Six Months Ended June 30,
	2026		2025	2026		2025
Volatility of common stock	60.00	%	n/a	62.62	%	65.42	%
Risk-free interest rate	4.14	%	n/a	4.03	%	4.03	%
Expected life (in years)	5.8 years		n/a	5.9 years		6.0 years
Dividend yield	—	%	n/a	—	%	—	%

Restricted Stock Unit Activity

PMI grants RSUs to certain employees that are subject to three-year or four-year vesting terms and the occurrence of a liquidity event. The following table summarizes the Company’s RSU activity for six months ended June 30, 2026:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested as of January 1, 2026	2,559,633	$	1.03
Granted	3,618,453	0.42
Unvested as of June 30, 2026	6,178,086	$	0.67

Share Based Compensation

The following table presents the amount of stock-based compensation related to stock-based awards granted to employees recognized in Prosper’s condensed consolidated statements of operations for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Origination and servicing	$	47	$	27	$	149	$	55
Sales and marketing	18		18		33		35
General and administrative	266		304		613		586
Total stock-based compensation	$	331	$	349	$	795	$	676

As of June 30, 2026, the unamortized stock-based compensation expense, adjusted for forfeiture estimates, related to unvested stock-based awards was approximately $1.9 million, which will be recognized over a remaining weighted-average vesting period of approximately 2.8 years.

15. Income Taxes

For the three months ended June 30, 2026 and 2025, PMI recognized $0.3 million and $28 thousand, respectively, of income tax expense. For the six months ended June 30, 2026 and 2025, PMI recognized $0.3 million and $56 thousand, respectively, of income tax expense. The income tax expense relates to state income tax expense and the amortization of tax deductible goodwill which gives rise to an indefinite-lived deferred tax liability. No other income tax expense or benefit was recorded for the three and six month periods ended June 30, 2026 and 2025 due to a full valuation allowance recorded against the Company’s deferred tax assets.

Management assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize our existing deferred tax assets. Management is in the process of evaluating whether it is more likely than not that the Company’s deferred tax assets will be realized, and a full valuation allowance has been recorded until management’s evaluation has been completed.

16. Leases

Prosper has operating leases for corporate offices. These leases have remaining lease terms of less than one year to approximately three years. Some of the lease agreements include options to extend the lease term for up to an additional five years. Rental expense under operating lease arrangements was $0.9 million and $0.9 million for the three months ended June 30, 2026 and 2025, respectively. Rental expense under operating lease arrangements was $1.8 million and $1.8 million for the six months ended June 30, 2026 and 2025, respectively. Additionally, Prosper subleases certain leased office space to third parties when it determines there is excess leased capacity. Sublease income from operating lease arrangements was $0.1 million and $0.1 million for the three months ended June 30, 2026 and 2025, respectively. Sublease income from operating lease arrangements was $0.2 million and $0.2 million for the six months ended June 30, 2026 and 2025, respectively

Operating Lease Right-of-Use (“ROU”) Assets

The following table summarizes the operating lease right-of-use assets as of June 30, 2026, which are included in Property and Equipment, Net on the condensed consolidated balance sheets.


	June 30, 2026
	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
ROU Assets - Office buildings	$	22,690	$	17,172	$	5,518

Lease Liabilities

Future maturities of operating lease liabilities as of June 30, 2026 are below (in thousands). The present value of the future minimum lease payments represents our operating lease liabilities as of June 30, 2026 and are included in "Other Liabilities" on the condensed consolidated balance sheets.


	June 30, 2026
Remainder of 2026	$	2,335
2027	3,834
2028	1,948
2029	411
Total future minimum lease payments	$	8,528
Less imputed interest	(1,109)
Present value of future minimum lease payments	$	7,419

Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments. Other information related to leases was as follows (dollars in thousands):


	June 30, 2026
Weighted average remaining lease term (in years)	2.09
Weighted average discount rate	11.25	%

17. Commitments and Contingencies

In the normal course of its operations, Prosper becomes involved in various legal actions. Prosper maintains provisions it considers to be adequate for such actions. Prosper does not believe it is probable that the ultimate liability, if any, arising out of any such matters will have a material effect on Prosper's financial condition, results of operations or cash flows.

Operating Commitments

PMI, along with PFL, and WebBank have entered into: (i) an Asset Sale Agreement, dated July 1, 2016, between PFL and WebBank, as most recently amended by a Seventh Amendment dated February 28, 2024 (as amended, the “Sale Agreement”); (ii) the Marketing Agreement, dated July 1, 2016, between PMI and WebBank, as most recently amended by a Seventh Amendment dated February 28, 2024 (as amended, the “Marketing Agreement”); and (iii) the Stand By Purchase Agreement, dated July 1, 2016, between PMI and WebBank, as most recently amended by a Fourth Amendment dated February 28, 2024 (as amended, the “Purchase Agreement” and, collectively with the Sale Agreement and the Marketing Agreement, the “Origination and Sale Agreements”). Under the Origination and Sale Agreements, all Borrower Loans originated through the marketplace are made by WebBank under its bank charter.

The Origination and Sale Agreements contain terms through February 1, 2027. Prosper is required, under the Origination and Sale Agreements, to maintain certain collateral requirements. In addition, pursuant to the Marketing Agreement, the marketing fee that Prosper receives in connection with the origination of each loan is partially reduced by an amount (the “Designated Amount”) calculated as a percentage of the principal amount of such loan based on the aggregate principal amount of loans originated for the applicable month. To the extent the aggregate Designated Amount for all loans originated during any month is less than $100,000 through February 1, 2027, Prosper is required to pay WebBank an amount

equal to such deficiency. Accordingly, the minimum fee is $0.6 million for the remaining six months of 2026 and $0.1 million in 2027.

Additionally, under the Origination and Sale Agreements, Prosper is required to maintain minimum net liquidity of $15.0 million at all times during the term of the agreement. Net liquidity is defined as the sum of Cash, Cash Equivalents and Available for Sale Investments. Violation of this covenant can result in termination of the contract with WebBank. As of June 30, 2026, Prosper was in compliance with the covenant.

On August 11, 2026, the Company entered into amendments to the Origination and Sale Agreements, which, among other things, (i) extend the terms of those agreements through February 1, 2029, (ii) eliminates or amends certain termination rights and the notice provisions therein and (iii) amends certain expense reimbursement and fee obligations of the Company.

Transaction Fee Refund Liability

Prosper assumed WebBank’s liability under Utah law to refund the pro-rated amount of any Transaction Fees collected in excess of 5%, in the event the underlying borrower prepaid the loan in full before full maturity. Following the passage of S.B. 230, only Borrower Loans originated prior to May 6, 2026, remain subject to this requirement, and no liability is recorded for Borrower Loans originated on or subsequent to that effective date. For the three months ended June 30, 2026 and 2025 the Company issued $6.4 million and $3.8 million, respectively, in refunds under this obligation. For the six months ended June 30, 2026 and 2025 the Company issued $11.6 million and $6.6 million, respectively, in refunds under this obligation. As of June 30, 2026 and December 31, 2025, the Company accrued $18.0 million and $17.2 million, respectively, related to anticipated future refunds under this obligation.

Loan Purchase Commitments

Prosper entered into an agreement with WebBank to purchase $32.6 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2026. Prosper will purchase these Borrower Loans within the first two business days of the quarter ending September 30, 2026.

Repurchase Obligation

Under the terms of the loan purchase agreements between Prosper and investors that participate in the Whole Loan Channel, Prosper may, in certain circumstances, become obligated to repurchase a Borrower Loan from an investor. Generally, these circumstances include the occurrence of verifiable identity theft, the failure to properly follow personal loan listing or bidding protocols or a violation of the applicable federal, state or local lending laws. Prosper recognizes a liability at fair value for the repurchase obligation when the Borrower Loans are sold. The fair value of the repurchase obligation is estimated based on historical experience. Repurchased Borrower Loans associated with violations of federal, state or local lending laws or verifiable identity theft are written off at the time of repurchase. The maximum potential amount of future payments associated with this obligation is the outstanding balances of the Borrower Loans issued to third parties through the Whole Loan Channel, which at June 30, 2026 is $4.1 billion. Prosper has accrued $0.3 million and $0.3 million as of June 30, 2026 and December 31, 2025, respectively, in regard to this obligation.

Regulatory Contingencies

Prosper accrues for contingencies when a loss from such contingencies is probable and the amount of loss can be reasonably estimated. In determining whether a loss is probable and if it is possible to quantify the amount of the estimated loss, Prosper reviews and evaluates its litigation and regulatory matters on at least a quarterly basis in light of potentially relevant factual and legal developments. If Prosper determines that an unfavorable outcome is not probable or that the amount of a loss cannot be reasonably estimated, Prosper does not accrue for a potential litigation loss. If an unfavorable outcome is probable and Prosper can estimate a range of outcomes, an amount is recorded which management considers to be the best estimate within the range of potential losses that are both probable and estimable; however, if management cannot quantify the amount of the estimated loss, then the low end of the range of the potential losses is recorded.

Cybersecurity Matter

On September 1, 2025, Prosper identified that an unauthorized third party gained access to the Company’s systems that contain proprietary and confidential information. The Company promptly initiated its cybersecurity response plans and began taking steps to investigate, contain and remediate the incident and enhance its security measures with the assistance of cybersecurity experts. The Company also informed law enforcement.

There is evidence that the unauthorized third party was able to obtain confidential, proprietary and personal information, including Social Security numbers, including through unauthorized queries made on Company databases that store customer and applicant data. There is no evidence of unauthorized access to customer accounts and funds as a result of the incident, and the Company’s customer-facing operations continued uninterrupted.

Multiple purported class-action lawsuits related to the September 2025 Incident have been filed against the Company. The federal lawsuits filed against Prosper have been consolidated into one proceeding, captioned In re: Prosper Funding, LLC Data Breach Litigation. Prosper is also subject to lawsuits filed in state courts and has received demands for mass and individual arbitrations. The Company may receive additional federal and state lawsuits and arbitration demands in the future.

The Company has accrued for various legal and cybersecurity costs incurred related to this incident that are not covered by insurance. As the lawsuits described herein above are still in their early stages, the Company is unable to accurately predict the ultimate outcome of this incident, or estimate a loss or range of loss that the Company may incur in the event of an unfavorable outcome. Accordingly, the Company has not recorded a provision for any estimated losses in respect to the incident as of June 30, 2026 and December 31, 2025.

18. Related Parties

Since Prosper’s inception, it has engaged in various transactions with its directors, executive officers, and holders of more than 10% of its voting securities, and immediate family members and other affiliates of its directors, executive officers, and 10% stockholders. Prosper believes that all of the transactions described below were made on terms no less favorable to Prosper than could have been obtained from unaffiliated third parties.

Prosper’s executive officers, directors who are not executive officers, and certain affiliates participate in its marketplace by placing bids and purchasing Notes. The aggregate amount of the Notes purchased and the income earned by parties deemed to be affiliates and related parties of Prosper for the three and six months ended June 30, 2026 and 2025, as well as the Notes outstanding as of June 30, 2026 and December 31, 2025 are summarized below (in thousands):


	Aggregate Amount of Notes Purchased the Three Months Ended June 30,				Interest Earned on Notes the Three Months Ended June 30,
Related Party	2026		2025		2026		2025
Executive officers and management	$	9	$	3	$	2	$	2
Directors (excluding executive officers and management)	—		—		—		—
Total	$	9	$	3	$	2	$	2


	Aggregate Amount of Notes Purchased the Six Months Ended June 30,				Interest Earned on Notes the Six Months Ended June 30,
Related Party	2026		2025		2026		2025
Executive officers and management	$	18	$	6	$	5	$	5
Directors (excluding executive officers and management)	—		—		—		—
Total	$	18	$	6	$	5	$	5


	Notes Balance as of
Related Party	June 30, 2026		December 31, 2025
Executive officers and management	$	61	$	69
Directors (excluding executive officers and management)	—		—
Total	$	61	$	69

19. Significant Concentrations

Prosper is dependent on third-party funding sources such as banks, credit unions, asset managers, investment funds and insurance companies to provide the funds to allow WebBank to originate Borrower Loans that the third-party funding sources will later purchase. Prosper receives all of its personal loan transaction fee revenue from WebBank for its services in facilitating originations of Borrower Loans issued by WebBank. The rate of the transaction fee for each individual Borrower Loan is based on the term and credit grade of the Borrower Loan and currently ranges from 1.00% to 9.99% for newly originated loans. No individual borrower or investor accounted for 10% or more of consolidated net revenue for any of the periods presented.

Of all Borrower Loans originated in the three months ended June 30, 2026, three individual third parties purchased 43.3%, 13.1% and 11.4% of all Borrower Loans originated. For the three months ended June 30, 2025, four individual third parties purchased 17.0%, 14.0%, 12.9%, and 10.9% of all Borrower Loans originated. Of all Borrower Loans originated in the six months ended June 30, 2026, one individual third party purchased 47.8% of all Borrower Loans originated. For the six months ended June 30, 2025, four individual third parties purchased 15.5%, 13.8%, 13.5%, and 13.4% of all Borrower Loans originated. These purchases indicate that a significant portion of Prosper’s business is dependent on funding through the Whole Loan Channel, through which 95% and 94% of Borrower Loans were originated for the three months ended June 30, 2026 and 2025, respectively, and through which 95% and 93% of Borrower Loans were originated for the six months ended June 30, 2026 and 2025, respectively.

Additionally, the net revenue the Company generates from its Credit Card product is largely dependent on its partnership with Coastal. In accordance with the Program Agreement between Prosper and Coastal, the receivables associated with these Credit Cards are maintained on the balance sheet of Coastal. This includes both the securitized (for accounting purposes) and non-securitized portions of the Credit Card portfolio.

20. Segments

Effective in the fourth quarter of 2025, the Company updated its operating and reportable segments to align with strategic business and management reporting changes. This realignment is reflected in the periodic financial reports provided to the Company’s Chief Executive Officer, who serves as the chief operating decision maker (“CODM”), for the purposes of evaluating performance, making operating decisions and allocating resources. As a result of these changes, the Company’s former Home Equity segment was eliminated and the related products and services are now combined with the Personal Loan segment, which includes both Personal Loan products and services, as well as general corporate expenses. The Company now has two reportable and operating segments: Personal Loan and Credit Card. Segment information presented for the three months ended June 30, 2025, has been recast to conform to the current reportable segment presentation.

The CODM evaluates the financial performance of the Company’s segments based upon segment revenues, as well as segment Adjusted EBITDA, a non-GAAP profitability measure. The Company does not prepare segment assets for the CODM to use to allocate resources or to assess performance of the segments and, therefore, total segment assets have not been disclosed.

The tables below present segment Total Net Revenue, significant segment operating expenses, and segment Adjusted EBITDA reconciled to Net Income (Loss) Before Taxes, as well as interest income and expense included in segment Adjusted EBITDA, for the periods indicated (in thousands).


	Three Months Ended June 30, 2026
	Personal Loan		Credit Card		Total
Total Net Revenue	$	60,843	$	10,515	$	71,358
Impact of interest rates on fair value of loans held in consolidated trusts	18		—		18
Less: Segment Operating Expenses (1)
Compensation and Benefits (2)	(18,440)		(3,003)		(21,443)
Marketing and Advertising	(13,976)		(5,722)		(19,698)
Transaction Costs	(1,631)		(3,366)		(4,997)
Other Expenses (3)	(7,253)		(295)		(7,548)
Segment Adjusted EBITDA	$	19,561	$	(1,871)	$	17,690
Depreciation expense:
Origination and Servicing					(3,374)
General and Administrative - Other					(176)
Stock-based compensation					(331)
Change in Fair Value of Convertible Preferred Stock Warrants					(5,941)
Impact of interest rates on fair value of loans held in consolidated trusts					(18)
Interest income on cash and cash equivalents					826
Interest Expense on Term Loan					(1,995)
Net Income Before Income Taxes					$	6,681

Interest Income (Expense) Included in Segment Adjusted EBITDA
Interest Income on Financial Instruments	$	10,149	$	5,570	$	15,719
Interest Expense on Financial Instruments	(9,732)		(2,047)		(11,779)
Total Interest Income, Net	$	417	$	3,523	$	3,940
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. These amounts exclude items that are adjusted out of Net Income (Loss) for the purposes of calculating Adjusted EBITDA.
(2) Compensation and Benefits includes costs related to certain outsourced headcount in operations.
(3) Other Expenses include, but are not limited to, costs related to professional services, insurance, facilities, software licenses, Cloud platform, and outsourced services in engineering and marketing.


	Three Months Ended June 30, 2025
	Personal Loan		Credit Card		Total
Total Net Revenue	$	50,309	$	1,341	$	51,650
Impact of interest rates on fair value of loans held in consolidated trusts	1,069		—		1,069
Less: Segment Operating Expenses (1)
Compensation and Benefits (2)	(17,187)		(2,556)		(19,743)
Marketing and Advertising	(11,557)		(1,842)		(13,399)
Transaction Costs	(1,835)		(2,698)		(4,533)
Other Expenses (3)	(6,555)		(151)		(6,706)
Segment Adjusted EBITDA	$	14,244	$	(5,906)	$	8,338
Depreciation expense:
Origination and Servicing					(2,785)
General and Administrative - Other					(232)
Stock-based compensation					(349)
Change in Fair Value of Convertible Preferred Stock Warrants					(59,359)
Impact of interest rates on fair value of loans held in consolidated trusts					(1,069)
Interest income on cash and cash equivalents					736
Interest Expense on Term Loan					(2,979)
Net Loss Before Income Taxes					$	(57,699)

Interest Income (Expense) Included in Segment Adjusted EBITDA
Interest Income on Borrower Loans and Loans Held for Sale	$	14,822	$	6,244	$	21,066
Interest Expense on Financial Instruments	(13,415)		(2,017)		(15,432)
Total Interest Income, Net Included in Segment Adjusted EBITDA	$	1,407	$	4,227	$	5,634
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. These amounts exclude items that are adjusted out of Net Income (Loss) for the purposes of calculating Adjusted EBITDA.
(2) Compensation and Benefits includes costs related to certain outsourced headcount in operations.
(3) Other Expenses include, but are not limited to, costs related to professional services, insurance, facilities, software licenses, Cloud platform, and outsourced services in engineering and marketing.


	Six Months Ended June 30, 2026
	Personal Loan		Credit Card		Total
Total Net Revenue	$	108,202	$	21,524	$	129,726
Impact of interest rates on fair value of loans held in consolidated trusts	73		—		73
Less: Segment Operating Expenses (1)
Compensation and Benefits (2)	(36,678)		(6,002)		(42,680)
Marketing and Advertising	(27,279)		(9,916)		(37,195)
Transaction Costs	(3,234)		(6,748)		(9,982)
Other Expenses (3)	(15,016)		(497)		(15,513)
Segment Adjusted EBITDA	26,068		(1,639)		24,429
Depreciation expense:
Origination and Servicing					(7,516)
General and Administrative - Other					(338)
Stock-based compensation					(795)
Change in Fair Value of Convertible Preferred Stock Warrants					58,008
Impact of interest rates on fair value of loans held in consolidated trusts					(73)
Interest income on cash and cash equivalents					1,632
Interest Expense on Term Loan					(3,977)
Net Income Before Income Taxes					$	71,370

Interest Income (Expense) Included in Segment Adjusted EBITDA
Interest Income on Financial Instruments	$	21,023	$	10,945	$	31,968
Interest Expense on Financial Instruments	(20,059)		(4,086)		(24,145)
Total Interest Income, Net	$	964	$	6,859	$	7,823
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. These amounts exclude items that are adjusted out of Net Income (Loss) for the purposes of calculating Adjusted EBITDA.
(2) Compensation and Benefits includes costs related to certain outsourced headcount in operations.
(3) Other Expenses include, but are not limited to, costs related to professional services, insurance, facilities, software licenses, Cloud platform, and outsourced services in engineering and marketing.


	Six Months Ended June 30, 2025
	Personal Loan		Credit Card		Total
Total Net Revenue	$	91,049	$	3,265	$	94,314
Impact of interest rates on fair value of loans held in consolidated trusts	343		—		343
Less: Segment Operating Expenses (1)
Compensation and Benefits (2)	(35,009)		(5,407)		(40,416)
Marketing and Advertising	(21,378)		(3,173)		(24,551)
Transaction Costs	(3,512)		(5,840)		(9,352)
Other Expenses (3)	(13,585)		(282)		(13,867)
Segment Adjusted EBITDA	17,908		(11,437)		6,471
Depreciation expense:
Origination and Servicing					(5,464)
General and Administrative - Other					(500)
Stock-based compensation					(676)
Change in Fair Value of Convertible Preferred Stock Warrants					(2,133)
Impact of interest rates on fair value of loans held in consolidated trusts					(343)
Interest income on cash and cash equivalents					1,404
Interest Expense on Term Loan					(6,055)
Net Loss Before Income Taxes					$	(7,296)

Interest Income (Expense) Included in Segment Adjusted EBITDA
Interest Income on Financial Instruments	$	31,084	$	13,283	$	44,367
Interest Expense on Financial Instruments	(27,754)		(4,007)		(31,761)
Total Interest Income, Net	$	3,330	$	9,276	$	12,606
(1) The significant expense categories and amounts align with the segment-level information that is regularly provided to the CODM. These amounts exclude items that are adjusted out of Net Income (Loss) for the purposes of calculating Adjusted EBITDA.
(2) Compensation and Benefits includes costs related to certain outsourced headcount in operations.
(3) Other Expenses include, but are not limited to, costs related to professional services, insurance, facilities, software licenses, Cloud platform, and outsourced services in engineering and marketing.

