10-Q

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, 2018

Commission File Number	Exact Name of Registrant as Specified in its Charter	I.R.S. Employer Identification Number
333-147019 333-179941-01 333-204880	PROSPER MARKETPLACE, INC. a Delaware corporation 221 Main Street, 3rd Floor San Francisco, CA 94105 Telephone: (415) 593-5400	73-1733867
333-179941 333-204880-01	PROSPER FUNDING LLC a Delaware limited liability company 221 Main Street, 3rd Floor San Francisco, CA 94105 Telephone: (415) 593-5479	45-4526070

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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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.	o	o	x	o	o
Prosper Funding LLC	o	o	x	o	o

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 6, 2018, there were 70,381,991 shares of Prosper Marketplace, Inc. common stock outstanding. Prosper Funding LLC does not have any common stock outstanding.

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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.

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TABLE OF CONTENTS

		Page No.
	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)	7
	Condensed Consolidated Statements of Other Comprehensive Income (Loss) (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	11
	Prosper Funding LLC	37
	Condensed Consolidated Balance Sheets (Unaudited)	37
	Condensed Consolidated Statements of Operations (Unaudited)	38
	Condensed Consolidated Statements of Cash Flows (Unaudited)	39
	Notes to Condensed Consolidated Financial Statements (Unaudited)	40
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	50
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	65
Item 4.	Controls and Procedures	67
PART II.	OTHER INFORMATION	68
Item 1.	Legal Proceedings	68
Item 1A.	Risk Factors	68
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	68
Item 3.	Defaults upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibit Index	68
Signatures		71

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” refer to PMI and its wholly owned subsidiaries, PFL, BillGuard, Inc. (“BillGuard”), a Delaware corporation, and Prosper Healthcare Lending LLC (“PHL”), a Delaware limited liability company, on a consolidated basis; and “Prosper Funding” refers to PFL and its wholly owned subsidiaries, Prosper Asset Holdings LLC (“PAH”), a Delaware limited liability company, and Prosper Depositor LLC, a Delaware limited liability company, on a consolidated basis. In addition, the unsecured, consumer 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.” Further, 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. Finally, although historically we have referred to investors as “lender members,” we call them “investors” herein to avoid confusion since WebBank is the lender for Borrower Loans originated through our marketplace.

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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 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 (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. In particular, information appearing under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes forward-looking statements. 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;

• our ability to attract potential borrowers and investors to our marketplace;

• 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, including the impact of borrower delinquencies, defaults and prepayments on the returns on the Notes, and the effectiveness of our credit rating systems;

• the impact of future economic conditions on the performance of the Notes and the loss rates for the Notes;

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

• 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;

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

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

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

• the lack of a public trading market for the Notes and the 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; and

• 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 our marketplace or adversely impact our ability to service Borrower Loans.

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” sections of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2017 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.

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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. Further, a copy of this Quarterly Report on Form 10-Q is located at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public at the SEC’s website at www.sec.gov.

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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, 2018			December 31, 2017
Assets
Cash and Cash Equivalents	$	58,652		$	45,795
Restricted Cash	134,552			152,668
Available for Sale Investments, at Fair Value	34,841			53,147
Accounts Receivable	3,539			683
Loans Held for Sale, at Fair Value	116,817			49
Borrower Loans, at Fair Value	277,361			293,005
Property and Equipment, Net	16,081			18,136
Prepaid and Other Assets	7,776			7,796
Servicing Assets	15,644			14,711
Goodwill	36,368			36,368
Intangible Assets, Net	1,177			1,377
Total Assets	$	702,808		$	623,735
Liabilities, Convertible Preferred Stock and Stockholders' Deficit
Accounts Payable and Accrued Liabilities	$	14,652		$	11,942
Payable to Investors	112,580			132,432
Notes at Fair Value	277,425			293,948
Warehouse Line	103,553			—
Other Liabilities	13,718			12,669
Convertible Preferred Stock Warrant Liability	143,676			116,366
Total Liabilities	665,604			567,357
Commitments and Contingencies (see Note 17)
Convertible Preferred Stock – $0.01 par value; 444,760,848 shares authorized; 214,637,925 issued and outstanding as of June 30, 2018; and 444,760,848 shares authorized; 214,637,925 issued and outstanding as of December 31, 2017. Aggregate liquidation preference of $375,952 as of June 30, 2018 and December 31, 2017.	323,793			323,793
Stockholders' Deficit
Common Stock – $0.01 par value; 625,000,000 shares authorized; 71,317,926 shares issued, and 70,381,991 shares outstanding, as of June 30, 2018; 625,000,000 shares authorized; 71,226,934 shares issued, and 70,290,999 shares outstanding, as of December 31, 2017.	228			228
Additional Paid-In Capital	141,463			136,653
Less: Treasury Stock	(23,417		)	(23,417		)
Accumulated Deficit	(404,801		)	(380,806		)
Accumulated Other Comprehensive Loss	(62		)	(73		)
Total Stockholders' Deficit	(286,589		)	(267,415		)
Total Liabilities, Convertible Preferred Stock and Stockholders' Deficit	$	702,808		$	623,735

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

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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,
	2018			2017			2018			2017
Revenues
Operating Revenues
Transaction Fees, Net	$	37,988		$	35,423		$	69,343		$	62,291
Servicing Fees, Net	7,487			6,793			14,671			12,947
Gain (Loss) on Sale of Borrower Loans	4,163			3,803			7,512			3,485
Fair Value of Warrants Vested on Sale of Borrower Loans	(20,633		)	(16,887		)	(35,912		)	(20,194		)
Other Revenue	1,015			1,415			2,367			2,135
Total Operating Revenues	30,020			30,547			57,981			60,664
Interest Income
Interest Income on Borrower Loans	14,556			12,007			26,916			23,507
Interest Expense on Notes and Warehouse Line	(11,471		)	(11,177		)	(22,200		)	(21,855		)
Net Interest Income	3,085			830			4,716			1,652
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net	(1,430		)	70			(572		)	(24		)
Total Net Revenue	31,675			31,447			62,125			62,292
Expenses
Origination and Servicing	9,192			8,873			18,013			17,278
Sales and Marketing	20,907			20,131			39,735			39,687
General and Administrative	18,151			18,758			36,865			39,473
Restructuring Charges, Net	271			647			595			572
Change in Fair Value of Convertible Preferred Stock Warrants	(3,998		)	22,416			(8,602		)	22,817
Other Expenses (Income), Net	(258		)	1,930			(500		)	7,629
Total Expenses	44,265			72,755			86,106			127,456
Net Loss Before Taxes	(12,590		)	(41,308		)	(23,981		)	(65,164		)
Income Tax Expense	9			97			19			262
Net Loss Applicable to Common Stockholders	$	(12,599	)	$	(41,405	)	$	(24,000	)	$	(65,426	)
Net Loss Per Share – Basic and Diluted	$	(0.18	)	$	(0.59	)	$	(0.34	)	$	(0.94	)
Weighted-Average Shares - Basic and Diluted	70,362,716			69,691,841			70,333,145			69,436,365

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

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Prosper Marketplace, Inc.

Condensed Consolidated Statements of Other Comprehensive Loss (Unaudited)

(in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Loss	$	(12,599	)	$	(41,405	)	$	(24,000	)	$	(65,426	)
Other Comprehensive Income (Loss), Before Tax
Change in Net Unrealized Gain on Available for Sale Investments, at Fair Value	27			(1		)	12			16
Realized (Gain) Loss on Sale of Available for Sale Investments, at Fair Value	—			—			—			(12		)
Other Comprehensive Income, Before Tax	27			(1		)	12			4
Income tax effect	—			—			—			—
Other Comprehensive Income, Net of Tax	27			(1		)	12			4
Comprehensive Loss	(12,572		)	(41,406		)	(23,988		)	(65,422		)

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

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Prosper Marketplace, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Six Months Ended June 30,
	2018			2017
Cash flows from Operating Activities:
Net Loss	$	(24,000	)	$	(65,426	)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes	572			24
Depreciation and Amortization	5,334			6,270
Gain on Sales of Borrower Loans	(7,501		)	(6,532		)
Change in Fair Value of Servicing Rights	6,538			5,742
Stock-Based Compensation Expense	4,584			6,812
Restructuring Liability	595			412
Fair Value of Warrants Vested	35,912			21,677
Change in Fair Value of Warrants	(8,602		)	22,817
Impairment Losses on Assets Held for Sale	—			6,319
Other, Net	(358		)	199
Changes in Operating Assets and Liabilities:
Purchase of Loans Held for Sale at Fair Value	(1,324,100		)	(1,245,826		)
Proceeds from Sales and Principal Payments of Loans Held for Sale at Fair Value	1,207,916			1,246,358
Accounts Receivable	(2,856		)	25
Prepaid and Other Assets	1,448			(4,637		)
Accounts Payable and Accrued Liabilities	2,540			(3,696		)
Payable to Investors	(19,852		)	17,967
Other Liabilities	(9		)	(1,774		)
Net Cash (Used in) Provided by Operating Activities	(121,839		)	6,731
Cash Flows from Investing Activities:
Purchase of Borrower Loans Held at Fair Value	(91,075		)	(106,940		)
Principal Payments of Borrower Loans Held at Fair Value	90,963			99,482
Purchases of Property and Equipment	(2,715		)	(2,485		)
Maturities of Short Term Investments	—			1,280
Purchases of Short Term Investments	—			(1,263		)
Purchases of Available for Sale Investments, at Fair Value	(5,448		)	—
Proceeds from Sale of Available for Sale Investments	—			16,163
Maturities of Available for Sale Investments	24,000			8,600
Net Cash Provided by Investing Activities	15,725			14,837
Cash Flows from Financing Activities:
Proceeds from Issuance of Notes Held at Fair Value	90,693			106,506
Payments of Notes Held at Fair Value	(91,525		)	(100,274		)
Proceeds from revolving debt facilities	103,097			—
Payment for debt issuance costs	(1,428		)	—
Proceeds from Exercise of Warrants and Stock Options including Early Exercise, and Issuance of Restricted Stock	18			18
Repurchase of Common Stock and Restricted Stock	—			(64		)

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Net Cash Provided by Financing Activities	100,855			6,186
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(5,259		)	27,754
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period	198,463			186,244
Cash, Cash Equivalents and Restricted Cash at End of the Period	$	193,204		$	213,998
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	$	22,252		$	22,121
Non-Cash Investing Activity- Accrual for Property and Equipment, Net	$	325		$	169

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

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Prosper Marketplace, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

Prosper Marketplace, Inc. (“PMI”) 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 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, 2017. The balance sheet at December 31, 2017 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.

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 and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.

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, 2017. There have been no changes to these accounting policies during the first six months of 2018 other than the changes noted below.

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Available for Sale Investments at Fair Value, Borrower Loans, Loans Held for Sale, Accounts Receivable, Accounts Payable and Accrued Liabilities, Payable to Investors, Convertible Preferred Stock Warrant Liability 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.

Restricted Cash

Restricted cash consists primarily of cash deposits 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 or Prosper has on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown in the condensed consolidated statements of cash flows:

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	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
Cash and Cash Equivalents	$	58,652	45,795		$	34,667	$	22,337
Restricted Cash	134,552		152,668		179,331		163,907
Total Cash, Cash Equivalents and Restricted Cash shown in the consolidated statements of cash flows	$	193,204	$	198,463	$	213,998	$	186,244

Borrower Loans, Loans Held for Sale and Notes

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. We choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. Management believes that the fair value option is more meaningful for the readers of the financial statements and it allows both the Borrower Loans and Notes to be valued using the same methodology. The fair value election, with respect to an item, may not be revoked once an election is made. Prosper estimates the fair value of such Borrower Loans and Notes using discounted cash flow methodologies that take into account expected prepayments, losses, recoveries and default rates. The Borrower Loans are not derecognized when a corresponding Note is issued as Prosper maintains the ability to sell the Borrower Loans without the approval of the holders of the corresponding Notes.

Debt

For debt instruments carried at amortized cost, the Company defers specific incremental costs directly related to issuing debt or entering into revolving debt arrangements. Debt issuance costs associated with revolving debt arrangements are presented as an asset and subsequently amortized over the term of the revolving debt arrangement.

Revenues

Revenue primarily results from fees and net interest income earned. Fees include transaction fees for our services performed on behalf of WebBank to originate a loan. We also have other smaller sources of revenue reported as other revenue, including referral fees and securitization fees. For more information about Prosper's revenues, see Note 2 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2017.

Transaction Fees

Prosper has a customer contract with WebBank to facilitate the origination of all Borrower Loans through Prosper’s marketplace. In exchange for these services, Prosper earns a transaction fee from WebBank that is recognized when performance is complete, which is upon the successful origination of a Borrower Loan and which is similar to the recognition prior to the adoption of ASC 606. The transaction fee Prosper earns is determined by the term and credit grade of the Borrower Loan that is facilitated on Prosper’s marketplace, and ranges from 1.00% to 5.00% of the original principal amount of such Borrower Loan that WebBank originates. Prosper records the transaction fee net of any fees paid to WebBank because Prosper does not receive an identifiable benefit from WebBank other than the Borrower Loan that has been recognized at fair value.

Other Revenues

Other Revenues consist primarily of securitization fees and credit referral fees. Credit referral fees are where partner companies pay us an agreed upon amount for successful referrals of customers from our marketplace. The transaction price is a fixed amount per referral and is recognized by the Company upon a successful referral which is similar to the recognition prior to the adoption of ASC 606. Securitization fees represent fees Prosper earns to facilitate securitizations for purchasers of Borrower Loans and is recognized as other revenue when the securitization is completed which is similar to the recognition prior to the adoption of ASC 606. In some instances Prosper may also provide a guarantee, which requires us to first determine the fair value of the guarantee and allocate the remaining transaction price to the securitization performance obligation.

As of June 30, 2018 Prosper had no material contract assets, contract liabilities or deferred contract costs. As of June 30, 2018, Prosper had no unsatisfied performance obligations related to transaction fee or other revenues.

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Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. Prosper adopted the requirements of the ASU as of January 1, 2018, utilizing the modified retrospective approach. Transaction fees, securitization fees and credit referral fees are included in the scope of the new guidance, while servicing fees, net interest income and gain or loss on the sale of loans remain within the scope of ASC topic 860, Transfers and Servicing or ASC topic 310. The impact of adopting the ASU did not result in a material cumulative effect adjustment upon the date of adoption. Additionally, the impact of adoption on the Consolidated Financial Statements for the current period is insignificant.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. Prosper adopted the standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16)," which requires companies to recognize the income-tax consequences of an intra-entity transfer

of an asset other than inventory. Prosper adopted the standard effective January 1, 2018, the adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (ASU2016-18)," which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prosper adopted the standard effective January 1, 2018. Prosper had $134.6 million and $179.3 million of restricted cash on its consolidated balance sheet as of June 30, 2018 and June 30, 2017, respectively, whose cash flow statement classification changed to align with the new guidance.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Prosper adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

Accounting Standards Issued, To Be Adopted By The Company In Future Periods

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures.  This guidance will be effective for us in the first quarter of our fiscal year 2019, and early adoption is permitted. Prosper is currently evaluating the impact that this guidance will have on its consolidated financial statements. We do expect that this guidance will have a material impact on Prosper's consolidated financial statements. As of June 30, 2018 Prosper had a total of $35.9 million in non-cancelable operating lease commitments.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard eliminates Step 2 from the goodwill impairment test, which requires a hypothetical purchase price allocation. Prosper will continue to have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The standard should be applied on a prospective basis. Prosper is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, "Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting."The ASU is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718, Compensation-Stock Compensation,which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned.

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This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year and early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. Prosper is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

3. Property and Equipment, Net

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

	June 30, 2018			December 31, 2017
Property and equipment:
Computer equipment	$	14,785		$	14,499
Internal-use software and website development costs	21,372			19,910
Office equipment and furniture	3,010			3,010
Leasehold improvements	7,078			7,078
Assets not yet placed in service	1,893			1,216
Property and equipment	48,138			45,713
Less accumulated depreciation and amortization	(32,057		)	(27,577		)
Total property and equipment, net	$	16,081		$	18,136

Depreciation and amortization expense for property and equipment for the three months ended June 30, 2018 and June 30, 2017 was $2.4 million and $2.7 million, respectively. Depreciation and amortization expense for property and equipment for the six months endedJune 30, 2018 and June 30, 2017 was $5.1 million and $5.2 million respectively. These charges are included in general and administration expenses on the condensed consolidated statements of operations. Prosper capitalized internal-use software and website development costs in the amount of $1.4 million and $1.0 million for the three months ended June 30, 2018 and June 30, 2017, respectively. Prosper capitalized internal-use software and website development costs in the amount of $2.5 million and $2.1 million for the six months endedJune 30, 2018 and June 30, 2017, respectively.

4. Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value

The aggregate principal balances outstanding and fair values of Borrower Loans, Loans Held for Sale, and Notes as of June 30, 2018 and December 31, 2017, are presented in the following table (in thousands):

	Borrower Loans						Notes						Loans Held for Sale
	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
Aggregate principal balance outstanding	$	280,852		$	296,668		$	(284,011	)	$	(300,922	)	$	117,028		$	59
Fair value adjustments	(3,491		)	(3,663		)	6,586			6,974			(211		)	(10		)
Fair value	$	277,361		$	293,005		$	(277,425	)	$	(293,948	)	$	116,817		$	49

At June 30, 2018, outstanding Borrower Loans had original terms to maturity of either 36 or 60 months, had monthly payments with fixed interest rates ranging from 5.31% to 32.32%, and had various maturity dates through June 2023. At December 31, 2017, outstanding Borrower Loans had original maturities of either 36 or 60 months, had monthly payments with fixed interest rates ranging from 5.31% to 32.32%, and had various maturity dates through December 2022. 

Approximately $0.6 million and $1.2 million represents the loss that is attributable to changes in the instrument-specific credit risks related to Borrower Loans that were recorded in the change in fair value during the six months ending June 30, 2018 and June 30, 2017, respectively.

As of June 30, 2018, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $2.6 million and a fair value of $1.1 million. As of December 31, 2017, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $3.5 million and a fair value of $1.3 million. Prosper places loans on non-accrual status when they are over 120 days past due. As of June 30, 2018 and December 31, 2017, Borrower Loans in non-accrual status had a fair value of $0.3 million and $0.3 million, respectively.

5. Loan Servicing Assets and Liabilities

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Prosper accounts for servicing assets and liabilities at their estimated fair values with changes in fair values recorded in servicing fees. The initial asset or liability is recognized when Prosper sells Borrower Loans to unrelated third-party buyers through the Whole Loan Channel and the servicing rights are retained. The servicing assets and liabilities are measured at fair value throughout the servicing period. The total gains and losses recognized on the sale of such Borrower Loans for the three months ended June 30, 2018 was a gain of $4.2 million and a loss of $20.6 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium (as defined in Note 16). The total gains and losses recognized on the sale of such Borrower Loans for the six months ended June 30, 2018 was a gain of $7.5 million and a loss of $35.9 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium. The total gains recognized on the sale of such Borrower Loans were $3.8 million during the three months ended June 30, 2017, which included rebates provided to members of the Consortium prior to the closing of the Consortium transaction and a loss of $16.9 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium after the closing of the Consortium transaction. The total gains recognized on the sale of such Borrower Loans were $3.5 million during the six months ended June 30, 2017, which included rebates provided to members of the Consortium prior to the closing of the Consortium transaction and a loss of $20.2 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium after the closing of the Consortium transaction.

As of June 30, 2018, Borrower Loans that were sold but for which Prosper retained servicing rights had a total outstanding principal balance of $3.9 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through June 2023. At December 31, 2017, Borrower Loans that were sold but for which Prosper retained servicing rights had a total outstanding principal balance of $3.7 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through December 2022.

$21.6 million and $18.2 million of contractually specified servicing fees and ancillary fees are included on our condensed consolidated statements of operations in Servicing Fees, Net for the six months ended June 30, 2018 and June 30, 2017, respectively.

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 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 below are those that Prosper considers significant to the estimated fair values of the level 3 servicing assets and liabilities. 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. Prosper estimated 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 a backup service provider.

