Prosper Marketplace Net Loss Doubles Amid Revenue Growth, Asset Shrink

TL;DR

**Prosper's growing losses and shrinking loan book make it a risky bet, despite revenue gains.**

AI Summary

PROSPER MARKETPLACE, INC. reported a significant increase in net loss for the nine months ended September 30, 2025, reaching $36.844 million, compared to a net loss of $16.680 million for the same period in 2024. Total Net Revenue grew to $153.500 million for the nine months ended September 30, 2025, up from $125.877 million in 2024, driven by a rise in Transaction Fees, Net to $174.716 million from $139.585 million. However, this was offset by a substantial increase in Loss on Sale of Borrower Loans, which surged to $44.363 million from $31.500 million. The company's total assets decreased to $802.386 million as of September 30, 2025, from $877.030 million at December 31, 2024, primarily due to a reduction in Borrower Loans, at Fair Value from $461.785 million to $342.046 million. Total liabilities also decreased from $1,061.348 million to $948.490 million, largely due to a reduction in Notes Issued by Securitization Trust from $258.960 million to $169.058 million. A key business change was the exercise of Series F convertible preferred stock warrant, resulting in 51,614,124 new shares and an increase of $73.808 million in convertible preferred stock. Risks include the performance of Notes, credit risks from Borrower Loans and Credit Card products, and compliance with evolving regulations. The strategic outlook involves managing loss rates on the Credit Card product and attracting borrowers and investors to its marketplace.

Why It Matters

Prosper Marketplace's widening net loss, despite revenue growth, signals potential profitability challenges for investors, especially given the significant increase in loss on sale of borrower loans. The decrease in total assets, particularly in Borrower Loans, could indicate a shift in lending strategy or market demand, impacting future revenue streams. For employees, sustained losses could lead to operational adjustments, while customers might see changes in loan product availability or terms. In the competitive fintech lending space, these financial results could make it harder for Prosper to attract capital and maintain market share against more profitable rivals.

Risk Assessment

Risk Level: high — The net loss for the nine months ended September 30, 2025, more than doubled to $36.844 million from $16.680 million in the prior year, indicating deteriorating profitability. The 'Loss on Sale of Borrower Loans' increased significantly to $44.363 million from $31.500 million, suggesting higher credit risk or less favorable market conditions for loan sales. Additionally, the 'Change in Fair Value of Convertible Preferred Stock Warrants' expense jumped to $37.254 million from $3.910 million, reflecting increased valuation volatility or dilution risk.

Analyst Insight

Investors should exercise extreme caution and thoroughly review Prosper's credit risk management strategies and future capital needs. Given the increasing net losses and significant 'Loss on Sale of Borrower Loans,' potential investors should consider if the company's current business model is sustainable and if it can achieve profitability in the near term.

Financial Highlights

revenue

$153.500M

total Assets

$802.386M

total Debt

$948.490M

net Income

-$36.844M

cash Position

$38.962M

revenue Growth

+22.0%

Revenue Breakdown

Key Numbers

• $36.844M — Net Loss (Increased from $16.680M in 2024 for the nine-month period, indicating worsening profitability.)
• $153.500M — Total Net Revenue (Increased from $125.877M in 2024 for the nine-month period, showing revenue growth.)
• $44.363M — Loss on Sale of Borrower Loans (Increased from $31.500M in 2024 for the nine-month period, highlighting higher credit risk or less favorable loan sale conditions.)
• $802.386M — Total Assets (Decreased from $877.030M at December 31, 2024, primarily due to reduced Borrower Loans.)
• $342.046M — Borrower Loans, at Fair Value (Decreased from $461.785M at December 31, 2024, indicating a shrinking loan portfolio.)
• $37.254M — Change in Fair Value of Convertible Preferred Stock Warrants (Increased significantly from $3.910M in 2024, impacting expenses.)
• 78,202,775 — Shares of Common Stock Outstanding (As of November 11, 2025, reflecting potential dilution from warrant exercises.)