Prosper Funding LLC

Condensed Consolidated Balance Sheets (Unaudited)

(amounts in thousands)


	June 30, 2026		December 31, 2025
Assets:
Cash and Cash Equivalents	$	2,532	$	2,864
Restricted Cash	147,758		79,033
Borrower Loans, at Fair Value	222,766		245,337
Property and Equipment, Net	19,516		21,983
Servicing Assets	19,754		17,601

Other Assets	2,289		1,309
Total Assets	$	414,615	$	368,127
Liabilities and Member’s Equity:
Accounts Payable and Accrued Liabilities	$	33,589	$	26,858
Payable to Related Party	4,486		12,460
Payable to Investors	148,458		77,971
Notes, at Fair Value	221,070		243,900
Other Liabilities	3,977		3,611
Total Liabilities	$	411,580	$	364,800
Member's Equity:
Member's Equity	9,998		9,998
Accumulated Deficit	(6,963)		(6,671)
Total Member's Equity	$	3,035	$	3,327
Total Liabilities and Member's Equity	$	414,615	$	368,127

The accompanying notes are an integral part of these condensed consolidated financial statements.

Prosper Funding LLC

Condensed Consolidated Statements of Operations (Unaudited)

(amounts in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Revenues:
Operating Revenues:
Administration Fee Revenue – Related Party	$	31,115	$	24,719	$	60,907	$	46,597
Servicing Fees, Net	8,883		8,399		17,859		16,077
Loss on Sale of Borrower Loans	(13,684)		(15,671)		(30,959)		(29,247)
Other Revenue	134		136		196		214
Total Operating Revenues	26,448		17,583		48,003		33,641
Interest Income on Borrower Loans	8,855		10,904		17,996		22,211
Interest Expense on Notes	(8,252)		(10,281)		(16,787)		(20,836)
Total Interest Income, Net	603		623		1,209		1,375
Change in Fair Value of Financial Instruments, Net	144		432		(540)		(214)
Total Net Revenues	27,195		18,638		48,672		34,802
Expenses:
Administration Fee Expense – Related Party	20,918		20,590		43,658		38,398
Servicing and Other, Net	2,601		1,862		5,306		3,867
Total Expenses	23,519		22,452		48,964		42,265
Net Income (Loss)	$	3,676	$	(3,814)	$	(292)	$	(7,463)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Prosper Funding LLC

Condensed Consolidated Statements of Member’s Equity (Unaudited)

(amounts in thousands)


	Member’s Equity		Accumulated Deficit		Total
Balance as of January 1, 2026	$	9,998	$	(6,671)	$	3,327
Net Loss	—		(292)		(292)
Balance as of June 30, 2026	$	9,998	$	(6,963)	$	3,035

	Member’s Equity		Retained Earnings (Accumulated Deficit)		Total
Balance as of January 1, 2025	$	9,998	$	7,407	$	17,405
Net Loss	—		(7,463)		(7,463)
Balance as of June 30, 2025	$	9,998	$	(56)	$	9,942


	Member’s Equity		Accumulated Deficit		Total
Balance as of January 1, 2026	$	9,998	$	(6,671)	$	3,327
Net Loss	—		(3,968)		(3,968)
Balance as of March 31, 2026	$	9,998	$	(10,639)	$	(641)
Net Income	—		3,676		3,676
Balance as of June 30, 2026	$	9,998	$	(6,963)	$	3,035


	Member’s Equity		Retained Earnings (Accumulated Deficit)		Total
Balance as of January 1, 2025	$	9,998	$	7,407	$	17,405
Net Loss	—		(3,649)		(3,649)
Balance as of March 31, 2025	$	9,998	$	3,758	$	13,756
Net Loss	—		(3,814)		(3,814)
Balance as of June 30, 2025	$	9,998	$	(56)	$	9,942

The accompanying notes are an integral part of these condensed consolidated financial statements.

Prosper Funding LLC

Condensed Consolidated Statements of Cash Flows (Unaudited)

(amounts in thousands)


	Six Months Ended June 30,
	2026		2025
Cash Flows from Operating Activities:
Net Loss	$	(292)	$	(7,463)
Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities:
Change in Fair Value of Financial Instruments, Net	540		214
Other Non-Cash Changes in Borrower Loans and Notes	(8)		20
Gain on Sale of Borrower Loans	(9,006)		(6,185)
Change in Fair Value of Servicing Rights	6,853		5,738
Depreciation and Amortization	5,302		3,964

Changes in Operating Assets and Liabilities:
Purchase of Loans Held for Sale, at Fair Value	(1,467,833)		(1,194,264)
Proceeds from Sales of Loans Held for Sale, at Fair Value	1,467,833		1,194,264
Other Assets	(980)		(1,145)
Accounts Payable and Accrued Liabilities	6,731		6,493
Payable to Investors	70,487		18,510
Net Related Party Receivable/Payable	1,922		3,817
Other Liabilities	366		81
Net Cash Provided by Operating Activities	81,915		24,044
Cash Flows from Investing Activities:
Purchase of Borrower Loans, at Fair Value	(73,639)		(85,833)
Proceeds from Principal Payments and Sales of Borrower Loans, at Fair Value	84,487		95,670
Purchases of Property and Equipment	(12,731)		(6,488)
Net Cash (Used in) Provided by Investing Activities	(1,883)		3,349
Cash Flows from Financing Activities:
Proceeds from Issuance of Notes, at Fair Value	71,984		84,582
Payments of Notes, at Fair Value	(83,623)		(94,781)
Net Cash Used in Financing Activities	(11,639)		(10,199)
Net Increase in Cash, Cash Equivalents and Restricted Cash	68,393		17,194
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period	81,897		96,740
Cash, Cash Equivalents and Restricted Cash at End of the Period	$	150,290	$	113,934

Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	$	17,194	$	11,317
Non-Cash Investing Activity - Accrual for Property and Equipment, Net	898		696

Reconciliation to Amounts on Consolidated Balance Sheets:
Cash and Cash Equivalents	$	2,532	$	3,290
Restricted Cash	147,758		110,644
Total Cash, Cash Equivalents and Restricted Cash	$	150,290	$	113,934

The accompanying notes are an integral part of these condensed consolidated financial statements.

PROSPER FUNDING LLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Prosper Funding LLC (“PFL”) was formed in the state of Delaware in February 2012 as a limited liability company with Prosper Marketplace, Inc. (“PMI”) as its sole equity member. Except as the context otherwise requires, as used in these Notes to the condensed consolidated financial statements of Prosper Funding LLC, “PFL,” and the “Company” refers to Prosper Funding LLC and its wholly owned subsidiary, Prosper Depositor LLC, a Delaware limited liability company, on a consolidated basis.

The unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and disclosure requirements for interim financial information and the requirements of Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by US GAAP for complete financial statements. The unaudited interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2025. The balance sheet at December 31, 2025 has been derived from the audited financial statements at that date. Management believes these unaudited interim condensed consolidated financial statements reflect all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the results for the interim periods presented. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year or any other interim period.

PFL did not have any items of other comprehensive income or loss for any of the periods presented in the condensed consolidated financial statements as of and for the six months ended June 30, 2026 and 2025.

The preparation of PFL's condensed consolidated financial statements and related disclosures in conformity with US GAAP requires management to make judgments, assumptions and estimates that affect the amounts reported in its condensed consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other factors it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of certain assets and liabilities. These judgments, estimates and assumptions are inherently subjective in nature and actual results may differ from these estimates and assumptions, and the differences could be material.

2. Summary of Significant Accounting Policies

PFL's significant accounting policies are included in Note 2, Summary of Significant Accounting Policies, in PFL’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no changes to these accounting policies during the first six months of 2026.

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Borrower Loans, Loans Held for Sale, Accounts Receivable, Accounts Payable and Accrued Liabilities, Payable to Investors and Notes. The estimated fair values of Cash and Cash Equivalents, Restricted Cash, Accounts Receivable, Accounts Payable and Accrued Liabilities, and Payable to Investors approximate their carrying values because of their short-term nature.

Refer to Note 7 for additional fair value disclosures.

Restricted Cash

Restricted Cash consists primarily of cash deposits, money market funds and short-term certificate of deposit accounts held as collateral as required for long term leases, loan funding and servicing activities, and cash that investors have on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

Borrower Loans and Notes

With respect to the Note Channel, PFL purchases Borrower Loans from WebBank, then issues Notes and holds the Borrower Loans until maturity. The obligation to repay a series of Notes funded through the Note Channel is dependent upon the repayment of the associated Borrower Loan. Borrower Loans and Notes funded through the Note Channel are carried on PFL’s condensed consolidated balance sheets as assets and liabilities, respectively.

PFL places Borrower Loans on non-accrual status when they are 120 days past due. When a loan is placed on non-accrual status, PFL stops accruing interest and reverses all accrued but unpaid interest as of such date. Additionally, PFL charges-off Borrower Loans when they are 120 days past due or reach the end of a settlement program. The fair value of loans 120 days past due generally consists of the expected recovery from debt sales in subsequent periods.

Management has elected the fair value option for Borrower Loans and Notes. Changes in fair value of Borrower Loans are largely offset by the changes in fair value of Notes due to the borrower payment-dependent design of the Notes. Changes in fair value of Borrower Loans and Notes are included in Change in Fair Value of Financial Instruments, Net on the condensed consolidated statements of operations.

PFL primarily uses a discounted cash flow model to estimate the fair value of Borrower Loans and Notes. The key assumptions used in the valuation include default rates and prepayment rates derived primarily from historical performance and discount rates based on estimates of the rates of return that investors would require when investing in financial instruments with similar characteristics.

Transaction Fee Refunds

Prosper assumed WebBank’s obligation under Utah law to refund the pro-rated amount of any Transaction Fees collected in excess of 5%, in the event the underlying borrower prepaid the loan in full before maturity. Liabilities under this obligation were estimated upon the origination of Borrower Loans, and reassessed each period. They are recorded within Accounts Payable and Accrued Liabilities on the accompanying condensed consolidated balance sheets. The key assumptions used in the estimated refund liability include prepayment rates and default rates derived primarily from historical performance. Changes in the liability are recorded within Administration Fee - Related Party on the accompanying consolidated Statements of Operations. Refer to Note 8, Commitments and Contingencies, for details on the amounts recorded under this obligation.

On March 23, 2026, Utah signed into law Senate Bill 230, Consumer Credit Amendments (“S.B. 230”), which eliminates the requirement to refund Transaction Fees in excess of 5% of Borrower Loan principal upon prepayment. The law became effective on May 6, 2026. Accordingly, PFL no longer accrues or remits Transaction Fee refunds under this requirement for Borrower Loans originated on or after that effective date. Borrower Loans originated prior to May 6, 2026, remain subject to the prior refund requirements.

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In April 2025, the FASB issued ASU No. 2025-05, “Financial Instruments—Credit Losses (Topic 326): Practical Expedient for Estimating Expected Credit Losses on Current Receivables,” which provides a practical expedient for measuring expected credit losses on current accounts receivable and contract assets. The expedient allows an entity to assume that current economic conditions will remain unchanged for the remaining life of the asset when developing forecasts. The standard is effective for fiscal years beginning after December 15, 2025. The Company adopted this guidance as of January 1, 2026, and elected this practical expedient for its short-term receivables. The adoption of this guidance did not have a material impact on the Company’s condensed consolidated financial statements.

Accounting Standards Issued, To Be Adopted By PFL In Future Periods

beginning after December 15, 2027. Early adoption is permitted, and the amendments may be applied either prospectively or retrospectively. The Company is currently evaluating this ASU to determine its impact on the Company’s interim financial statements and related disclosures.

3. Property and Equipment, Net

Property and equipment consist of the following as of the dates presented (in thousands):


	June 30, 2026		December 31, 2025
Internal-use software and web site development costs	$	66,188	$	63,353
Less: accumulated depreciation and amortization	(46,672)		(41,370)
Total property and equipment, net	$	19,516	$	21,983

Depreciation expense for the three months ended June 30, 2026 and 2025 was $2.6 million and $1.9 million, respectively. Depreciation expense for the six months ended June 30, 2026 and 2025 was $5.3 million and $4.0 million, respectively.

4. Borrower Loans and Notes, at Fair Value

The aggregate principal balances outstanding and fair values of Borrower Loans and Notes as of June 30, 2026 and December 31, 2025, are presented in the following table (in thousands):


	Borrower Loans				Notes
	June 30, 2026		December 31, 2025		June 30, 2026		December 31, 2025
Aggregate principal balance outstanding and interest outstanding	$	232,661	$	255,132	$	233,817	$	256,929
Fair value adjustments	(9,895)		(9,795)		(12,747)		(13,029)
Fair value	$	222,766	$	245,337	$	221,070	$	243,900

As of June 30, 2026, outstanding Borrower Loans had original terms to maturity of 24, 36, 48 or 60 months, had monthly payments with fixed interest rates ranging from 6.30% to 33.00% and had various original maturity dates through June 2031. As of December 31, 2025, outstanding Borrower Loans had original maturities of either 24, 36, 48 or 60 months, monthly payments with fixed interest rates ranging from 6.00% to 33.00% and had various original maturity dates through December 2030.

As of June 30, 2026, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $1.6 million and a fair value of $0.3 million. As of December 31, 2025, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $2.2 million and a fair value of $0.4 million. PFL places loans on non-accrual status when they are over 120 days past due. As of June 30, 2026 and December 31, 2025, Borrower Loans in non-accrual status had a fair value of $0.3 million and $0.3 million, respectively.

5. Servicing Assets

PFL accounts for Servicing Assets at their estimated fair values with changes in fair values recorded in Servicing Fees, Net on the condensed consolidated statements of operations. The initial asset is recognized in Gain (Loss) on the Sale of Borrower Loans on the condensed consolidated statements of operations when PFL sells Borrower Loans to unrelated third-party buyers through the Whole Loan Channel and the servicing rights are retained. The Servicing Assets are measured at fair value throughout the servicing period. PFL recognized gains from the initial recognition of Servicing Assets on the sale of Borrower Loans in the amounts of $4.7 million and $3.4 million for the three months ended June 30, 2026 and 2025, respectively, and gains from the initial recognition of Servicing Assets on the sale of Borrower Loans in the amounts of $9.0 million and $6.2 million for the six months ended June 30, 2026 and 2025, respectively. These amounts are recorded in Loss on Sale of Borrower Loans on the condensed consolidated statements of operations, and are offset primarily by incentives provided to loan buyers at the time of sale.

As of June 30, 2026, Borrower Loans that were sold, but for which PFL retained servicing rights, had a total outstanding principal balance of $4.2 billion, original terms of 24, 36, 48, 60 or 72 months, monthly payments with fixed interest rates ranging from 5.75% to 33.00%, and various original maturity dates through June 2032. As of December 31, 2025, Borrower Loans that were sold, but for which PFL retained servicing rights, had a total outstanding principal balance of $3.8 billion, original terms of either 24, 36, 48 or 60 months, monthly payments with fixed interest rates ranging from 5.75% to 33.00%, and various original maturity dates through December 2030.

Contractually-specified servicing fees and ancillary fees totaled $13.1 million and $11.6 million for the three months ended June 30, 2026, and 2025, respectively, and $26.0 million and $23.3 million for the six months ended June 30, 2026, and 2025, respectively, and are included primarily in Servicing Fees, Net on the condensed consolidated statements of operations.

Fair Value Valuation Method

PFL uses a discounted cash flow valuation methodology generally consisting of developing an estimate of future cash flows that are expected to occur over the life of a financial instrument and then discounting those cash flows at a rate of return that results in the fair value amount.

Significant unobservable inputs presented in the table within Note 7 are those that PFL considers significant to the estimated fair values of the Level 3 Servicing Assets. The following is a description of the significant unobservable inputs provided in the table.

Market Servicing Rate

PFL estimates adequate market servicing rates that would fairly compensate a substitute servicer should one be required, which includes the profit that would be demanded in the marketplace. This rate is stated as a fixed percentage of outstanding principal balance on a per annum basis. With the assistance of a valuation specialist, PFL estimates these market servicing rates based on observable market rates for other loan types in the industry and bids from sub-servicing providers, adjusted for the unique loan attributes that are present in the specific loans that PFL sells and services and information from backup service providers.

Discount Rate

The discount rate is a rate of return used to discount future expected cash flows to arrive at a present value, which represents the fair value of the loan servicing rights. Management used a range of discount rates for the Servicing Assets based on comparable observed valuations of similar assets and publicly available disclosures related to servicing valuations, with comparability adjustments made to account for differences with PFL’s Servicing Assets.

Default Rate

The default rate presented in Note 7 is an annualized, average estimate considering all Borrower Loan categories (i.e., risk ratings and duration), and represents an aggregate of conditional default rate curves for each credit grade or Borrower Loan category. Each point on a particular Borrower Loan category’s curve represents the percentage of principal expected to default per period based on the term and age of the underlying Borrower Loans. The assumption regarding defaults directly reduces servicing revenues because the amount of servicing revenues received is based on the amount collected each period.

Prepayment Rate

The prepayment rate presented in Note 7 is an annualized, average estimate considering all Borrower Loan categories (i.e., risk ratings and duration), and represents an aggregate of conditional prepayment rate curves for each credit grade or Borrower Loan category. Each point on a particular Borrower Loan category’s curve represents the percentage of principal expected to prepay per period based on the term and age of the underlying Borrower Loans. Prepayments reduce servicing revenues as they shorten the period over which PFL expects to collect fees on the Borrower Loans, which is used to project future servicing revenues.

6. Income Taxes

PFL incurred no income tax provision for the six months ended June 30, 2026 and 2025. PFL is a U.S. disregarded entity and its income and loss are included in the income tax reporting of its parent, PMI. Since PMI is in a taxable loss position, is not currently subject to income taxes, and has fully reserved against its deferred tax asset, the net effective tax rate for PFL is 0%.

7. Fair Value of Assets and Liabilities

PFL has elected to record certain financial instruments at fair value on the balance sheet. PFL classifies Borrower Loans, Loans Held for Sale and Notes as financial instruments and assesses their fair value each on a quarterly basis for financial statement presentation purposes. Gains and losses on these financial instruments are shown separately on the condensed consolidated statements of operations.

As of June 30, 2026 and December 31, 2025, the discounted cash flow methodology used to estimate the Notes fair values used the same projected cash flows as the related Borrower Loans. As demonstrated in the table below, the fair value adjustments for Borrower Loans were largely offset by the fair value adjustments of the Notes due to the borrower payment dependent design of the Notes and because the principal balances of the Borrower Loans approximated the principal balances of the Notes.

Assets and liabilities carried at fair value on the balance sheets are classified among three levels based on the observability of the inputs used to determine fair value:

Level 1 — The valuation is based on quoted prices in active markets for identical instruments.

Financial Instruments Recorded at Fair Value

The fair value of the Borrower Loans and Notes are estimated using discounted cash flow methodologies based upon a set of valuation assumptions. The primary cash flow assumptions used to value such Borrower Loans and Notes include default and prepayment rates derived primarily from historical performance and discount rates that reflect estimates of the rates of return that investors would require when investing in financial instruments with similar characteristics.

The following tables present the fair value hierarchy for assets and liabilities measured at fair value (in thousands):


June 30, 2026	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans, at Fair Value	$	—	$	—	$	222,766	$	222,766
Servicing Assets	—		—		19,754		19,754
Total Assets	$	—	$	—	$	242,520	$	242,520
Liabilities:
Notes, at Fair Value	$	—	$	—	$	221,070	$	221,070
Loan Trailing Fee Liability (included in Other Liabilities)	—		—		3,710		3,710
Total Liabilities	$	—	$	—	$	224,780	$	224,780


December 31, 2025	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans, at Fair Value	$	—	$	—	$	245,337	$	245,337
Servicing Assets	—		—		17,601		17,601
Total Assets	$	—	$	—	$	262,938	$	262,938
Liabilities:
Notes, at Fair Value	$	—	$	—	$	243,900	$	243,900
Loan Trailing Fee Liability (included in Other Liabilities)	—		—		3,328		3,328
Total Liabilities	$	—	$	—	$	247,228	$	247,228

As PFL’s Borrower Loans, Notes, Servicing Assets and loan trailing fee liability do not trade in an active market with readily observable prices, PFL uses significant unobservable inputs to measure the fair value of these assets and liabilities. Financial instruments are categorized in the Level 3 valuation hierarchy based on the significance of unobservable factors in the overall fair value measurement. These fair value estimates may also include observable, actively quoted components derived from external sources. As a result, the realized and unrealized gains and losses for assets and liabilities within the Level 3 category may include changes in fair value that were attributable to both observable and unobservable inputs. PFL did not transfer any assets or liabilities in or out of Level 3 for the six months ended June 30, 2026 or June 30, 2025.