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 used a range of discount rates for the servicing assets and liabilities 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 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 we expect to collect fees on the Borrower Loans, which is used to project future servicing revenues.

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6. Available for Sale Investments, at Fair Value 

Available for sale investments are recorded at fair value and unrealized gains and losses are reported, net of taxes, in accumulated other comprehensive income (loss) included in stockholders' equity unless management determines that an investment is other-than-temporarily impaired . 

The amortized cost, gross unrealized gains and losses, and fair value of available for sale investments as of June 30, 2018 and December 31, 2017, are as follows (in thousands): 

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturity securities:
Treasury Bills	20,668		—		(23		)	20,645
US Treasury securities	14,232		—		(36		)	14,196
Total Available for Sale Investments	$	34,900	$	—	$	(59	)	$	34,841

December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturity securities:
Treasury Bills	$	34,014	$	—	$	(36	)	$	33,978
US Treasury securities	19,207		—		(38		)	19,169
Total Available for Sale Investments	$	53,221	$	—	$	(74	)	$	53,147

A summary of available for sale investments with unrealized losses as of June 30, 2018, and December 31, 2017, aggregated by category and period of continuous unrealized loss, is as follows (in thousands):

	Less than 12 months					12 months or longer				Total
June 30, 2018	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
Treasury Bills	$	20,645	$	(23	)	$	—	$	—	$	20,645	$	(23	)
US Treasury securities	$	14,196	$	(36	)	$	—	$	—	$	14,196	$	(36	)
Total Investments with Unrealized Losses	$	34,841	$	(59	)	$	—	$	—	$	34,841	$	(59	)

	Less than 12 months					12 months or longer				Total
December 31, 2017	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
Treasury Bills	$	33,978	$	(36	)	$	—	$	—	$	33,978	$	(36	)
US Treasury securities	$	19,169	$	(38	)	$	—	$	—	$	19,169	$	(38	)
Total Investments with Unrealized Losses	$	53,147	$	(74	)	$	—	$	—	$	53,147	$	(74	)

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There were no impairment charges recognized during the six months ended June 30, 2018. 

The maturities of available for sale investments at June 30, 2018 and December 31, 2017 are as follows (in thousands):

June 30, 2018	Within 1 year		After 1 year through 5 years		After 5 years to 10 years		After 10 years		Total
Treasury Bills	20,645		—		—		—		20,645
US Treasury securities	14,196		—		—		—		14,196
Total Fair Value	$	34,841	$	—	$	—	$	—	$	34,841
Total Amortized Cost	$	34,900	$	—	$	—	$	—	$	34,900

December 31, 2017	Within 1 year		After 1 year through 5 years		After 5 years to 10 years		After 10 years		Total
Treasury Bills	33,978		—		—		—		33,978
US Treasury securities	14,947		4,222		—		—		19,169
Total Fair Value	$	48,925	$	4,222	$	—	$	—	$	53,147
Total Amortized Cost	$	48,992	$	4,229	$	—	$	—	$	53,221

During the six months ended June 30, 2018, Prosper sold $0 of investments which resulted in a realized gain of $0.

7.  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. We apply 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, Loans Held for Sale, 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, Loans Held for Sale and Notes include default rates derived from historical performance and discount rates applied to each credit grade based on the perceived credit risk of each credit grade.

Investments held at fair value consist of available for sale investments. The available for sale investments may consist of corporate debt securities, commercial paper, U.S. Treasury securities, Treasury bills, agency bonds and short term bond funds. When available, Prosper uses quoted prices in active markets to measure the fair value of securities available for sale. When utilizing market data and bid-ask spreads, Prosper uses the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, Prosper uses prices obtained from independent third-party pricing services to measure the fair value of investment

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assets. Prosper's primary independent pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information, such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar securities. Prosper compares the prices obtained from its primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Prosper does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in a material difference in the recorded amounts. 

The Convertible Preferred Stock Warrant Liability is valued using a Black-Scholes option pricing model. Refer to Note 12 for further details.

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

June 30, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	277,361	$	277,361
Loans Held for Sale	—		—		116,817		116,817
Available for Sale Investments, at Fair Value	—		34,841		—		34,841
Servicing Assets	—		—		15,644		15,644
Total Assets	—		34,841		409,822		444,663
Liabilities:
Notes	$	—	$	—	$	277,425	$	277,425
Servicing Liabilities	—		—		28		28
Convertible Preferred Stock Warrant Liability	—		—		143,676		143,676
Loan Trailing Fee Liability	—		—		3,078		3,078
Total Liabilities	$	—	$	—	$	424,207	$	424,207

December 31, 2017	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	293,005	$	293,005
Loans Held for Sale	—		—		49		49
Available for Sale Investments, at Fair Value	—		53,147		—		53,147
Servicing Assets	—		—		14,711		14,711
Total Assets	—		53,147		307,765		360,912
Liabilities:
Notes	$	—	$	—	$	293,948	$	293,948
Servicing Liabilities	—		—		59		59
Convertible Preferred Stock Warrant Liability	—		—		116,366		116,366
Loan Trailing Fee Liability	—		—		2,595		2,595
Total Liabilities	$	—	$	—	$	412,968	$	412,968

As Prosper’s Borrower Loans, Loans Held for Sale, Notes, and loan servicing rights do not trade in an active market with readily observable prices, Prosper 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.

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs used for Prosper’s level 3 fair value measurements at June 30, 2018 and December 31, 2017:

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Borrower Loans, Loans Held for Sale and Notes:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	4.4% - 13.9%	4.0% - 14.4%
Default rate	2.0% - 15.6%	2.0% - 15.4%

Servicing Rights

	Range
Unobservable Input	June 30, 2018		December 31, 2017
Discount rate	15% - 25%		15% - 25%
Default rate	1.6% - 16.5%		1.5% - 16.1%
Prepayment rate	15.2% - 32.9%		13.5% - 30.2%
Market servicing rate	0.625	%	0.625	%

Loan Trailing Fee Liability:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	15% - 25%	15% - 25%
Default rate	1.6% - 16.5%	1.5% - 16.1%
Prepayment rate	15.2% - 32.9%	13.5% - 30.2%

At June 30, 2018, the discounted cash flow methodology used to estimate the Note fair values used the same projected cash flows as the related Borrower Loans. As demonstrated in the following table, 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.

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)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2018	$	293,005		$	(293,948	)	$	49		$	(894	)
Purchase of Borrower Loans/Issuance of Notes	91,075			(90,693		)	1,324,100			1,324,482
Principal repayments	(88,947		)	91,525			(14,265		)	(11,687		)
Borrower Loans sold to third parties	(2,016		)	—			(1,193,651		)	(1,195,667		)
Other changes	(338		)	633			796			1,091
Change in fair value	(15,418		)	15,058			(212		)	(572		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	116,817		$	116,753

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Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2017	$	315,627		$	(316,236	)	$	624		$	15
Purchase of Borrower Loans/Issuance of Notes	106,940			(106,506		)	1,245,826			1,246,260
Principal repayments	(97,492		)	100,274			(42		)	2,740
Borrower Loans sold to third parties	(1,990		)	—			(1,246,316		)	(1,248,306		)
Other changes	9			266			(3		)	272
Change in fair value	(10,822		)	10,792			6			(24		)
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2018	$	285,584		$	(285,095	)	$	82,803		$	83,292
Purchase of Borrower Loans/Issuance of Notes	44,799			(44,468		)	728,901			729,232
Principal repayments	(43,990		)	44,423			(10,416		)	(9,983		)
Borrower Loans sold to third parties	(950		)	—			(683,547		)	(684,497		)
Other changes	(202		)	86			255			139
Change in fair value	(7,880		)	7,629			(1,179		)	(1,430		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	116,817		$	116,753

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2017	$	317,536		$	(316,944	)	$	109		$	701
Purchase of Borrower Loans/Issuance of Notes	50,260			(49,692		)	721,829			722,397
Principal repayments	(48,048		)	48,695			(14		)	633
Borrower Loans sold to third parties	(869		)	—			(721,829		)	(722,698		)
Other changes	10			(156		)	—			(146		)
Change in fair value	(6,617		)	6,687			—			70
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

The following tables present additional information about level 3 servicing assets and liabilities measured at fair value on a recurring basis (in thousands):

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2018	14,711		59
Additions	7,502		—
Less: Changes in fair value	(6,569	)	(31	)
Fair Value at June 30, 2018	15,644		28

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2017	12,786		198
Additions	6,532		—
Less: Changes in fair value	(5,829	)	(87	)
Fair Value at June 30, 2017	13,489		111

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	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2018	14,754		41
Additions	4,163		—
Less: Changes in fair value	(3,273	)	(13	)
Fair Value at June 30, 2018	15,644		28

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2017	12,436		147
Additions	3,768		—
Less: Changes in fair value	(2,715	)	(36	)
Fair Value at June 30, 2017	13,489		111

The following table presents additional information about level 3 Preferred Stock Warrant Liability measured at fair value on a recurring basis (in thousands):

Balance as of January 1, 2018	$	116,366
Add Issuances of Preferred Stock Warrant	35,912
Change in fair value of the preferred stock warrant liability	(8,602		)
Balance at June 30, 2018	$	143,676

Balance as of January 1, 2017	$	—
Add Issuances of Preferred Stock Warrant	47,297
Change in fair value of the preferred stock warrant liability	22,817
Balance at June 30, 2017	$	70,114

Balance as of April 1, 2018	$	127,041
Add Issuances of Preferred Stock Warrant	20,633
Change in fair value of the preferred stock warrant liability	(3,998		)
Balance at June 30, 2018	$	143,676

Balance as of April 1, 2017	$	30,811
Add Issuances of Preferred Stock Warrant	16,887
Change in fair value of the preferred stock warrant liability	22,416
Balance at June 30, 2017	$	70,114

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 defaults rates using a discounted cash flow model.

The following table presents additional information about level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):

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Balance at January 1, 2018	2,595
Issuances	1,529
Cash payment of Loan Trailing Fee	(1,206	)
Change in fair value	160
Balance as of June 30, 2018	3,078

Significant Recurring Level 3 Fair Value Asset and Liability Input Sensitivity

Key economic assumptions and the sensitivity of the current fair value to immediate changes in those assumptions at June 30, 2018 for Borrower Loans, Loans Held for Sale and Notes funded through the Note Channel are presented in the following table (in thousands, except percentages):

	Borrower Loans and Loans Held for Sale				Notes
Fair Value as of June 30, 2018	$394,178				$277,425
Discount rate assumption:	7.52		%	*	7.52		%	*
Resulting fair value from:
100 basis point increase	$	390,255			$	274,660
200 basis point increase	386,431				271,964
Resulting fair value from:
100 basis point decrease	$	398,202			$	280,262
200 basis point decrease	402,333				283,173
Default rate assumption:	13.11		%	*	13.11		%	*
Resulting fair value from:
100 basis point increase	$	389,288			$	273,967
200 basis point increase	384,542				270,612
Resulting fair value from:
100 basis point decrease	$	399,107			$	280,911
200 basis point decrease	404,079				284,428

* Represents weighted average assumptions considering all credit grades.

The following table presents the estimated impact on Prosper’s estimated fair value of servicing assets and liabilities, calculated using different market servicing rates and different default rates as of June 30, 2018 (in thousands, except percentages).

	Servicing Assets			Servicing Liabilities
Fair Value as of June 30, 2018	$15,644			$28
Market servicing rate assumptions	0.625		%	0.625		%
Resulting fair value from:
Market servicing rate increase to 0.65%	$	14,691		$	31
Market servicing rate decrease to 0.60%	$	16,634		$	25
Weighted average prepayment assumptions	19.98		%	19.98		%
Resulting fair value from:
Applying a 1.1 multiplier to prepayment rate	$	15,471		$	28
Applying a 0.9 multiplier to prepayment rate	$	15,857		$	29
Weighted average default assumptions	12.66		%	12.66		%
Resulting fair value from:
Applying a 1.1 multiplier to default rate	$	15,473		$	28
Applying a 0.9 multiplier to default rate	$	15,857		$	28

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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.

Financial Instruments, Assets and Liabilities not Recorded at Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value (in thousands):

June 30, 2018	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and Cash Equivalents	$	58,652	$	58,652	$	—	$	—	$	58,652
Restricted Cash	134,552		—		134,552		—		134,552
Accounts Receivable	3,539		—		3,539		—		3,539
Total Assets	196,743		58,652		138,091		—		196,743
Liabilities:
Accounts Payable and Accrued Liabilities	$	14,652	$	—	$	14,652	$	—	$	14,652
Payable to Investors	112,580		—		112,580		—		112,580
Warehouse Line	103,553		—		103,553		—		103,553
Total Liabilities	$	230,785	$	—	$	230,785	$	—	$	230,785

8. Goodwill and Other Intangible Assets

Goodwill 

Prosper’s goodwill balance of $36.4 million at June 30, 2018 did not change during the six months ended June 30, 2018. We did not record any goodwill impairment expense for the six months ended June 30, 2018.

Other Intangible Assets 

The following table presents the detail of other intangible assets for the period presented (dollars in thousands):

	June 30, 2018
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Remaining Useful Life (In Years)
Developed technology	$	3,060	$	(3,060	)	$	—	—
User base and customer relationships	5,050		(3,873		)	$	1,177	6.8
Brand name	60		(60		)	—		—
Total intangible assets subject to amortization	$	8,170	$	(6,993	)	$	1,177

Prosper’sintangible asset balance was $1.2 million and $1.4 million at June 30, 2018 and December 31, 2017, respectively. During the six months ended June 30, 2017, certain intangible assets were made available for sale and as a result they were written down to fair value. This resulted in an impairment loss of $6.3 million, which is recorded in Other Expenses on the Condensed Consolidated Statement of Operations.

The user base and customer relationship intangible assets are being amortized on an accelerated basis over a three to ten year period. The technology and brand name intangible assets are being amortized on a straight line basis over three to five years and one year, respectively.

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Amortization expense for the three months ended June 30, 2018 and June 30, 2017 was $0.1 million and $0.2 million, respectively. Amortization expense for the six months ended June 30, 2018 and June 30, 2017 was $0.2 million and $1.0 million, respectively. Estimated amortization of purchased intangible assets for future periods is as follows (in thousands):

Year Ending December 31,
Remainder of 2018	$	178
2019	279
2020	220
2021	172
2022	136
Thereafter	$	192
Total	$	1,177

9. Other Liabilities

Other Liabilities includes the following:

	June 30, 2018		December 31, 2017
Loan trailing fee	3,078		2,595
Deferred revenue	436		452
Servicing liabilities	28		59
Deferred income tax liability	244		225
Deferred rent	3,651		3,904
Restructuring liability	3,457		3,355
Other	2,824		2,079
Total Other Liabilities	$	13,718	$	12,669

10. Debt

Warehouse Line

On January 19, 2018, through a wholly-owned subsidiary, Prosper Warehouse I Trust ("PWIT"), Prosper entered into an agreement (the "Warehouse Agreement") for a committed revolving line of credit (the "Warehouse Line"). In connection with the Warehouse Agreement, PWIT entered into a security agreement with a bank as administrative agent and a national banking association as collateral trustee and paying agent. Proceeds under the Warehouse Line may only be used to purchase certain unsecured consumer loans and related rights and documents from the Company and to pay fees and expenses related to the Warehouse Line. Effective June 12, 2018 the Warehouse Agreement was amended. The amendments included increasing the committed line of credit from $100 million to $200 million, extending the term of the Warehouse line (including the final maturity date), amending the monthly unused commitment fee, and reducing the rate at which the Warehouse Line bears interest.

Under the amended agreement, proceeds of loans made under the Warehouse Line may be borrowed, repaid, and reborrowed until the earlier of June 12, 2020 and the occurrence of any accelerated amortization event or event of default. Repayment of any outstanding proceeds will be made over the 24 month period ending June 12, 2022, excluding the occurrence of any accelerated amortization event or event of default.

Under the amended agreement, the Warehouse Line bears interest at a rate of LIBOR plus 3.00% and has an advance rate of 89%. Additionally, the Warehouse Line bears a monthly unused commitment fee, depending on utilization, of 0.50% or 0.75% per annum on the undrawn portion available under the Warehouse Line.

The Warehouse Agreement contains certain covenants applicable to PWIT, including restrictions on PWIT’s ability to incur indebtedness, pledge assets, merge or consolidate, and enter into certain affiliate transactions. The Warehouse Line also requires Prosper to maintain a minimum tangible net worth of $25 million, minimum net liquidity of $15 million and a maximum leverage ratio of 5:1. Tangible net worth is defined as the sum of (i) (A) convertible preferred stock, (B) total stockholders’ deficit and (C) convertible preferred stock warrant liability, less the sum of (ii) (A) goodwill and (B) intangible assets. Net liquidity is defined as the sum of cash, cash equivalents and available for sale investments. The leverage ratio is defined as the ratio of total consolidated

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indebtedness other than non-recourse securitization indebtedness, non-recourse or limited recourse warehouse indebtedness, and borrower dependent notes, to tangible net worth. As of June 30, 2018, Prosper was in compliance with the covenants under the Warehouse Agreement.

As of June 30, 2018, Prosper had $103.6 million in debt outstanding and accrued interest under the Warehouse Line. This debt is secured by an aggregate outstanding principal balance of $116.2 million included in "Loans Held for Sale, at Fair Value" on the Condensed Consolidated Balance Sheet. At June 30, 2018 the undrawn portion available under the Warehouse Line was $96.9 million. Prosper incurred $1.6 million of capitalized debt issuance costs, which will be recognized as interest expense through June 12, 2022.

Prosper has also purchased swaptions to limit our exposure to increases in LIBOR. The swaptions are recorded on the Condensed Consolidated Balance Sheet at fair value in Prepaids and Other Assets. Any changes in the fair value are recorded in the Change in Fair Value of Loans, Loans Held for Sale and Notes, Net on the Condensed Consolidated Statement of Operations. The fair value of the swaptions was not material at June 30, 2018.

11. Net Loss Per Share

The weighted average shares used in calculating basic and diluted net loss per share excludes certain shares that are disclosed as outstanding shares in the condensed consolidated balance sheets because such shares are restricted as they were associated with options that were early exercised and continue to remain unvested.

Basic and diluted net loss per share was calculated as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Numerator:
Net loss available to common stockholders for basic    and diluted EPS	$	(12,599	)	$	(41,405	)	$	(24,000	)	$	(65,426	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share	70,362,716			69,691,841			70,333,145			69,436,365
Basic and diluted net loss per share	$	(0.18	)	$	(0.59	)	$	(0.34	)	$	(0.94	)

The following common stock equivalents were excluded from the computation of diluted net 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,
	2018	2017	2018	2017
	(shares)	(shares)	(shares)	(shares)
Excluded securities:
Convertible preferred stock issued and outstanding	214,637,925	177,388,428	214,637,925	177,388,428
Stock options issued and outstanding	75,206,928	60,938,265	66,403,696	53,040,604
Unvested stock options exercised	2,190	20,940	2,190	20,940
Restricted stock units	—	—	—	—
Warrants issued and outstanding	1,080,349	1,199,403	1,082,917	1,199,403
Series E-1 convertible preferred stock warrants	35,544,141	35,544,141	35,544,141	35,544,141
Series F convertible preferred stock warrants	177,720,704	177,720,704	177,720,704	177,720,704
Total common stock equivalents excluded from diluted    net loss per common share computation	504,192,237	452,811,881	495,391,573	444,914,220

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12. Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit

Convertible Preferred Stock and Warrants

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

On February 27, 2017, PMI issued to Pinecone Investments LLC a second warrant (the “Second Series E-1 Warrant,” and together with a previously issued First Series E-1 Warrant, the “Series E-1 Warrants”) to purchase 15,277,006 shares of Series E-1 convertible preferred stock at an exercise price of $0.01 per share. The Series E-1 Warrants are immediately exercisable, in whole or in part, by paying in cash the full purchase price payable in respect of the number of shares purchased. The Series E-1 Warrants were issued pursuant to the Warrant Agreement, dated December 16, 2016, between PMI and Colchis Capital Management, L.P. ("Colchis"), as previously described in PMI’s Current Report on Form 8-K as filed with the SEC on December 22, 2016.