Key Players & Entities

• PROSPER MARKETPLACE, INC. (company) — Registrant
• PROSPER FUNDING LLC (company) — Wholly owned subsidiary and co-registrant
• WebBank (company) — Lender for Borrower Loans
• SEC (regulator) — Securities and Exchange Commission
• $36.844 million (dollar_amount) — Net Loss for nine months ended September 30, 2025
• $153.500 million (dollar_amount) — Total Net Revenue for nine months ended September 30, 2025
• $44.363 million (dollar_amount) — Loss on Sale of Borrower Loans for nine months ended September 30, 2025
• $802.386 million (dollar_amount) — Total Assets as of September 30, 2025
• $37.254 million (dollar_amount) — Change in Fair Value of Convertible Preferred Stock Warrants for nine months ended September 30, 2025
• 51,614,124 (dollar_amount) — Shares issued from Series F convertible preferred stock warrant exercise

FAQ

Risk Factors

• Performance of Notes [high — financial]: The company's financial performance is tied to the performance of notes issued through its marketplace. Deterioration in note performance could lead to increased losses.
• Credit Risk from Borrower Loans [high — financial]: Prosper faces credit risks associated with its Borrower Loans. Defaults or increased delinquency rates on these loans can negatively impact the company's financial results.
• Credit Risk from Credit Card Products [high — financial]: The company is exposed to credit risks from its Credit Card products. Managing loss rates on this product is a key strategic focus.
• Evolving Regulatory Compliance [medium — regulatory]: Prosper must comply with evolving regulations in the financial services and fintech industries. Non-compliance can lead to fines, sanctions, and reputational damage.
• Marketplace Dynamics [medium — operational]: The success of Prosper's marketplace depends on attracting and retaining both borrowers and investors. Imbalances or a decline in participation can affect revenue and profitability.

Industry Context

Prosper Marketplace operates in the peer-to-peer lending and online lending sector, a competitive landscape characterized by increasing regulatory scrutiny and evolving credit risk models. Fintech companies in this space are challenged to balance growth with robust risk management and compliance.

Regulatory Implications

The company faces ongoing regulatory risks, particularly concerning consumer lending, data privacy, and anti-money laundering (AML) regulations. Compliance with evolving financial regulations is critical to maintaining operational integrity and market access.

What Investors Should Do

1. Monitor Loss Rates on Credit Card Product
2. Assess Impact of Reduced Borrower Loans
3. Analyze Increased Loss on Sale of Borrower Loans
4. Evaluate Dilution from Warrant Exercise

Key Dates

• 2025-09-30: Nine Months Ended — Reported a net loss of $36.844 million and total net revenue of $153.500 million.
• 2025-09-30: Balance Sheet Date — Total assets stood at $802.386 million, with total liabilities at $948.490 million.
• 2024-12-31: Prior Year End Balance Sheet Date — Total assets were $877.030 million, and total liabilities were $1,061.348 million.

Glossary

Borrower Loans, at Fair Value

Loans originated through the Prosper platform that are valued at their current market price, reflecting potential gains or losses from market fluctuations. (A significant asset that decreased from $461.785 million to $342.046 million, impacting the company's asset base.)

Notes Issued by Securitization Trust

Debt instruments created from the pooling of loans and sold to investors, representing obligations of a trust set up for securitization. (A major liability that decreased from $258.960 million to $169.058 million, contributing to the reduction in total liabilities.)

Convertible Preferred Stock Warrant Liability

A financial instrument that gives the holder the right, but not the obligation, to purchase convertible preferred stock at a specified price. It is recorded as a liability due to its potential to be exercised. (This liability decreased from $261.249 million to $225.211 million, but a significant change in fair value was noted.)

Variable Interest Entities (VIEs)

Entities in which equity investors do not have sufficient voting interest or equity at risk, requiring the primary beneficiary to consolidate the VIE's financial statements. (The company consolidates VIEs, and their assets and liabilities are included in the consolidated balance sheets.)

Loss on Sale of Borrower Loans

The financial loss incurred when borrower loans are sold for less than their carrying value. (This loss increased significantly to $44.363 million from $31.500 million, indicating less favorable loan sale conditions or higher credit risk realization.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, Prosper Marketplace reported a substantial increase in net loss to $36.844 million from $16.680 million in the prior year, despite a revenue increase to $153.500 million from $125.877 million. This widening loss is exacerbated by a significant rise in Loss on Sale of Borrower Loans, up to $44.363 million from $31.500 million. Total assets and liabilities have both decreased, with assets falling to $802.386 million from $877.030 million, largely due to a reduction in Borrower Loans, and liabilities declining to $948.490 million from $1,061.348 million.