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs used for PFL’s Level 3 fair value measurements at the dates presented:


	Range
Borrower Loans and Notes	June 30, 2026	December 31, 2025
Discount rate	6.2% - 16.8%	6.3% - 15.5%
Default rate	2.4% - 13.9%	2.3% - 14.5%


	Range
Servicing Assets	June 30, 2026	December 31, 2025
Discount rate	15.0% - 25.0%	15.0% - 25.0%
Default rate	2.0% - 13.9%	1.9% - 15.0%
Prepayment rate	8.7% - 38.0%	3.4% - 41.4%
Market servicing rate (1) (2)	0.593% - 0.842%	0.593% - 0.842%


	Range
Loan Trailing Fee Liability	June 30, 2026	December 31, 2025
Discount rate	15.0% - 25.0%	15.0% - 25.0%
Default rate	2.0% - 13.9%	1.9% - 15.0%
Prepayment rate	8.7% - 38.0%	3.4% - 41.4%

Changes in Level 3 Fair Value Assets and Liabilities on a Recurring Basis

The following tables present additional information about Level 3 Borrower Loans, Loans Held for Sale and Notes measured at fair value on a recurring basis (in thousands):


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance as of January 1, 2026	$	245,337	$	—	$	(243,900)	$	1,437
Originations	73,639		1,467,833		(71,984)		1,469,488
Principal repayments	(82,348)		—		83,623		1,275
Borrower Loans sold to third parties	(2,139)		(1,467,833)		—		(1,469,972)
Other changes	(400)		—		408		8
Change in fair value	(11,323)		—		10,783		(540)
Balance as of June 30, 2026	$	222,766	$	—	$	(221,070)	$	1,696


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance as of January 1, 2025	$	285,578	$	—	$	(283,030)	$	2,548
Originations	85,833		1,194,264		(84,582)		1,195,515
Principal repayments	(94,393)		—		94,781		388
Borrower Loans sold to third parties	(1,277)		(1,194,264)		—		(1,195,541)
Other changes	(357)		—		338		(19)
Change in fair value	(8,706)		—		8,492		(214)
Balance as of June 30, 2025	$	266,678	$	—	$	(264,001)	$	2,677


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance as of April 1, 2026	$	232,747	$	—	$	(230,283)	$	2,464
Originations	37,913		769,615		(37,638)		769,890
Principal repayments	(41,457)		—		41,680		223
Borrower Loans sold to third parties	(1,347)		(769,615)		—		(770,962)
Other changes	(176)		—		113		(63)
Change in fair value	(4,914)		—		5,058		144
Balance as of June 30, 2026	$	222,766	$	—	$	(221,070)	$	1,696


Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Assets				Liabilities
	Borrower Loans		Loans Held for Sale		Notes		Total
Balance as of April 1, 2025	$	275,362	$	—	$	(272,500)	$	2,862
Originations	42,895		661,430		(42,443)		661,882
Principal repayments	(47,226)		—		46,917		(309)
Borrower Loans sold to third parties	(601)		(661,430)		—		(662,031)
Other changes	(217)		—		58		(159)
Change in fair value	(3,535)		—		3,967		432
Balance as of June 30, 2025	$	266,678	$	—	$	(264,001)	$	2,677

The following tables present additional information about Level 3 Servicing Assets recorded at fair value (in thousands):


	Servicing Assets
Balance as of January 1, 2026	$	17,601
Additions	9,006
Less: Changes in fair value	(6,853)
Balance as of June 30, 2026	$	19,754


	Servicing Assets
Balance as of January 1, 2025	$	14,333
Additions	6,186
Less: Changes in fair value	(5,739)
Balance as of June 30, 2025	$	14,780


	Servicing Assets
Balance as of April 1, 2026	$	18,561
Additions	4,743
Less: Changes in fair value	(3,550)
Balance as of June 30, 2026	$	19,754


	Servicing Assets
Balance as of April 1, 2025	$	13,911
Additions	3,418
Less: Changes in fair value	(2,549)
Balance as of June 30, 2025	$	14,780

Loan Trailing Fee Liability

The fair value of the Loan Trailing Fee Liability (included in Other Liabilities on the accompanying condensed consolidated balance sheets) represents the present value of the expected monthly Loan Trailing Fee payments, which takes into consideration certain assumptions related to expected prepayment rates and default rates using a discounted cash flow model. The assumptions used are the same as those used for the valuation of Servicing Assets, as described below.

The following tables present additional information about Level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):


	Loan Trailing Fee Liability
Balance as of January 1, 2026	$	3,328
Issuances	1,514
Cash payment of Loan Trailing Fee	(1,424)
Change in fair value	292
Balance as of June 30, 2026	$	3,710


	Loan Trailing Fee Liability
Balance as of January 1, 2025	$	3,004
Issuances	1,172
Cash payment of Loan Trailing Fee	(1,293)
Change in fair value	246
Balance as of June 30, 2025	$	3,129


	Loan Trailing Fee Liability
Balance as of April 1, 2026	$	3,491
Issuances	806
Cash payment of Loan Trailing Fee	(715)
Change in fair value	128
Balance as of June 30, 2026	$	3,710


	Loan Trailing Fee Liability
Balance as of April 1, 2025	$	2,933
Issuances	650
Cash payment of Loan Trailing Fee	(641)
Change in fair value	187
Balance as of June 30, 2025	$	3,129

Significant Recurring Level 3 Fair Value Asset and Liability Input Sensitivity

Key economic assumptions are used to compute the fair value of Borrower Loans. The sensitivity of the fair value to immediate changes in assumptions at June 30, 2026 and December 31, 2025 for Borrower Loans are presented in the following table (in thousands, except percentages).


Borrower Loans:	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	222,766		$	245,337
Weighted-average discount rate	9.39		%	8.67		%
Weighted-average default rate	11.17		%	11.48		%

Fair value resulting from:
100 basis point increase in discount rate	$	220,777		$	243,180
200 basis point increase in discount rate	218,835			241,073
Fair value resulting from:
100 basis point decrease in discount rate	$	224,804		$	247,547
200 basis point decrease in discount rate	226,893			249,810

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	220,980		$	243,371
Applying a 1.2 multiplier to default rate	219,192			241,402
Fair value resulting from:
Applying a 0.9 multiplier to default rate	$	224,553		$	247,304
Applying a 0.8 multiplier to default rate	226,340			249,269

Key economic assumptions are used to compute the fair value of Notes. The sensitivity of the fair value to immediate changes in assumptions at June 30, 2026 and December 31, 2025 for Notes funded through the Note Channel are presented in the following table (in thousands, except percentages).


Notes	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	221,070		$	243,900
Weighted-average discount rate	9.39		%	8.67		%
Weighted-average default rate	11.17		%	11.48		%

Fair value resulting from:
100 basis point increase in discount rate	$	219,093		$	241,752
200 basis point increase in discount rate	217,163			239,655
Fair value resulting from:
100 basis point decrease in discount rate	$	223,093		$	246,096
200 basis point decrease in discount rate	225,171			248,352

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	219,297		$	241,944
Applying a 1.2 multiplier to default rate	217,523			239,987
Fair value resulting from:
Applying a 0.9 multiplier to default rate	$	222,842		$	245,853
Applying a 0.8 multiplier to default rate	224,615			247,806

Key economic assumptions are used to compute the fair value of Servicing Assets. The sensitivity of the current fair value to immediate changes in assumptions at June 30, 2026 and December 31, 2025 for Servicing Assets are presented in the following table (in thousands, except percentages).


Servicing Assets	June 30, 2026			December 31, 2025
Fair value, using the following assumptions:	$	19,754		$	17,601
Weighted-average market servicing rate	0.598		%	0.598		%
Weighted-average prepayment rate	21.72		%	21.72		%
Weighted-average default rate	11.17		%	11.86		%

Fair value resulting from:
Market servicing rate increase of 0.025%	$	18,624		$	16,586
Market servicing rate decrease of 0.025%	20,884			18,615

Fair value resulting from:
Applying a 1.1 multiplier to prepayment rate	$	19,445		$	17,143
Applying a 0.9 multiplier to prepayment rate	20,063			18,068

Fair value resulting from:
Applying a 1.1 multiplier to default rate	$	19,228		$	17,310
Applying a 0.9 multiplier to default rate	20,292			17,892

8. Commitments and Contingencies

In the normal course of its operations, PFL becomes involved in various legal actions. PFL maintains provisions it considers to be adequate for such actions. The Company does not believe it is probable that the ultimate liability, if any, arising out of any such matters will have a material effect on financial condition, results of operations or cash flows.

Operating Commitments

PMI, along with PFL, and WebBank has entered into: (i) an Asset Sale Agreement, dated July 1, 2016, between PFL and WebBank, as most recently amended by a Seventh Amendment dated February 28, 2024 (as amended, the “Sale Agreement”); (ii) the Marketing Agreement, dated July 1, 2016, between PMI and WebBank, as most recently amended by a Seventh Amendment dated February 28, 2024 (as amended, the “Marketing Agreement”); and (iii) the Stand By Purchase Agreement, dated July 1, 2016, between PMI and WebBank, as most recently amended by a Fourth Amendment dated February 28, 2024 (as amended, the “Purchase Agreement” and, collectively with the Sale Agreement and the Marketing Agreement, the “Origination and Sale Agreements”). Under the Origination and Sale Agreements, all Borrower Loans originated through the marketplace are made by WebBank under its bank charter.

Available for Sale Investments. Violation of this covenant can result in termination of the contract with WebBank. As of June 30, 2026, the Company was in compliance with the covenant.

Transaction Fee Refund Liability

Prosper assumed WebBank’s liability under Utah law to refund the pro-rated amount of any transaction fees collected in excess of 5%, in the event the underlying borrower prepaid the loan in full before maturity. Following the passage of S.B. 230, only Borrower Loans originated prior to May 6, 2026, remain subject to this requirement, and no liability is recorded for Borrower Loans originated on or subsequent to that effective date. For the three months ended June 30, 2026 and 2025 the Company issued $6.4 million and $3.8 million, respectively, in refunds under this obligation. For the six months ended June 30, 2026 and 2025 the Company issued $11.6 million and $6.6 million, respectively, in refunds under this obligation. As of June 30, 2026 and December 31, 2025, the Company accrued $18.0 million and $17.2 million, respectively, related to anticipated future refunds under this obligation. As a result of executing Amendment 7 to the Administration Agreement with PMI on November 14, 2025, all Transaction Fee refunds issued by PFL are now reimbursed by PMI and recorded in the Administration Fee Revenue – Related Party account on the consolidated statements of operations.

Loan Purchase Commitments

Under the terms of PFL’s agreement with WebBank, PFL is committed to purchase $32.6 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2026. PFL will purchase these Borrower Loans within the first three business days of the quarter ending September 30, 2026.

Repurchase Obligation

Under the terms of the loan purchase agreements between PFL and investors that participate in the Whole Loan Channel, PFL may, in certain circumstances, become obligated to repurchase a Borrower Loan from an investor. Generally, these circumstances include the occurrence of verifiable identity theft, the failure to properly follow personal loan listing or bidding protocols, or a violation of the applicable federal, state, or local lending laws. The fair value of the indemnification and repurchase obligation is estimated based on historical experience. PFL recognizes a liability for the repurchase and indemnification obligation when the Borrower Loans are issued. Indemnified or repurchased Borrower Loans associated with violations of federal, state, or local lending laws or verifiable identity theft are written off at the time of repurchase or at the time an indemnification payment is made. The maximum potential amount of future payments associated under this repurchase obligation is the outstanding balances of the Borrower Loans issued through the Whole Loan Channel, which as of June 30, 2026 is $4.2 billion. PFL has accrued $0.3 million and $0.3 million as of June 30, 2026 and December 31, 2025, respectively, in regard to this obligation.

Regulatory Contingencies

PFL accrues for contingencies when a loss from such contingencies is probable and the amount of loss can be reasonably estimated. In determining whether a loss is probable and if it is possible to quantify the amount of the estimated loss, PFL reviews and evaluates its litigation and regulatory matters on at least a quarterly basis in light of potentially relevant factual and legal developments. If PFL determines that an unfavorable outcome is not probable or that the amount of a loss cannot be reasonably estimated, PFL does not accrue for a potential litigation loss. If an unfavorable outcome is probable and PFL can estimate a range of outcomes, PFL records the amount management considers to be the best estimate within the range of potential losses that are both probable and estimable; however, if management cannot quantify the amount of the estimated loss, then PFL records the low end of the range of those potential losses.

Cybersecurity Matter

On September 1, 2025, Prosper identified that an unauthorized third party gained access to Prosper’s systems that contain proprietary and confidential information. Prosper promptly initiated its cybersecurity response plans and began taking steps to investigate, contain and remediate the incident and enhance its security measures with the assistance of cybersecurity experts. Prosper also informed law enforcement.

There is evidence that the unauthorized third party was able to obtain confidential, proprietary and personal information, including Social Security numbers, including through unauthorized queries made on Prosper databases that store customer and applicant data. There is no evidence of unauthorized access to customer accounts and funds as a result of the incident, and Prosper’s customer-facing operations continued uninterrupted.

Multiple purported class-action lawsuits related to the September 2025 Incident have been filed against Prosper. The federal lawsuits filed against Prosper have been consolidated into one proceeding, captioned In re: Prosper Funding, LLC Data Breach Litigation. Prosper is also subject to lawsuits filed in state courts and has received demands for mass and individual arbitrations. The Company may receive additional federal and state lawsuits and arbitration demands in the future.

Prosper has accrued for various legal and cybersecurity software costs incurred related to this incident that are not covered by insurance at the PMI corporate level. Due to the significant uncertainties involved, Prosper is not able to accurately predict the ultimate outcome of this incident, or estimate a loss or range of loss that Prosper may incur. Accordingly, Prosper has not recorded a provision for any estimated losses in respect to the incident as of June 30, 2026.

9. Related Parties

Since inception, PFL has engaged in various transactions with its directors, executive officers, PMI, and immediate family members and other affiliates of its directors, executive officers, and PMI. PFL believes that all of the transactions described below were made on terms no less favorable to PFL than could have been obtained from unaffiliated third parties.

PFL’s executive officers and directors who are not executive officers participate in its marketplace by placing bids and purchasing Notes. The aggregate amount of the Notes purchased and the income earned by parties deemed to be related parties of PFL for the three and six months ended June 30, 2026 and 2025 are summarized below (in thousands):


	Aggregate Amount of Notes Purchased				Interest Earned on Notes
	Three Months Ended June 30,				Three Months Ended June 30,
Related Party	2026		2025		2026		2025
Executive officers and management	$	2	$	1	$	1	$	2
Directors (excluding executive officers and management)	—		—		—		—
Total	$	2	$	1	$	1	$	2


	Aggregate Amount of Notes Purchased				Interest Earned on Notes
	Six Months Ended June 30,				Six Months Ended June 30,
Related Party	2026		2025		2026		2025
Executive officers and management	$	3	$	3	$	2	$	4
Directors (excluding executive officers and management)	—		—		—		—
Total	$	3	$	3	$	2	$	4

The balance of Notes held by officers and directors who are not executive officers are as follows (in thousands):


	Notes Balance as of
Related Party	June 30, 2026		December 31, 2025
Executive officers and management	$	20	$	27
Directors (excluding executive officers and management)	—		—
Total	$	20	$	27

10. Significant Concentrations

PFL is dependent on third-party funding sources such as banks, credit unions, asset managers, investment funds and insurance companies to provide the funds to allow WebBank to originate Borrower Loans that the third-party funding sources will later purchase. PFL receives all of its personal loan transaction fee revenue from WebBank for its services in facilitating originations of Borrower Loans issued by WebBank. The rate of the transaction fee for each individual Borrower Loan is based on the term and credit grade of the Borrower Loan and currently ranges from 1.00% to 9.99% for newly originated loans. No individual borrower or investor accounted for 10% or more of consolidated net revenue for any of the periods presented.

Of all Borrower Loans originated in the three months ended June 30, 2026, three individual third parties purchased 43.3%, 13.1% and 11.4% of all Borrower Loans originated. For the three months ended June 30, 2025, four individual third parties purchased 17.0%, 14.0%, 12.9%, and 10.9% of all Borrower Loans originated. Of all Borrower Loans originated in the six months ended June 30, 2026, one individual third parties purchased 47.8% of all Borrower Loans originated. For the six months ended June 30, 2025, four individual third parties purchased 15.5%, 13.8%, 13.5%, and 13.4% of all Borrower Loans originated. These purchases indicate that a significant portion of PFL’s business is dependent on funding through the Whole Loan Channel, through which 95% and 94% of Borrower Loans were originated for the three months ended June 30, 2026 and 2025, respectively, and through which 95% and 93% of Borrower Loans were originated for the six months ended June 30, 2026 and 2025, respectively.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management’s discussion and analysis of financial condition and results of operations, or MD&A, contains forward-looking statements that involve risks and uncertainties. Please see “Forward-Looking Statements” in this Quarterly Report on Form 10-Q for a discussion of the uncertainties, risks, and assumptions associated with these statements. This discussion should be read in conjunction with Prosper’s historical condensed consolidated financial statements and related notes thereto and the other disclosures contained elsewhere in this Quarterly Report on Form 10-Q. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and Prosper’s actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those included in the “Risk Factors” sections and elsewhere in this Quarterly Report on Form 10-Q and Prosper’s Annual Report on Form 10-K for the year ended December 31, 2025.

PROSPER MARKETPLACE, INC.

Overview

Our vision is to transform lives by providing affordable financial solutions through the simplest and most trusted platform. We currently offer access to two primary lending products, each of which supports our vision: (i) unsecured Personal Loans through a personal loan marketplace which connects eligible consumer borrowers with individual and institutional investors, and (ii) a Credit Card product available to eligible borrowers. Historically, we have offered access to Home Equity lending products as well, but we made the strategic decision to discontinue offering Home Equity products in December 2025.

We believe our Personal Loan business model has key advantages relative to traditional banks, including (i) an innovative marketplace model that efficiently connects qualified supply and demand of capital, (ii) online operations that substantially reduce the need for physical infrastructure and improve convenience, and (iii) use of advanced technology and artificial intelligence to deliver simple, fast, personalized, and transparent solutions that can improve consumers’ financial health as they move across the credit spectrum. We do not operate physical branches or incur expenses related to infrastructure like traditional banks or consumer finance institutions. As part of operating our marketplace, we verify the identity of borrowers and assess borrowers’ credit risk profile using a combination of public and proprietary data. Our proprietary technology automates several loan origination and servicing functions, including the borrower application process, data gathering, underwriting, credit scoring, loan funding, investing and servicing, regulatory compliance and fraud detection.

For the year ended December 31, 2025, our marketplace facilitated $2.7 billion in Borrower Loan originations, of which $2.5 billion were funded through our Whole Loan Channel, representing 94% of the total Borrower Loans originated through our marketplace during this period. For the three months ended June 30, 2026, our marketplace facilitated $809.8 million in Borrower Loan originations, an increase of 15% from the same period in 2025. The percentage of loans funded through the Whole Loan Channel for the three months ended June 30, 2026 was 95%. From inception through June 30, 2026, our marketplace has facilitated $32.1 billion in Borrower Loan originations, of which $29.0 billion were funded through our Whole Loan Channel, representing 90% of the total Borrower Loans originated through our marketplace during this period.

We believe our Credit Card product provides consumers working to build their credit profile with affordable access to the credit they need, when they need it, as well as tools and resources to help them stay on track with their personal finances. As with the Personal Loan product, we manage the credit risk associated with our Credit Card borrowers through a combination of public and proprietary data. From the launch of the Credit Card product through June 30, 2026, approximately 608,000 Credit Card accounts have been booked through our platform, and borrowers have spent $1.5 billion on their Prosper Credit Cards.

As a company that operates a credit marketplace, and offers a Credit Card product, our customers may be highly susceptible to uncertainties and negative trends, real or perceived, in the markets driven by, among other factors, general economic conditions in the United States and abroad. These external economic conditions and resulting trends or uncertainties could adversely impact our customers’ ability or desire to participate in our Personal Loan marketplace, as borrowers or investors, or maintain compliance with the repayment terms on a Prosper Credit Card. Consequently, our business and results of operations could be negatively affected.