In connection with the Consortium Purchase Agreement (as defined in Note 16) entered into with affiliates of the Consortium (as defined in Note 16, such affiliates, "Warrant Holders'") a warrant agreement was signed (the "Warrant Agreement"). Pursuant to the Warrant Agreement, PMI issued to the Consortium, three warrants (together, the “Series F Warrant”) to purchase up to an aggregate of 177,720,706 shares of PMI’s Series F convertible preferred stock at an exercise price of $0.01 per share (the “Warrant Shares”).

The Warrant Holders' right to exercise the Series F Warrant is subject to monthly vesting during the term of the Consortium Purchase Agreement based upon the volume of loans the Consortium elects to purchase (if any) in each month, subject to certain cure rights such as offering additional loans for sale in subsequent periods. Under the terms of the Warrant Agreement, the Warrant Shares may also vest in full upon a change of control of PMI, insolvency of PMI or PFL certain breaches of contract by PMI or PFL that are not cured within a defined cure period and upon the occurrence of certain events set forth in the Warrant Agreement.

The Series F Warrant will be exercisable with respect to vested Warrant Shares, in whole or in part, at any time prior to the tenth anniversary of its date of issuance. The number of shares underlying the Series F Warrant may be adjusted following certain events such as stock splits, dividends, reclassifications, and certain other issuances by PMI.

On September 20, 2017, Prosper issued and sold 37,249,497 shares of Series G convertible preferred stock in a private placement at a purchase price of $1.34 per share for proceeds of approximately $47.9 million, net of issuance costs. The Series G convertible preferred stock was sold in reliance on the exemption from the registration requirements of the Securities Act set forth in Section 4(a)(2) of the Securities Act regarding sales by an issuer not involving a public offering. The purpose of the Series G private placement was to raise funds for general corporate purposes.

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, 2018 are disclosed in the table below (amounts in thousands except share and per share amounts): 

Convertible Preferred Stock	Par Value		Authorized Shares	Outstanding and Issued Shares	Liquidation Preference (Outstanding Shares)
Series A	$	0.01	68,558,220	68,558,220	$	19,774
Series A-1	0.01		24,760,915	24,760,915	49,522
Series B	0.01		35,775,880	35,775,880	21,581
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	—	—
Series E-2	0.01		16,858,078	—	—
Series F	0.01		177,720,707	3	—
Series G	0.01		37,249,497	37,249,497	50,000
			444,760,848	214,637,925	$	375,952

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 of Directors. 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

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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 the 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 (“IPO”) 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. 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 its Board of Directors. At present, each of the Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F and the Series G convertible preferred stock converts into PMI common stock at a 1:1 ratio while the Series A-1 convertible preferred stock converts into common stock at a 1,000,000:1 ratio.

The conversion price of the Series G convertible preferred stock shall be 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) were exercisable or exercised as of the Series G Preferred Stock closing date.

LiquidationRights

PMI’s convertible preferred stock has been classified as temporary equity on the 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 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 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.

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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 Bylaws of PMI. 

Convertible Preferred Stock Warrant Liability

SeriesE-1 Warrants

In connection with the Settlement and Release Agreement dated November 17, 2016 among PMI, PFL and Colchis, on December 16, 2016, PMI issued the First Series E-1 Warrant. 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 defined in Note 16) on February 27, 2017. The warrants expire ten years from the date of issuance. For the three months ended June 30, 2018, Prosper recognized $1.1 million of income from the re-measurement of the fair value of the warrants. For the six months ended June 30, 2018, Prosper recognized $2.5 million of income from the re-measurement of the fair value of the warrants. The income is recorded through change in fair value of convertible preferred stock warrants in the condensed consolidated statement of operations.

To determine the fair value of the Series E-1 Warrants, the Company first determined the value of a share of a Series E-1 convertible preferred stock. To determine the fair value of the convertible preferred stock, the Company first derived the business enterprise value (“BEV”) of the Company using valuation methods, including a combination of 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 the Company’s equity, including the Company’s 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.

The Company determined the fair value of the outstanding convertible Series E-1 preferred stock warrants utilizing the following assumptions as of the following dates:

	June 30, 2018	December 31, 2017
Volatility	40%	40%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8.55	9.04
Dividend yield	0%	0%

The above assumptions were determined as follows:

Volatility. The volatility is derived from historical volatilities of several unrelated publicly listed peer companies over a period approximately equal to the term of the warrant because the Company has limited information on the volatility of the preferred stock since there is currently no trading history. When making the selections of industry peer companies to be used in the volatility calculation, the Company considered the size, operational, and economic similarities to the Company’s principal business operations.

Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield in effect as of the period end date and for zero coupon U.S. Treasury notes with maturities approximately equal to the term of the warrant.

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Remaining Contractual Term. The remaining contractual term represents the time from the date of the valuation to the expiration of the warrant.

Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about the Company’s anticipated dividend policy.

Series F Warrants

In connection with the Consortium Purchase Agreement (as described in Note 16), PMI issued warrants to purchase up to 177,720,706 shares of PMI's Series F convertible preferred stock at $0.01 per share. For the three months ended June 30, 2018, Prosper recognized $2.9 million of income from the re-measurement of the fair value of the warrants. For the six months ended June 30, 2018, Prosper recognized $6.1 million of income from the re-measurement of the fair value of the warrants. The income is recorded through change in fair value of convertible preferred stock warrants in the condensed consolidated statement of operations.

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

The Company determined the fair value of the outstanding convertible Series F preferred stock warrants utilizing the following assumptions as of the following dates:

	June 30, 2018	December 31, 2017
Volatility	40%	40%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8.66	9.16
Dividend yield	0%	0%

The above assumptions were determined as follows:

Volatility. The volatility is derived from historical volatilities of several unrelated publicly listed peer companies over a period approximately equal to the term of the warrant because the Company has limited information on the volatility of the preferred stock since there is currently no trading history. When making the selections of industry peer companies to be used in the volatility calculation, the Company considered the size, operational, and economic similarities to the Company’s principal business operations.

Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield in effect as of the period end date and for zero coupon U.S. Treasury notes with maturities approximately equal to the term of the warrant.

Remaining Contractual Term.The remaining contractual term represents the time from the date of the valuation to the expiration of the warrant.

Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about the Company’s anticipated dividend policy.

The combined activity of the Convertible Preferred Stock Warrant Liability for the six months ended June 30, 2018 is as follows (in thousands):

Balance at January 1, 2018	$	116,366
Warrants Vested	35,912
Change in Fair Value	(8,602		)
Balance as of June 30, 2018	$	143,676

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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. The total number of shares of stock which PMI has the authority to issue is 1,069,760,848, consisting of 625,000,000 shares of common stock, $0.01 par value per share, and 444,760,848 shares of preferred stock, $0.01 par value per share. As of June 30, 2018, 71,317,926 shares of common stock were issued and 70,381,991 shares of common stock were outstanding. As of December 31, 2017, 71,226,934 shares of common stock were issued and 70,290,999 shares of common stock were outstanding. Each holder of common stock is entitled to one vote for each share of common stock held.

Common Stock Issued upon Exercise of Stock Options

During the six months ended June 30, 2018, PMI issued 82,792 shares of common stock upon the exercise of vested options for cash proceeds of $18 thousand. Certain options are eligible for exercise prior to vesting. These unvested options may be exercised for restricted shares of common stock that have the same vesting schedule as the options. Prosper records a liability for the exercise price paid upon the exercise of unvested options, which is reclassified to common stock and additional paid-in capital as the shares vest. Should the optionholder’s employment be terminated, the unvested restricted shares are subject to repurchase by PMI at an amount equal to the exercise price paid for such shares. At June 30, 2018 and December 31, 2017, there were 2,190 and 11,565 shares, respectively, of restricted stock outstanding that remain unvested and subject to PMI’s right of repurchase.

For the six months ended June 30, 2018, PMI repurchased no shares of restricted stock upon termination of employment of employees.

13.Share Based Incentive Plan and Compensation

PMI grants equity awards primarily through its Amended and Restated 2005 Stock Option Plan (the “2005 Plan”), which was approved as amended and restated by its stockholders on December 1, 2010; and its 2015 Equity Incentive Plan, which was approved by its stockholders on April 7, 2015 and subsequently amended by an Amendment No. 1 and Amendment No. 2,which were approved by PMI's stockholders on February 15, 2016 and May 31, 2016, respectively (as amended, the "2015 Plan"). In March 2015, the 2005 Plan expired, except that any awards granted under the 2005 Plan prior to its expiration remain in effect pursuant to their terms.

As of June 30, 2018, up to 93,468,710 shares of common stock are reserved for issuance under the 2015 Plan, and may be granted to employees, directors, and consultants by PMI’s board of directors and stockholders to promote the success of Prosper’s business. Options generally vest (i) 25%1 year from the vesting commencement date and 1/48th per month thereafter, (ii) 50%one year from the vesting date and 1/48th per month thereafter, (iii) 50%2 years from the vesting commencement date and 1/48th per month thereafter, or (iv) 1/36th per month from the vesting commencement date. In no event are options exercisable more than 10 years after the date of grant.

At June 30, 2018, there were 22,824,771 shares available for grant under the 2015 Plan and zero shares available for grant under the 2005 Plan.

Stock Option Reprice

On May 3, 2016, the Compensation Committee of the Board of Directors of PMI approved a stock option repricing program (the “2016 Reprice”), authorizing PMI’s officers to reprice certain outstanding stock options held by employees and directors that have exercise prices above the current fair market value of PMI’s common stock.  The repricing was effected on May 16, 2016 for eligible directors and employees located in the United States and on May 19, 2016 for eligible employees located in Israel.

On March 17, 2017, the Compensation Committee of the Board of Directors of PMI approved a stock option repricing program (the “2017 Reprice” and together with the 2016 Reprice, the "Repricings"), authorizing PMI’s officers to reprice certain outstanding stock options held by employees and directors that have exercise prices above the current fair market value of PMI’s common stock.  The repricing was effected on March 17, 2017 for eligible directors and employees.

Prosper believes that the Repricings will encourage the continued service of valued employees and directors, and motivate such service providers to perform at high levels, both of which are critical to Prosper’s continued success. Prosper expects to incur additional stock based compensation charges as a result of the Repricings.

The financial statement impact of the above Repricings is $0.2 million in the three months ended June 30, 2018 and $0.7 million (net of forfeitures) that will be recognized over the remaining weighted average vesting period of 1.1 years.

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Early Exercised Stock Options

The balance of stock options that were early exercised under the 2005 Plan as of June 30, 2018 is not material.

Stock Option Activity

Stock option activity under the 2005 Plan and 2015 Plan is summarized for the six months ended June 30, 2018 below: 

	Options Issued and Outstanding		Weighted- Average Exercise Price
Balance as of January 1, 2018	58,628,039		$	0.25
Options issued	18,703,551		0.54
Options exercised – vested	(82,792	)	0.22
Options forfeited	(3,879,249	)	0.37
Balance as of June 30, 2018	73,369,549		$	0.32
Options vested and expected to vest as of June 30, 2018	60,048,513		0.32
Options vested and exercisable at June 30, 2018	34,914,602		0.22

Other Information Regarding Stock Options

Additional information regarding common stock options outstanding as of June 30, 2018 is as follows: 

		Options Outstanding				Options Vested and Exercisable
	Range of Exercise Prices	Number Outstanding	Weighted – Avg. Remaining Life	Weighted –Avg. Exercise Price		Number Vested	Weighted – Avg. Exercise Price
$	0.02 - 0.20	4,768,290	5.55	$	0.11	4,768,290	$	0.11
	0.21 - 0.50	45,281,131	8.25	0.23		28,602,923	0.22
	0.51 - 1.13	23,320,128	9.60	0.54		1,543,389	0.54
$	0.02 - 1.13	73,369,549	8.51	$	0.32	34,914,602	$	0.22

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 Prosper 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, Prosper 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 Prosper. 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. Prosper uses an expected dividend yield of zero as it does not anticipate paying any dividends in the foreseeable future.  

Prosper also estimates forfeitures of unvested stock options. Expected forfeitures are based on Prosper’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.

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The fair value of PMI’s stock option awards granted during the three and six months ended June 30, 2018 and June 30, 2017 was estimated at the date of grant using the Black-Scholes model with the following average assumptions:

	Three Months Ended June 30,			Six Months Ended June 30,
	2018		2017	2018		2017
Volatility of common stock	44.43	%	N/A	44.12	%	50.28	%
Risk-free interest rate	2.85	%	N/A	2.75	%	2.12	%
Expected life (in years)	6.0 years		N/A	6.0 years		5.7 years
Dividend yield	0	%	N/A	0	%	0	%

Restricted Stock Unit Activity

During the six months ended June 30, 2018, PMI granted restricted stock units (“RSUs”) to certain employees that are subject to three-year vesting terms or four-year vesting terms and the occurrence of a liquidity event.

The aggregate fair value of the RSUs granted was $1.9 million. The following table summarizes the activities for PMI’s RSUs during the six months ended June 30, 2018:

	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested - January 1, 2018	1,399,180		$	2.16
Granted	3,569,586		0.54
Vested	—		—
Forfeited	(100,500	)	2.17
Unvested - June 30, 2018	4,868,266		$	0.96

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 during the three and six months ended June 30, 2018 and June 30, 2017 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Origination and servicing	$	241	$	328	$	456	$	545
Sales and marketing	108		141		216		311
General and administrative	1,904		2,843		3,912		5,956
Total stock based compensation	$	2,253	$	3,312	$	4,584	$	6,812

During the three months ended June 30, 2018 and June 30, 2017, Prosper capitalized $0.1 million and $0.1 million, respectively, of stock-based compensation as internal use software and website development costs. As of June 30, 2018, the unamortized stock-based compensation expense adjusted for forfeiture estimates related to Prosper’s employees’ unvested stock-based awards was approximately $10.4 million, which will be recognized over the remaining weighted-average vesting period of approximately 2 years.

14. Restructuring    

Summary of Restructuring Plan

During 2016, Prosper adopted a strategic restructuring of its business. This restructuring was intended to streamline our operations and support future growth efforts. Under this restructuring, Prosper closed its Salt Lake City, Utah location and its Tel Aviv, Israel location.

In the six months ended June 30, 2018 Prosper's only restructuring activities related to office space that is no longer needed. Other than accretion and changes in sublease loss estimates, Prosper does not expect any additional restructuring charges related to this restructuring.

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The following table summarizes the activities related to Prosper's restructuring plan (in thousands):

	Facilities Related			Total
Balance January 1, 2018	$	3,244		$	3,244
Adjustments to expense	591			591
Sublease cash receipts	316			316
Less: Cash paid	(775		)	(775		)
Balance June 30, 2018	$	3,376		$	3,376

15. Income Taxes

For the three months ended June 30, 2018 and June 30, 2017, Prosper recognized $9 thousand and $97 thousand of income tax expense, respectively. For the six months ended June 30, 2018 and June 30, 2017, Prosper recognized $19 thousand and $262 thousand of income tax expense, 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 or six month periods ended June 30, 2018 and June 30, 2017 due to a full valuation allowance recorded against our 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. On the basis of this evaluation, it is not more likely than not that our deferred tax assets will be realized and therefore a full valuation allowance has been recorded.

16. Consortium Purchase Agreement

On February 27, 2017, Prosper entered into a series of agreements (the "Consortium Purchase Agreement") with a consortium of investors (the "Consortium"), pursuant to which the Consortium has agreed to purchase borrower loans in an aggregate principal amount of up to $5.0 billion (including certain loans purchased by one of the investors prior to the date of the Consortium Purchase Agreement). PFL will be obligated to offer for purchase minimum monthly volumes of eligible loans to the Consortium, for the Consortium to elect to purchase.

In connection with the Consortium Purchase Agreement, PMI issued to the Consortium, three warrants to purchase up to an aggregate 177,720,706 shares of PMI’s Series F Preferred Stock at an exercise price of $0.01 per share (the “Warrant Shares”).

The Consortium’s right to exercise the Series F Warrant is subject to monthly vesting during the term of the Consortium Purchase Agreement based upon the volume of loans the Consortium elects to purchase (if any) in each month, subject to certain cure rights such as offering additional loans for sale in subsequent periods. Pursuant to these cure rights, if the Consortium fails to respond to offers for allocation, purchase or funding, the Consortium can take advantage of a designated period of time to cure such failure. There have been no such failures by the Consortium to date. Under the terms of the Warrant Agreement, the Warrant Shares may also vest in full upon a change of control of PMI, insolvency of PMI or PFL, certain breaches of contract by PMI or PFL that are not cured within a defined cure period and upon the occurrence of certain other events set forth in the Warrant Agreement.

On vesting of the Series F warrants, Prosper records a liability as "Convertible Preferred Stock Warrant Liability" on the Condensed Consolidated Balance Sheet at fair value and a corresponding amount as "Fair Value of Warrants Vested on Sale of Borrower Loans" on the Condensed Consolidated Statement of Operations. Subsequent changes in the fair value of the vested warrants are recorded in "Change in Fair Value of Convertible Preferred Stock Warrants" on the Condensed Consolidated Statement of Operations. Additionally, in connection with the execution of the Consortium Purchase Agreement, certain previously issued rebates were settled by an issuance of vested Series F Convertible Preferred Stock Warrants. The difference in fair value of these warrants over the cash settlement price is recorded in "Change in Fair Value of Convertible Preferred Stock Warrants" on the Condensed Consolidated Statement of Operations.

The following represents the loans purchased and warrants vested under the Consortium Purchase Agreement:

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	Loans Acquired (in thousands)		Warrants Vested
Total as of December 31, 2017	$	1,826,527	75,186,002
Loans Purchased by the Consortium during the six months ended June 30, 2018	831,097		36,830,278
Total as of June 30, 2018	$	2,657,624	112,016,280

In addition to the $2.7 billion above, warrants vested on signing of the Consortium Purchase Agreement were issued to settle certain rebates on $0.3 billion of whole loan purchases by members of the Consortium prior to the signing of the Consortium Purchase Agreement. This $0.3 billion also reduces the up to $5.0 billion aggregate amount under the Consortium Purchase Agreement.

17. Commitments and Contingencies

Future Minimum Lease Payments

Prosper has entered into various non-cancelable operating leases for certain offices with contractual lease periods expiring between 2022 and 2027.

The table below presents future minimum rental payments, net of minimum sublease rentals of $6.5 million, for the remaining terms of the operating leases (in thousands):

Remainder of 2018	2,939
2019	6,026
2020	6,193
2021	6,170
2022	6,076
Thereafter	8,480
Total	$	35,884

The payments in the above table include amounts that have been accrued for as part of the restructuring liability in Note 14 – Restructuring. Accrual balances related to operating facility leases were $3.4 million at June 30, 2018.

Rental expense under operating lease arrangements was $1.0 million and $1.2 million for the three months ended June 30, 2018 and June 30, 2017, respectively. Rental expense under operating lease arrangements was $2.1 million and $2.5 million for the six months ended June 30, 2018 and June 30, 2017, respectively. 

Operating Commitments

Prosper has entered into an agreement with WebBank, under which all Borrower Loans originated through the marketplace are made by WebBank under its bank charter. Pursuant to the 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 $143,500, Prosper is required to pay WebBank an amount equal to such deficiency. Accordingly, the minimum fee for the remaining six months of 2018 is $0.9 million. The minimum fee is $0.9 million for the year 2019.

Additionally, under the agreement with WebBank, Prosper is required to maintain a 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, 2018, Prosper was in compliance with the covenant.

Loan Purchase Commitments

Prosper has entered into an agreement with WebBank to purchase $31.5 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2018 and the first business day of the quarter ending September 30, 2018. Prosper will purchase these Borrower Loans within the first three business days of the quarter ending September 30, 2018.

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Repurchase and Indemnification Contingency

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 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 and the initial fair value is insignificant. Prosper 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 obligation is the outstanding balances of the Borrower Loans issued through the Whole Loan Channel, which at June 30, 2018 is $3.9 billion. Prosper has accrued $1.3 million and $0.8 million as of June 30, 2018 and December 31, 2017, 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, we record the amount we consider to be the best estimate within the range of potential losses that are both probable and estimable; however, if we cannot quantify the amount of the estimated loss, then we record the low end of the range of those potential losses.