Filing Documents

• prosper-20250930.htm (10-Q) — 3725KB
• prosper10q093025ex311.htm (EX-31.1) — 9KB
• prosper10q093025ex312.htm (EX-31.2) — 9KB
• prosper10q093025ex313.htm (EX-31.3) — 9KB
• prosper10q093025ex314.htm (EX-31.4) — 9KB
• prosper10q093025ex321.htm (EX-32.1) — 6KB
• prosper10q093025ex322.htm (EX-32.2) — 6KB
• 0001416265-25-000043.txt ( ) — 18159KB
• prosper-20250930.xsd (EX-101.SCH) — 101KB
• prosper-20250930_cal.xml (EX-101.CAL) — 104KB
• prosper-20250930_def.xml (EX-101.DEF) — 727KB
• prosper-20250930_lab.xml (EX-101.LAB) — 980KB
• prosper-20250930_pre.xml (EX-101.PRE) — 907KB
• prosper-20250930_htm.xml (XML) — 3857KB

Forward-Looking Statements

Forward-Looking Statements 4 PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements 6 Prosper Marketplace, Inc. 6 Condensed Consolidated Balance Sheets (Unaudited) 6 Condensed Consolidated Statements of Operations (Unaudited) 8 Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders' Deficit 9 Condensed Consolidated Statements of Cash Flows (Unaudited) 12 Notes to Condensed Consolidated Financial Statements (Unaudited) 14 Prosper Funding LLC 55 Condensed Consolidated Balance Sheets (Unaudited) 55 Condensed Consolidated Statements of Operations (Unaudited) 56 Condensed Consolidated Statements of Member's Equity 57 Condensed Consolidated Statements of Cash Flows (Unaudited) 58 Notes to Condensed Consolidated Financial Statements (Unaudited) 59 Item 2.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations 73 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 100 Item 4.

Controls and Procedures

Controls and Procedures 101 PART II. OTHER INFORMATION 101 Item 1.

Legal Proceedings

Legal Proceedings 101 Item 1A.

Risk Factors

Risk Factors 101 Item 2. Unregistered Sale of Equity Securities and Use of Proceeds 102 Item 3. Defaults upon Senior Securities 103 Item 4. Mine Safety Disclosures 103 Item 5. Other Information 103 Item 6. Exhibit Index 103

Signatures

Signatures 104 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"), Prosper Credit Card Issuer LLC ("PMCC 2024-1"), a Delaware limited liability company, a Delaware statutory trust 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 pu

Forward-Looking Statements

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, and secured digital home

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

Condensed Consolidated Financial Statements

Item 1. Condensed Consolidated Financial Statements Prosper Marketplace, Inc . Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except for share and per share amounts) September 30, 2025 December 31, 2024 Assets: Cash and Cash Equivalents $ 38,962 $ 30,334 Restricted Cash (1) 142,647 114,753 Accounts Receivable 9,806 7,545 Borrower Loans, at Fair Value 342,046 461,785 Receivable from Credit Card Partner, at Fair Value (1) 101,388 104,153 Property and Equipment, Net 45,194 44,273 Prepaid and Other Assets (1) 28,293 25,362 Credit Card Derivative 40,984 38,739 Servicing Assets 16,698 13,718 Goodwill 36,368 36,368 Total Assets $ 802,386 $ 877,030 Liabilities, Convertible Preferred Stock and Stockholders' Deficit: Accounts Payable and Accrued Liabilities $ 71,306 $ 58,558 Payable to Investors 125,554 91,945 Notes, at Fair Value 255,538 283,030 Notes Issued by Securitization Trust (1) 169,058 258,960 Term Loan 67,026 73,857 Other Liabilities 34,797 33,749 Convertible Preferred Stock Warrant Liability 225,211 261,249 Total Liabilities $ 948,490 $ 1,061,348 Commitments and Contingencies (Note 17) Convertible Preferred Stock – $ 0.01 par value; 444,760,848 shares authorized as of September 30, 2025 and December 31, 2024; 261,227,694 issued and outstanding as of September 30, 2025 and 209,613,570 issued and outstanding as of December 31, 2024. Aggregate liquidation preference of $ 414,019 as of September 30, 2025 and $ 370,459 as of December 31, 2024. $ 396,556 $ 322,748 Less: Convertible Preferred Stock Held by Consolidated VIE (Note 13), 51,247,915 shares issued and outstanding as of September 30, 2025 and December 31, 2024 ( 2,381 ) ( 2,381 ) Stockholders' Deficit: Common Stock – $ 0.01 par value; 625,000,000 shares authorized; 79,124,210 shares issued and 78,188,275 shares outstanding, as of September 30, 2025; 78,401,384 shares issued and 77,465,449 shares outstanding, as of December 31, 2024 307 300 Additional Paid

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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, 2024. The balance sheet at December 31, 2024 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 nine months ended September 30, 2025 and 2024. 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 repo

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