Recent Developments

In June 2026, we started offering Borrower Loans with 72-month terms through our marketplace, as an expansion to our existing offering of 24-, 36-, 48- and 60-month loan terms. Borrower Loans with these expanded terms were available solely for investment through our Whole Loan Channel as of June 30, 2026.

Key Operating and Financial Metrics (in thousands)

The following table displays our key operating and financial metrics for six months ended June 30, 2026 and 2025.


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Personal Loan Originations	$	809,828	$	703,416	$	1,540,671	$	1,274,952
Transaction Fees, Net	71,054		61,252		133,143		113,330
Personal Loan Serviced Portfolio (1)	4,395,341		3,907,915		4,395,341		3,907,915
Whole Loans Outstanding (1)	4,164,136		3,632,920		4,164,136		3,632,920
Prosper Credit Card Portfolio (1) (2)	448,682		374,120		448,682		374,120
Servicing Fees, Net	7,816		7,385		16,297		14,742
Total Net Revenues	71,358		51,650		129,726		94,314
Net Income	6,381		(57,727)		71,032		(7,352)
Adjusted EBITDA (3)	17,690		8,338		24,429		6,471
(1) Unpaid principal balance as of June 30
(2) Total of Prosper Allocations, Coastal Allocations and securitized PMCC 2024-1 Credit Card receivables
(3) Adjusted EBITDA is a non-GAAP financial measure. For more information regarding this measure and the reconciliation to Net Income (Loss), the most comparable US GAAP measure, see “Non-GAAP Financial Measure - Adjusted EBITDA.”

Personal Loan Originations

From inception of the Company through June 30, 2026, a total of 2,425,781 Borrower Loans, totaling $32.1 billion were originated through our marketplace.

For the three months ended June 30, 2026, 50,768 Borrower Loans totaling $809.8 million were originated through our marketplace, compared to 42,949 Borrower Loans totaling $703.4 million during the three months ended June 30, 2025. This represents a unit increase of 18% and a dollar increase of 15%. The originations increase for the quarter ended June 30, 2026 versus the quarter ended June 30, 2025 is primarily due to increased third-party investor demand, updated underwriting models, lower interest rates and a new customer acquisition channel.

Personal loan origination volume by Prosper Rating was as follows for the periods presented (in millions, except percentages):


	Three Months Ended June 30,								Six Months Ended June 30,
	2026				2025				2026				2025
	Amount		%		Amount		%		Amount		%		Amount		%
AA	$	122.2	15	%	$	99.9	14	%	$	241.8	16	%	$	183.6	14	%
A	216.2		27	%	125.5		18	%	425.5		28	%	230.1		18	%
B	149.0		17	%	147.4		21	%	276.6		18	%	266.2		22	%
C	101.5		13	%	68.2		9	%	191.4		12	%	112.5		9	%
D	86.9		11	%	69.3		10	%	162.5		11	%	112.6		9	%
E	89.0		11	%	91.1		13	%	161.6		10	%	164.6		13	%
Other (1)	45.0		6	%	102.0		15	%	81.3		5	%	205.4		16	%
Total	$	809.8			$	703.4			$	1,540.7			$	1,275.0
(1) Represents personal loans funded through the Prosper platform via the Whole Loan Channel but not assigned Prosper Ratings.

For the three and six months ended June 30, 2026, compared to the corresponding periods in 2025, Personal Loan originations on the Prosper platform reflect increased originations across most loan ratings. Loans not assigned Prosper ratings are sold only to institutional investors based on specific underwriting criteria and custom risk models developed by those investors. These loans decreased from the prior year primarily as a result of our updated underwriting models, which resulted in the assignment of Prosper ratings to a greater number of loans, and reduced risk appetite from investors that purchase loans without Prosper ratings.

Personal Loan Serviced Portfolio and Whole Loans Outstanding

Our Personal Loan serviced portfolio consists of all Borrower Loans that we service both through the Note and Whole Loan Channels. Borrower Loans funded through the Whole Loan Channels include loans that we hold in consolidated trusts, as well as those sold to third parties. Our Personal Loan serviced portfolio increased $487.4 million, or 12%, from June 30, 2025 to June 30, 2026. This increase is primarily due to increased originations for the three and six months ended June 30, 2026, as compared to the corresponding periods in the prior year.

The outstanding balance of Borrower Loans sold through our Whole Loan Channel serves as a primary driver of our Servicing Assets. Whole loans outstanding increased $531.2 million, or 15%, from June 30, 2025 to June 30, 2026, due primarily to the year-over-year increase in originations discussed above.

Prosper Credit Card Portfolio

Our Credit Card portfolio consists of the outstanding principal balance of all Prosper-branded Credit Cards originated through our partnership with Coastal Community Bank (“Coastal”). From June 30, 2025 to June 30, 2026, the principal balance of the Credit Card portfolio increased $74.6 million, or 20%, due to increases in the number of active Credit Cards and cardholder spend during this time.

Net Income (Loss)

See the section titled “Results of Operations” below, for the discussion on significant changes in Net Income (Loss) year-over-year.

Results of Operations

Overview

The following tables summarize our net income (loss) for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentage):


	Three Months Ended June 30,
	2026		2025		Change		% Change
Total Net Revenues	$	71,358	$	51,650	$	19,708	38	%
Total Expenses	64,677		109,349		(44,672)		41	%
Net Income (Loss) Before Taxes	6,681		(57,699)		64,380		n/m
Income Tax Expense	(300)		(28)		(272)		971	%
Net Income (Loss)	$	6,381	$	(57,727)	$	64,108	n/m
n/m: not meaningful


	Six Months Ended June 30,
	2026		2025		Change		% Change
Total Net Revenues	129,726		94,314		$	35,412	38	%
Total Expenses	58,356		101,610		(43,254)		(43)	%
Net Income (Loss) Before Taxes	71,370		(7,296)		78,666		n/m
Income Tax Expense	(338)		(56)		(282)		504	%
Net Income (Loss)	$	71,032	$	(7,352)	$	78,384	n/m
n/m: not meaningful

Total Net Revenues for the three months ended June 30, 2026 increased $19.7 million, or 38%, as compared to the same period in 2025. The increase was largely attributable to an $10.2 million increase to Total Net Revenues from Change in Fair Value of Financial Instruments, primarily due to an increase in the fair value of our Credit Card Derivative, reflective of growth in the underlying Credit Card portfolio, as well as decreased charge-offs and estimated loss rates (including the impact of the change in estimate related to Credit Card loss rates discussed below). There was also a $9.8 million increase in Transaction Fees, Net, primarily as a result of higher Personal Loan origination volume during this period, as discussed above. In addition, there was a combined $2.4 million increase in Total Net Revenues from Servicing Fees, Net, and Loss on Sale of Borrower Loans, primarily due to higher Personal Loan originations, the increase in whole loans outstanding during this period and decreases in incentives provided to whole loan investors (“incentives”). We also lowered our Personal Loan market servicing rate in September 2025, increasing the valuation of the underlying Servicing Asset. These increases were partially offset by a $1.7 million decrease in Total Interest Income (Expense), Net, due largely to a decrease in the outstanding balance of personal loans held in consolidated trusts, as well as lower interest rates, which reduced interest income generated from the securitized Credit Card portfolio. Finally, Other Revenues decreased $1.0 million year-over-year, due primarily to lower credit referral fees, and certain one-time miscellaneous Credit Card fees earned in the second quarter of 2025.

Total Expenses include the Change in Fair Value of Convertible Preferred Stock Warrants, which is in turn driven by changes in the fair value of the outstanding Convertible Preferred Stock. The loss recognized related to this item was $5.9 million for the three months ended June 30, 2026, which compared to a loss of $59.4 million for the corresponding period in 2025, due to the timing of warrant exercises and changes in the fair value of the underlying Convertible Preferred Stock for these periods. Other components of Total Expenses increased $8.7 million for the three months ended June 30, 2026, as compared to the same period in 2025, primarily due to a combined $9.8 million increase in Origination and Servicing, Sales and Marketing and General and Administrative expenses, as costs increased primarily due to higher Personal Loan originations and growth in the Credit Card portfolio. These increases were partially offset by a $1.0 million decrease in Interest Expense on Term Loans, as a result of the lower interest rate on the new Term Loan we closed in November 2025 (see Note 11 of the accompanying condensed consolidated financial statements). Accordingly, the net income for the three months ended June 30, 2026 increased $64.1 million when compared to the net loss for the three months ended June 30, 2025.

Total Net Revenues for the six months ended June 30, 2026 increased $35.4 million, or 38%, as compared to the same period in 2025. The increase was largely attributable to: (i) a $22.1 million increase to Total Net Revenues from Change in Fair Value of Financial Instruments, primarily due to an increase in the fair value of our Credit Card Derivative, reflective of growth in the underlying Credit Card portfolio, as well as decreased charge-offs and estimated loss rates (including the impact of the change in estimate related to Credit Card loss rates discussed below) and (ii) a $19.8 million increase in Transaction Fees, Net, primarily as a result of higher Personal Loan origination volume during this period, as discussed above. In addition, there was a $1.6 million increase in Servicing Fees, Net, due primarily to increased Personal Loan servicing income, generally consistent with the increase in whole loans outstanding during this period. We also lowered our Personal Loan market servicing rate in September 2025, increasing the Servicing Asset and Servicing Fees, Net. These increases were partially offset by a $4.8 million decrease in Total Interest Income (Expense), Net, due largely to a decrease in the outstanding balance of personal loans held in consolidated trusts, as well as lower interest rates, which reduced interest income generated from the securitized Credit Card portfolio. Additionally, Loss on Sale of Borrower Loans increased $1.7 million from the prior year, primarily as a result of additions to the estimated performance-based payment liability year-over-year. Finally, Other Revenues decreased $1.5 million year-over-year, due primarily to lower credit referral fees, and certain one-time miscellaneous Credit Card fees earned in the second quarter of 2025.

Total Expenses include the Change in Fair Value of Convertible Preferred Stock Warrants, which is in turn driven by changes in the fair value of the outstanding Convertible Preferred Stock. There were gains recognized related to this item of $58.0 million for the six months ended June 30, 2026, which compared to a loss of $2.1 million for the corresponding period in 2025, due to the timing of warrant exercises and changes in the fair value of the underlying Convertible Preferred Stock for these periods. Other components of Total Expenses increased $16.9 million for the six months ended June 30, 2026, as compared to the same period in 2025, primarily due to a combined $19.2 million increase in Origination and Servicing, Sales and Marketing and General and Administrative expenses, as costs increased primarily due to higher Personal Loan originations and growth in the Credit Card portfolio. These increases were partially offset by a $2.1 million decrease in Interest Expense on Term Loans, as a result of the lower interest rate on the new Term Loan we closed in November 2025 (see Note 11 of the accompanying condensed consolidated financial statements). Accordingly, the net income for the six months ended June 30, 2026 increased $78.4 million when compared to the net loss for the six months ended June 30, 2025.

Revenues

The following table summarizes our revenues for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):


	Three Months Ended June 30,
	2026		2025		$ Change		% Change
Operating Revenues:
Transaction Fees, Net	$	71,054	$	61,252	$	9,802	16	%
Servicing Fees, Net	7,816		7,385		431		6	%
Loss on Sale of Borrower Loans	(13,684)		(15,671)		1,987		13	%
Other Revenues	1,810		2,807		(997)		(36)	%
Total Operating Revenues	66,996		55,773		11,223		20	%

Interest Income (Expense):
Interest Income on Financial Instruments	15,719		21,066		(5,347)		(25)	%
Interest Expense on Financial Instruments	(11,779)		(15,432)		3,653		24	%
Total Interest Income (Expense), Net	3,940		5,634		(1,694)		(30)	%
Change in Fair Value of Financial Instruments	422		(9,757)		10,179		n/m
Total Net Revenues	$	71,358	$	51,650	$	19,708	38	%
n/m: not meaningful


	Six Months Ended June 30,
	2026		2025		$ Change		% Change
Operating Revenues:
Transaction Fees, Net	$	133,143	113,330		$	19,813	17	%
Servicing Fees, Net	16,297		14,742		1,555		11	%
Loss on Sale of Borrower Loans	(30,959)		(29,247)		(1,712)		(6)	%
Other Revenues	3,465		4,996		(1,531)		(31)	%
Total Operating Revenues	121,946		103,821		18,125		17	%

Interest Income (Expense):
Interest Income on Financial Instruments	31,968		44,367		(12,399)		(28)	%
Interest Expense on Financial Instruments	(24,145)		(31,761)		7,616		24	%
Total Interest Income (Expense), Net	7,823		12,606		(4,783)		(38)	%
Change in Fair Value of Financial Instruments	(43)		(22,113)		22,070		100	%
Total Net Revenues	$	129,726	$	94,314	$	35,412	38	%

Transaction Fees, Net

We earn a transaction fee upon the successful origination of all Borrower Loans facilitated through our marketplace. Specifically, we receive payments from WebBank as compensation for the activities we perform on its behalf. Transaction fees are determined by the term and credit grade of the underlying Borrower Loans and range from 1.00% to 9.99% of the initial principal balance. We record transaction fee revenue net of any directly related fees paid to WebBank. For Borrower Loans originated prior to May 6, 2026, transaction fees exceeding 5.0% are refundable on a pro-rata basis upon full prepayment prior to maturity, as required by Utah law, where WebBank is domiciled. Changes in the estimated liability for prepayment refunds are recorded as variable consideration and reduce transaction fee revenues. Borrower Loans originated on or after May 6, 2026, are no longer subject to this refund requirement under Utah law, and we expect the refund liability to decrease over time, which we expect will result in an increase in transaction fee revenues.

In addition, Transaction Fees, Net also includes program fees earned from our Credit Card product, such as interchange fees, annual fees and late fees.

Transaction Fees, Net increased $9.8 million, or 16% and $19.8 million, or 17%, for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025, primarily due to the increased Personal Loan

originations discussed above. For the three month period, the increase is also reflective of the impact of the prepayment refund liability decrease following the change in Utah law effective May 6, 2026, as discussed above.

We recognized approximately $8.6 million and $16.5 million in program fees under our Credit Card product for the three and six months ended June 30, 2026, respectively, which represented $1.4 million and $2.1 million increases from the corresponding periods in 2025. These increases are primarily reflective of growth in the underlying Credit Card portfolio during this time.

Servicing Fees, Net

Investors who purchase Borrower Loans through the Whole Loan Channel typically pay us a servicing fee which is generally set at 1.0% per annum of the outstanding principal balance of the Borrower Loan prior to applying the current payment, plus an additional 0.075% per annum to cover the Loan Trailing Fee. The Servicing Fee compensates us for the costs incurred in servicing the Borrower Loan, including managing payments from borrowers, payments to investors and maintaining investors’ account portfolios. We record Servicing Fees from investors as a component of operating revenues when received. We also include any collection fees received, net of collection agency expenses, in Servicing Fees, Net.

In addition, we are contractually obligated to service the entire portfolio under our Credit Card product. Our banking partner, Coastal, pays us a servicing fee of 1.0% per annum of the daily outstanding principal balance of all cards designated as Coastal allocations within the non-securitized portion of the portfolio. These allocations represent approximately 5% of the portfolio. To the extent these contractual fees are less than the market servicing rate that would be required by a market participant to service the portfolio, a servicing obligation is recorded. Changes to the net Credit Card servicing obligation are included in Servicing Fees, Net. We do not recognize a servicing asset or obligation related to any Credit Card receivables that are effectively consolidated on our balance sheet through the PMCC 2024-1 securitization transaction discussed in Note 5 of the accompanying condensed consolidated financial statements.

The increase of $0.4 million, or 6% in Servicing Fees, Net for the three months ended June 30, 2026, as compared to the corresponding period in 2025, is primarily due to a $1.0 million increase in net collections and debt sale fees, due to growth in our Personal Loan servicing book and Credit Card portfolio, and our enhanced collections and recovery efforts. Additionally, Personal Loan servicing revenue from servicing fees collected, net of amortization of the Servicing Asset, increased $0.4 million from the prior year. This is reflective of both (a) the growth in the underlying servicing book discussed above, as well as (b) the reduction in the estimated market servicing rate used to value the Servicing Asset from 63.3 basis points to 59.3 basis points in September 2025. These increases were partially offset by a $1.2 million decrease in Servicing Fees related to increases in the fair value of the net Credit Card servicing obligation. This is due in part to the growth in the underlying Credit Card portfolio, as well as a change in estimate starting in the first quarter of 2026 related to the default rate applied to the cash flows that drive the Credit Card servicing obligation. This change is further discussed in Note 8, Fair Value of Assets and Liabilities, of the accompanying condensed consolidated financial statements.

The increase of $1.6 million, or 11%, in Servicing Fees for the six months ended June 30, 2026, as compared to the corresponding period in 2025, is primarily due to a $1.4 million increase in Personal Loan servicing revenue from servicing fees collected, net of amortization of the Servicing Asset, reflective of both (a) the growth in the underlying servicing book discussed above, as well as (b) the reduction in the estimated market servicing rate used to value the Servicing Asset from 63.3 basis points to 59.3 basis points in September 2025. Additionally, there was a $1.4 million increase in net collections and debt sale fees, due to growth in our Personal Loan servicing book and Credit Card portfolio, and our enhanced collections and recovery efforts. We also recognized a $0.4 million increase in Servicing Fees from miscellaneous Credit Card fees.

These increases were partially offset by a $1.7 million decrease in Servicing Fees related to increases in the fair value of the net Credit Card servicing obligation. This is due in part to the growth in the underlying Credit Card portfolio, as well as a change in estimate starting in the first quarter of 2026 related to the default rate applied to the cash flows that drive the Credit Card servicing obligation. This change is further discussed in Note 8, Fair Value of Assets and Liabilities, of the accompanying condensed consolidated financial statements.

Loss on Sale of Borrower Loans

We recognize a Gain or Loss on Sale of Borrower Loans based on the net proceeds received on a sale through the Whole Loan Channel, less the fair value of the Borrower Loans sold. The net proceeds of the sale represent the fair value of any assets obtained or liabilities incurred as part of the transaction, including, but not limited to Servicing Assets, retained securities, incentives and repurchase obligations provided or received at the time of sale. We also record changes in the estimated investor performance-based payment liability in Gain or Loss on Sale of Borrower Loans.

For the three months ended June 30, 2026, the Loss on Sale of Borrower Loans decreased $2.0 million (increasing Total Net Revenues), primarily due to a $1.3 million increased gain from the recognition of additional Servicing Assets upon the sale of Personal Loans through the Whole Loan Channel. This gain also includes the impact of the market servicing rate used to value the Servicing Assets decreasing from 63.3 bps to 59.3 basis points in September 2025. There was also a $2.0 million decrease in incentives provided to whole loan investors, partially offset by a $1.4 million increase in additions to the performance-based payment liability.

For the six months ended June 30, 2026, the Loss on Sale of Borrower Loans increased $1.7 million (decreasing Total Net Revenues), primarily due to a $5.0 million increase from changes in the performance-based payment liability, partially offset by a $0.4 million decrease in incentives provided to whole loan investors. Excluding these items, the remaining change in Loss on Sale of Borrower Loans for the six months ended June 30, 2026, as compared to the same period in 2025, was an increased gain of $2.9 million, primarily due to the recognition of additional Servicing Assets upon the sale of Personal Loans through the Whole Loan Channel, as the market servicing rate used to value the Servicing Assets decreased from 63.3 bps to 59.3 basis points in September 2025.

Other Revenues

Other Revenues consists primarily of credit referral fees earned from partner companies for the referral of customers from our platform, as well as net volume-based fees from our Credit Card network partner, and miscellaneous fees from our Credit Card banking partner. Of the total $1.0 million and $1.5 million decreases in Other Revenues for the three and six months ended June 30, 2026, respectively, approximately $0.5 million and $1.2 million related to credit referral fees. In addition, net Credit Card fees decreased $0.6 million and $0.5 million for these respective periods, primarily due to certain one-time miscellaneous fees earned from our Credit Card banking partner in the second quarter of 2025.

Interest Income on Financial Instruments and Interest Expense on Financial Instruments

We recognize Interest Income on Borrower Loans and Receivable from Credit Card Partner (consisting of the underlying securitized Credit Card receivables) using the accrual method based on the stated interest rate to the extent we

believe it to be collectible. We record interest expense on the corresponding fractional Notes, at Fair Value and Notes Issued by Securitization Trusts based on the contractual interest rates. The interest rate on fractional Notes, at Fair Value is generally 1% lower than the interest rate on the corresponding Borrower Loans to compensate us for servicing the underlying Borrower Loans.