SEC Inquiry

In April and May of 2017, we became aware of an error in the annualized net return and seasoned annualized net return numbers displayed to note investors. Although we have since corrected the error, we are currently subject to an investigation by the Securities and Exchange Commission (the “SEC”) as to whether violations of federal securities laws have occurred in connection with this error. We have been fully and voluntarily cooperating with the SEC.

We cannot predict the outcome of the investigation at this time and any potential fines or penalties, if any, that may arise from the investigation. Further, we are unable at this time to estimate a range of outcomes and as a result no accrual has been made.

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 and Borrower Loans. The aggregate amount of the Notes and Borrower Loans 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, 2018 and June 30, 2017, as well as the Notes and Borrower Loans outstanding as of June 30, 2018 and December 31, 2017 are summarized below (in thousands):

	Aggregate Amount of Notes and Borrower Loans Purchased Six Months Ended June 30,				Interest Earned on Notes and Borrower Loans Six Months Ended June 30,
Related Party	2018		2017		2018		2017
Executive officers and management	$	9	$	10	$	1	$	81
Directors (excluding executive officers and management)	208		174		22		20
Total	$	217	$	184	$	23	$	101

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	Aggregate Amount of Notes and Borrower Loans Purchased Three Months Ended March 31,				Interest Earned on Notes and Borrower Loans Three Months Ended March 31,
Related Party	2018		2017		2018		2017
Executive officers and management	$	3	$	5	$	—	$	35
Directors (excluding executive officers and management)	107		85		11		10
Total	$	110	$	90	$	11	$	45

	Notes balance as of
Related Party	June 30, 2018		December 31, 2017
Executive officers and management	$	17	$	38
Directors (excluding executive officers and management)	560		553
	$	577	$	591

19. Significant Concentrations

Prosper is dependent on third party funding sources such as banks, assets managers, and investment funds to provide the funds to allow WebBank to originate Borrower Loans that the third party funding sources will later purchase. Of all Borrower Loans originated in the six months ended June 30, 2018, the largest party purchased a total of 52% of those loans. This compares to 52%, 14% and 8% for the three largest parties for the six months ended June 30, 2017. The party purchasing 14% for the six

months ended June 30, 2017 is a member of the Consortium and purchased these loans prior to the closing of the Consortium Agreement on February 27, 2017. Further, a significant portion of our business is dependent on funding through the Whole Loan Channel, for which 93% and 92% of Borrower Loans were originated through the Whole Loan Channel in the six months ended June 30, 2018 and June 30, 2017, respectively.  

Prosper receives all of its transaction fee revenue from WebBank. Prosper earns a transaction fee from WebBank for our 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. No individual borrower or investor accounted for 10% or more of consolidated net revenue for any of the periods presented.

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Prosper Funding LLC

Condensed Consolidated Balance Sheets (Unaudited)

(amounts in thousands)

	June 30, 2018		December 31, 2017
Assets
Cash and Cash Equivalents	$	10,892	$	8,223
Restricted Cash	120,152		140,092
Loans Held for Sale at Fair Value	31		49
Borrower Loans Receivable at Fair Value	277,361		293,005
Property and Equipment, Net	6,972		7,953
Servicing Assets	16,162		14,598
Other Assets	274		125
Total Assets	$	431,844	$	464,045
Liabilities and Member’s Equity
Accounts Payable and Accrued Liabilities	$	1,453	$	745
Payable to Related Party	5,121		2,889
Payable to Investors	112,444		132,112
Notes at Fair Value	277,425		293,948
Other Liabilities	4,926		3,985
Total Liabilities	401,369		433,679
Member's Equity
Member's Equity	24,904		24,904
Retained Earnings	5,571		5,462
Total Member's Equity	$	30,475	$	30,366
Total Liabilities and Member's Equity	$	431,844	$	464,045

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

37

Prosper Funding LLC

Condensed Consolidated Statements of Operations (Unaudited)

(amounts in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Revenues
Operating Revenues
Administration Fee Revenue - Related Party	$	30,836		$	27,309		$	54,620		$	42,463
Servicing Fees, Net	7,209			6,520			14,022			12,401
Gain (Loss) on Sale of Borrower Loans	(16,181		)	(13,084		)	(27,754		)	(16,709		)
Other Revenues	73			34			136			64
Total Operating Revenues	21,937			20,779			41,024			38,219
Interest Income on Borrower Loans	10,907			12,007			21,859			23,507
Interest Expense on Notes	(10,177		)	(11,177		)	(20,388		)	(21,855		)
Net Interest Income	730			830			1,471			1,652
Change in Fair Value on Borrower Loans, Loans Held for Sale and Notes, Net	(255		)	70			(364		)	(24		)
Total Net Revenues	22,412			21,679			42,131			39,847
Expenses
Administration Fee - Related Party	20,285			18,466			38,175			34,282
Servicing	1,663			1,524			3,478			3,255
General and Administrative	182			145			365			318
Total Expenses	22,130			20,135			42,018			37,855
Total Net Income (Loss)	$	282		$	1,544		$	113		$	1,992

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

38

Prosper Funding LLC

Condensed Consolidated Statements of Cash Flows (Unaudited)

(amounts in thousands)

	Six Months Ended June 30,
	2018			2017
Cash Flows from Operating Activities:
Net Income (Loss)	$	113		$	1,992
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes	364			24
Other Non-Cash Changes in Borrower Loans, Loans Held for Sale and Notes	(295		)	(272		)
Gain on Sale of Borrower Loans	(8,147		)	(6,532		)
Change in Fair Value of Servicing Rights	6,552			5,609
Depreciation and Amortization	2,991			2,637
Changes in Operating Assets and Liabilities:
Purchase of Loans Held for Sale at Fair Value	(1,324,100		)	(1,245,826		)
Proceeds from Sales and Principal Payments of Loans Held for Sale at Fair Value	1,324,114			1,246,358
Other Assets	(153		)	(71		)
Accounts Payable and Accrued Liabilities	708			(1,592		)
Payable to Investors	(19,668		)	18,374
Net Related Party Receivable/Payable	2,116			3,807
Other Liabilities	972			1,398
Net Cash (Used in) Provided by Operating Activities	(14,433		)	25,906
Cash Flows from Investing Activities:
Purchase of Borrower Loans Held at Fair Value	(91,075		)	(106,940		)
Principal Payment of Borrower Loans Held at Fair Value	90,963			99,482
Maturities of Short Term Investments	—			1,280
Purchases of Short Term Investments	—			(1		)
Purchases of Property and Equipment	(1,894		)	(2,859		)
Net Cash Used in Investing Activities	(2,006		)	(9,038		)
Cash Flows from Financing Activities:
Proceeds from Issuance of Notes Held at Fair Value	90,693			106,506
Payments of Notes Held at Fair Value	(91,525		)	(100,274		)
Net Cash (Used in) Provided by Financing Activities	(832		)	6,232
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(17,271		)	23,100
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period	148,315			154,912
Cash, Cash Equivalents and Restricted Cash at End of the Period	$	131,044		$	178,012
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	$	22,252		$	22,121
Non-Cash Investing Activity - Accrual for Property and Equipment, Net	$	(116	)	601

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

39

Prosper Funding LLC

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Basis of Presentation

Prosper Funding LLC (“PFL”) was formed in the state of Delaware on February 17, 2012 as a limited liability company with the sole equity member being Prosper Marketplace, Inc. (“PMI”). Except as the context otherwise requires, as used in these Notes to the condensed consolidated financial statements of Prosper Funding LLC, “Prosper Funding,” “we,” “us,” and “our” refers to PFL and its wholly owned subsidiaries, Prosper Asset Holdings LLC (“PAH”), a Delaware limited liability company, and 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, 2017. The balance sheet at December 31, 2017 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.

Prosper Funding did not have any items of other comprehensive income (loss) during any of the periods presented in the condensed consolidated financial statements as of and for the six months ended June 30, 2018 and June 30, 2017.

The preparation of Prosper Funding'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. Significant Accounting Policies

Prosper Funding's significant accounting policies are included in Note 2 – Summary of Significant Accounting Policies in Prosper Funding’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no changes to these accounting policies during the first six months of 2018.

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Short Term Investments, 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.

Restricted Cash

Restricted cash consists primarily of cash deposits 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 or Prosper has on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown in the consolidated statements of cash flows:

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	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
Cash and Cash Equivalents	$	10,892	8,223		$	12,384	$	6,929
Restricted Cash	120,152		140,092		165,628		147,983
Total Cash, Cash Equivalents and Restricted Cash show in the consolidated statements of cash flows	$	131,044	$	148,315	$	178,012	$	154,912

Borrower Loans, Loans Held for Sale and Notes

Through the Note Channel, Prosper Funding 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 Prosper Funding’s consolidated balance sheets as assets and liabilities, respectively. We choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. Management believes that the fair value option is more meaningful for the readers of the financial statements and it allows both the Borrower Loans and Notes to be valued using the same methodology. The fair value election, with respect to an item, may not be revoked once an election is made. Prosper Funding estimates the fair value of such Borrower Loans and Notes using discounted cash flow methodologies that take into account expected prepayments, losses, recoveries and default rates. The Borrower Loans are not derecognized when a corresponding Note is issued as Prosper Funding maintains the ability to sell the Borrower Loans without the approval of the holders of the corresponding Notes. 

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in US GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. Prosper Funding adopted the requirements of the ASU as of January 1, 2018, utilizing the modified retrospective approach. Administration fees are included in the scope of the new guidance, while servicing fees and gain or loss on the sale of loans remain within the scope of ASC topic 860, Transfers and Servicing. The impact of adopting the ASU is not significant to the Consolidated Financial Statements in the current period.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. Prosper Funding adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper Funding’s consolidated financial statements. 

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (ASU2016-18)," which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prosper Funding adopted standard effective January 1, 2018. Prosper Funding has $120.2 million and $165.6 million of restricted cash on its consolidated balance sheet as of June 30, 2018 and 2017, respectively, whose cash flow statement classification changed to align with the new guidance.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Prosper Funding adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper Funding’s consolidated financial statements.

3. Property and Equipment

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

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	June 30, 2018			December 31, 2017
Property and equipment:
Internal-use software and web site development costs	$	21,372		$	19,911
Less accumulated depreciation and amortization	(14,400		)	(11,958		)
Total property and equipment, net	$	6,972		$	7,953

Depreciation expense for the three months ended June 30, 2018 and June 30, 2017 was $1.4 million and $1.4 million, respectively. Depreciation expense for the six months ended June 30, 2018 and June 30, 2017 was $3.0 million and $2.6 million, respectively.

4. Borrower Loans, Loans Held For Sale, and Notes Held at Fair Value

The aggregate principal balances outstanding and fair values of Borrower Loans, Loans Held for Sale, and Notes as of June 30, 2018 and December 31, 2017, are presented in the following table (in thousands):

	Borrower Loans						Notes						Loans Held for Sale
	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
Aggregate principal balance outstanding	$	280,852		$	296,668		$	(284,011	)	$	(300,922	)	$	44		$	59
Fair value adjustments	(3,491		)	(3,663		)	6,586			6,974			(13		)	(10		)
Fair value	$	277,361		$	293,005		$	(277,425	)	$	(293,948	)	$	31		$	49

At June 30, 2018, outstanding Borrower Loans had original terms to maturity of either 36 or 60 months; had monthly payments with fixed interest rates ranging from 5.31% to 32.32% and had various maturity dates through June 2023. At December 31, 2017, outstanding Borrower Loans had original maturities of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 32.32%, and had various maturity dates through December 2022.

Approximately $0.6 million represents the loss that is attributable to changes in the instrument specific credit risks related to Borrower Loans that was recorded in the change in fair value during the six months ended June 30, 2018.

As of June 30, 2018, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $2.6 million and a fair value of $1.1 million. As of December 31, 2017, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $3.5 million and a fair value of $1.3 million. Prosper Funding places loans on non-accrual status when they are over 120 days past due. As of June 30, 2018 and December 31, 2017, Borrower Loans in non-accrual status had a fair value of $0.3 million and $0.3 million, respectively.

5. Loan Servicing Assets and Liabilities

Prosper Funding accounts for servicing assets and liabilities at their estimated fair values with changes in fair values recorded in servicing fees. The initial asset or liability is recognized when Prosper Funding sells Borrower Loans to unrelated third-party buyers through the Whole Loan Channel and the servicing rights are retained. The total losses recognized on the sale of such Borrower Loans were a loss of $16.2 million and $13.1 million for the three months ended June 30, 2018 and June 30, 2017, respectively. The total gains and losses recognized on the sale of such Borrower Loans were a loss of $27.8 million and $16.7 million for the six months ended June 30, 2018 and June 30, 2017, respectively.

As of June 30, 2018, Borrower Loans that were sold, but for which Prosper Funding retained servicing rights, had a total outstanding principal balance of $3.9 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through June 2023. At December 31, 2017, Borrower Loans that were sold, but for which Prosper Funding retained servicing rights, had a total outstanding principal balance of $3.7 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through December 2022.

$11.2 million and $9.2 million of contractually specified servicing fees and ancillary fees are included on our condensed consolidated statements of operations in Servicing Fees, Net for the three months ended June 30, 2018 and June 30, 2017, respectively. $21.8 million and $17.9 million of contractually specified servicing fees and ancillary fees are included on our condensed consolidated statements of operations in Servicing Fees, Net for the six months ended June 30, 2018 and June 30, 2017, respectively.

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Fair Value

Valuation Method. Prosper Funding 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 below are those that Prosper Funding considers significant to the estimated fair values of the level 3 servicing assets and liabilities. The following is a description of the significant unobservable inputs provided in the table.

Market Servicing Rate. Prosper Funding 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. Prosper Funding estimated 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 Funding sells and services and information from a backup service provider.

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 used a range of discount rates for the servicing assets and liabilities 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 Funding’s servicing assets.

DefaultRate. 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 we expect to collect fees on the Borrower Loans, which is used to project future servicing revenues. 

6. Income Taxes

Prosper Funding incurred no income tax provision for the six months ended June 30, 2018 and June 30, 2017. Prosper Funding is a US disregarded entity and its income and loss is included in the return of its parent, PMI. Since PMI is in a loss position, is not currently subject to income taxes, and has fully reserved its deferred tax asset, the net effective tax rate for Prosper Funding is 0%.

7. Fair Value of Assets and Liabilities

Prosper Funding 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. We apply 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.

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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, Loans Held for Sale 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, Loans Held for Sale and Notes include default rates derived from historical performance and discount rates applied to each credit grade based on the perceived credit risk of each credit grade.

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

June 30, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	277,361	$	277,361
Servicing Assets	—		—		16,162		16,162
Loans Held for Sale	—		—		31		31
Total Assets	—		—		293,554		293,554
Liabilities:
Notes	$	—	$	—	$	277,425	$	277,425
Servicing Liabilities	—		—		28		28
Loan Trailing Fee Liability	—		—		3,078		3,078
Total Liabilities	$	—	$	—	$	280,531	$	280,531

December 31, 2017	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	293,005	$	293,005
Servicing Assets	—		—		14,598		14,598
Loans Held for Sale	—		—		49		49
Total Assets	—		—		307,652		307,652
Liabilities:
Notes	$	—	$	—	$	293,948	$	293,948
Servicing Liabilities	—		—		59		59
Loan Trailing Fee Liability	—		—		2,595		2,595
Total Liabilities	$	—	$	—	$	296,602	$	296,602

As Prosper Funding’s Borrower Loans, Loans Held for Sale, Notes and loan servicing rights do not trade in an active market with readily observable prices, Prosper Funding 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.

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs used for Prosper Funding’s level 3 fair value measurements at June 30, 2018 and December 31, 2017: 

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Borrower Loans, Loans Held for Sale and Notes:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	4.4% - 13.9%	4.0% - 14.4%
Default rate	2.0% - 15.6%	2.0% - 15.4%

Servicing Assets and Liabilities:

	Range
Unobservable Input	June 30, 2018		December 31, 2017
Discount rate	15% - 25%		15% - 25%
Default rate	1.6% - 16.5%		1.5% - 16.1%
Prepayment rate	15.2% - 32.9%		13.5% - 30.2%
Market servicing rate	0.625	%	0.625	%

Loan Trailing Fee Liability:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	15% - 25%	15% - 25%
Default rate	1.6% - 16.5%	1.5% - 16.1%
Prepayment rate	15.2% - 32.9%	13.5% - 30.2%

The changes in the Borrower Loans, Loans Held for Sale and Notes, which are level 3 assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2018	$	293,005		$	(293,948	)	$	49		$	(894	)
Originations	91,075			(90,693		)	1,324,100			1,324,482
Principal repayments	(88,947		)	91,525			(14		)	2,564
Borrower Loans sold to third parties	(2,016		)	—			(1,324,100		)	(1,326,116		)
Other changes	(338		)	633			—			295
Change in fair value	(15,418		)	15,058			(4		)	(364		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	31		$	(33	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2017	$	315,627		$	(316,236	)	$	624		$	15
Originations	106,940			(106,506		)	1,245,826			1,246,260
Principal repayments	(97,492		)	100,274			(42		)	2,740
Borrower Loans sold to third parties	(1,990		)	—			(1,246,316		)	(1,248,306		)
Other changes	9			266			(3		)	272
Change in fair value	(10,822		)	10,792			6			(24		)
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

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Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2018	$	285,584		$	(285,095	)	$	41		$	530
Originations	44,799			(44,468		)	728,901			729,232
Principal repayments	(43,990		)	44,423			(6		)	427
Borrower Loans sold to third parties	(950		)	—			(728,901		)	(729,851		)
Other changes	(202		)	86			—			(116		)
Change in fair value	(7,880		)	7,629			(4		)	(255		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	31		$	(33	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2017	$	317,536		$	(316,944	)	$	109		$	701
Originations	50,260			(49,692		)	721,829			722,397
Principal repayments	(48,048		)	48,695			(14		)	633
Borrower Loans sold to third parties	(869		)	—			(721,829		)	(722,698		)
Other changes	10			(156		)	—			(146		)
Change in fair value	(6,617		)	6,687			—			70
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

The following table presents additional information about level 3 servicing assets and liabilities recorded at fair value (in thousands):

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2018	14,598		59
Additions	8,147		—
Less: Changes in fair value	(6,583	)	(31	)
Fair Value at June 30, 2018	16,162		28

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2017	12,461		198
Additions	6,532		—
Less: Changes in fair value	(5,696	)	(87	)
Fair Value at June 30, 2017	13,297		111

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2018	15,023		41
Additions	4,452		—
Less: Changes in fair value	(3,313	)	(13	)
Fair Value at June 30, 2018	16,162		28

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	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2017	12,190		147
Additions	3,768		—
Less: Changes in fair value	(2,661	)	(36	)
Fair Value at June 30, 2017	13,297		111

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 defaults rates using a discounted cash flow model.

The following table presents additional information about level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):

Balance at January 1, 2018	2,595
Issuances	1,529
Cash payment of Loan Trailing Fee	(1,206	)
Change in fair value	160
Balance as of June 30, 2018	3,078

Significant Recurring Level 3 Fair Value Asset and Liability Input Sensitivity

Key economic assumptions and the sensitivity of the current fair value to immediate changes in those assumptions at June 30, 2018 for Borrower Loans, Loans Held for Sale and Notes funded are presented in the following table (in thousands, except percentages):

	Borrower Loans and Loans Held for Sale				Notes
Fair Value as of June 30, 2018	$	277,392			$	277,425
Discount rate assumption:	7.52		%	*	7.52		%	*
Resulting fair value from:
100 basis point increase	$	274,662			$	274,660
200 basis point increase	271,970				271,964
Resulting fair value from:
100 basis point decrease	$	280,255			$	280,262
200 basis point decrease	283,162				283,173
Default rate assumption:	13.11		%	*	13.11		%	*
Resulting fair value from:
100 basis point increase	$	273,981			$	273,967
200 basis point increase	270,641				270,612
Resulting fair value from:
100 basis point decrease	$	280,892			$	280,911
200 basis point decrease	284,391				284,428

 * Represents weighted average assumptions considering all credit grades.

