Prosper Funding's Net Loss Widens to $36.8M Amid Rising Expenses

TL;DR

**Prosper Funding's deepening losses and shrinking loan book make it a risky bet; steer clear until profitability improves.**

AI Summary

Prosper Funding LLC, as part of Prosper Marketplace, Inc., reported a net loss of $36.844 million for the nine months ended September 30, 2025, a significant increase from the $16.680 million net loss in the prior year period. Total net revenue increased to $153.500 million from $125.877 million year-over-year, driven by a rise in transaction fees to $174.716 million from $139.585 million and servicing fees to $23.617 million from $14.156 million. However, this was offset by a substantial increase in the loss on sale of borrower loans, which grew to $44.363 million from $31.500 million. The change in fair value of convertible preferred stock warrants also significantly impacted expenses, rising to $37.254 million from $3.910 million. Borrower Loans at fair value decreased to $342.046 million as of September 30, 2025, from $461.785 million at December 31, 2024, indicating a reduction in the loan portfolio. Total assets declined from $877.030 million to $802.386 million, while total liabilities decreased from $1,061.348 million to $948.490 million over the same period. The company's accumulated deficit widened to $681.055 million from $644.211 million.

Why It Matters

Prosper Funding LLC's widening net loss and increasing accumulated deficit are critical for investors, signaling potential financial instability and a challenging path to profitability. The significant increase in the loss on sale of borrower loans and the change in fair value of convertible preferred stock warrants suggest underlying pressures on the business model and valuation. For employees, this could indicate future cost-cutting measures or a slowdown in growth. Customers might see changes in loan product offerings or terms as the company navigates these financial headwinds. In the competitive fintech lending market, these results could weaken Prosper's position against more profitable rivals, making it harder to attract capital and maintain market share.

Risk Assessment

Risk Level: high — The company reported a net loss of $36.844 million for the nine months ended September 30, 2025, a substantial increase from the $16.680 million loss in the prior year. This widening loss, coupled with an accumulated deficit of $681.055 million, indicates significant financial challenges. Additionally, the decrease in Borrower Loans at fair value from $461.785 million to $342.046 million suggests a shrinking core business asset.

Analyst Insight

Investors should exercise extreme caution and consider avoiding Prosper Funding LLC given the escalating net losses and growing accumulated deficit. Monitor future filings for signs of improved profitability, reduced loan sale losses, and a stable or growing loan portfolio before considering any investment.

Financial Highlights

debt To Equity

N/A

revenue

$153.500M

operating Margin

N/A

total Assets

$802.386M

total Debt

$761.860M

net Income

-$36.844M

eps

N/A

gross Margin

N/A

cash Position

$38.962M

revenue Growth

+22.0%

Revenue Breakdown

Key Numbers

• $36.844M — Net Loss (9 months) (Increased from $16.680M in prior year, indicating worsening financial performance.)
• $153.500M — Total Net Revenue (9 months) (Increased from $125.877M, showing revenue growth despite losses.)
• $44.363M — Loss on Sale of Borrower Loans (9 months) (Increased from $31.500M, impacting profitability.)
• $37.254M — Change in Fair Value of Convertible Preferred Stock Warrants (9 months) (Significant increase from $3.910M, contributing to higher expenses.)
• $681.055M — Accumulated Deficit (Widened from $644.211M, reflecting ongoing losses.)
• $342.046M — Borrower Loans, at Fair Value (Decreased from $461.785M, indicating a reduction in the loan portfolio.)
• $802.386M — Total Assets (Decreased from $877.030M, reflecting a shrinking balance sheet.)
• $948.490M — Total Liabilities (Decreased from $1,061.348M, partially offsetting asset decline.)
• $174.716M — Transaction Fees, Net (9 months) (Increased from $139.585M, a key driver of operating revenue.)
• $23.617M — Servicing Fees, Net (9 months) (Increased from $14.156M, contributing to revenue growth.)