The decrease of $1.7 million, or 30%, in Total Interest Income (Expense), Net for the three months ended June 30, 2026, as compared to the corresponding period in 2025, was primarily due to a $0.9 million decrease in Total Interest Income (Expenses), Net generated from securitized Borrower Loans, net of interest expense and setup cost amortization incurred on the Notes Issued by Securitization Trust, which is primarily reflective of the lower average outstanding balance of loans held in consolidated trusts year-over-year, as well as the related decrease in the associated financing liabilities as a result of principal repayments. In addition, there was a $0.7 million decrease in Total Interest Income (Expenses), Net from the underlying securitized Credit Card receivables included within Receivable from Credit Card Partner, less interest expense and setup cost amortization incurred on the related Notes Issued by Securitization Trust. This decrease is primarily reflective of lower interest rates during this time.

The decrease of $4.8 million, or 38%, in Total Interest Income (Expense), Net for the six months ended June 30, 2026, as compared to the corresponding period in 2025, was primarily due to a $2.4 million decrease in Total Interest Income (Expenses), Net generated from the underlying securitized Credit Card receivables included within Receivable from Credit Card Partner, less interest expense and setup cost amortization incurred on the related Notes Issued by Securitization Trust. This decrease is primarily reflective of lower interest rates during this time. In addition, there was a $2.0 million decrease in Total Interest Income (Expense), Net generated from securitized Borrower Loans, net of interest expense and setup cost amortization incurred on the Notes Issued by Securitization Trust, which is primarily reflective of the lower average outstanding balance of loans held in consolidated trusts year-over-year, as well as the related decrease in the associated financing liabilities as a result of principal repayments. Finally, Total Interest Income (Expense), Net from securitization bank accounts, servicing revenue related to fractional Notes, and Borrower Loans we hold for investment decreased a combined $0.3 million from the prior year.

Change in Fair Value of Financial Instruments

We record Borrower Loans, Notes, the Credit Card Derivative and Receivable from Credit Card Partner at fair value on our balance sheets. Changes in the fair values of these financial instruments are presented within Change in Fair Value of Financial Instruments on our statements of operations.

Personal Loan

Changes in the fair value of Borrower Loans funded through the Note Channel are largely offset by the changes in the fair value of the Notes due to their borrower payment-dependent structure. Our obligation to pay principal and interest on Notes is equal to the loan payments, if any, that are received on the corresponding Borrower Loan, net of the servicing fee, which is generally 1.0% of the outstanding balance.

In September 2023 and March 2024, we sponsored and consolidated two Personal Loan securitization transactions, PMIT 2023-1 and PMIT 2024-1, respectively, with loans that were previously funded through consolidated Warehouse Lines. Refer to Note 7, Securitizations, of the accompanying condensed consolidated financial statements for additional information on these securitization transactions. We expect that changes in the fair value of Borrower Loans held by PMIT 2023-1 and PMIT 2024-1 will be negative due to delinquencies and charge-offs, but they could ultimately be negative or positive due to changes in fair value assumptions, such as expected credit performance, prepayment rates and implied market discount rates. Additionally, the impact from fair value adjustments on these securitized Borrower Loans may lessen as they season and the outstanding principal balances decrease. Notes issued by PMIT 2023-1 and PMIT 2024-1 are carried at amortized cost on the accompanying condensed consolidated balance sheets and thus do not impact the Change in Fair Value of Financial Instruments.

We earn interest income on personal loans held in securitization trusts during the period we own or consolidate the loans, which partially offsets changes in the fair value of these loans. The following table illustrates the weighted-average composition of the loans held in consolidated securitization trusts by Prosper Rating for the periods presented, which is an indicator of their credit quality:


	Six Months Ended June 30
	2026		2025
Borrower Loans - Securitization(1):
AA	21	%	24	%
A	31	%	30	%
B	25	%	23	%
C	10	%	11	%
D	6	%	6	%
E	6	%	5	%
HR	1	%	1	%
Total	100	%	100	%
(1) The percentages are calculated using the weighted-average of month-end principal balances of Borrower Loans by Prosper Rating.

Fair values of Borrower Loans and Notes are estimated using discounted cash flow methodologies based upon a set of valuation assumptions. The key assumptions used include default and prepayment rates derived primarily from historical performance, and discount rates based on estimates of the rates of return that market investors would require when investing in other financial instruments with similar characteristics.

Credit Card

The Credit Card Derivative is recorded at fair value and is primarily reflective of discounted future cash flows from certain features of our Credit Card program that were determined to meet the definition of freestanding derivatives, including interest income, program fees paid to our banking partner Coastal, credit losses and fraud losses. These cash flows are estimated based upon a set of valuation assumptions, including default rates derived from our historical performance, prepayment rates derived from market data and discount rates based on estimates of the rates of return that investors would require when investing in other financial instruments with similar characteristics. We also record the net impact of realized gains and losses under the Credit Card Derivative in Change in Fair Value of Financial Instruments.

In November 2024, we sponsored and consolidated a Credit Card securitization transaction, PMCC 2024-1, with existing Credit Card receivables that were previously accounted for through our Credit Card Derivative. See Notes 5 and 7 of the accompanying condensed consolidated financial statements for further details on both the Credit Card Derivative and PMCC 2024-1. We fully consolidate PMCC 2024-1 as a variable interest entity, as it has insufficient equity at risk and we determined that we were its primary beneficiary. Based on an analysis of the facts and circumstances surrounding the transaction, it was determined that the transfer of the Credit Card receivables from Coastal to PMCC 2024-1 did not meet the sales or participating interest criteria under Accounting Standards Codification (“ASC”) 860, Transfers and Servicing, and thus could not be recognized on our condensed consolidated balance sheets. As a result, we record a secured Receivable from Credit Card Partner, which we have elected to present at fair value on our condensed consolidated balance sheets. Receivable from Credit Card Partner is secured by and effectively mirrors the value of the underlying Credit Card receivables.

As the sole sponsor of PMCC 2024-1, we are entitled to any residual cash flows it generates, and estimate the fair value of that residual interest using a discounted cash flow analysis based upon valuation assumptions generally similar to those used to value the Credit Card Derivative, adjusted to reflect the specific characteristics of the securitized Credit Card receivables underlying the Receivable from Credit Card Partner. That residual interest fair value is then added to the securitization advance rate applied to the outstanding balance of the Credit Card receivables to calculate the estimated fair value of Receivable from Credit Card Partner. Consistent with securitized Borrower Loans, Notes issued by PMCC 2024-1 are carried at amortized cost on the accompanying condensed consolidated balance sheets, and thus do not impact the Change in Fair Value of Financial Instruments.

For both the Credit Card Derivative and Receivable from Credit Card Partner, changes in the fair value should generally fluctuate in line with changes in the underlying portfolio and charge-off levels, but could also be impacted by changes in fair value assumptions, such as estimated loss and prepayment rates and implied market discount rates.

Fluctuation Analysis

For the three months ended June 30, 2026 and 2025, the Change in Fair Value of Financial Instruments was a gain of $0.4 million and a loss of $9.8 million, respectively. The increase in the gain for this period of $10.2 million was largely driven by the Credit Card Derivative. For the three months ended June 30, 2026, fair value changes related to future cash flows resulted in a gain of $3.3 million, and the net impact of realized transactions resulted in a gain of $1.6 million. This compares to the corresponding period in the prior year, when fair value changes resulted in a loss of $0.5 million, and the net impact of realized transactions resulted in a loss of $3.0 million. As discussed in Note 8, Fair Value of Assets and Liabilities, of the accompanying condensed consolidated financial statements, there was a change in estimate effective March 31, 2026, related to the default rate applied to the cash flows that drive the Credit Card Derivative. This change resulted in an increase to the Credit Card Derivative of $5.2 million on the effective date. Remaining fluctuations in gains and losses on the Credit Card Derivative for this period are due primarily to growth in the underlying non-securitized Credit Card portfolio from the prior year, as well as lower loss rates.

For the Receivable from Credit Card Partner, we recognized a $0.1 million gain from changes in fair value related to future cash flows and $3.9 million in net charge-offs for the three months ended June 30, 2026. This compares to the corresponding period in the prior year, when we recognized a $0.4 million loss from changes in fair value related to future cash flows and $4.3 million in net charge-offs. Because of the minimum contractual ratio of Credit Card receivables to outstanding Notes issued by PMCC 2024-1, the underlying securitized Credit Card portfolio has remained generally flat year-over-year, limiting the impact of fair value changes related to future cash flows.

In addition, there was a decrease in the net loss from securitized Borrower Loans year-over-year, due primarily to the overall decrease in the average balance of loans held in consolidated securitization trusts during this time, as these loans continue to season. For the three months ended June 30, 2026, the loss from changes in the fair value of securitized Borrower Loans was $0.8 million, due to a $1.1 million gain from fair value adjustments, offset by $1.9 million in net charge-offs. This compares to the same period in the prior year, when the loss from changes in the fair value of securitized Borrower Loans was $2.1 million, due to a $2.3 million gain from fair value adjustments, offset by $4.3 million in net charge-offs.

The net impact to the Change in Fair Value of Financial Instruments for fractional Borrower Loans and Notes (as well as the population of whole loans that are owned directly by our wholly-owned subsidiary PFL) was a gain of $0.1 million for the three months ended June 30, 2026, due to the borrower payment-dependent structure described above, offset by certain timing factors related to the receipt of borrower payments. During the same period in 2025, the net impact from these fractional Borrower Loans and Notes (as well as the population of whole loans that are owned directly by PFL) was a gain of $0.4 million.

For the six months ended June 30, 2026 and 2025, the Change in Fair Value of Financial Instruments were losses of less than $0.1 million and $22.1 million, respectively. The decrease in the loss for this period of $22.1 million was largely driven by the Credit Card Derivative. For the six months ended June 30, 2026, fair value changes related to future cash flows resulted in a gain of $7.7 million, and the net impact of realized transactions resulted in a gain of $2.8 million. This compares to the corresponding period in the prior year when fair value changes resulted in a loss of $2.3 million, and the net impact of realized transactions resulted in a loss of $7.8 million. These changes are primarily reflective of growth in the underlying non-securitized Credit Card portfolio, lower loss rates and the change in estimate made in the first quarter of 2026 referenced above.

In addition, there was a decrease in the net loss from securitized Borrower Loans year-over-year, due primarily to the overall decrease in the average balance of loans held in consolidated securitization trusts during this time, as these loans continue to season. For the six months ended June 30, 2026, the loss from changes in the fair value of securitized Borrower Loans was $2.1 million, due to a $2.3 million gain from fair value adjustments, offset by $4.4 million in net charge-offs. This compares to the same period in the prior year, when the loss from changes in the fair value of securitized Borrower Loans was $5.2 million, due to a $4.6 million gain from fair value adjustments, offset by $9.9 million in net charge-offs.

These decreases in the net loss were partially offset by the Receivable from Credit Card Partner, for which we recognized a $0.3 million loss from changes in fair value related to future cash flows and $7.7 million in net charge-offs for the six months ended June 30, 2026. This compares to the corresponding period in the prior year, when we recognized a $0.4 million loss from changes in fair value related to future cash flows and $6.2 million in net charge-offs. Because of the minimum contractual ratio of Credit Card receivables to outstanding Notes issued by PMCC 2024-1, the underlying securitized Credit Card portfolio has remained generally flat year-over-year, limiting the impact of fair value changes related to future cash flows.

The net impact to the Change in Fair Value of Financial Instruments for fractional Borrower Loans and Notes (as well as the population of whole loans that are owned directly by our wholly-owned subsidiary PFL) was a loss of $0.5 million for the six months ended June 30, 2026, due to the borrower payment-dependent structure described above, offset by certain timing factors related to the receipt of borrower payments. During the same period in 2025, the net impact from these fractional Borrower Loans and Notes (as well as the population of whole loans that are owned directly by PFL) was a loss of $0.2 million.

The following table details the components of Changes in Fair Value of Financial Instruments for the three and six months ended June 30, 2026 and 2025, respectively (in thousands, except percentages):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Assets:
Borrower Loans	$	(5,707)	(5,614)		$	(13,431)	$	(13,948)
Credit Card Derivative (includes gains and losses from settled transactions)	4,898		(3,199)		10,522		(9,647)
Receivable from Credit Card Partner	(3,827)		(4,912)		(7,917)		(7,011)

Liabilities:
Notes	5,058		3,968		10,783		8,493
Total	$	422	$	(9,757)	$	(43)	$	(22,113)

Expenses

The following tables summarize our expenses for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):


	Three Months Ended June 30,
	2026		2025		Change		% Change
Expenses
Origination and Servicing	$	13,472	$	11,967	$	1,505	13	%
Sales and Marketing	21,262		14,517		6,745		46	%
General and Administrative - Research and Development	6,022		5,410		612		11	%
General and Administrative - Other	16,932		15,976		956		6	%
Change in Fair Value of Convertible Preferred Stock Warrants	5,941		59,359		(53,418)		(90)	%
Interest Expense on Term Loans	1,995		2,979		(984)		(33)	%
Other Income, Net	(947)		(859)		(88)		10	%
Total Expenses	$	64,677	$	109,349	$	(44,672)	41	%


	Six Months Ended June 30,
	2026		2025		Change		% Change
Expenses
Origination and Servicing	27,850		23,642		$	4,208	18	%
Sales and Marketing	40,281		27,949		12,332		44	%
General and Administrative - Research and Development	11,581		10,131		1,450		14	%
General and Administrative - Other	34,550		33,349		1,201		4	%
Change in Fair Value of Convertible Preferred Stock Warrants	(58,008)		2,133		(60,141)		n/m
Interest Expense on Term Loan	3,977		$	6,055	(2,078)		(34)	%
Other Income, Net	(1,875)		(1,649)		(226)		14	%
Total Expenses	$	58,356	$	101,610	$	(43,254)	(43)	%
n/m: not meaningful

The following table reflects full-time employees as of June 30, 2026 and 2025 by functional area:


	June 30, 2026	June 30, 2025
Origination and Servicing	87	90
Sales and Marketing	26	23
General and Administrative - Research and Development	109	104
General and Administrative - Other	161	165
Total Headcount	383	382

Origination and Servicing

Origination and Servicing costs consist primarily of salaries, benefits and stock-based compensation expense related to our capital markets, collections, customer support and payment processing employees and vendor costs associated with facilitating and servicing personal loans and our Credit Card product. The increase for the three months ended June 30, 2026, of $1.5 million, or 13%, as compared to the corresponding period in 2025, is primarily due to a $0.6 million increase in depreciation, reflecting the increased balance of internal-use software during this time. In addition, there was a $0.6 million increase in servicing and origination costs and a $0.4 million increase in compensation costs, driven by overall growth in our Personal Loan and Credit Card products during this time.

The increase for the six months ended June 30, 2026 of $4.2 million, or 18%, as compared to the corresponding period in 2025, is primarily due to a $2.1 million increase in depreciation, reflecting the increased balance of internal-use software during this time. In addition, servicing and origination costs increased $1.0 million, and compensation costs increased $0.9 million, driven by overall growth in our Personal Loan and Credit Card products during this time.

Sales and Marketing

Sales and Marketing costs consist primarily of affiliate marketing, search engine marketing, online and offline campaigns, email marketing, public relations and direct mail marketing, as well as compensation expenses such as wages, benefits and stock-based compensation for the employees who support these activities. For the three months ended June 30, 2026, the increase of $6.7 million, or 46%, from the corresponding period in 2025, is due primarily to an overall increase in marketing and advertising costs, including direct mail marketing costs of $4.0 million and marketing partnership costs of $2.2 million. This is generally in line with the increase in Personal Loan originations and growth in our Credit Card portfolio during this time. In addition, compensation expense and outsourced services costs increased a combined $0.4 million from the prior year, generally in line with an increase in headcount during this time, as well as the Personal Loan and Credit Card growth referenced above.

For the six months ended June 30, 2026, the increase of $12.3 million, or 44%, from the corresponding period in 2025, is due primarily to an overall increase in marketing and advertising costs, including direct mail marketing costs of $7.3 million and marketing partnership costs of $5.3 million. This is generally in line with the increase in Personal Loan originations and growth in our Credit Card portfolio during this time, which also contributed to a $0.4 million increase in outsourced services. These increases were partially offset by a $0.8 million decrease in compensation expense, including one-time severance costs incurred in the prior year.

General and Administrative – Research and Development

General and Administrative – Research and Development costs consist primarily of salaries, benefits and stock-based compensation expense related to our engineering and product development employees, as well as related vendor costs. The increase in General and Administrative – Research and Development for the three months ended June 30, 2026, of $0.6 million, or 11%, from the corresponding period in the prior year is primarily due to a $0.6 million increase in compensation costs, reflective of increased headcount and the reinstatement of 401(k) employer contributions at the start of 2026. Additionally, there was a $0.2 million increase in outsourced services to further support the growth in our operations. These increases were partially offset by a $0.2 million year-over-year increase in capitalized internal-use software and web development costs (decreasing the expense). Specifically, these capitalized costs were $4.0 million and $3.8 million for the three months ended June 30, 2026 and 2025, respectively.

The increase in General and Administrative – Research and Development for the six months ended June 30, 2026, of $1.5 million, or 14%, from the corresponding period in the prior year is primarily due to a $1.2 million increase in compensation costs, reflective of increased headcount and the reinstatement of 401(k) employer contributions at the start of 2026. Additionally, there was a $0.2 million increase in outsourced services to further support the growth in our operations. These increases were partially offset by a $0.1 million increase in capitalized internal-use software and web development costs (decreasing the expense). Specifically, these capitalized costs were $7.7 million and $7.5 million for the six months ended June 30, 2026 and 2025, respectively.

General and Administrative – Other

General and Administrative – Other expenses consist primarily of salaries, benefits and stock-based compensation expense related to our accounting, finance, risk, legal, compliance, human resources and facilities employees; professional fees related to legal and accounting services; and facilities expenses. The increase in General and Administrative – Other expenses for the three months ended June 30, 2026 of $1.0 million, or 6%, from the corresponding period in the prior year is primarily due to (a) a $0.5 million increase in software and subscription costs, (b) a $0.4 million increase in compensation expense and (c) a $0.2 million increase in cloud computing costs during this time. These increases are reflective of the overall growth in our operations, as well as the reinstatement of the 401k employer contributions at the start of 2026. They were partially offset by a $0.4 million decrease in professional services expenses.

The increase in General and Administrative – Other expenses for the six months ended June 30, 2026 of $1.2 million, or 4%, from the corresponding period in the prior year is primarily due to (a) a $0.6 million increase in compensation expense, (b) a $0.4 million increase in software and subscription costs and (c) a $0.4 million increase in cloud computing costs during this time. These increases are reflective of the overall growth in our operations, as well as the reinstatement of the 401k employer contributions at the start of 2026. They were partially offset by a $0.2 million decrease in professional services expenses and a $0.2 million decrease in depreciation expense.

Change in Fair Value of Convertible Preferred Stock Warrants

Change in Fair Value of Convertible Preferred Stock Warrants was a loss of $5.9 million for the three months ended June 30, 2026, due to an increase in the fair value of the underlying outstanding Convertible Preferred Stock for the period. For the six months ended June 30, 2026, Change in Fair Value of Convertible Preferred Stock Warrants was a gain of $58.0 million, due to a decrease in the fair value of the underlying outstanding Convertible Preferred Stock for the period. Change in Fair Value of Convertible Preferred Stock Warrants were losses of $59.4 million and $2.1 million for the three and six months ended June 30, 2025, respectively, due to increases in the fair value of the underlying Convertible Preferred Stock for those periods.

For the six months ended June 30, 2026, there were four individual exercises of Convertible Preferred Stock Warrants. We record changes in the estimated fair value of the Convertible Preferred Stock Warrants up to the exercise date, at which time the full fair value of the exercised warrants is reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock on our consolidated balance sheets.

•On March 19, 2026, one warrant holder exercised 41,833,904 shares of Series F warrants for total proceeds of $0.4 million, and the estimated fair value of these warrants of $42.3 million was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock on our consolidated balance sheet.

•On March 31, 2026, one warrant holder exercised 35,544,141 shares of Series E-1 warrants for total proceeds of $0.4 million, and the estimated fair value of these warrants of $38.7 million was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock on our consolidated balance sheet.

•On May 15, 2026, one warrant holder exercised 41,833,904 shares of Series F warrants for total proceeds of $0.4 million, and the estimated fair value of these warrants of $42.7 million was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock on our consolidated balance sheet.

•On June 15, 2026, one warrant holder exercised 41,833,904 shares of Series F warrants for total proceeds of $0.4 million, and the estimated fair value of these warrants of $47.7 million was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock on our consolidated balance sheet.

Following these exercises, 604,868 of Series F Convertible Preferred Stock Warrants remain outstanding, with a total estimated fair value of $0.7 million.