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Servicing Asset and Liability Fair Value Input Sensitivity:

The following table presents the estimated impact on Prosper Funding’s estimated fair value of servicing assets and liabilities, calculated using different market servicing rates and different default rates as of June 30, 2018 (in thousands, except percentages).

	Servicing Assets			Servicing Liabilities
Fair Value as of June 30, 2018	$	16,162		$	28
Market servicing rate assumptions	0.625		%	0.625		%
Resulting fair value from:
Market servicing rate increase to 0.65%	15,160			31
Market servicing rate decrease to 0.60%	17,165			25
Weighted average prepayment assumptions	19.98		%	19.98		%
Resulting fair value from:
Applying a 1.1 multiplier to prepayment rate	15,964			28
Applying a 0.9 multiplier to prepayment rate	16,363			29
Weighted average default assumptions	12.66		%	12.66		%
Resulting fair value from:
Applying a 1.1 multiplier to default rate	15,967			28
Applying a 0.9 multiplier to default rate	16,362			28

These sensitivities are hypothetical and should be evaluated with care. The effect on fair value of a 10% 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.

8. Commitments and Contingencies

Operating Commitments

Prosper has entered into an agreement with WebBank, under which all Borrower Loans originated through the marketplace are made by WebBank under its bank charter. Pursuant to the 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 $143,500, Prosper is required to pay WebBank an amount equal to such deficiency.  Accordingly, the minimum fee for the remaining six months of 2018 is $0.9 million. The minimum fee is $0.9 million for the year 2019.

Loan Purchase Commitments

Under the terms of Prosper Funding’s agreement with WebBank, Prosper Funding is committed to purchase $31.5 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2018 and first business day of the quarter ending September 30, 2018. Prosper Funding will purchase these Borrower Loans within the first three business days of the quarter ending September 30, 2018.

Repurchase and Indemnification Contingency

Under the terms of the loan purchase agreements between Prosper Funding and investors that participate in the Whole Loan Channel, Prosper Funding 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 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. Prosper Funding 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 obligation is the

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outstanding balances of the Borrower Loans issued through the Whole Loan Channel, which at June 30, 2018 is $3.9 billion. Prosper Funding had accrued $1.3 million and $0.8 million as of June 30, 2018 and December 31, 2017, 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, we record the amount we consider to be the best estimate within the range of potential losses that are both probable and estimable; however, if we cannot quantify the amount of the estimated loss, then we record the low end of the range of those potential losses.

SEC Inquiry

In April and May of 2017, we became aware of an error in the annualized net return and seasoned annualized net return numbers displayed to note investors. Although we have since corrected the error, we are currently subject to an investigation by the Securities and Exchange Commission (the “SEC”) as to whether violations of federal securities laws have occurred in connection with this error. We have been fully and voluntarily cooperating with the SEC.

We cannot predict the outcome of the investigation at this time and any potential fines or penalties, if any, that may arise from the investigation. Further, we are unable at this time to estimate a range of outcomes and as a result no accrual has been made.

9. Related Parties

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

Prosper Funding’s executive officers and directors who are not executive officers participate in its marketplace by placing bids and purchasing Notes and Borrower Loans. The aggregate amount of the Notes and Borrower Loans purchased and the income earned by parties deemed to be related parties of Prosper Funding as of June 30, 2018 and December 31, 2017 are summarized below (in thousands):

	Aggregate Amount of Notes and Borrower Loans Purchased				Interest Earned on Notes and Borrower Loans
	Six Months Ended June 30,				Six Months Ended June 30,
Related Party	2018		2017		2018		2017
Executive officers and management	$	9	$	10	$	1	$	81
Directors (excluding executive officers and management)	—		—		—		—
Total	$	9	$	10	$	1	$	81

	Aggregate Amount of Notes and Borrower Loans Purchased				Interest Earned on Notes and Borrower Loans
	Three Months Ended March 31,				Three Months Ended March 31,
Related Party	2018		2017		2018		2017
Executive officers and management	$	3	$	5	$	—	$	35
Directors (excluding executive officers and management)	—		—		—		—
Total	$	3	$	5	$	—	$	35

	Note and Borrower Loan Balance as of
Related Party	June 30, 2018		December 31, 2017
Executive officers and management	$	17	$	38
Directors  (excluding executive officers and management)	—		—
	$	17	$	38

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Item 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATION

PROSPER MARKETPLACE, INC.

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, 2017.

Overview

Prosper is a pioneer of online marketplace lending that connects borrowers and investors. Our goal is to enable borrowers to access credit at affordable rates and provide investors with attractive risk-adjusted rates of return.

We believe our online marketplace model has key advantages relative to traditional bank lending, 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) data and technology driven automation that increases efficiency and improves the borrower and investor experience. We do not operate physical branches or incur expenses related to that infrastructure; instead, we use data and technology to drive automation and efficiency in our operation. 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 portions of the borrower application process, data gathering, credit scoring, loan funding, investing and servicing, regulatory compliance and fraud detection.

During the year ended December 31, 2017, our marketplace facilitated $2.9 billion in Borrower Loan originations, of which $2.7 billion were funded through our Whole Loan Channel, representing 93% of the total Borrower Loans originated through our marketplace during this period. From inception through June 30, 2018, our marketplace facilitated $12.8 billion in Borrower Loan originations, of which $11.3 billion were funded through our Whole Loan Channel, representing 88% of the total Borrower Loans originated through our marketplace during this period. In the three months ended June 30, 2018, our marketplace facilitated $866.9 million in Borrower Loan originations up 12% from the same period in 2017. In the three months ended June 30, 2018, $822.4 million of the borrower loan originations originated through our marketplace were funded through our Whole Loan Channel, representing 95% of the total Borrower Loans originated through our marketplace during this period.

As a credit marketplace, we believe our customers are 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.

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Results of Operations

Key Operating and Financial Metrics (in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Loan Originations	$	866,894		$	774,700		$	1,611,021		$	1,360,315
Transaction Fees, Net	37,988			35,423			69,343			62,291
Whole Loans Outstanding (1)	3,902,142			3,557,914			3,902,142			3,557,914
Servicing Fees, Net	7,487			6,793			14,671			12,947
Total Net Revenues	31,675			31,447			62,125			62,292
Core Revenue (2)	52,308			48,334			98,037			82,486
Net Loss	(12,599		)	(41,405		)	(24,000		)	(65,426		)
Adjusted EBITDA (2)	8,807			6,716			13,327			(2,336		)

(1) Balance as of June 30.

(2) Core Revenue and Adjusted EBITDA are non-GAAP Financial measures. For more information regarding these measures and a reconciliation of these measures to the most comparable GAAP measure, see “Non-GAAP Financial Measures”

Overview

The following tables summarize Prosper’s net loss for the three and six months ended June 30, 2018 and 2017 (in thousands, except percentages):

	Three Months Ended June 30,
	2018			2017			$ Change		% Change
Total Net Revenue	$	31,675		$	31,447		228		1	%
Total Expenses	44,265			72,755			(28,490	)	(39	)%
Net Loss Before Taxes	(12,590		)	(41,308		)	28,718		(70	)%
Income Tax Expense	9			97			(88	)	(91	)%
Net Loss	$	(12,599	)	$	(41,405	)	28,806		(70	)%

	Six Months Ended June 30,
	2018			2017			$ Change		% Change
Total Net Revenue	$	62,125		$	62,292		(167	)	—	%
Total Expenses	86,106			127,456			(41,350	)	(32	)%
Net Loss Before Taxes	(23,981		)	(65,164		)	41,183		(63	)%
Income Tax Expense	19			262			(243	)	(93	)%
Net Loss	$	(24,000	)	$	(65,426	)	41,426		(63	)%

Total net revenue for the three months ended June 30, 2018 was relatively flat when compared to the three months ended June 30, 2017, primarily due to increased Borrower Loan originations, which increased 12% on a dollar basis, but was offset by an increase of $3.7 million of rebates that were provided to members of the Consortium via the issuance of Convertible Preferred Stock Warrants that vested during the three months ended June 30, 2018. See below for an explanation of the increase in origination volume.  Total expenses for the three months ended June 30, 2018 decreased $28.5 million, a 39% decrease from the three months ended June 30, 2017, primarily due to a decrease in the fair value of the preferred stock warrant liability of $4.0 million in the three months ended June 30, 2018 compared to a $22.4 million increase in the three months ended June 30, 2017. Net loss for the three months ended June 30, 2018 decreased $28.8 million, primarily due to the decrease in expenses explained above.

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Total net revenue for the six months ended June 30, 2018 was relatively flat when compared to the six months ended June 30, 2017, primarily due to increased Borrower Loan originations, which increased 18% on a dollar basis, but was offset by an increase of $15.7 million of rebates that were provided to members of the Consortium via the issuance of Convertible Preferred Stock Warrants that vested during the six months ended June 30, 2018. See below for an explanation of the increase in origination volume. Total expenses for the six months ended June 30, 2018 decreased $41.4 million, a 32% decrease from the six months ended June 30, 2017, primarily due to a decrease in the fair value of the preferred stock warrant liability of $8.6 million in the six months ended June 30, 2018 compared to a $22.8 million increase in the six months ended June 30, 2017 and a $8.1 million decrease in other expenses for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The $8.1 million decrease is partially driven by impairment charges, which we incurred in the six months ended June 30, 2017 (see below for further details). Net loss for the six months ended June 30, 2018 decreased $41.4 million, primarily due to the decrease in expenses explained above.

Origination Volume

From inception through June 30, 2018, a total of 1,003,231 Borrower Loans totaling $12.8 billion were originated through Prosper’s marketplace.

During the second quarter ended June 30, 2018, 65,442 Borrower Loans totaling $866.9 million were originated through Prosper’s marketplace, compared to 61,346 Borrower Loans totaling $774.6 million during the second quarter ended June 30, 2017. This represented an increase of 7% in terms of the number of loans and a 12% increase in the dollar amount of loans. The origination increase experienced during the quarter ended June 30, 2018 versus the quarter ended June 30, 2017 was due to higher borrower demand and stable funding sources.

Loan origination volume by Prosper Rating was as follows (in millions):

	Three Months Ended June 30,								Six Months Ended June 30,
	2018				2017				2018				2017
	Amount		%		Amount		%		Amount		%		Amount		%
AA	$	100.7	12	%	$	40.9	5	%	$	197.1	12	%	$	73.2	5	%
A	166.8		19	%	81.4		11	%	297.6		18	%	154.8		11	%
B	216.1		25	%	162.0		21	%	394.6		24	%	289.8		21	%
C	227.3		26	%	243.8		31	%	431.4		27	%	423.6		31	%
D	102.1		12	%	153.7		20	%	191.4		12	%	261.0		19	%
E	43.6		5	%	75.9		10	%	80.3		5	%	125.8		9	%
HR	10.3		1	%	16.9		2	%	18.6		1	%	32.0		2	%
Total	$	866.9			$	774.6			$	1,611.0			$	1,360.2

During the three and six months ended June 30, 2018, the mix of originations on the Prosper platform was relatively lower risk when compared to the three and six months ended June 30, 2017 as Prosper tightened its credit underwriting to reduce borrower defaults in higher risk tiers.

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Revenue

The following tables summarize Prosper’s revenue for the three and six months ended June 30, 2018 and 2017 (in thousands, except percentages):

	Three Months Ended June 30,
	2018			2017			$ Change		% Change
Operating Revenues
Transaction Fees, Net	$	37,988		$	35,423		2,565		7	%
Servicing Fees, Net	7,487			6,793			694		10	%
Gain (Loss) on Sale of Borrower Loans	4,163			3,803			360		9	%
Fair Value of Warrants Vested on the Sale of Borrower Loans	(20,633		)	(16,887		)	(3,746	)	22	%
Other Revenues	1,015			1,415			(400	)	(28	)%
Total Operating Revenues	30,020			30,547			(527	)	(2	)%
Interest Income
Interest Income on Borrower Loans	14,556			12,007			2,549		21	%
Interest Expense on Notes and Warehouse Line	(11,471		)	(11,177		)	(294	)	3	%
Net Interest Income	3,085			830			2,255		272	%
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net	(1,430		)	70			(1,500	)	(2,143	)%
Total Revenues	31,675			31,447			228		1	%

	Six Months Ended June 30,
	2018			2017			$ Change		% Change
Operating Revenues
Transaction Fees, Net	$	69,343		$	62,291		7,052		11	%
Servicing Fees, Net	14,671			12,947			1,724		13	%
Gain (Loss) on Sale of Borrower Loans	7,512			3,485			4,027		116	%
Fair Value of Warrants Vested on the Sale of Borrower Loans	(35,912		)	(20,194		)	(15,718	)	78	%
Other Revenues	2,367			2,135			232		11	%
Total Operating Revenues	57,981			60,664			(2,683	)	(4	)%
Interest Income
Interest Income on Borrower Loans	26,916			23,507			3,409		15	%
Interest Expense on Notes and Warehouse Line	(22,200		)	(21,855		)	(345	)	2	%
Net Interest Income	4,716			1,652			3,064		185	%
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net	(572		)	(24		)	(548	)	2,283	%
Total Revenues	62,125			62,292			(167	)	—	%

Transaction Fees, Net

Prosper earns a transaction fee upon the successful origination of all Borrower Loans facilitated through Prosper’s marketplace. Prosper receives payments from WebBank as compensation for the activities Prosper performs on behalf of WebBank. Prosper’s fee is determined by the term and credit grade of the Borrower Loans that Prosper facilitates on its marketplace and WebBank originates. We record the transaction fee revenue net of any fees paid by us to WebBank.

Transaction fees increased primarily due to higher origination volume through Prosper’s marketplace during the three months ended June 30, 2018. This was partially offset by a lower average transaction fee which was 4.38% and 4.57% of the principal amount of originated loans facilitated through Prosper’s marketplace for the three months ended June 30, 2018 and 2017,

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respectively. The decrease in the average transaction fee was due to the higher proportion of loans with a Prosper rating of AA being originated on the platform during the current quarter. These loans have a lower transaction fee rate.

Transaction fees increased primarily due to higher originations during the six months ended June 30, 2018. This was partially offset by a lower average transaction fee, which was 4.30% and 4.58% of the principal amount of originated loans facilitated through Prosper’s marketplace for the six months ended June 30, 2018 and June 30, 2017, respectively. The decrease in the average transaction fee was due to the higher proportion of loans with a Prosper rating of AA being originated on the platform during the current quarter. These loans have a lower transaction fee rate.

Servicing Fees, Net

Prosper earns a fee from investors who purchase Borrower Loans through the Whole Loan Channel for servicing such loans on their behalf. The servicing fee compensates us for the costs we incur in servicing the Borrower Loan, including managing payments from borrowers and payments to investors and maintaining investors’ account portfolios. Historically, the servicing fee has been generally set at 1% per annum of the outstanding principal balance of the corresponding Borrower Loan prior to applying the current payment. For loans sold after August 1, 2016, the servicing fee has been set at 1.075% per annum of the outstanding principal balance of the corresponding Borrower Loan prior to applying the current payment. The increase in servicing fees during the three months ended June 30, 2018 was due to an increase in the net collection fees collected and higher overall whole loan balance as compared to the three months ended June 30, 2017. The increase in servicing fees during the six months ended June 30, 2018 was due to the increase in collection fees and higher overall whole loan balance as compared to the six months ended June 30, 2017.

Gain (Loss) on Sale of Borrower Loans

Gain (Loss) on Sale of Borrower Loans consists of net gains and losses on Borrower Loans sold through the Whole Loan Channel. The increase during the three months ended June 30, 2018 was due to an increase in volume of such sales during the three months ending June 30, 2018 due to an increase in loans being originated through the platform as described above. The increase during the six months ended June 30, 2018 was due to an increase in volume of such sales during the six months ended June 30, 2018 and $3.2 million less of rebates that were issued in the six months ended June 30, 2018 when compared to the six months ended June 30, 2017. The amount of rebates decreased in the six months ended June 30, 2018 as Prosper had sufficient demand for the loans being sold on the Platform, in part due to the consortium agreement signed in February 2017.

Fair Value of Warrants Vested on the Sale of Borrower Loans

Fair Value of Warrants Vested on the Sale of Borrower Loans relates to warrants to purchase Series F Convertible Preferred Stock issued to the Consortium that vest when the Consortium purchases whole loans under the Consortium Purchase Agreement that was signed in February 2017. The increases of $3.7 million and $15.7 million recognized primarily related to an increase in the number of warrants that vested during the three and six months ended June 30, 2018, respectively.

Other Revenues

Other Revenues consist primarily of securitization fees and credit referral fees. Credit referral fees are where partner companies pay us an agreed upon amount for referrals of customers from our website. Securitization fees represent fees Prosper earns to facilitate securitizations for purchasers of borrower loans. The decrease in Other Revenues for the three months ended June 30, 2018 was primarily the result of a decrease in securitization fees as Prosper facilitated no securitizations during the three months ended June 30, 2018 compared to one securitization during the three months ended June 30, 2017. The change for the six months ended June 30, 2018 is not significant.

Interest Income on Borrower Loans and Interest Expense on Notes

Prosper recognizes interest income on Borrower Loans funded through the Note Channel 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 charged on the Borrower Loans is generally 1% higher than the corresponding interest rate on the Note to compensate us for servicing the Borrower Loans. The increase during the three and six months ended June 30, 2018 was due to the net interest earned on the borrower loans purchased by Prosper with funding from the Warehouse Line. The Warehouse Line has a lower interest rate than the related borrower loans.

Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net

The fair value of Borrower Loans, Loans Held for Sale and Notes are estimated using discounted cash flow methodologies based upon a set of valuation assumptions. The main assumptions used to value such Borrower Loans, Loans Held for Sale and

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Notes include default rates derived from historical performance, and discount rates. Loans held for sale are valued using the same approach as the Borrower Loans held at fair value.

The following table summarizes the fair value adjustments for the three and six months ended June 30, 2018 and 2017, respectively (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Borrower Loans	$	(7,880	)	$	(6,617	)	$	(15,418	)	$	(10,822	)
Loans held for sale	(1,179		)	—			(212		)	6
Notes	7,629			6,687			15,058			10,792
Total	$	(1,430	)	$	70		$	(572	)	$	(24	)

Expenses

The following tables summarize Prosper’s expenses for the three and six months ended June 30, 2018 and 2017 (in thousands):

	Three Months Ended June 30,
	2018			2017		$ Change			% Change
Expenses
Origination and Servicing	$	9,192		$	8,873	319			4	%
Sales and Marketing	20,907			20,131		776			4	%
General and Administrative -Research and Development	4,153			3,909		244			6	%
General and Administrative - Other	13,998			14,849		(851		)	(6	)%
Change in Fair Value of Convertible Preferred Stock Warrants	(3,998		)	22,416		(26,414		)	(118	)%
Restructuring Charges	271			647		(376		)	(58	)%
Other Expenses	$	(258	)	1,930		(2,188		)	(113	)%
Total Expenses	$	44,265		$	72,755	$	(28,490	)	(39	)%

	Six Months Ended June 30,
	2018			2017		$ Change			% Change
Expenses
Origination and Servicing	$	18,013		$	17,278	735			4	%
Sales and Marketing	39,735			39,687		48			—	%
General and Administrative -Research and Development	8,421			8,083		338			4	%
General and Administrative - Other	28,444			31,390		(2,946		)	(9	)%
Change in Fair Value of Convertible Preferred Stock Warrants	$	(8,602	)	22,817		(31,419		)	(138	)%
Restructuring Charges	595			572		23			4	%
Other Expenses	$	(500	)	7,629		(8,129		)	(107	)%
Total Expenses	$	86,106		$	127,456	$	(41,350	)	(32	)%

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As of June 30, 2018, Prosper had 396 full-time employees compared to 363 full-time employees as of June 30, 2017. The following table reflects full-time employees as of June 30, 2018 and 2017 by department:

	June 30, 2018	June 30, 2017
Origination and Servicing	172	162
Sales and Marketing	10	24
General and Administrative - Research and Development	86	74
General and Administrative - Other	128	103
Total Headcount	396	363

Origination and Servicing

Origination and Servicing costs consist primarily of salaries, benefits, and stock-based compensation expense related to Prosper’s credit, collections, customer support and payment processing employees and vendor costs associated with facilitating and servicing Borrower Loans. The increase in the three months ending June 30, 2018 was not significant.