Key Players & Entities

• Prosper Funding LLC (company) — Registrant and wholly owned subsidiary of Prosper Marketplace, Inc.
• Prosper Marketplace, Inc. (company) — Parent company and co-registrant
• WebBank (company) — Lender for Borrower Loans originated through Prosper's marketplace
• SEC (regulator) — Securities and Exchange Commission
• September 30, 2025 (date) — End of the reported quarterly period
• $36.844 million (dollar_amount) — Net loss for the nine months ended September 30, 2025
• $16.680 million (dollar_amount) — Net loss for the nine months ended September 30, 2024
• $681.055 million (dollar_amount) — Accumulated deficit as of September 30, 2025
• $44.363 million (dollar_amount) — Loss on sale of Borrower Loans for the nine months ended September 30, 2025
• $37.254 million (dollar_amount) — Change in Fair Value of Convertible Preferred Stock Warrants for the nine months ended September 30, 2025

FAQ

Risk Factors

• Increased Net Loss [high — financial]: The company reported a net loss of $36.844 million for the nine months ended September 30, 2025, a substantial increase from $16.680 million in the prior year period. This widening loss indicates deteriorating profitability.
• Growing Loss on Sale of Loans [high — financial]: The loss on sale of borrower loans increased to $44.363 million from $31.500 million year-over-year. This trend negatively impacts the company's ability to generate profit from its loan portfolio.
• Fair Value Fluctuations of Warrants [medium — financial]: The change in fair value of convertible preferred stock warrants resulted in a significant expense of $37.254 million, up from $3.910 million in the prior year. These fluctuations introduce volatility to the company's financial results.
• Shrinking Loan Portfolio [medium — financial]: Borrower loans at fair value decreased to $342.046 million as of September 30, 2025, from $461.785 million at December 31, 2024. This reduction in the core asset suggests a contraction in the company's primary business activity.
• Declining Asset Base [high — financial]: Total assets decreased from $877.030 million to $802.386 million. This contraction in the balance sheet, coupled with an increasing accumulated deficit of $681.055 million, signals financial strain.
• Persistent Accumulated Deficit [high — financial]: The company's accumulated deficit widened to $681.055 million from $644.211 million. This indicates a history of net losses that have eroded equity.

Industry Context

Prosper operates in the online lending marketplace, connecting borrowers with investors. The industry faces competition from traditional financial institutions and other fintech platforms. Trends include evolving regulatory scrutiny, interest rate sensitivity, and the need for robust risk management to assess borrower creditworthiness.

Regulatory Implications

The financial services sector is subject to extensive regulation. Changes in lending laws, consumer protection regulations, and data privacy requirements could impact Prosper's operations and profitability. Compliance with these evolving regulations is a continuous challenge.

What Investors Should Do

1. Monitor loan portfolio performance and loss rates.
2. Analyze the impact of warrant fair value changes on profitability.
3. Assess the sustainability of revenue growth against increasing losses.
4. Evaluate the company's ability to manage its liabilities and asset base.

Glossary

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. (Crucial for valuing assets like Borrower Loans and liabilities like Convertible Preferred Stock Warrant Liability, impacting reported financial performance.)

Accumulated Deficit

The cumulative net losses of a company that have not been offset by net income or other gains. (Indicates the company's historical profitability, with a widening deficit suggesting ongoing financial challenges.)

Convertible Preferred Stock Warrant Liability

A financial instrument that gives the holder the right, but not the obligation, to purchase shares of convertible preferred stock at a specified price within a certain timeframe. Its value fluctuates with market conditions. (Significant changes in its fair value can materially impact the company's net income and financial position.)

Variable Interest Entities (VIEs)

Entities for which the total equity is not sufficient to permit an entity to finance its activities without additional financial support from other parties, or where the equity investors do not have the characteristics of a voting interest. (The company consolidates VIEs, meaning their assets and liabilities are included in Prosper's financial statements, affecting the overall balance sheet.)

Year-Over-Year Comparison

For the nine months ended September 30, 2025, Prosper Funding LLC experienced a significant increase in net loss to $36.844 million, more than double the $16.680 million loss in the prior year. Total net revenue saw healthy growth of 22.0% to $153.500 million, driven by higher transaction and servicing fees. However, this was overshadowed by a substantial rise in the loss on sale of borrower loans and a dramatic increase in expenses related to the fair value of convertible preferred stock warrants. The company's balance sheet also contracted, with total assets decreasing from $877.030 million to $802.386 million and total liabilities falling from $1,061.348 million to $948.490 million, while the accumulated deficit widened.

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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