Interest Expense on Term Loan

We entered into a $75.0 million Term Loan with a third party lender in November 2022. In November 2025, we entered into a new $75.0 million Term Loan with a different third-party lender, and simultaneously repaid the outstanding principal and interest balance of approximately $68.4 million on the old Term Loan. Refer to Note 11, Debt, of the accompanying condensed consolidated financial statements for further information on our Term Loans. We incurred interest costs of $2.0 million and $4.0 million under the new Term Loan for the three and six months ended June 30, 2026, respectively, as compared to $3.0 million and $6.1 million, respectively, under the old Term Loan for the corresponding period in 2025. This decrease is primarily reflective of more favorable interest terms under the new Term Loan, as the interest rate associated with the new Term Loan is four percentage points lower than the old Term Loan. We expect to continue to incur lower interest expense in the future because of this change.

Other Income, Net

Other Income, Net was $0.9 million and $1.9 million for the three and six months ended June 30, 2026, respectively, and primarily consists of interest income on cash and cash equivalents, sublease income and other miscellaneous items. The $0.1 million and $0.2 million increases in Other Income, Net, for the three and six ended June 30, 2026, as compared to the corresponding periods in the prior year, were not considered significant.

Income Tax Expense

Income Tax Expense was $0.3 million and $28 thousand for the three months ended June 30, 2026 and 2025, respectively, and $0.3 million and $56 thousand for the six months ended June 30, 2026 and 2025, respectively. The income tax expense relates to state income tax expense and the amortization of tax deductible goodwill which gives rise to an indefinite-lived deferred tax liability. No other income tax expense or benefit was recorded for the three and six month periods ended June 30, 2026 and 2025 due to a full valuation allowance recorded against our deferred tax assets.

Non-GAAP Financial Measure - Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as Net Income (Loss) adjusted for interest income on Cash and Cash Equivalents, Interest Expense on Term Loan, Income Tax Benefit or Expense, depreciation and amortization, impairment of long-lived assets and Goodwill, stock-based compensation expense, Change in Fair Value of Convertible Preferred Stock Warrants, impact of interest rates on the fair value of loans held in consolidated trusts, and certain infrequent or unusual transactions. The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.

We consider Adjusted EBITDA to be a helpful indicator of the operational strength and performance of our business and a good measure of our historical operating trends. Management uses Adjusted EBITDA, among other things, to understand and compare operating results across accounting periods, to evaluate our operations and financial performance and for internal planning and forecasting purposes. Inclusion of Adjusted EBITDA is intended to provide investors insight into the manner in which management views the performance of the Company, enhance investors’ evaluation of our operating results, and to facilitate meaningful comparisons of our results between periods. This non-GAAP financial measure should not be considered an alternative to, or more meaningful than, the GAAP financial information provided herein.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

•Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•Adjusted EBITDA does not consider the potentially dilutive impact of equity-based charges;

•Adjusted EBITDA does not reflect interest and tax payments that may represent a reduction in cash available to us; and

•Other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

The major non-GAAP adjustments, and our basis for excluding them, are outlined below:

•Changes in the fair value of Convertible Preferred Stock Warrants: We exclude these fair value changes primarily because they are non-cash items and the fair value varies based on the fair value of the underlying preferred stock,

varying valuation methodologies and subjective assumptions. Their inclusion makes the comparison of our current financial results to previous and future periods difficult to evaluate.

•Stock-based compensation expense: This consists of expenses for equity awards under our equity incentive plans. Although stock-based compensation is an important aspect of the compensation paid to our employees, the grant date fair value varies based on the stock price at the time of grant, varying valuation methodologies, subjective assumptions and the variety of award types. This makes the comparison of our current financial results to previous and future periods difficult to evaluate; therefore, we believe it is useful to exclude stock-based compensation. We also excluded these expenses because they are non-cash.

•Amortization or impairment of acquired Intangible Assets and impairment of Goodwill: We incur amortization or impairment of acquired Intangible Assets and Goodwill in connection with acquisitions and therefore exclude these amounts from our non-GAAP measures. We exclude these items because management does not believe they are reflective of our ongoing operating results.

•Impairment of long-lived assets: We incur losses on the impairment of long-lived assets that are disposed of primarily in connection with the exit of facilities. We exclude these items because management does not believe they are reflective of our ongoing operating results.

•Impact of interest rates on the fair value of loans held in consolidated trusts: We believe it is useful to investors to exclude the impact of interest rates on the fair value of loans held in consolidated trusts to gain insight into the performance of our consolidated loans, independent of market factors that are beyond management’s control.

•Interest Expense on Term Loans: We incur interest expense on our Term Loan, which is more fully described in Note 11, Debt, of the accompanying condensed consolidated financial statements. This includes any amortization of original issue discount and deferred issuance costs associated with the Term Loan. Proceeds from the Term Loan are used to fund the operations of the business at our discretion, within certain limitations. This may include, but is not limited to, making investments in our Credit Card product or meeting operational obligations. We exclude the Term Loan interest expense as it is based on our overall financing structure. This differs from Interest Expense on Financial Instruments (part of Total Net Revenues), as the proceeds from those instruments are used exclusively for the purposes of purchasing Personal Loans on our marketplace and Credit Card receivables through the underlying securitization transactions.

The following table presents a reconciliation of Net Income (Loss) to Adjusted EBITDA for each of the periods indicated (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Net Income (Loss)	$	6,381	$	(57,727)	$	71,032	$	(7,352)
Depreciation expense:
Servicing and Origination	3,374		2,785		7,516		5,464
General and Administration - Other	176		232		338		500
Stock-Based Compensation	331		349		795		676
Change in the Fair Value of Convertible Preferred Stock Warrants	5,941		59,359		(58,008)		2,133
Impact of interest rates on fair value of loans held in consolidated trusts	18		1,069		73		343
Interest Income on Cash and Cash Equivalents	(826)		(736)		(1,632)		(1,404)
Interest Expense on Term Loan	1,995		2,979		3,977		6,055
Income Tax Expense	300		28		338		56
Adjusted EBITDA	$	17,690	$	8,338	$	24,429	$	6,471

The increase in Adjusted EBITDA for the three months ended June 30, 2026 of $9.4 million, as compared to the corresponding period in 2025, is primarily reflective of increased net revenues from (i) Transaction Fees, Net, due primarily to the increase in Personal Loan originations during this time, (ii) Change in Fair Value of Financial Instruments, driven largely by growth in the Credit Card portfolio and decreased loss rates and (iii) Loss on Sale of Borrower Loans and Servicing Fees, primarily as a result of the increase in Personal Loan originations, growth in the underlying Personal Loan servicing book and decreased whole loan investor incentives. These increases were partially offset by (i) decreased interest income generated from

securitized Personal Loans and Credit Card receivables, and (ii) increased expenses in response to higher Personal Loan originations and growth in the Credit Card portfolio.

The increase in Adjusted EBITDA for the six months ended June 30, 2026 of $18.0 million, as compared to the corresponding period in 2025, is primarily reflective of increased net revenues from (i) Change in Fair Value of Financial Instruments, driven largely by growth in the Credit Card portfolio and decreased loss rates, and (ii) Transaction Fees, Net, driven by the increase in Personal Loan originations during this time. These increases were partially offset by (i) decreased interest income generated from securitized Personal Loans and Credit Card receivables, (ii) increased estimated performance-based payment liabilities and (iii) increased expenses in response to higher Personal Loan originations and growth in the Credit Card portfolio.

Expenses on the condensed consolidated statements of operations include the following amounts of stock-based compensation expense for the periods presented (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Origination and Servicing	$	47	$	27	$	149	$	55
Sales and Marketing	18		18		33		35
General and Administrative	266		304		613		586
Total Stock-Based Compensation Expense	$	331	$	349	$	795	$	676

Segment Net Revenues and Adjusted EBITDA

Refer to Note 20, Segments, of the accompanying condensed consolidated financial statements for information on our segment reporting, including reconciliations of segment Adjusted EBITDA to Net Income (Loss) Before Income Taxes, as well as details on segment operating expenses.

Effective in the fourth quarter of 2025, we updated our operating and reportable segments to align with strategic business and management reporting changes. This realignment is reflected in the periodic financial reports provided to our Chief Executive Officer, who serves as the chief operating decision maker, for the purposes of evaluating performance, making operating decisions and allocating resources. As a result of these changes, our former Home Equity segment was eliminated and the related products and services are now combined with the Personal Loan segment, which includes both Personal Loan products and services, as well as general corporate expenses. We now have two reportable and operating segments: Personal Loan and Credit Card. Segment information presented for the three and six months ended June 30, 2025, has been recast to conform to the current reportable segment presentation.

The following table summarizes our segment net revenues and segment Adjusted EBITDA for the periods presented (in thousands, except percentages).


	Three Months Ended June 30,
	2026		2025		Change		% Change
Segment Net Revenues
Personal Loan	$	60,843	$	50,309	$	10,534	21	%
Credit Card	10,515		1,341		9,174		684	%
Subtotal - Reportable Segments	$	71,358	$	51,650	$	19,708	38	%

Segment Adjusted EBITDA
Personal Loan	$	19,561	14,244		$	5,317	37	%
Credit Card	(1,871)		(5,906)		4,035		68	%
Subtotal - Reportable Segments	$	17,690	$	8,338	$	9,352	112	%
n/m: not meaningful


	Six Months Ended June 30,
	2026		2025		Change		% Change
Segment Net Revenues
Personal Loan	$	108,202	$	91,049	$	17,153	19	%
Credit Card	21,524		3,265		18,259		559	%
Subtotal - Reportable Segments	$	129,726	$	94,314	$	35,412	38	%

Segment Adjusted EBITDA
Personal Loan	$	26,068	$	17,908	$	8,160	46	%
Credit Card	(1,639)		(11,437)		9,798		86	%
Subtotal - Reportable Segments	$	24,429	$	6,471	$	17,958	278	%
n/m: not meaningful

Segment Adjusted EBITDA is our primary segment profitability metric, and is calculated as segment revenues less operating expenses that are directly attributable to each individual segment’s products.

Personal Loan

For the three months ended June 30, 2026, Personal Loan segment net revenues increased $10.5 million, or 21%, as compared to the corresponding period in 2025, primarily as a result of (a) a $8.1 million increase in Transaction Fees, Net, due to the impact from higher Personal Loan originations during this time; (b) a $2.0 million increase from Loss on Sale of Borrower Loans, due primarily to increased originations and decreased whole loan investor incentives; (c) a $1.0 million increase in net revenues from Change in Fair Value of Financial Instruments related primarily to securitized Borrower Loans, as described above; and (d) a $0.9 million increase in Servicing Fees, Net, largely from increased servicing fees collected due to growth in the Personal Loan servicing book. These increases were partially offset by (d) a $1.0 million decrease in Total Interest Income (Expense), Net, due primarily to the decrease in the average outstanding principal balance of loans held in securitization trusts during this time; and (f) a $0.4 million decrease in Other Revenues, due primarily to reduced credit referral fees generated from our partners.

For the six months ended June 30, 2026, Personal Loan segment net revenues increased $17.2 million, or 19%, as compared to the corresponding period in 2025, primarily as a result of (a) a $17.0 million increase in Transaction Fees, Net, due to the impact from higher Personal Loan originations during this time; (b) a $2.8 million increase in net revenues from Change in Fair Value of Financial Instruments related primarily to securitized Borrower Loans, as described above; and (c) a $2.4 million increase in Servicing Fees, Net, due to both increased servicing fees as a result of growth in the Personal Loan servicing book, as well as additional collections and debt sale fees. These increases were partially offset by (d) a $2.4 million decrease in Total Interest Income (Expense), Net, due primarily to the decrease in the average outstanding principal balance of loans held in securitization trusts during this time; (e) a $1.7 million decrease in net revenues from Loss on Sale of Borrower Loans, due primarily to an increase in the estimated performance-based payment liability; and (f) a $1.0 million decrease in Other Revenues, due primarily to reduced credit referral fees generated from our partners.

Adjusted EBITDA associated with the Personal Loan segment increased $5.3 million and $8.2 million for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025. These increases are primarily reflective of the same factors that drove the respective increases in net revenues discussed above, excluding the impact of interest rates on the fair value of loans held in consolidated trusts, and partially offset by increases of $4.2 million and $8.7 million in segment operating expenses year-over-year for the three and six months ended June 30, 2026, respectively. These increases in segment operating expenses were primarily reflective of increased marketing, compensation, outsourced services, software and cloud computing costs driven by the increase in Personal Loan originations during this time.

Credit Card

For the three months ended June 30, 2026, Credit Card segment net revenues increased $9.2 million as compared to the corresponding period in 2025, primarily as a result of a $9.2 million increase in net revenues from Change in Fair Value of Financial Instruments, primarily related to the Credit Card Derivative, as discussed above. Generally, this increase in net revenues from fair value changes is reflective of growth in the non-securitized portion of the Credit Card portfolio, as well as decreased loss rates. In addition, Transaction Fees, Net increased $1.7 million, primarily due to the growth in the Credit Card portfolio, which resulted in additional annual and interchange fees. These increases were partially offset by a $0.7 million decrease in Total Interest Income (Expense), Net, from the securitized Credit Card receivables underlying the Receivable from Credit Card Partner, as discussed above. Finally, there was a $0.6 million decrease in Other Revenues, largely due to certain one-time miscellaneous fees earned from our Credit Card banking partner in the second quarter of 2025, and a $0.4 million decrease in Servicing Fees, Net, primarily from an increase in the Credit Card servicing obligation attributable to growth in the Credit Card portfolio.

For the six months ended June 30, 2026, Credit Card segment net revenues increased $18.3 million as compared to the corresponding period in 2025, primarily as a result of a $19.3 million increase in net revenues from Change in Fair Value of Financial Instruments, primarily related to the Credit Card Derivative, partially offset by the Receivable from Credit Card Partner, as discussed above. Generally, this increase in net revenues from fair value changes is reflective of growth in the non-securitized portion of the Credit Card portfolio, as well as decreased loss rates. In addition, Transaction Fees, Net increased $2.8 million, primarily due to the growth in the Credit Card portfolio, which resulted in additional annual and interchange fees. These increases were partially offset by a $2.4 million decrease in Total Interest Income (Expense), Net from the securitized Credit Card receivables underlying the Receivable from Credit Card Partner, as discussed above. Finally, there was a $0.9 million decrease in Servicing Fees, Net, primarily from an increase in the Credit Card servicing obligation attributable to growth in the Credit Card portfolio, and a $0.5 million decrease in Other Revenues, largely due to certain one-time miscellaneous fees earned from our Credit Card banking partner in the second quarter of 2025.

Adjusted EBITDA associated with the Credit Card segment increased $4.0 million and $9.8 million for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025. These increases are primarily reflective of the same factors that drove the respective increases in net revenues discussed above, partially offset by increases of $5.1 million and $8.5 million in segment operating expenses year-over-year for the three and six months ended June 30, 2026, respectively. These increases in segment operating expenses were largely driven by increased marketing, servicing and compensation costs, which was in line with the increase in the underlying Credit Card portfolio during this time.

LIQUIDITY AND CAPITAL RESOURCES

We have incurred operating losses in prior periods and may continue to incur net losses in the future. For the three months ended June 30, 2026 and 2025, we generated net income of $6.4 million and a net loss of $57.7 million, respectively. For the six months ended June 30, 2026 and 2025, we generated net income of $71.0 million and a net loss of $7.4 million, respectively. These net income and loss totals include the impact from Change in Fair Value of Convertible Preferred Stock Warrants, a non-cash item. Additionally, from our inception through June 30, 2026, we have an accumulated deficit of $608.5 million.

We believe our liquidity needs for the next twelve months, and for the foreseeable future beyond that period, can be met through transaction fees, servicing fees, net interest income, other revenue, proceeds from sales of loans and securitizations, realized gains from the Credit Card portfolio and Cash and Cash Equivalents. Management monitors our financial results and operations. If the anticipated financial results are not achieved or we fail to maintain compliance with the debt covenants under our Term Loan, our sources of liquidity may not be sufficient to meet our operating and liquidity requirements without obtaining additional liquidity, which may not be available on favorable terms or at all. For further details related to our Term Loan, see Note 11, Debt, of the accompanying condensed consolidated financial statements.

The following table summarizes our cash flow activities for the three months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,
	2026		2025
Net Income (Loss)	$	6,381	$	(57,727)

Net Cash Provided by Operating Activities	62,449		39,352
Net Cash Used in Investing Activities	(2,434)		(2,400)
Net Cash Used in Financing Activities	(16,294)		(38,062)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	43,721		(1,110)
Cash, Cash Equivalents and Restricted Cash at the beginning of the period	171,666		168,786
Cash, Cash Equivalents and Restricted Cash at the end of the period	$	215,387	$	167,676

Cash, Cash Equivalents and Restricted Cash increased by $43.7 million for the three months ended June 30, 2026, based on the following components:

Operating Activities: $62.4 million in cash was provided by operating activities, due to (a) $34.1 million in cash provided from working capital, primarily due to the timing of loan sales and payments to investors and third-party vendors, (b) $16.4 million in net income, net of non-cash items and (c) $11.9 million in net proceeds from Loans Held for Sale, including securitized Borrower Loans that were previously classified as Loans Held for Sale.

Investing Activities: $2.4 million in cash was used in investing activities, due to (a) $37.9 million in purchases of Borrower Loans, at Fair Value, (b) $16.8 million in purchases of Credit Card receivables from our Credit Card Partner that were sold to the PMCC 2024-1 securitization and (c) $3.7 million in purchases of property and equipment, primarily consisting of internal-use software, partially offset by (d) $42.8 million from principal payments and sales of Borrower Loans, at Fair Value, and (e) $13.2 million from principal payments on Credit Card receivables from our Receivable from Credit Card Partner.

Financing Activities: $16.3 million in cash was used in financing activities, due primarily to (a) $13.1 million in payments on Notes Issued by Securitization Trusts and (b) $4.0 million in payments, net of proceeds on Notes, at Fair Value, partially offset by (c) $0.8 million in proceeds from the exercise of Series F Convertible Preferred Stock Warrants, as discussed above.

Cash, Cash Equivalents and Restricted Cash decreased by $1.1 million for the three months ended June 30, 2025, based on the following components:

Operating Activities: $39.4 million in cash was provided by operating activities, due to (a) $28.0 million in net proceeds from Loans Held for Sale, including securitized Borrower Loans that were previously classified as Loans Held for Sale and (b) $15.0 million in net income, net of non-cash items, partially offset by (c) $3.6 million in cash used in working capital, primarily due to the timing of loan sales and payments to investors and third-party vendors.

Investing Activities: $2.4 million in cash was used in investing activities, due to (a) $42.9 million in purchases of Borrower Loans, (b) $18.0 million in purchases of Credit Card receivables from our Credit Card Partner to the PMCC 2024-1 securitization and (c) $3.2 million in purchases of property and equipment, primarily consisting of internal-use software, partially offset by (d) $47.8 million from principal payments and sales of Borrower Loans and (e) $13.9 million from principal payments on Credit Card receivables included in the Receivable from Credit Card Partner.

Financing Activities: $38.1 million in cash was used in financing activities, due primarily to (a) $31.1 million in payments on Notes Issued by Securitization Trust, (b) $4.5 million in payments, net of proceeds, on Notes, at Fair Value and (c) a contractual $2.5 million quarterly repayment on our Term Loan.

The following table summarizes our cash flow activities for the six months ended June 30, 2026 and 2025 (in thousands):


	Six Months Ended June 30,
	2026		2025
Net Income (Loss)	$	71,032	$	(7,352)

Net Cash Provided by Operating Activities	118,557		105,424
Net Cash Used in Investing Activities	(6,137)		(1,738)
Net Cash Used in Financing Activities	(38,151)		(81,097)
Net Increase in Cash, Cash Equivalents and Restricted Cash	74,269		22,589
Cash, Cash Equivalents and Restricted Cash at the beginning of the period	141,118		145,087
Cash, Cash Equivalents and Restricted Cash at the end of the period	$	215,387	$	167,676

Cash, Cash Equivalents and Restricted Cash increased by $74.3 million for the six months ended June 30, 2026, based on the following components:

Operating Activities: $118.6 million in cash was provided by operating activities, due to (a) $69.4 million in cash provided from working capital, primarily due to the timing of loan sales and payments to investors and third-party vendors, (b) $26.5 million in net proceeds from Loans Held for Sale, including securitized Borrower Loans that were previously classified as Loans Held for Sale and (c) $22.7 million in net income, net of non-cash items.

Investing Activities: $6.1 million in cash was used in investing activities, due to (a) $73.6 million in purchases of Borrower Loans, at Fair Value, (b) $33.2 million in purchases of Credit Card receivables from our Credit Card Partner that were sold to the PMCC 2024-1 securitization and (c) $9.5 million in purchases of property and equipment, primarily consisting of internal-use software, partially offset by (d) $84.5 million from principal payments and sales of Borrower Loans, at Fair Value, and (e) $25.7 million from principal payments on Credit Card Receivable from Credit Card Partner.