The increase in the six months ended June 30, 2018 was primarily the result of increased amortization costs for internal use software of $0.4 million.

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 the compensation expenses such as wages, benefits and stock based compensation for the employees who support these activities. For the three months ended June 30, 2018, the increase was largely due to increased variable costs as Prosper increased its marketing efforts. The increase was driven by a $3.5 million or 93% increase in partnership costs as Prosper significantly increased partnership activities and a $0.6 million or 27% increase in online marketing costs as Prosper increased its online marketing activities. The increase in these costs was partially offset by a $3.6 million or 27% decrease in direct mailing costs as Prosper decreased the volume of its direct mail campaigns.

For the six months ended June 30, 2018, marketing costs were relatively flat largely due to more efficient marketing spending as Prosper was able to save on direct mail costs while increasing partnership and digital marketing spend. Direct mail costs decreased $7.7 million or 27% as Prosper decreased the volume of its direct mail campaigns. The decrease in direct mailing costs was offset by a $6.0 million or 98% increase in partnership costs and a $1.6 million or 45% increase in online marketing costs.

Research and Development

Research and development costs consist primarily of salaries, benefits, and stock-based compensation expense related to engineering and product development employees and related vendor costs. The increase during the three months ended June 30, 2018 was due to a $0.2 million increase in compensation as Prosper increased its headcount in this area. The total expenses incurred for the three months ended June 30, 2018 do not reflect the total investment in research and development activities as a portion of these costs are capitalized as internal use software projects, which are amortized in origination and servicing expense. Prosper capitalized internal-use software and website development costs in the amount of $1.4 million and $1.0 million for the three months ended June 30, 2018 and 2017, respectively.

The increase during the six months ended June 30, 2018 was due to a $0.3 million increase in compensation as Prosper increased its headcount in this area. The total expenses incurred for the six months ended June 30, 2018 do not reflect the total investment in research and development activities as a portion of these costs are capitalized as internal use software projects, which are amortized in origination and servicing expense. Prosper capitalized internal-use software and website development costs in the amount of $2.5 million and $2.1 million for the six months ended June 30, 2018 and June 30, 2017, respectively.

General and Administrative

General and Administrative expenses consists primarily of salaries, benefits, and stock-based compensation expense related to accounting and finance, legal, human resources and facilities employees, professional fees related to legal and accounting and facilities expense. The decrease for the three months ended June 30, 2018 was primarily the result of a decrease in compensation expense of $1.0 million, a decrease in professional services of $0.4 million and a decrease in amortization of property and equipment of $0.3 million.

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The decrease for the six months ended June 30, 2018 was primarily the result of a decrease in compensation expense of $1.5 million, a decrease in professional services of $0.9 million, a decrease in amortization of property and equipment of $0.5 million and a decrease in amortization of intangibles of $0.8 million.

Changes in the Fair Value of Convertible Preferred Stock Warrants

Changes in the Fair Value of Convertible Preferred Stock warrants moved to a gain in the three and six months ended June 30, 2018 due to a decrease in the fair value of the underlying convertible preferred stock.

Restructuring Charges

Restructuring costs consist of personnel and facilities related costs related to the strategic restructuring of the business that Prosper announced on May 3, 2016. For the six months ended June 30, 2018 and 2017, the expenses relate to adjustments to fair value of the existing liabilities and accretion expense on the remaining liability.

Other Expenses (Income)

Other Expenses (Income) includes interest income, impairment charges on assets held for sale, and fair value changes on Convertible Preferred Stock Warrants. During the three and six months ended June 30, 2017, Prosper management actively marketed the assets related to the Prosper Daily application and as a result the related assets were marked down to fair value less costs to sell, resulting in impairment charges of $2.0 million and $6.3 million, respectively. Additionally, during the six months ended June 30, 2017, Prosper settled certain rebates related to the purchase of whole loans by members of the Consortium prior to the closing of the Consortium transaction via the issuance of Convertible Preferred Stock Warrants at a loss of $1.5 million over the cash settlement amount.

Non-GAAP Financial Measures

Core Revenue

Core Revenue is a non-GAAP financial measure that we define as our Total Net Revenue adjusted to exclude the Fair Value of Warrants Vested on Sale of Borrower Loans. We believe it is useful to exclude the Fair Value of Warrants Vested on Sale of Borrower Loans from Total Net Revenue to derive a better measurement of our business performance. We believe that this adjustment also affords greater comparability to other marketplace lenders.

The Fair Value of Warrants Vested on the Sale of Borrower Loans relates to the Consortium Agreement. This agreement is set to expire in 2019 and Prosper currently does not expect to sign a similar agreement to replace it. As a result we believe that providing the Core Revenue metric that excludes the impact of our Fair Value of Warrants Vested on Sale of Borrower Loans is useful to investors.    

Core Revenue has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for Total Net Revenue which has been prepared in accordance with GAAP. These limitations include the following:

• Core Revenue is net of Fair Value of Warrants Vested on Sale of Borrower Loans, which is our largest contra revenue item; and

• other companies, including companies in our industry, may calculate Core Revenue differently or not at all, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider Core Revenue alongside other financial performance measures, including Total Net Revenue and our financial results presented in accordance with GAAP. The following table presents a reconciliation of Total Net Revenue to Core Revenue for each of the periods indicated (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Total Net Revenue	$	31,675		$	31,447		$	62,125		$	62,292
Less: Fair Value of Warrants Vested on Sale of Borrower Loans	(20,633		)	(16,887		)	(35,912		)	(20,194		)
Core Revenue	$	52,308		$	48,334		$	98,037		$	82,486

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as Net Loss adjusted for interest income on available for sale securities and cash and cash equivalents, income tax expense, depreciation and amortization, impairment of intangible

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assets, stock based compensation expense, fair value of warrants vested on the sale of borrower loans, restructuring charges, and fair value adjustments for warrant liabilities. 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 to, among other things, understand and compare operating results across accounting periods, 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. These non-GAAP financial measures 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 US 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 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:

• Fair value of warrants vested on the sale of borrower loans and change in the fair value of convertible preferred stock warrants liability. We exclude these charges primarily because they are non-cash charges and the fair value varies based on the fair value of the underlying preferred stock, varying valuation methodologies and subjective assumptions. This 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.

• Restructuring charges.We have incurred restructuring charges that are included in our GAAP financial statements, related to workforce reductions and estimated costs of exiting facility lease commitments due to our May 2016 restructuring. We exclude these items from our non-GAAP financial measures when evaluating our continuing business performance as such items do not reflect expected future operating expenses. In addition, these charges do not necessarily provide meaningful insight into the fundamentals of current or historical operations of our business.

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

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	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Net Loss	$	(12,599	)	$	(41,405	)	$	(24,000	)	$	(65,426	)
Fair Value of Warrants Vested on Sale of Borrower Loans	20,633			16,887			35,912			20,194
Depreciation expense:
Servicing and Origination	1,413			1,357			2,991			2,637
General & Administration - Other	1,007			1,293			2,142			2,603
Amortization of Intangibles	89			177			201			1,030
Impairment of Intangibles	—			1,999			—			6,320
Stock-based Compensation	2,253			3,312			4,584			6,812
Restructuring Charges	271			647			595			572
Change in the Fair Value of Warrants	(3,998		)	22,416			(8,602		)	22,817
Interest Income on Available for Sale Securities, Cash and Cash Equivalents	(271		)	(64		)	(515		)	(157		)
Income Tax Expense	9			97			19			262
Adjusted EBITDA	$	8,807		$	6,716		$	13,327		$	(2,336	)

Expenses on the Condensed Consolidated Statement of Operations include the following amount of stock based compensation for the periods presented (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2018		2017		2018		2017
Origination and servicing	241		328		456		545
Sales and marketing	108		141		216		311
General and administrative	1,904		2,843		3,912		5,956
Total stock based compensation	$	2,253	$	3,312	$	4,584	$	6,812

Liquidity and Capital Resources

We currently anticipate that our available funds, warehouse line, and cash flow from operations will be sufficient to meet our operational cash needs for the foreseeable future.

The following table summarizes Prosper’s cash flow activities for the six months ended June 30, 2018 and 2017 (in thousands):

	Six Months Ended June 30,
	2018			2017
Net Loss	$	(24,000	)	$	(65,426	)
Net cash (used in) provided by operating activities	(121,839		)	6,731
Net cash provided by investing activities	15,725			14,837
Net cash provided by financing activities	100,855			6,186
Net increase (decrease) in cash, cash equivalents and restricted cash	(5,259		)	27,754
Cash, cash equivalents and restricted cash at the beginning of the period	198,463			186,244
Cash, cash equivalents and restricted cash at the end of the period	$	193,204		$	213,998

Cash, cash equivalents and restricted cash ("net cash") decreased for the six months ended June 30, 2018 primarily due to the net $19.9 million less cash held on the platform by investors that is classified as restricted cash, $116.2 million of net purchases of borrower loans by Prosper, and $2.7 million in purchases of property and equipment, which was partially offset by $103.1 million provided by the Warehouse Line, $13.1 million of net income, net of non-cash items and net maturity of $18.6 million in available for sale securities. Net cash used in investing primarily represents acquisitions of Borrower Loans (excluding acquisition of Borrower Loans sold to unrelated third parties, which is included in cash flow from operating activities along with the corresponding proceeds from sale of Borrower Loans), offset by repayment of Borrower Loans and the net $18.6 million of available for sale securities that have been converted into cash. Net cash provided by financing activities primarily represents proceeds from the warehouse line and the issuance of Notes, partially offset by payments on Notes.

The following table summarizes Prosper’s cash flow activities for the three months ended June 30, 2018 and June 30, 2017 (in thousands):

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	Three Months Ended June 30,
	2018			2017
Net Loss	$	(12,599	)	$	(41,405	)
Net cash (used in) provided by operating activities	(61,006		)	53,348
Net cash provided by (used in) investing activities	11,840			(2,217		)
Net cash provided by financing activities	30,996			1,011
Net increase (decrease) in cash and cash equivalents	(18,170		)	52,142
Cash and cash equivalents at the beginning of the period	211,374			161,856
Cash and cash equivalents at the end of the period	$	193,204		$	213,998

Net cash decreased for the three months ended June 30, 2018 primarily due to the net $38.5 million less cash held on the platform by investors that is classified as restricted cash, $34.9 million of net purchases of borrower loans by Prosper, and $1.4 million in purchases of property and equipment, which was partially offset by $31.5 million provided by the Warehouse Line, $9.8 million of net income, net of non-cash items and net maturity of $13.1 million in available for sale securities. Net cash used in investing primarily represents acquisitions of Borrower Loans (excluding acquisition of Borrower Loans sold to unrelated third parties, which is included in cash flow from operating activities along with the corresponding proceeds from sale of Borrower Loans) and purchases of property and equipment. Net cash provided by financing activities primarily represents proceeds from the issuance of Notes, partially offset by payments on Notes.  

Income Taxes

Prosper recognizes benefits from uncertain tax positions only if it believes that it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position.

Given Prosper’s history of operating losses, it is difficult to accurately forecast when and in what amounts future results will be affected by the realization, if any, of the tax benefits of future deductions for its net operating loss carry-forwards. Based on the weight of available evidence, which includes historical operating performance and the reported cumulative net losses in prior years, Prosper has recorded a full valuation allowance against its net deferred tax assets. The income tax expense relates to state income tax expense and the amortization of goodwill from the acquisition of PHL for tax purposes which gives rise to an indefinite-lived deferred tax liability.

Off-Balance Sheet Arrangements

As a result of retaining servicing rights on the sale of Borrower Loans, Prosper is a variable interest holder in certain special purposes entities that purchase these Borrower Loans. None of these special purpose entities are consolidated as Prosper is not the primary beneficiary.

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 Operation - Critical Accounting Estimates" in Prosper’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no significant changes to these critical accounting estimates during the first six months of 2018.

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PROSPER FUNDING LLC

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 Funding’s historical 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 Funding’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 Funding’s Annual Report on Form 10-K for the year ended December 31, 2017.

Prosper Funding was formed in the state of Delaware on February 17, 2012 as a limited liability company with its sole equity member being PMI. Prosper Funding was formed by PMI to hold Borrower Loans originated through the Note Channel and issue related Notes. Although Prosper Funding is consolidated with PMI for accounting and tax purposes, Prosper Funding 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. Prosper Funding’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 Prosper Funding would become subject to bankruptcy proceedings directly. Prosper Funding seeks to achieve this by placing certain restrictions on its activities and implementing certain formal procedures designed to expressly reinforce its status as a distinct corporate entity from PMI.

PFL formed PAH on October 4, 2013 as a limited liability company with the sole equity member being PFL. PAH was formed to purchase certain Borrower Loans from PFL and, sell them to certain participants in the Whole Loan Channel. PFL formed Prosper Depositor LLC on March 29, 2017 as a limited liability company with the sole equity member being PFL.

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 on our marketplace as borrowers or investors, and consequently could negatively affect our business and results of operations.

Results of Operations

Overview

The following table summarizes Prosper Funding’s net income for the three and six months ended June 30, 2018 and 2017 (in thousands, except percentages):

	Three Months Ended June 30,
	2018		2017		$ Change			% Change
Total Net Revenue	$	22,412	$	21,679	$	733		3	%
Total Expenses	22,130		20,135		1,995			10	%
Net Income (Loss)	$	282	$	1,544	$	(1,262	)	(82	)%

	Six Months Ended June 30,
	2018		2017		$ Change			% Change
Total Net Revenue	$	42,131	$	39,847	$	2,284		6	%
Total Expenses	42,018		37,855		4,163			11	%
Net Income (Loss)	$	113	$	1,992	$	(1,879	)	(94	)%

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Total net revenue for the three months ended June 30, 2018 increased $0.7 million, a 3% increase from the three months ended June 30, 2017, primarily due to the increased number of loan listings on the marketplace during the quarter, which resulted in increased administration fee revenue for the listing driven portion of the administration fee. Total expenses for the three months ended June 30, 2018 increased $2.0 million, a 10% increase from the three months ended June 30, 2017, primarily due to higher corporate administration fees related to the listing driven portion during the current quarter.

Total net revenue for the six months ended June 30, 2018 increased $2.3 million, a 6% increase from the six months ended June 30, 2017, primarily due to the increased number of loan listings on the marketplace during the quarter, which resulted in increased administration fee revenue for the listing driven portion of the administration fee. Total expenses for the six months ended June 30, 2018 increased $4.2 million, an 11% increase from the six months ended June 30, 2017, primarily due to higher corporate administration fees related to the listing driven portion during the current quarter.

Revenue

The following tables summarize Prosper Funding’s revenue for the three and six months ended June 30, 2018 and 2017 (in thousands, except percentages):

	Three Months Ended June 30,
	2018			2017			$ Change		% Change
Revenues
Operating Revenues
Administration Fee Revenue - Related Party	$	30,836		$	27,309		3,527		13	%
Servicing Fees, Net	7,209			6,520			689		11	%
Gain (Loss) on Sale of Borrower Loans	(16,181		)	(13,084		)	(3,097	)	24	%
Other Revenues	73			34			39		115	%
Total Operating Revenues	21,937			20,779			1,158		6	%
Interest Income on Borrower Loans	10,907			12,007			(1,100	)	(9	)%
Interest Expense on Notes	(10,177		)	(11,177		)	1,000		(9	)%
Net Interest Income	730			830			(100	)	(12	)%
Change in Fair Value on Borrower Loans, Loans Held for    Sale and Notes, net	(255		)	70			(325	)	(464	)%
Total Revenue	$	22,412		$	21,679		733		3	%

	Six Months Ended June 30,
	2018			2017			$ Change		% Change
Revenues
Operating Revenues
Administration Fee Revenue - Related Party	$	54,620		$	42,463		12,157		29	%
Servicing Fees, Net	14,022			12,401			1,621		13	%
Gain (Loss) on Sale of Borrower Loans	(27,754		)	(16,709		)	(11,045	)	66	%
Other Revenues	136			64			72		113	%
Total Operating Revenues	41,024			38,219			2,805		7	%
Interest Income on Borrower Loans	21,859			23,507			(1,648	)	(7	)%
Interest Expense on Notes	(20,388		)	(21,855		)	1,467		(7	)%
Net Interest Income	1,471			1,652			(181	)	(11	)%
Change in Fair Value on Borrower Loans, Loans Held for    Sale and Notes, net	(364		)	(24		)	(340	)	1,417	%
Total Revenue	$	42,131		$	39,847		2,284		6	%

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Administration Fee Revenue - Related Party

Prosper Funding primarily generates revenue through license fees it earns under its Administration Agreement with PMI. The Administration Agreement contains a license granted by Prosper Funding 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. Effective July 1, 2016, the Administration Agreement was amended. The amendments included amending the license fee to include a fixed monthly fee alongside a reduced variable fee and the introduction of a rebates fee related to rebates given to investors. The increase for the three months ended June 30, 2018 was the result of an increase in the listing driven portion of administration fees as a result of higher listings in the three months ended June 30, 2018 and an increase in the rebate fee due to an increase in the rebates given related to the Consortium Purchase Agreement. The increase for the six months ended June 30, 2018 was the result of an increase in the listing driven portion of administration fees as a result of higher listings in the six months ended June 30, 2018 and an increase in the rebate fee due to an increase in the rebates given related to the Consortium Purchase Agreement.

Servicing Fees, Net

Prosper Funding earns a fee from investors who purchase Borrower Loans through the Whole Loan Channel for servicing such loans on their behalf. The servicing fee compensates Prosper Funding for the costs it incurs in servicing these Borrower Loans, including managing payments from borrowers, payments to investors and maintaining investors’ account portfolios. Historically, the servicing fee has been generally set at 1% per annum of the outstanding principal balance of the corresponding Borrower Loan prior to applying the current payment. For loans sold after August 1, 2016, the servicing fee has been set at 1.075% per annum of the outstanding principal balance of the corresponding Borrower Loan prior to applying the current payment. The increases in servicing fees were due to an increase in collection fees during the period and an higher outstanding Borrower Loan balance.

Gain (Loss) on Sale of Borrower Loans

Gain (Loss) on Sale of Borrower Loans consists of net gains (losses) on Borrower Loans sold through the Whole Loan Channel. The increase in the loss for the three months ended June 30, 2018 was due to the increase in rebates of $3.6 million primarily due to warrants issued by PMI in relation to the agreements with the Consortium that were reached in 2017 that result in warrants for convertible preferred stock vesting as loans are purchased by the Consortium.

The increase in the loss for the six months ended June 30, 2018 was due to the increase in rebates of $12.5 million primarily due to warrants issued by PMI in relation to the agreements with the Consortium that were reached in 2017 that result in warrants for convertible preferred stock vesting as loans are purchased by the Consortium.

Other Revenues

Other Revenues consist primarily of fees earned from assisting whole loan purchasers with securitizations of their holdings. The changes in Other Revenues were not considered to be material.

Interest Income on Borrower Loans and Interest Expense on Notes

Prosper Funding recognizes interest income on Borrower Loans funded through the Note Channel using the accrual method based on the stated interest rate to the extent Prosper Funding believes it to be collectible. Prosper Funding records interest expense on the corresponding Notes based on the contractual interest rates. The interest rate charged on a Borrower Loan is generally 1% higher than the interest rate on the corresponding Notes to compensate Prosper Funding for servicing the Borrower Loan. This is recorded in interest income.

Overall, the decrease in net interest income for the periods above was primarily driven by the decrease in volume of Borrower Loans funded through the Note Channel.

Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net

The fair value of Borrower Loans, Loans Held for Sale and Notes are estimated using discounted cash flow methodologies based upon a set of valuation assumptions. The main assumptions used to value such Borrower Loans, Loans Held for Sale and Notes include default rates derived from historical performance, and discount rates. Loans Held for Sale are primarily comprised of Borrower Loans that are recorded using the same approach as the Borrower Loans held at fair value.