Financing Activities: $38.2 million in cash was used in financing activities, due primarily to (a) $28.2 million in payments on Notes Issued by Securitization Trusts and (b) $11.6 million in payments, net of proceeds on Notes, at Fair Value, partially offset by (c) $1.6 million in proceeds from the exercise of Series E-1 and F Convertible Preferred Stock Warrants, as discussed above.

Cash, Cash Equivalents and Restricted Cash increased by $22.6 million for the six months ended June 30, 2025, based on the following components:

Operating Activities: $105.4 million in cash was provided by operating activities, due to (a) $60.7 million in net proceeds from Loans Held for Sale, including securitized Borrower Loans that were previously classified as Loans Held for Sale, (b) $24.8 million in net income, net of non-cash items and (c) $19.9 million in cash provided from working capital, primarily due to the timing of loan sales and payments to investors and third-party vendors.

Investing Activities: $1.7 million in cash was used in investing activities, due to (a) $85.8 million in purchases of Borrower Loans, (b) $39.2 million in purchases of Credit Card receivables from our Credit Card Partner to the PMCC 2024-1 securitization and (c) $6.5 million in purchases of property and equipment, primarily consisting of internal-use software, partially offset by (d) $95.7 million from principal payments and sales of Borrower Loans and (e) $34.2 million from principal payments on Credit Card receivables included in the Receivable from Credit Card Partner.

Financing Activities: $81.1 million in cash was used in financing activities, due primarily to (a) $65.9 million in payments on Notes Issued by Securitization Trust, (b) $10.2 million in payments, net of proceeds, on Notes, at Fair Value and (c) contractual quarterly repayments of $5.0 million on our Term Loan.

Income Taxes

We use the liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized by applying the statutory tax rates in effect in the years in which the differences between the financial reporting and tax filing bases of existing assets and liabilities are expected to reverse. We are in the process of evaluating our future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance against our deferred tax assets. Until our evaluation is completed, we have provided a full valuation allowance against our net deferred tax assets.

We report a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. We are required to make subjective assumptions and judgments regarding our income tax exposures. Interpretations and guidance surrounding income tax laws and regulations change over time. As such, changes in our subjective assumptions and judgments can materially affect amounts recognized in the condensed consolidated balance sheets and statements of operations.

Off-Balance Sheet Arrangements

As a result of retaining servicing rights on the sale of Borrower Loans, we are an interest holder in certain special purpose entities that purchase these Borrower Loans. None of these special purpose entities are consolidated as we are not the primary beneficiary. Other than these special purpose entities, as of June 30, 2026, we did not have any relationships with unconsolidated entities or financial partnerships, such as structured finance entities, that were established for the purpose of facilitating off-balance sheet arrangements or other purposes.

CRITICAL ACCOUNTING POLICIES

Certain of Prosper's accounting policies that involve a higher degree of judgment and complexity are discussed in Part II, Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” in Prosper’s Annual Report on Form 10-K for the year ended December 31, 2025. There have been no changes to our critical accounting estimates during the first six months of 2026, other than the following changes to our Valuation of Credit Card Derivative and Credit Card Servicing Obligation estimate.

Effective March 31, 2026 and on a prospective basis, we applied a default rate to the projected cash flows that comprise the Credit Card Derivative and Credit Card servicing obligation based solely on the recent credit performance of our underlying Credit Card portfolio. Previously, the default rate was estimated based on a combination of our recent credit performance, and the credit performance of comparable third-party credit card products. This change was made to better align with how we believe a market participant would estimate the fair value of these cash flows, given there is now more than four years of historical data available for the underlying Credit Card portfolio. The effect of this change in estimate increased the Credit Card Derivative by $5.2 million and increased the Credit Card servicing obligation by $0.7 million as of the effective date of March 31, 2026.

PROSPER FUNDING LLC

Overview

Prosper Funding LLC (“PFL”) was formed in the state of Delaware in February 2012 as a limited liability company with PMI as its sole equity member. PFL was formed by PMI to hold Borrower Loans originated through the Note Channel and issue related Notes. Although PFL is consolidated with PMI for accounting and tax purposes, PFL has been organized and is operated in a manner that is intended to minimize the likelihood that it would be substantively consolidated with PMI in a bankruptcy proceeding. PFL’s intention is to minimize the likelihood that its assets would be subject to claims by PMI’s creditors if PMI were to file for bankruptcy, as well as to minimize the likelihood that PFL will become subject to bankruptcy proceedings directly. PFL seeks to achieve this by placing certain restrictions on its activities and by implementing certain formal procedures designed to expressly reinforce its status as a distinct corporate entity from PMI.

PFL and PMI are parties to an Administration Agreement, most recently amended on November 14, 2025, in which PMI serves as the corporate administrator, marketplace manager, and loan servicer for Prosper's marketplace lending platform. In exchange for, among other things, managing the platform, assigning risk ratings, and servicing loans, PFL pays PMI a series of structured monthly fees based primarily on personnel costs and loan volume. PMI in turn pays PFL platform licensing fees based primarily on investor incentives, borrower refunds and loan volume. Specifically, the compensation structure is primarily as follows:

•PFL compensates PMI monthly based on the number of Borrower Loans funded and a flat fee of $0.5 million for legal and accounting personnel costs, as well as 59.3% of servicing fees collected each month.

•PMI compensates PFL monthly based on the number of Borrower Loan listings on the platform and a flat licensing fee of $0.3 million, and reimburses PFL for any whole loan investor incentives and performance-based payments, as well as Transaction Fee refunds issued each month.

As a credit marketplace, we believe our customers are more highly susceptible to uncertainties and negative trends, real or perceived, in the markets driven by, among other factors, general economic conditions in the United States and abroad. These external economic conditions and resulting trends or uncertainties could adversely impact our customers’ ability or desire to participate in our marketplace as borrowers or investors, and consequently could negatively affect our business and results of operations.

Recent Developments

Results of Operations

Overview

The following tables summarize Prosper Funding’s net income (loss) for the three and six months ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,
	2026		2025		$ Change		% Change
Total Net Revenues	$	27,195	$	18,638	$	8,557	46	%
Total Expenses	23,519		22,452		1,067		5	%
Net Income (Loss)	$	3,676	$	(3,814)	$	7,490	n/m
n/m: not meaningful


	Six Months Ended June 30,
	2026		2025		$ Change		% Change
Total Net Revenues	$	48,672	$	34,802	$	13,870	40	%
Total Expenses	48,964		42,265		6,699		16	%
Net Loss	$	(292)	$	(7,463)	$	7,171	96	%

Total net revenues for the three months ended June 30, 2026 increased $8.6 million, or 46%, from the three months ended June 30, 2025, primarily due to a $6.4 million increase in Administrative Fee Revenue – Related Party as a result of (a) the reimbursement of transaction fee refunds and performance-based payments issued under the terms of the November 2025 Amendment 7 to the Administration Agreement discussed above and (b) an increase in loan listings on the platform, partially offset by (c) a decrease in whole loan investor incentive reimbursements. Changes in estimated transaction fee refunds are recorded in Administration Fee Expense – Related Party (part of Total Expenses), while changes in estimated performance-based payment liabilities, and incentives incurred and paid, are recorded in Loss on Sale of Borrower Loans, and as a result, the reimbursement for these items generally does not have a direct impact on net income (loss), though this will be impacted by timing differences between estimated accruals and reimbursements received from PMI. In addition, there was a $2.0 million increase in net revenues from Loss on Sale of Borrower Loans, due primarily to increased originations and decreased whole loan investor incentives. There was also a $0.5 million increase in Servicing Fees, Net, generally related to increased loan servicing fees, net collections fees and debt sale fees, due to the growth in the underlying Personal Loan servicing book and the impact of lowering our estimated market servicing rate in September 2025.

Total expenses for the three months ended June 30, 2026 increased $1.1 million, or 5%, from the corresponding period in 2025, largely due to a $0.7 million increase in Servicing and Other Expenses, primarily due to increased depreciation expense in line with the increase in the balance of internal-use software during this time. Finally, Administration Fee Expense – Related Party, increased $0.3 million from the prior year, generally due to an increase in the number of loans funded on the platform during this time, partially offset by the impact of lower estimated transaction fee refunds. As a result of a change to the law in Utah (where WebBank is domiciled), personal loans originated on or subsequent to May 6, 2026, are no longer subject to transaction fee refund requirements, and thus adjustments to the liability for estimated refunds have decreased from the prior year.

Total net revenues for the six months ended June 30, 2026 increased $13.9 million, or 40%, from the six months ended June 30, 2025, primarily due to a $14.3 million increase in Administrative Fee Revenue – Related Party as a result of (a) the reimbursement of transaction fee refunds and performance-based payments issued under the terms of the November 2025 Amendment 7 to the Administration Agreement discussed above and (b) an increase in loan listings on the platform, partially offset by (c) a decrease in whole loan investor incentive reimbursements. In addition, Servicing Fees, Net, increased $1.8 million, generally related to increased loan servicing fees, net collections fees and debt sale fees, due to the growth in the underlying Personal Loan servicing book and the impact of lowering our estimated market servicing rate in September 2025. These increases were partially offset by a $1.7 million decrease in net revenues from Loss on Sale of Borrower Loans, primarily as a result of additions to the estimated performance-based payment liability year-over-year, partially offset by the impact of increased originations.

Total expenses for the six months ended June 30, 2026 increased $6.7 million, or 16%, from the corresponding period in 2025, largely due to a $5.3 million increase in Administration Fee Expense – Related Party resulting primarily from an increase in actual and estimated transaction fee refunds (prior to the change in Utah law referenced above) due to the increase in Personal Loan originations for this period. As discussed above, under Amendment 7 to the Administration Agreement, transaction fee refunds issued to borrowers are now billed back to PMI through Administration Fee Revenue – Related Party. Administration Fee Expense – Related Party also increased due to an increase in the number of loans funded on the platform during this time. Finally, Servicing and Other expenses increased approximately $1.4 million, primarily due to increased depreciation expense in line with the increase in the balance of internal-use software during this time.

Revenues

The following tables summarize PFL’s revenue for the three and six months ended June 30, 2026 and 2025 (in thousands, except percentages):


	Three Months Ended June 30,
	2026		2025		$ Change		% Change
Revenues:
Operating Revenues:
Administration Fee Revenue – Related Party	$	31,115	$	24,719	$	6,396	26	%
Servicing Fees, Net	8,883		8,399		484		6	%
Loss on Sale of Borrower Loans	(13,684)		(15,671)		1,987		13	%
Other Revenues	134		136		(2)		(1)	%
Total Operating Revenues	26,448		17,583		8,865		50	%
Interest Income on Borrower Loans	8,855		10,904		(2,049)		(19)	%
Interest Expense on Notes	(8,252)		(10,281)		2,029		20	%
Net Interest Income	603		623		(20)		(3)	%
Change in Fair Value of Financial Instruments, Net	144		432		(288)		(67)	%
Total Net Revenues	$	27,195	$	18,638	$	8,557	46	%


	Six Months Ended June 30,
	2026		2025		$ Change		% Change
Revenues:
Operating Revenues:
Administration Fee Revenue – Related Party	$	60,907	$	46,597	$	14,310	31	%
Servicing Fees, Net	17,859		16,077		1,782		11	%
Loss on Sale of Borrower Loans	(30,959)		(29,247)		(1,712)		(6)	%
Other Revenues	196		214		(18)		(8)	%
Total Operating Revenues	48,003		33,641		14,362		43	%
Interest Income on Borrower Loans	17,996		22,211		(4,215)		(19)	%
Interest Expense on Notes	(16,787)		(20,836)		4,049		19	%
Net Interest Income	1,209		1,375		(166)		(12)	%
Change in Fair Value of Financial Instruments, Net	(540)		(214)		(326)		(152)	%
Total Net Revenues	$	48,672	$	34,802	$	13,870	40	%

Administration Fee Revenue – Related Party

We primarily generate revenues through license fees we earn under our Administration Agreement with PMI. The Administration Agreement contains a license we grant to PMI that entitles PMI to use the marketplace for, and in relation to: (i) PMI’s performance of its duties and obligations under the Administration Agreement, and (ii) PMI’s performance of its duties and obligations to WebBank under the Loan Account Program Agreement. The Administration Agreement requires PMI to pay us a monthly license fee that is partially based on the number of Personal Loan listings posted on the marketplace in that month, as well as a fee based on incentives provided to investors to incentivize the purchase of Personal Loans from PFL. As discussed above, as a result of Amendment 7 to the Administration Agreement starting in November 2025, we are also reimbursed by PMI for whole loan investor performance-based payments and transaction fee refunds issued each month.

For the three months ended June 30, 2026, the increase in Administrative Fee Revenue – Related Party of $6.4 million from the corresponding period in the prior year, was due to (a) a $6.4 million increase in transaction fee refund reimbursements, (b) a $1.0 million increase in performance-based payment reimbursements and (c) a $0.9 million increase from higher Personal Loan listings posted on the marketplace, partially offset by (d) a $2.0 million decrease in whole loan investor incentive reimbursements.

For the six months ended June 30, 2026, the increase in Administrative Fee Revenue – Related Party of $14.3 million from the corresponding period in the prior year, was due to (a) a $11.6 million increase in transaction fee refund reimbursements, (b) a $2.1 million increase from higher Personal Loan listings posted on the marketplace and (c) a $1.0 million increase in performance-based payment reimbursements, partially offset by (d) a $0.4 million decrease in whole loan investor incentive reimbursements.

Servicing Fees, Net

Investors who purchase Borrower Loans through the Whole Loan Channel typically pay us a servicing fee which is currently set at 1.0% per annum of the outstanding principal balance of the Borrower Loan prior to applying the current payment, plus an additional 0.075% per annum to cover the Loan Trailing Fee. The Servicing Fee compensates us for the costs incurred in servicing the Borrower Loans, including managing payments from borrowers, managing payments to investors and maintaining investors’ account portfolios. We record Servicing Fees from investors as a component of operating revenues when received. We also include any collection fees received, net of collection agency expenses, and debt sale fees in Servicing Fees, Net.

The increases in Servicing Fees, Net of $0.5 million and $1.8 million for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025, were largely due to increases in net collections and debt sales fees of $0.4 million and $0.9 million, respectively, due to growth in our Personal Loan servicing book, and our enhanced collections and recovery efforts. In addition, servicing fees collected and amortization of the Servicing Asset accounted for $0.1 million and $0.9 million of the increases for these respective periods, which is generally in line with the increases in Personal Loan originations and the underlying servicing book during this time. It also reflects the impact of lowering the estimated market servicing rate used to value the Servicing Asset from 63.3 basis points to 59.3 basis points in September 2025.

Loss on Sale of Borrower Loans

For the six months ended June 30, 2026, the Loss on Sale of Borrower Loans increased $1.7 million (decreasing Total Net Revenues), primarily due to a $5.0 million increase from changes in the performance-based payment liability, partially offset by a $0.4 million decrease in incentives provided to whole loan investors. Excluding these items, the remaining change in Loss on Sale of Borrower Loans for the six months ended June 30, 2026, as compared to the same period in 2025, was an increased gain of $2.9 million, primarily due to the recognition of additional Servicing Assets upon the sale of Personal Loans through the Whole Loan Channel, as the the market servicing rate used to value the Servicing Assets decreased from 63.3 bps to 59.3 basis points in September 2025.

Other Revenues

Other Revenues have historically consisted primarily of miscellaneous fees, including incentive fees earned from partner companies through our incentive programs, or securitization fees earned from sponsoring or facilitating securitization transactions with loans from our marketplace. We also record changes to the reserve for the repurchase of Personal Loans in Other Revenues. The decreases in Other Revenues for the three and six months ended June 30, 2026, as compared to the corresponding periods in 2025, were not considered significant.

Interest Income on Borrower Loans and Interest Expense on Notes

We recognize Interest Income on Borrower Loans using the accrual method based on the stated interest rate to the extent we believe it to be collectible. We record Interest Expense on the corresponding Notes based on the contractual interest rates. The interest rate on Notes is generally 1% lower than the interest rate on the corresponding Borrower Loans to compensate us for servicing the underlying Borrower Loans.

Overall, the decreases of less than $0.1 million and $0.2 million in Net Interest Income for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025, is reflective of the decrease in the outstanding principal balance of Borrower Loans and Notes from the prior year.

Change in Fair Value of Financial Instruments, Net

Change in Fair Value of Financial Instruments, Net captures gains (losses) in fair value estimates using discounted cash flow methodologies that are based upon a set of valuation assumptions. The key assumptions used in valuations include default and prepayment rates derived from historical performance and discount rates that reflect estimates of the rates of return that investors would require when investing in other financial instruments with similar characteristics. Changes in fair value of Borrower Loans funded through the Note Channel are largely offset by the changes in fair value of the corresponding Notes due to the borrower payment-dependent structure, though differences will arise due to the actual and projected impact of cash flows related to charge-offs, debt sales and miscellaneous fees, as well as certain timing differences.

The following table summarizes the fair value adjustments for the three and six month periods ended June 30, 2026 and 2025 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Borrower Loans	$	(4,914)	$	(3,535)	$	(11,323)	$	(8,706)
Notes	5,058		3,967		10,783		8,492
Total	$	144	$	432	$	(540)	$	(214)

The decrease in the gain and increase in the loss recognized from Change in Fair Value of Financial Instruments, Net for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025, were primarily due to changes in the timing of borrower payments received close to quarter-end, and the application of those payments against the related Notes. Other fair value changes were generally not material, which is consistent with the borrower payment-dependent structure described above.

Expenses

The following table summarizes our expenses for the three and six month periods ended June 30, 2026 and 2025 (in thousands, except percentages):


	Three Months Ended June 30,
	2026		2025		Change		% Change
Expenses:
Administration Fee – Related Party	$	20,918	$	20,590	$	328	2	%
Servicing and Other, Net	2,601		1,862		739		40	%
Total Expenses	$	23,519	$	22,452	$	1,067	5	%


	Six Months Ended June 30,
	2026		2025		Change		% Change
Expenses:
Administration Fee – Related Party	$	43,658	$	38,398	$	5,260	14	%
Servicing and Other, Net	5,306		3,867		1,439		37	%
Total Expenses	$	48,964	$	42,265	$	6,699	16	%

Administration Fee Expense – Related Party

Pursuant to our Administration Agreement with PMI, PMI manages the marketplace on our behalf. Accordingly, each month we are required to pay PMI (a) a corporate administration fee of $500,000 per month, (b) a fee for each Borrower Loan originated through the marketplace, (c) 59.3% of all Servicing Fees collected by us or on our behalf (was 62.5% prior to executing Amendment 7 to the Administration agreement in November 2025) and (d) all nonsufficient funds fees collected by us or on our behalf. In general, the Administrative Fee Expense – Related Party will not fluctuate directly in line with the Administrative Fee Revenue – Related Party due to both the flat corporate administrative fee, as well as the fact that we pay fees for three different services, but receive a fee that fluctuates based on the number of Personal Loans listed on the platform, transaction fee refunds, as well as incentive and performance-based payments made to whole loan investors each month. We also include WebBank transaction costs, loan trailing fees and refund liabilities for transaction fees above 5% in Administration Fee Expense – Related Party.

The increase in Administration Fee Expense – Related Party of $0.3 million, or 2%, for the three months ended June 30, 2026, as compared to the same period in the prior year, was primarily due to a $1.4 million increase in Administration Fee

Expense – Related Party, due primarily to a year-over-year increase in loans funded on the platform, and a $0.4 million combined increase in WebBank transaction costs and net loan trailing fees due to the increase in Personal Loan originations during this time. These increases were partially offset by a $1.4 million decrease in changes in actual and estimated refunds for transaction fees above 5% of Borrower Loan principal, as the total of refundable transaction fees is decreasing following the change in Utah law discussed above, which eliminates the transaction fee refund requirement for loans originated on or subsequent to May 6, 2026. Actual transaction fee refunds issued are reimbursed by PMI through the Administrative Fee Revenue – Related Party account following the execution of Amendment 7 to the Administration Agreement in November 2025.

The increase in Administration Fee Expense – Related Party of $5.3 million, or 14%, for the six months ended June 30, 2026, as compared to the same period in the prior year, was primarily due to a $2.7 million increase in Administration Fee Expense – Related Party, due primarily to a year-over-year increase in loans funded on the platform. There was also a $1.5 million increase from changes in actual and estimated refunds for transaction fees above 5% of Borrower Loan principal, as the total of refundable transaction fees increased for this period (prior to the Utah law change referenced above), due to growth in Personal Loan origination volume. As discussed above, actual transaction fee refunds issued are reimbursed by PMI through Administrative Fee Revenue – Related Party account following the execution of Amendment 7 to the Administration Agreement in November 2025. Finally, there was a $1.0 million combined increase in WebBank transaction costs and net loan trailing fees due to the increase in Personal Loan originations during this time.

Servicing and Other, Net

Servicing costs consist primarily of vendor and borrower costs, as well as depreciation of internal-use software associated with servicing Borrower Loans. Other items consist primarily of interest income earned on cash invested on our platform, as well as bank service charges and professional fees. The increases in Servicing and Other, Net of $0.7 million, or 40% and $1.4 million, or 37%, for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in 2025, were primarily due to increases in depreciation of $0.7 million and $1.3 million, respectively, due to growth in internal-use software during this time.

LIQUIDITY AND CAPITAL RESOURCES

We anticipate that our available funds and cash flows from operations, including reimbursements from PMI under the Administration Agreement, will be sufficient to meet our operational cash needs for at least the next 12 months.

The following table summarizes our cash flow activities for the six months ended June 30, 2026 and 2025 (in thousands):


	Six Months Ended June 30,
	2026		2025
Net Loss	$	(292)	$	(12,601)

Net Cash Provided by Operating Activities	81,915		18,906
Net Cash (Used in) Provided by Investing Activities	(1,883)		3,349
Net Cash Used in Financing Activities	(11,639)		(10,199)
Net Increase in Cash, Cash Equivalents and Restricted Cash	68,393		12,056
Cash, Cash Equivalents and Restricted Cash at the beginning of the period	81,897		96,740
Cash, Cash Equivalents and Restricted Cash at the end of the period	$	150,290	$	108,796

Cash, Cash Equivalents and Restricted Cash increased $68.4 million for the six months ended June 30, 2026, based on the following components:

Operating Activities: $81.9 million was provided by operating activities, driven by cash provided by working capital of $78.5 million, primarily due to the timing of loan sales and payments to PMI and investors, and net income, net of non-cash adjustments of $3.4 million.

Investing Activities: $1.9 million was used in investing activities, due to $73.6 million in purchases of Borrower Loans, at Fair Value, and $12.7 million in purchases of property and equipment, partially offset by $84.5 million from principal payments and sales of Borrower Loans, at Fair Value.

Financing Activities: $11.6 million was used in financing activities, due to $83.6 million in payments for Notes, at Fair Value, partially offset by $72.0 million in proceeds from the issuance of Notes, at Fair Value.

Cash, Cash Equivalents and Restricted Cash increased $12.1 million for the six months ended June 30, 2025, based on the following components:

Operating Activities: $18.9 million was provided by operating activities, driven by cash provided by working capital of $27.8 million, primarily due to the timing of loan sales and payments to PMI and investors, partially offset by net loss, net of non-cash adjustments of $8.9 million.

Investing Activities: $3.3 million was provided by investing activities, due to $95.7 million of principal payments from Borrower Loans, partially offset by $85.8 million in purchases of Borrower Loans and $6.5 million in purchases of property and equipment.

Financing Activities: $10.2 million was used in financing activities, due to $94.8 million in payments for Notes, at Fair Value, partially offset by $84.6 million in proceeds from the issuance of Notes, at Fair Value

Income Taxes

We incurred no income tax expense for the six months ended June 30, 2026 and 2025. We are a US disregarded entity for income tax purposes and our income and loss is included in the return of our parent, PMI. Given PMI’s history of taxable losses, it is difficult to accurately forecast how PMI’s and our results will be affected by the realization and use of net operating loss carry forwards.

Off-Balance Sheet Arrangements

As a result of retaining servicing rights on the sale of Borrower Loans, we are a variable interest holder in certain special purposes entities that purchase these Borrower Loans. None of these special interest entities are consolidated as we are not the primary beneficiary. Otherwise, we have not engaged in any off-balance sheet financing activities for the six months ended June 30, 2026.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK AND INTEREST RATE RISK

PROSPER MARKETPLACE, INC.

Market Risk

Market risk is the risk of loss to future earnings, values, or future cash flows that may result from changes in financial market prices and interest rates.

Through our securitization trusts (formed in September 2023 and March 2024) we hold Borrower Loans. Changes in U.S. interest rates affect the market value of these Borrower Loans on our balance sheet. Our future investment income may fall short of expectations, or we may suffer a loss in principal if we are forced to sell Borrower Loans that have declined in market value due to changes in interest rates, loss assumptions or overall market conditions. Interest rate increases may increase the risks of our investments in Borrower Loans through our securitization trusts, and additional fluctuations in interest rates may exacerbate such risks. Changes in the market value of Borrower Loans are recorded on the consolidated statements of operations. The fair value of Borrower Loans held in consolidated securitization trusts was $35.4 million as of June 30, 2026.

The fair values of Borrower Loans and Notes are determined using discounted cash flow methodologies based upon a set of valuation assumptions such as default rate, prepayment rate and discount rate. Default rate, prepayment rate and discount rate may change due to expected loan performance or changes in the expected returns of similar financial instruments available in the market. We are exposed to the risk of a decrease in the fair value of loans held in securitization trusts. For Borrower Loans and Notes presented on our Balance Sheet on behalf of our Note Channel investors, the fair value adjustments for Borrower Loans are largely offset by the fair value adjustments of the Notes due to the borrower payment dependent design of the Notes and due to the total principal balances of the Borrower Loans being very close to the total principal balances of the Notes.

We had cash and cash equivalents of $55.1 million and $46.8 million as of June 30, 2026, and December 31, 2025, respectively. These amounts were held in various unrestricted deposits with highly rated financial institutions and short-term, highly liquid marketable securities which may include money market funds, U.S. Treasury securities, and U.S. agency securities. Cash and Cash Equivalents are held for working capital purposes. Due to their short-term nature, we believe that we do not have any material exposure to changes in the fair value of these liquid investments as a result of changes in interest rates. Decreases in short-term interest rates will moderately reduce interest income on these Cash and Cash Equivalents. Increases in short-term interest rates will moderately increase the interest income earned on the Cash and Cash Equivalents.

Interest Rate Sensitivity

As more fully described in Note 8, Fair Value of Assets and Liabilities, of Prosper's condensed consolidated financial statements attached to this Quarterly Report on Form 10-Q, the fair value of Borrower Loans is $258.2 million as of June 30, 2026, determined using a weighted-average discount rate of 9.25%. The fair value of Borrower Loans was $309.7 million as of December 31, 2025, determined using a weighted-average discount rate of 8.53%. A hypothetical 100 basis point increase in interest rates would result in a decrease of approximately $2.3 million and $2.7 million in the fair value of PMI’s investment in Borrower Loans as of June 30, 2026, and December 31, 2025, respectively. A hypothetical 100 basis point decrease in interest rates would result in an increase of $2.4 million and $2.8 million in the fair value of our investment in Borrower Loans as of June 30, 2026, and December 31, 2025, respectively. Any realized or unrealized gains or losses resulting from such interest rate change would be recorded in our statement of operations so long as we hold these Borrower Loans on our balance sheet.

PROSPER FUNDING LLC

Market Risk

Market risk is the risk of loss to future earnings, values, or future cash flows that may result from changes in financial market prices and interest rates.

Because balances, interest rates, and maturities of Borrower Loans are matched and offset by an equal balance of Notes with the exact same interest rates (net of our servicing fee) and initial maturities, we believe that we do not have any material exposure to changes in the net fair value of the combined Borrower Loan and Note portfolios as a result of changes in interest rates. We do not hold or issue financial instruments for trading purposes.

The fair values of Borrower Loans and the related Notes are determined using discounted cash flow methodologies based upon a set of valuation assumptions. The fair value adjustments for Borrower Loans are largely offset by the fair value

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adjustments of the Notes due to the borrower payment dependent design of the Notes and due to the total principal balances of the Borrower Loans being very close to the total principal balances of the Notes.

Prosper Funding had Cash and Cash Equivalents of $2.5 million and $2.9 million as of June 30, 2026 and December 31, 2025, respectively. These amounts were held in various unrestricted deposits with highly rated financial institutions and short term, highly liquid marketable securities which may include money market funds, U.S. treasury securities and U.S. agency securities. Cash and cash equivalents are held for working capital purposes. Due to their short-term nature, Prosper Funding believes that it does not have any material exposure to changes in the fair value of these liquid investments as a result of changes in interest rates. Decreases in short-term interest rates will moderately reduce interest income on these cash and cash equivalents, while increases in short-term interest rates will moderately increase the interest income earned on these cash and cash equivalent balances.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Registrants’ disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are designed to provide reasonable assurance that the information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including to each Registrant’s Principal Executive Officer (PEO) and Principal Financial Officer (PFO), to allow timely decisions regarding required disclosures. The management of each Registrant, with the participation of such Registrant’s PEO and PFO, has evaluated the effectiveness of such Registrant’s disclosure controls and procedures as of June 30, 2026. Based on this evaluation, each Registrant’s PEO and PFO have concluded that these disclosure controls and procedures were effective as of June 30, 2026.

Changes in Internal Control Over Financial Reporting

There were no changes in either Registrant’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the three months ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, either Registrant’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

This Item should be read in conjunction with the disclosures contained in Part I, Item 3, “Legal Proceedings” of our Annual Report on Form 10-K for the year ended December 31, 2025.

Item 1A. Risk Factors

You should carefully consider all information in this Quarterly Report on Form 10-Q, including the condensed consolidated financial statements and related notes, and the risks described in Part I, Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025.

Item 2. Unregistered Sale of Equity Securities and Use of Proceeds

PMI – During the six months ended June 30, 2026, the following Convertible Preferred Stock, Common Stock warrant and Common Stock option exercises occurred:

•March 19, 2026: A warrant holder exercised 41,833,904 shares of Series F warrants for total proceeds of $0.4 million. The estimated fair value of $42.3 million as of the exercise date was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

•March 31, 2026: A warrant holder exercised all 35,544,141 outstanding shares of Series E-1 warrants for total proceeds of $0.4 million. The estimated fair value of approximately $38.7 million was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

•April 26, 2026: A warrant holder exercised 503,821 shares of Common Stock warrants via a cashless exercise.

•May 15, 2026: A warrant holder exercised 41,833,904 shares of Series F warrants for total proceeds of $0.4 million. The estimated fair value of $42.7 million as of the exercise date was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

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•June 15, 2026: A warrant holder exercised 41,833,904 shares of Series F warrants for total proceeds of $0.4 million. The estimated fair value of $47.7 million as of the exercise date was reclassified from Convertible Preferred Stock Warrant Liability to Convertible Preferred Stock.

•1,229,353 shares of Common Stock were issued upon the exercise of vested Common Stock options for cash proceeds of $33 thousand.

PMI previously issued the Series E-1 Preferred Stock and Series F Convertible Preferred Stock in reliance on the exemption from the registration requirements set forth in Section 4(a)(2) of the Securities Act relative to sales by an issuer not involving any public offering.

PFL – Information for this Item is not required for PFL because it meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q; PFL is therefore filing this Form with the reduced disclosure format.

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Eligible Employee Retention Plan

On August 12, 2026, the Board of PMI adopted the Second Amended and Restated Eligible Employee Retention Plan, which amended and restated the Amended and Restated Eligible Employee Retention Plan adopted by the Board on August 13, 2025 in its entirety (as further amended and restated, the “Retention Plan”). The purpose of the Retention Plan is to encourage continued service from employees prior to, and in the event of, an acquisition by providing retention payments upon a Change in Control (as defined in the Retention Plan).

The Retention Plan establishes a pool equal to the greater of $20,000,000 and the Grantor Trust Value (as defined in the Retention Plan). See Note 13 of the accompanying condensed consolidated financial statements for information on Prosper Grantor Trust, which holds the shares that make up the Grantor Trust Value. At least 75% of the pool is designated as the fixed allocation pool and the remaining up to 25% is designated as the discretionary allocation pool. Employees who, as of the Measurement Date (as defined in the Retention Plan), are employed by PMI for a minimum of two years, hold Vested Equity (as defined in the Retention Plan), and execute a participation agreement are eligible to receive payments from the fixed allocation pool. The fixed allocation payment for each eligible employee is based on such employee’s pro rata share of equity holdings, relative to the equity holdings of all eligible employees. An employee’s equity, for this purpose, includes stock, restricted stock, vested RSUs, and vested options, provided that the options and RSUs held by employees with at least two years of continuous employment as of the closing of the acquisition will be deemed to be fully vested for purposes of the fixed allocation payment calculation. In the event of a Corporate Transaction (as defined in the Retention Plan) in which each Preferred Stock Holder does not receive its full Preferred Liquidation Preference (as defined in the Retention Plan), the fixed allocation payment for each eligible employee is subject to reduction by the amount, if any, the employee receives in transaction proceeds in their capacity as a stockholder of PMI (such amount, the “Equity Reduction Amount”). Equity Reduction Amounts will not be reallocated under the Retention Plan but instead become available for distribution to PMI’s stockholders in accordance with the definitive agreement effecting the Corporate Transaction.

The discretionary allocation pool will be allocated at the discretion of the Chief Executive Officer, and the payment amounts to be distributed to the Chief Executive Officer under the discretionary allocation pool, if any, will be determined by the Compensation Committee of the Board.

The Retention Plan automatically expires on August 13, 2030. If an employee leaves PMI prior to closing of an acquisition, that employee’s allocation under the Retention Plan, whether fixed or discretionary, will be automatically forfeited and reallocated to the remaining plan participants according to their equity holdings on a pro rata basis.

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Severance and Change in Control Agreement

On August 12, 2026, the Board of PMI adopted an amended and restated form of Severance and Change in Control Agreement (the “Severance Agreement”), which amended and restated the prior form of Severance and Change in Control Agreement adopted by the Board on February 9, 2022 in its entirety. The Severance Agreement provides that upon a termination without “Cause” or a resignation for “Good Reason,” (each as defined in the Severance Agreement) unrelated to a change in control of PMI, senior executives subject to a Severance Agreement will be eligible to receive the following benefits, in addition to their accrued compensation:

•a lump sum severance payment equal to (i) six months of base salary for executives with less than one year of service, or (ii) twelve months of base salary for executives with one year or more of service;

•for executives with at least 36 months of service (“Tenured Executives”), any unpaid annual bonus and long-term cash incentive for the year(s) preceding the year of termination;

•for Tenured Executives, a pro-rated annual bonus payment for the year of termination, and with respect to any long-term performance period that commenced more than one year prior to the executive’s termination date, a pro-rated long-term cash incentive payment for the performance period in which the termination occurs;

•for Tenured Executives, continued coverage for the participant and eligible dependents pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for 12 months, unless such coverage is earlier terminated in accordance with the terms of the Severance Agreement; and

•for Tenured Executives, a cash payment equal to the value of any time-vested Restricted Stock Units (“RSUs”) granted under the Company’s Equity Plans, based on the fair market value of the underlying Common Stock as of the termination date, after which payment, the executive will have no further rights with respect to any RSUs, whether vested or not.

If an executive is terminated without Cause or resigns for Good Reason within 24 months following a change in control of PMI, such executive will be eligible to receive the following benefits in lieu of the above, in addition to their accrued compensation:

•a lump sum severance payment equal to one year base salary;

•for Tenured Executives, any unpaid annual bonus and long-term cash incentive for the year(s) preceding the year of termination;

•for Tenured Executives, target annual bonus for the year of termination;

•for Tenured Executives, target long-term cash incentive payment; and

•for Tenured Executives, continued coverage for the participant and eligible dependents pursuant to COBRA, for 12 months, unless such coverage is earlier terminated in accordance with the terms of the Severance Agreement.

In order to receive any of the foregoing severance benefits, an executive must timely execute (and not revoke) a release of claims in favor of PMI and its affiliates, and comply with all applicable post-separation restrictive covenants.

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Amendment to Coastal Program Agreement

Effective August 7, 2026, PMI entered into a Fourth Amendment (the “Coastal Amendment”) to the First Amended and Restated Program Agreement dated August 16, 2023 (as further amended and restated, the “Agreement”) with Coastal Community Bank (“Coastal”), that governs PMI’s partnership with Coastal through which eligible consumers are extended unsecured credit through Prosper-branded credit cards. Defined terms used herein and not defined shall have the meaning set forth in the Agreement.

The Coastal Amendment, among other things, introduces a rewards card product (the “Rewards Card”) to the Program, which may provide cashback, points, rewards or similar incentive benefits to certain eligible customers. Prosper will administer and service the Rewards Card program for all Rewards Card accounts. Each of Prosper and Coastal will be responsible for the economic obligations for the Rewards Card accounts that are such party's allocations.

The Coastal Amendment also modifies the amount of receivables corresponding to the principal balance of Prosper Allocations (the “Retained Principal Receivables”) which Coastal maintains on its balance sheet. As of the effective date of the Coastal Amendment, the minimum amount of Retained Principal Receivables that Coastal is required to maintain on its balance sheet is reduced to $100 million. Upon the closing of certain conditions precedent, Coastal shall maintain at least $100 million and up to $275 million of outstanding Retained Principal Receivables on its balance sheet.

Amendments to Agreements with WebBank

Effective August 11, 2026, the Registrants and WebBank entered into: (i) an Eighth Amendment (the “Sale Agreement Amendment”) to the Asset Sale Agreement, dated July 1, 2016, between Prosper Funding and WebBank (the “Sale Agreement”); and (ii) an Eighth Amendment (the “Marketing Agreement Amendment”) to the Marketing Agreement, dated July 1, 2016, between PMI and WebBank (the “Marketing Agreement” and, collectively with the Sale Agreement, the “Sale and Marketing Agreements”). The Sale Agreement Amendment and the Marketing Agreement Amendment, collectively, are hereinafter referred to as the “WebBank Amendments.”

The Sale and Marketing Agreements, as amended to date, set forth the respective rights and obligations of the Registrants and WebBank with respect to the sales and marketing activities for consumer loans originated on or after August 1, 2016. The Sale Agreement Amendment, among other things, extends the term of the Sale Agreement to February 1, 2029 and eliminates certain termination rights previously set forth in the Sale Agreement. The Marketing Agreement Amendment, among other things, extends the term of the Marketing Agreement to February 1, 2029, amends certain termination rights and the notice provisions therein, amends certain expense reimbursement obligations of PMI with respect to WebBank’s fees related to the Program, and sets forth the amended terms and conditions of certain fees owed by the Registrants to WebBank under the Marketing Agreement which will become effective on February 1, 2027.

The foregoing descriptions of the Retention Plan, Severance Agreement, Coastal Amendment and the WebBank Amendments do not purport to be complete and are qualified in their entirety by reference to the full text of the Retention Plan, Severance Agreement, Coastal Amendment and the WebBank Amendments, which will be filed as exhibits to the Registrants’ Quarterly Filing on Form 10-Q for the period ended September 30, 2026.

Item 6. Exhibits

The exhibits listed on the Exhibit Index are filed or incorporated by reference as a part of this report and such Exhibit Index is incorporated herein by reference.

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EXHIBIT INDEX


Exhibit Number						Exhibit Description
10.1						Asset Sale Agreement, dated July 1, 2016, between PFL and WebBank (1)(2)

10.2						Marketing Agreement, dated July 1, 2016, between PMI and WebBank (1)(2)

10.3						Stand By Purchase Agreement, dated July 1, 2016, between WebBank and PMI (1)(2)

10.4						Prosper Marketplace, Inc. 2025 Equity Incentive Plan (2)(3)

31.1						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to PMI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (2)

31.2						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to PMI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (2)

31.3						Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to PFL’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (2)

31.4						Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, with respect to PFL’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (2)

32.1						Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to PMI’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (2)

32.2						Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to PFL’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (2)

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH						XBRL Taxonomy Extension Schema Document

101.CAL						Taxonomy Extension Calculation Linkbase Document

101.LAB						Taxonomy Extension Label Linkbase Document

101.PRE						Taxonomy Extension Presentation Linkbase Document

101.DEF						Taxonomy Extension Definition Linkbase Document

(1)						Certain portions of this exhibit have been marked by brackets and omitted because the information is (a) not material and (b) would be competitively harmful if disclosed. Additionally, certain schedules (or similar attachments) to this exhibit may have been omitted. This exhibit is being refiled upon expiration of confidential treatment previously granted by the Securities and Exchange Commission.

(2)						Filed herewith.

(3)						Management Contract or Compensatory Plan or Arrangement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			PROSPER MARKETPLACE, INC.
			PROSPER FUNDING LLC

August 13, 2026			/s/ David Kimball
			David Kimball
			Chief Executive Officer of Prosper Marketplace, Inc.
			Chief Executive Officer of Prosper Funding LLC
			(Principal Executive Officer)

August 13, 2026			/s/ Usama Ashraf
			Usama Ashraf
			President and Chief Financial Officer of Prosper Marketplace, Inc.
			President, Chief Financial Officer and Treasurer of Prosper Funding LLC
			(Principal Financial Officer)