The following table summarizes the fair value adjustments for the six month periods ended June 30, 2018 and 2017, respectively (in thousands):

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	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Borrower Loans	$	(7,880	)	$	(6,617	)	$	(15,418	)	$	(10,822	)
Loans held for sale	(4		)	—			(4		)	6
Notes	7,629			6,687			15,058			10,792
Total	$	(255	)	$	70		$	(364	)	$	(24	)

Expenses

The following tables summarize Prosper Funding’s expenses for the three and six month periods ended June 30, 2018 and 2017 (in thousands, except percentages):

	Three Months Ended June 30,
	2018		2017		$ Change	% Change
Expenses
Administration Fee Expense – Related Party	$	20,285	$	18,466	1,819	10	%
Servicing	1,663		1,524		139	9	%
General and Administrative	182		145		37	26	%
Total Expenses	$	22,130	$	20,135	1,995	10	%

	Six Months Ended June 30,
	2018		2017		$ Change	% Change
Expenses
Administration Fee Expense – Related Party	$	38,175	$	34,282	3,893	11	%
Servicing	3,478		3,255		223	7	%
General and Administrative	365		318		47	15	%
Total Expenses	$	42,018	$	37,855	4,163	11	%

Administration Fee Expense - Related Party

Pursuant to an Administration Agreement between Prosper Funding and PMI, PMI manages the marketplace on behalf of Prosper Funding. Accordingly, each month, Prosper Funding is required to pay PMI a corporate administration fee, a fee for each Borrower Loan originated through the marketplace, a proportion of all servicing fees collected by or on behalf of Prosper Funding, and all nonsufficient funds fees collected by or on behalf of Prosper Funding. Effective July 1, 2016 the Administration Agreement was amended. The amendments included amending the corporate administration fee to a fixed amount of $500,000 per month, increasing the loan platform servicing fee to $150 per Borrower Loan originated through the marketplace and reducing the loan and note servicing fee to 62.5% of all servicing fees collected by or on behalf of Prosper Funding. The increase in fees for the three months ended June 30, 2018 was due to higher fees paid on the origination of borrower loans due to the increase in origination volume. The increase in fees for the six months ended June 30, 2018 was due to higher fees paid on the origination of borrower loans due to the increase in origination volume.

Servicing

Servicing costs consists primarily of vendor costs and depreciation of internal use software costs associated with servicing Borrower Loans. The increase for the three and six months ended June 30, 2018 was primarily due to an increase in amortization of internal use software.

General and Administrative

General and Administrative costs consist primarily of bank service charges and professional fees. The decrease for the three months and six months ended June 30, 2018 was primarily due to an increase in outsourced costs.

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Liquidity and Capital Resources

We currently anticipate that our available funds and cash flow from operations will be sufficient to meet our operational cash needs for the foreseeable future.

The following table summarizes Prosper Funding’s cash flow activities for the six months ended June 30, 2018 and 2017 (in thousands):

	Six Months Ended June 30,
	2018			2017
Net Income	$	113		$	1,992
Net cash provided by (used in) operating activities	(14,433		)	$	25,906
Net cash used in investing activities	(2,006		)	(9,038		)
Net cash (used in) provided by financing activities	(832		)	6,232
Net increase (decrease) in cash, cash equivalents and restricted cash	(17,271		)	23,100
Cash, cash equivalents and restricted cash at the beginning of the period	148,315			154,912
Cash, cash equivalents and restricted cash at the end of the period	$	131,044		$	178,012

The net decrease in Cash for the six months ended June 30, 2018, is primarily due to the net $19.7 million less cash held on the platform by investors that is classified as restricted cash. Net cash used in investing primarily represents acquisitions of Borrower Loans (excluding acquisition of Borrower Loans sold to unrelated third parties which is included in cash flow from operating activities along with the corresponding proceeds from sale of Borrower Loans), offset by repayment of Borrower Loans. Net cash provided by financing activities primarily represents proceeds from the issuance of Notes, partially offset by payments on Notes.

Income Taxes

Prosper Funding incurred no income tax expense for the three months ended June 30, 2018 and 2017. Prosper Funding is a US disregarded entity for income tax purposes and the income and loss is included in the return of its parent, PMI. Given PMI’s history of operating losses, it is difficult to accurately forecast how Prosper’s and Prosper Funding’s 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, Prosper Funding is a variable interest holder in certain special purposes entities that purchase these Borrower Loans. None of these special interest entities are consolidated as Prosper Funding is not the primary beneficiary. Otherwise as of June 30, 2018, Prosper Funding has not engaged in any off-balance sheet financing activities.

Item 3. Quantitative and Qualitative Disclosures about Market Risk and Interest Rate Risk

Prosper Marketplace, Inc.

Market Rate Sensitivity

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 the Warehouse Line we invest in Borrower Loans classified as held for sale. Investments in interest-earning instruments carry a degree of interest rate risk. Changes in U.S. interest rates affect the market value of these Borrower Loans held on our balance sheet. The Company’s future investment income may fall short of expectations, or the Company may suffer a loss in principal if the Company is forced to sell Borrower Loans, which have declined in market value due to changes in interest rates as stated above. Changes in the market value of Borrower Loans classified as held for sale are recorded through the Statement of Operations. The fair value of Borrower Loans which are held on our balance sheet as held for sale is $116.8 million as of June 30, 2018.

The fair values of Borrower Loans, Loans Held for Sale and the related Notes are determined using discounted cash flow methodologies based upon a set of valuation assumptions. For Borrower Loans and Notes presented on our Balance Sheet on behalf of our fractional loan pool 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.

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The Company is also exposed to variable interest rate risk under the debt from the Warehouse Line, which had an outstanding balance of $103.6 million as of June 30, 2018. To reduce the impact of large fluctuations in interest rates, we hedged a portion of our interest rate risk by entering into a derivative agreement with a financial institution, which is currently out of the money. The derivative agreement that we use to manage the risk associated with fluctuations in interest rates may not be able to eliminate the exposure to these changes. Interest rates are sensitive to numerous factors outside of our control, such as government and central bank monetary policy in the United States. Depending on the size of the exposures and the relative movements of interest rates, if we choose not to hedge or fail to effectively hedge our exposure, we could experience a material adverse effect on our results of operations and financial condition.

Prosper had cash and cash equivalents of $58.7 million as of June 30, 2018, and $45.8 million as of December 31, 2017. 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 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 not materially reduce interest income on these cash and cash equivalents because of the current low rate environment. Increases in short-term interest rates will moderately increase the interest income earned on these cash balances.  

Interest Rate Sensitivity

Prosper holds available for sale investments. The fair value of Prosper’s available for sale investment portfolio was $34.8 million and $53.1 million as of June 30, 2018 and December 31, 2017, respectively. These investments consisted of U.S. Treasury bills, and U.S. Treasury securities. To mitigate the risk of loss, Prosper’s investment policy and strategy is focused first on the preservation of capital and supporting our liquidity requirements, and then maximizing returns. To manage this risk, Prosper limits and monitors maturities, credit ratings, and concentrations within the investment portfolio. Changes in U.S. interest rates affect the interest earned on Prosper’s available for sale investments and the market value of those investments. A hypothetical 100 basis point increase in interest rates would result in a decrease of approximately $0.1 million in the fair value of Prosper’s available for sale investments as of June 30, 2018, and of approximately $0.3 million in the fair value of Prosper’s available for sale investments as of December 31, 2017. A hypothetical 100 basis point decrease in interest rates would result in an increase of approximately $0.1 million in the fair value of Prosper’s available for sale investments as of June 30, 2018, and of approximately $0.3 million in the fair value of Prosper’s available for sale investments as of December 31, 2017. Any realized gains or losses resulting from such interest rate changes would only be recorded if Prosper sold the investments prior to maturity and the investments were not considered other-than-temporarily impaired.

Prosper’s investment in Borrower Loans held for sale was $116.8 million as of June 30, 2018. A hypothetical 100 basis point increase in interest rates would result in a decrease of approximately $1.2 million in the fair value of Prosper’s investment in Borrower Loans held for sale as of June 30, 2018. A hypothetical 100 basis point decrease in interest rates would result in an increase of approximately $1.2 million in the fair value of Prosper’s investment in Borrower Loans held for sale as of June 30, 2018. Any realized 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 Rate Sensitivity

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, Loans Held for Sale 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 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 $10.9 million as of June 30, 2018, and $8.2 million as of December 31, 2017. These amounts were held in various unrestricted deposits with highly rated financial institutions. 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

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interest rates will not materially reduce interest income on these cash and cash equivalents because of the current low rate environment. Increases in short-term interest rates will moderately increase the interest income earned on these cash 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, 2018. Based on this evaluation, each Registrant’s PEO and PFO have concluded that these disclosure controls and procedures were effective as of June 30, 2018.

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, 2018, that have materially affected, or are reasonably likely to materially affect, either Registrant’s internal control over financial reporting.

67

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

Prosper's disclosure under this Item is incorporated by reference to the matters referenced in "Note 17 – Commitments and Contingencies – SEC Inquiry" of PMI’s Notes to Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Prosper Funding's disclosure under this Item is incorporated by reference to the matters referenced in "Note 8 – Commitments and Contingencies – SEC Inquiry" of Prosper Funding's Notes to Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q.

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, 2017.

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, 2017.

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

None.

Information for this Item is not required for Prosper Funding because it meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q; Prosper Funding 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

None.

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.

EXHIBIT INDEX

68

Exhibit Number	Exhibit Description
3.1	Fifth Amended and Restated Limited Liability Company Agreement of PFL, dated October 21, 2013 (incorporated by reference to Exhibit 3.1 of the Post-Effective Amendment No. 3 to the Registration Statement on Form S-1, filed October 23, 2013 by PFL and PMI)
3.2	Amended and Restated Certificate of Incorporation of PMI (incorporated by reference to Exhibit 3.2 of PMI and PFL’s Quarterly Report on Form 10-Q, filed on November 13, 2017)
3.3	PFL Certificate of Formation (incorporated by reference to Exhibit 3.2 of the Registration Statement on Form S-1/A, filed April 23, 2012 by PFL)
3.4	Bylaws of PMI, as amended by an Amendment No. 1 dated February 15, 2016 (incorporated by reference to Exhibit 3.2 of PMI's and PFL's Form 10-Q, filed on August 15, 2016)
4.1	Form of PFL Borrower Payment Dependent Note (included as Exhibit A in Exhibit 4.5)
4.2	Form of PMI Borrower Payment Dependent Note (included as Exhibit A in Exhibit 4.4)
4.3	Supplemental Indenture, dated January 22, 2013, between PMI, PFL and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.1 of PMI and PFL’s Current Report on Form 8-K, filed on January 28, 2013)
4.4	Indenture, dated June 15, 2009, between PMI and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.2 of Pre-Effective Amendment No. 5 to PMI’s Registration Statement on Form S-1 (File No. 333-147019), filed June 26, 2009)
4.5	Amended and Restated Indenture, dated January 22, 2013, between PFL and Wells Fargo Bank, National Association (incorporated by reference to Exhibit 4.2 of PMI and PFL’s Current Report on Form 8-K, filed on January 28, 2013)
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, 2018 (1)
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, 2018 (1)
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, 2018 (1)
31.4	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, 2018 (1)
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, 2018 (1)
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, 2018 (1)
101.INS	XBRL Instance Documents
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

69

(1) Filed herewith.

70

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
Date: August 10, 2018	/s/ David Kimball
	David Kimball
	Chief Executive Officer of Prosper Marketplace, Inc.
	Chief Executive Officer of Prosper Funding LLC
	(Principal Executive Officer)
Date: August 10, 2018	/s/ Usama Ashraf
	Usama Ashraf
	Chief Financial Officer of Prosper Marketplace, Inc.
	Chief Financial Officer of Prosper Funding LLC
	(Principal Financial and Accounting Officer)

71

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, David Kimball, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Prosper Marketplace, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2018	/s/ David Kimball
	David Kimball
	Chief Executive Officer of
	Prosper Marketplace, Inc.
	(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Usama Ashraf, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Prosper Marketplace, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2018	/s/ Usama Ashraf
	Usama Ashraf
	Chief Financial Officer of
	Prosper Marketplace, Inc.
	(principal financial officer)

EX-31.3

Exhibit 31.3

CERTIFICATIONS

I, David Kimball, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Prosper Funding LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2018	/s/ David Kimball
	David Kimball
	Chief Executive Officer and President of
	Prosper Funding LLC
	(principal executive officer)

EX-31.4

Exhibit 31.4

CERTIFICATIONS

I, Usama Ashraf, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Prosper Funding LLC;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 10, 2018	/s/ Usama Ashraf
	Usama Ashraf
	Chief Financial Officer and Treasurer of
	Prosper Funding LLC
	(principal financial officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Prosper Marketplace, Inc. (“PMI”) on Form 10-Q for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of PMI certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PMI.

Date: August 10, 2018	/s/ David Kimball
	David Kimball
	Chief Executive Officer of Prosper Marketplace, Inc.
	/s/ Usama Ashraf
	Usama Ashraf
	Chief Financial Officer of Prosper Marketplace, Inc.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Prosper Funding LLC (“PFL”) on Form 10-Q for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned officers of PFL certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to such officer’s knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of PFL.

Date: August 10, 2018	/s/ David Kimball
	David Kimball
	Chief Executive Officer and President of Prosper Funding LLC
	/s/ Usama Ashraf
	Usama Ashraf
	Chief Financial Officer and Treasurer of Prosper Funding LLC

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 06, 2018
Document And Entity Information [Line Items]
Entity Registrant Name	PROSPER MARKETPLACE, INC
Entity Central Index Key	0001416265
Current Fiscal Year End Date	--12-31
Current Fiscal Year End Date	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		70,381,991
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2018
Prosper Funding LLC
Document And Entity Information [Line Items]
Entity Registrant Name	Prosper Funding LLC
Entity Central Index Key	0001542574
Current Fiscal Year End Date	--12-31
Current Fiscal Year End Date	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		0

XML

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets
Cash and Cash Equivalents	$ 58,652	$ 45,795
Restricted Cash	134,552	152,668
Available for Sale Investments, at Fair Value	34,841	53,147
Accounts Receivable	3,539	683
Loans Held for Sale, at Fair Value	116,817	49
Borrower Loans, at Fair Value	277,361	293,005
Property and Equipment, Net	16,081	18,136
Prepaid and Other Assets	7,776	7,796
Servicing Assets	15,644	14,711
Goodwill	36,368	36,368
Intangible Assets, Net	1,177	1,377
Total Assets	702,808	623,735
Liabilities, Convertible Preferred Stock and Stockholders' Deficit
Accounts Payable and Accrued Liabilities	14,652	11,942
Payable to Investors	112,580	132,432
Notes at Fair Value	277,425	293,948
Warehouse Line	103,553	0
Other Liabilities	13,718	12,669
Convertible Preferred Stock Warrant Liability	143,676	116,366
Total Liabilities	665,604	567,357
Commitments and Contingencies (see Note 17)
Convertible Preferred Stock – $0.01 par value; 444,760,848 shares authorized; 214,637,925 issued and outstanding as of June 30, 2018; and 444,760,848 shares authorized; 214,637,925 issued and outstanding as of December 31, 2017. Aggregate liquidation preference of $375,952 as of June 30, 2018 and December 31, 2017.	323,793	323,793
Stockholders' Deficit
Common Stock – $0.01 par value; 625,000,000 shares authorized; 71,317,926 shares issued, and 70,381,991 shares outstanding, as of June 30, 2018; 625,000,000 shares authorized; 71,226,934 shares issued, and 70,290,999 shares outstanding, as of December 31, 2017.	228	228
Additional Paid-In Capital	141,463	136,653
Less: Treasury Stock	(23,417)	(23,417)
Retained Earnings (Accumulated Deficit)	(404,801)	(380,806)
Accumulated Other Comprehensive Loss	(62)	(73)
Total Stockholders' Equity (Deficit)	(286,589)	(267,415)
Total Liabilities, Convertible Preferred Stock and Stockholders' Deficit	702,808	623,735
Prosper Funding LLC
Assets
Cash and Cash Equivalents	10,892	8,223
Restricted Cash	120,152	140,092
Loans Held for Sale, at Fair Value	31	49
Borrower Loans, at Fair Value	277,361	293,005
Property and Equipment, Net	6,972	7,953
Servicing Assets	16,162	14,598
Other Assets	274	125
Total Assets	431,844	464,045
Liabilities, Convertible Preferred Stock and Stockholders' Deficit
Accounts Payable and Accrued Liabilities	1,453	745
Payable to Related Party	5,121	2,889
Payable to Investors	112,444	132,112
Notes at Fair Value	277,425	293,948
Other Liabilities	4,926	3,985
Total Liabilities	401,369	433,679
Stockholders' Deficit
Member's Equity	24,904	24,904
Retained Earnings (Accumulated Deficit)	5,571	5,462
Total Stockholders' Equity (Deficit)	30,475	30,366
Total Liabilities, Convertible Preferred Stock and Stockholders' Deficit	$ 431,844	$ 464,045

XML

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Sep. 20, 2017
Statement of Financial Position [Abstract]
Convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized (in shares)	444,760,848	444,760,848	444,760,848
Convertible preferred stock, shares issued (in shares)	214,637,925	214,637,925
Convertible preferred stock, shares outstanding (in shares)	214,637,925	214,637,925
Convertible preferred stock, aggregate liquidation preference	$ 375,952	$ 375,952
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	625,000,000	625,000,000	625,000,000
Common stock, shares issued (in shares)	71,317,926	71,226,934
Common stock, shares outstanding (in shares)	70,381,991	70,290,999

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Operating Revenues
Transaction Fees, Net	$ 37,988,000	$ 35,423,000	$ 69,343,000	$ 62,291,000
Servicing Fees, Net	7,487,000	6,793,000	14,671,000	12,947,000
Gain (Loss) on Sale of Borrower Loans	4,163,000	3,803,000	7,512,000	3,485,000
Fair Value of Warrants Vested on Sale of Borrower Loans	(20,633,000)	(16,887,000)	(35,912,000)	(20,194,000)
Other Revenue	1,015,000	1,415,000	2,367,000	2,135,000
Total Operating Revenues	30,020,000	30,547,000	57,981,000	60,664,000
Interest Income
Interest Income on Borrower Loans	14,556,000	12,007,000	26,916,000	23,507,000
Interest Expense on Notes and Warehouse Line	(11,471,000)	(11,177,000)	(22,200,000)	(21,855,000)
Net Interest Income	3,085,000	830,000	4,716,000	1,652,000
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net	(1,430,000)	70,000	(572,000)	(24,000)
Total Net Revenue	31,675,000	31,447,000	62,125,000	62,292,000
Expenses
Origination and Servicing	9,192,000	8,873,000	18,013,000	17,278,000
Sales and Marketing	20,907,000	20,131,000	39,735,000	39,687,000
General and Administrative	18,151,000	18,758,000	36,865,000	39,473,000
Restructuring Charges, Net	271,000	647,000	595,000	572,000
Change in Fair Value of Convertible Preferred Stock Warrants	(3,998,000)	22,416,000	(8,602,000)	22,817,000
Other Expenses (Income), Net	(258,000)	1,930,000	(500,000)	7,629,000
Total Expenses	44,265,000	72,755,000	86,106,000	127,456,000
Net Loss Before Taxes	(12,590,000)	(41,308,000)	(23,981,000)	(65,164,000)
Income Tax Expense	9,000	97,000	19,000	262,000
Net Income (Loss)	$ (12,599,000)	$ (41,405,000)	$ (24,000,000)	$ (65,426,000)
Net Loss Per Share – Basic and Diluted (in dollars per share)	$ (0.18)	$ (0.59)	$ (0.34)	$ (0.94)
Weighted-Average Shares - Basic and Diluted (in shares)	70,362,716	69,691,841	70,333,145	69,436,365
Prosper Funding LLC
Operating Revenues
Administration Fee Revenue - Related Party	$ 30,836,000	$ 27,309,000	$ 54,620,000	$ 42,463,000
Servicing Fees, Net	7,209,000	6,520,000	14,022,000	12,401,000
Gain (Loss) on Sale of Borrower Loans	(16,181,000)	(13,084,000)	(27,754,000)	(16,709,000)
Other Revenue	73,000	34,000	136,000	64,000
Total Operating Revenues	21,937,000	20,779,000	41,024,000	38,219,000
Interest Income
Interest Income on Borrower Loans	10,907,000	12,007,000	21,859,000	23,507,000
Interest Expense on Notes and Warehouse Line	(10,177,000)	(11,177,000)	(20,388,000)	(21,855,000)
Net Interest Income	730,000	830,000	1,471,000	1,652,000
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes, Net	(255,000)	70,000	(364,000)	(24,000)
Total Net Revenue	22,412,000	21,679,000	42,131,000	39,847,000
Expenses
Administration Fee - Related Party	20,285,000	18,466,000	38,175,000	34,282,000
Servicing	1,663,000	1,524,000	3,478,000	3,255,000
General and Administrative	182,000	145,000	365,000	318,000
Total Expenses	22,130,000	20,135,000	42,018,000	37,855,000
Income Tax Expense			0	0
Net Income (Loss)	$ 282,000	$ 1,544,000	$ 113,000	$ 1,992,000

XML

Condensed Consolidated Statements of Other Comprehensive Loss (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Statement of Comprehensive Income [Abstract]
Net Loss	$ (12,599)	$ (41,405)	$ (24,000)	$ (65,426)
Other Comprehensive Income (Loss), Before Tax
Change in Net Unrealized Gain on Available for Sale Investments, at Fair Value	27	(1)	12	16
Realized (Gain) Loss on Sale of Available for Sale Investments, at Fair Value	0	0	0	(12)
Other Comprehensive Income, Before Tax	27	(1)	12	4
Income tax effect	0	0	0	0
Other Comprehensive Income, Net of Tax	27	(1)	12	4
Comprehensive Loss	$ (12,572)	$ (41,406)	$ (23,988)	$ (65,422)

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Cash flows from Operating Activities:
Net Loss	$ (24,000)	$ (65,426)
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes	572	24
Depreciation and Amortization	5,334	6,270
Gain on Sales of Borrower Loans	(7,501)	(6,532)
Change in Fair Value of Servicing Rights	6,538	5,742
Stock-Based Compensation Expense	4,584	6,812
Restructuring Liability	595	412
Fair Value of Warrants Vested	35,912	21,677
Change in Fair Value of Warrants	(8,602)	22,817
Impairment Losses on Assets Held for Sale	0	6,319
Other, Net	(358)	199
Changes in Operating Assets and Liabilities:
Purchase of Loans Held for Sale at Fair Value	(1,324,100)	(1,245,826)
Proceeds from Sales and Principal Payments of Loans Held for Sale at Fair Value	1,207,916	1,246,358
Accounts Receivable	(2,856)	25
Prepaid and Other Assets	1,448	(4,637)
Accounts Payable and Accrued Liabilities	2,540	(3,696)
Payable to Investors	(19,852)	17,967
Other Liabilities	(9)	(1,774)
Net Cash (Used in) Provided by Operating Activities	(121,839)	6,731
Cash Flows from Investing Activities:
Purchase of Borrower Loans Held at Fair Value	(91,075)	(106,940)
Principal Payments of Borrower Loans Held at Fair Value	90,963	99,482
Purchases of Property and Equipment	(2,715)	(2,485)
Maturities of Short Term Investments	0	1,280
Purchases of Short Term Investments	0	(1,263)
Purchases of Available for Sale Investments, at Fair Value	(5,448)	0
Proceeds from Sale of Available for Sale Investments	0	16,163
Maturities of Available for Sale Investments	24,000	8,600
Net Cash Provided by Investing Activities	15,725	14,837
Cash Flows from Financing Activities:
Proceeds from Issuance of Notes Held at Fair Value	90,693	106,506
Payments of Notes Held at Fair Value	(91,525)	(100,274)
Proceeds from revolving debt facilities	103,097	0
Payment for debt issuance costs	(1,428)	0
Proceeds from Exercise of Warrants and Stock Options including Early Exercise, and Issuance of Restricted Stock	18	18
Repurchase of Common Stock and Restricted Stock	0	(64)
Net Cash Provided by Financing Activities	100,855	6,186
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(5,259)	27,754
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period	198,463	186,244
Cash, Cash Equivalents and Restricted Cash at End of the Period	193,204	213,998
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	22,252	22,121
Non-Cash Investing Activity- Accrual for Property and Equipment, Net	325	169
Prosper Funding LLC
Cash flows from Operating Activities:
Net Loss	113	1,992
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
Change in Fair Value of Borrower Loans, Loans Held for Sale and Notes	364	24
Other Non-Cash Changes in Borrower Loans, Loans Held for Sale and Notes	(295)	(272)
Depreciation and Amortization	2,991	2,637
Gain on Sales of Borrower Loans	(8,147)	(6,532)
Change in Fair Value of Servicing Rights	6,552	5,609
Changes in Operating Assets and Liabilities:
Purchase of Loans Held for Sale at Fair Value	(1,324,100)	(1,245,826)
Proceeds from Sales and Principal Payments of Loans Held for Sale at Fair Value	1,324,114	1,246,358
Other Assets	(153)	(71)
Accounts Payable and Accrued Liabilities	708	(1,592)
Payable to Investors	(19,668)	18,374
Net Related Party Receivable/Payable	2,116	3,807
Other Liabilities	972	1,398
Net Cash (Used in) Provided by Operating Activities	(14,433)	25,906
Cash Flows from Investing Activities:
Purchase of Borrower Loans Held at Fair Value	(91,075)	(106,940)
Principal Payments of Borrower Loans Held at Fair Value	90,963	99,482
Purchases of Property and Equipment	(1,894)	(2,859)
Maturities of Short Term Investments	0	1,280
Purchases of Short Term Investments	0	(1)
Net Cash Provided by Investing Activities	(2,006)	(9,038)
Cash Flows from Financing Activities:
Proceeds from Issuance of Notes Held at Fair Value	90,693	106,506
Payments of Notes Held at Fair Value	(91,525)	(100,274)
Net Cash Provided by Financing Activities	(832)	6,232
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(17,271)	23,100
Cash, Cash Equivalents and Restricted Cash at Beginning of the Period	148,315	154,912
Cash, Cash Equivalents and Restricted Cash at End of the Period	131,044	178,012
Supplemental Disclosure of Cash Flow Information:
Cash Paid for Interest	22,252	22,121
Non-Cash Investing Activity- Accrual for Property and Equipment, Net	$ (116)	$ 601

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Basis of Presentation

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Basis of Presentation

Basis of Presentation

Prosper Marketplace, Inc. (“PMI”) 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 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, 2017. The balance sheet at December 31, 2017 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.

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 and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.

Prosper Funding LLC

Entity Information [Line Items]

Basis of Presentation

Basis of Presentation

Prosper Funding LLC (“PFL”) was formed in the state of Delaware on February 17, 2012 as a limited liability company with the sole equity member being Prosper Marketplace, Inc. (“PMI”). Except as the context otherwise requires, as used in these Notes to the condensed consolidated financial statements of Prosper Funding LLC, “Prosper Funding,” “we,” “us,” and “our” refers to PFL and its wholly owned subsidiaries, Prosper Asset Holdings LLC (“PAH”), a Delaware limited liability company, and 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, 2017. The balance sheet at December 31, 2017 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.

Prosper Funding did not have any items of other comprehensive income (loss) during any of the periods presented in the condensed consolidated financial statements as of and for the six months ended June 30, 2018 and June 30, 2017.

The preparation of Prosper Funding'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.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Summary of Significant Accounting Policies

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, 2017. There have been no changes to these accounting policies during the first six months of 2018 other than the changes noted below.

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Available for Sale Investments at Fair Value, Borrower Loans, Loans Held for Sale, Accounts Receivable, Accounts Payable and Accrued Liabilities, Payable to Investors, Convertible Preferred Stock Warrant Liability 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.

Restricted Cash

Restricted cash consists primarily of cash deposits 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 or Prosper has on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown in the condensed consolidated statements of cash flows:

	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
Cash and Cash Equivalents	$	58,652	45,795		$	34,667	$	22,337
Restricted Cash	134,552		152,668		179,331		163,907
Total Cash, Cash Equivalents and Restricted Cash shown in the consolidated statements of cash flows	$	193,204	$	198,463	$	213,998	$	186,244

Borrower Loans, Loans Held for Sale and Notes

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. We choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. Management believes that the fair value option is more meaningful for the readers of the financial statements and it allows both the Borrower Loans and Notes to be valued using the same methodology. The fair value election, with respect to an item, may not be revoked once an election is made. Prosper estimates the fair value of such Borrower Loans and Notes using discounted cash flow methodologies that take into account expected prepayments, losses, recoveries and default rates. The Borrower Loans are not derecognized when a corresponding Note is issued as Prosper maintains the ability to sell the Borrower Loans without the approval of the holders of the corresponding Notes.

Debt

For debt instruments carried at amortized cost, the Company defers specific incremental costs directly related to issuing debt or entering into revolving debt arrangements. Debt issuance costs associated with revolving debt arrangements are presented as an asset and subsequently amortized over the term of the revolving debt arrangement.

Revenues

Revenue primarily results from fees and net interest income earned. Fees include transaction fees for our services performed on behalf of WebBank to originate a loan. We also have other smaller sources of revenue reported as other revenue, including referral fees and securitization fees. For more information about Prosper's revenues, see Note 2 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2017.

Transaction Fees

Prosper has a customer contract with WebBank to facilitate the origination of all Borrower Loans through Prosper’s marketplace. In exchange for these services, Prosper earns a transaction fee from WebBank that is recognized when performance is complete, which is upon the successful origination of a Borrower Loan and which is similar to the recognition prior to the adoption of ASC 606. The transaction fee Prosper earns is determined by the term and credit grade of the Borrower Loan that is facilitated on Prosper’s marketplace, and ranges from 1.00% to 5.00% of the original principal amount of such Borrower Loan that WebBank originates. Prosper records the transaction fee net of any fees paid to WebBank because Prosper does not receive an identifiable benefit from WebBank other than the Borrower Loan that has been recognized at fair value.

Other Revenues

Other Revenues consist primarily of securitization fees and credit referral fees. Credit referral fees are where partner companies pay us an agreed upon amount for successful referrals of customers from our marketplace. The transaction price is a fixed amount per referral and is recognized by the Company upon a successful referral which is similar to the recognition prior to the adoption of ASC 606. Securitization fees represent fees Prosper earns to facilitate securitizations for purchasers of Borrower Loans and is recognized as other revenue when the securitization is completed which is similar to the recognition prior to the adoption of ASC 606. In some instances Prosper may also provide a guarantee, which requires us to first determine the fair value of the guarantee and allocate the remaining transaction price to the securitization performance obligation.

As of June 30, 2018 Prosper had no material contract assets, contract liabilities or deferred contract costs. As of June 30, 2018, Prosper had no unsatisfied performance obligations related to transaction fee or other revenues.

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. Prosper adopted the requirements of the ASU as of January 1, 2018, utilizing the modified retrospective approach. Transaction fees, securitization fees and credit referral fees are included in the scope of the new guidance, while servicing fees, net interest income and gain or loss on the sale of loans remain within the scope of ASC topic 860, Transfers and Servicing or ASC topic 310. The impact of adopting the ASU did not result in a material cumulative effect adjustment upon the date of adoption. Additionally, the impact of adoption on the Consolidated Financial Statements for the current period is insignificant.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. Prosper adopted the standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16)," which requires companies to recognize the income-tax consequences of an intra-entity transfer

of an asset other than inventory. Prosper adopted the standard effective January 1, 2018, the adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (ASU2016-18)," which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prosper adopted the standard effective January 1, 2018. Prosper had $134.6 million and $179.3 million of restricted cash on its consolidated balance sheet as of June 30, 2018 and June 30, 2017, respectively, whose cash flow statement classification changed to align with the new guidance.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Prosper adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

Accounting Standards Issued, To Be Adopted By The Company In Future Periods

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures.  This guidance will be effective for us in the first quarter of our fiscal year 2019, and early adoption is permitted. Prosper is currently evaluating the impact that this guidance will have on its consolidated financial statements. We do expect that this guidance will have a material impact on Prosper's consolidated financial statements. As of June 30, 2018 Prosper had a total of $35.9 million in non-cancelable operating lease commitments.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard eliminates Step 2 from the goodwill impairment test, which requires a hypothetical purchase price allocation. Prosper will continue to have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The standard should be applied on a prospective basis. Prosper is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, "Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting."The ASU is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718, Compensation-Stock Compensation,which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year and early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. Prosper is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

Prosper Funding LLC

Entity Information [Line Items]

Summary of Significant Accounting Policies

Significant Accounting Policies

Prosper Funding's significant accounting policies are included in Note 2 – Summary of Significant Accounting Policies in Prosper Funding’s Annual Report on Form 10-K for the year ended December 31, 2017. There have been no changes to these accounting policies during the first six months of 2018.

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Short Term Investments, 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.

Restricted Cash

Restricted cash consists primarily of cash deposits 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 or Prosper has on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown in the consolidated statements of cash flows:

	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
Cash and Cash Equivalents	$	10,892	8,223		$	12,384	$	6,929
Restricted Cash	120,152		140,092		165,628		147,983
Total Cash, Cash Equivalents and Restricted Cash show in the consolidated statements of cash flows	$	131,044	$	148,315	$	178,012	$	154,912

Borrower Loans, Loans Held for Sale and Notes

Through the Note Channel, Prosper Funding 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 Prosper Funding’s consolidated balance sheets as assets and liabilities, respectively. We choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. Management believes that the fair value option is more meaningful for the readers of the financial statements and it allows both the Borrower Loans and Notes to be valued using the same methodology. The fair value election, with respect to an item, may not be revoked once an election is made. Prosper Funding estimates the fair value of such Borrower Loans and Notes using discounted cash flow methodologies that take into account expected prepayments, losses, recoveries and default rates. The Borrower Loans are not derecognized when a corresponding Note is issued as Prosper Funding maintains the ability to sell the Borrower Loans without the approval of the holders of the corresponding Notes. 

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in US GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. Prosper Funding adopted the requirements of the ASU as of January 1, 2018, utilizing the modified retrospective approach. Administration fees are included in the scope of the new guidance, while servicing fees and gain or loss on the sale of loans remain within the scope of ASC topic 860, Transfers and Servicing. The impact of adopting the ASU is not significant to the Consolidated Financial Statements in the current period.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. Prosper Funding adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper Funding’s consolidated financial statements. 

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (ASU2016-18)," which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prosper Funding adopted standard effective January 1, 2018. Prosper Funding has $120.2 million and $165.6 million of restricted cash on its consolidated balance sheet as of June 30, 2018 and 2017, respectively, whose cash flow statement classification changed to align with the new guidance.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Prosper Funding adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper Funding’s consolidated financial statements.

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Property and Equipment, Net

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Property and Equipment, Net

Property and Equipment, Net

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

	June 30, 2018			December 31, 2017
Property and equipment:
Computer equipment	$	14,785		$	14,499
Internal-use software and website development costs	21,372			19,910
Office equipment and furniture	3,010			3,010
Leasehold improvements	7,078			7,078
Assets not yet placed in service	1,893			1,216
Property and equipment	48,138			45,713
Less accumulated depreciation and amortization	(32,057		)	(27,577		)
Total property and equipment, net	$	16,081		$	18,136

Depreciation and amortization expense for property and equipment for the three months ended June 30, 2018 and June 30, 2017 was $2.4 million and $2.7 million, respectively. Depreciation and amortization expense for property and equipment for the six months endedJune 30, 2018 and June 30, 2017 was $5.1 million and $5.2 million respectively. These charges are included in general and administration expenses on the condensed consolidated statements of operations. Prosper capitalized internal-use software and website development costs in the amount of $1.4 million and $1.0 million for the three months ended June 30, 2018 and June 30, 2017, respectively. Prosper capitalized internal-use software and website development costs in the amount of $2.5 million and $2.1 million for the six months endedJune 30, 2018 and June 30, 2017, respectively.

Prosper Funding LLC

Entity Information [Line Items]

Property and Equipment, Net

Property and Equipment

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

	June 30, 2018			December 31, 2017
Property and equipment:
Internal-use software and web site development costs	$	21,372		$	19,911
Less accumulated depreciation and amortization	(14,400		)	(11,958		)
Total property and equipment, net	$	6,972		$	7,953

Depreciation expense for the three months ended June 30, 2018 and June 30, 2017 was $1.4 million and $1.4 million, respectively. Depreciation expense for the six months ended June 30, 2018 and June 30, 2017 was $3.0 million and $2.6 million, respectively.

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Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value

Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value

The aggregate principal balances outstanding and fair values of Borrower Loans, Loans Held for Sale, and Notes as of June 30, 2018 and December 31, 2017, are presented in the following table (in thousands):

	Borrower Loans						Notes						Loans Held for Sale
	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
Aggregate principal balance outstanding	$	280,852		$	296,668		$	(284,011	)	$	(300,922	)	$	117,028		$	59
Fair value adjustments	(3,491		)	(3,663		)	6,586			6,974			(211		)	(10		)
Fair value	$	277,361		$	293,005		$	(277,425	)	$	(293,948	)	$	116,817		$	49

At June 30, 2018, outstanding Borrower Loans had original terms to maturity of either 36 or 60 months, had monthly payments with fixed interest rates ranging from 5.31% to 32.32%, and had various maturity dates through June 2023. At December 31, 2017, outstanding Borrower Loans had original maturities of either 36 or 60 months, had monthly payments with fixed interest rates ranging from 5.31% to 32.32%, and had various maturity dates through December 2022. 

Approximately $0.6 million and $1.2 million represents the loss that is attributable to changes in the instrument-specific credit risks related to Borrower Loans that were recorded in the change in fair value during the six months ending June 30, 2018 and June 30, 2017, respectively.

As of June 30, 2018, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $2.6 million and a fair value of $1.1 million. As of December 31, 2017, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $3.5 million and a fair value of $1.3 million. Prosper places loans on non-accrual status when they are over 120 days past due. As of June 30, 2018 and December 31, 2017, Borrower Loans in non-accrual status had a fair value of $0.3 million and $0.3 million, respectively.

Prosper Funding LLC

Entity Information [Line Items]

Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value

Borrower Loans, Loans Held For Sale, and Notes Held at Fair Value

The aggregate principal balances outstanding and fair values of Borrower Loans, Loans Held for Sale, and Notes as of June 30, 2018 and December 31, 2017, are presented in the following table (in thousands):

	Borrower Loans						Notes						Loans Held for Sale
	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
Aggregate principal balance outstanding	$	280,852		$	296,668		$	(284,011	)	$	(300,922	)	$	44		$	59
Fair value adjustments	(3,491		)	(3,663		)	6,586			6,974			(13		)	(10		)
Fair value	$	277,361		$	293,005		$	(277,425	)	$	(293,948	)	$	31		$	49

At June 30, 2018, outstanding Borrower Loans had original terms to maturity of either 36 or 60 months; had monthly payments with fixed interest rates ranging from 5.31% to 32.32% and had various maturity dates through June 2023. At December 31, 2017, outstanding Borrower Loans had original maturities of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 32.32%, and had various maturity dates through December 2022.

Approximately $0.6 million represents the loss that is attributable to changes in the instrument specific credit risks related to Borrower Loans that was recorded in the change in fair value during the six months ended June 30, 2018.

As of June 30, 2018, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $2.6 million and a fair value of $1.1 million. As of December 31, 2017, Borrower Loans that were 90 days or more delinquent had an aggregate principal amount of $3.5 million and a fair value of $1.3 million. Prosper Funding places loans on non-accrual status when they are over 120 days past due. As of June 30, 2018 and December 31, 2017, Borrower Loans in non-accrual status had a fair value of $0.3 million and $0.3 million, respectively.

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Loan Servicing Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Loan Servicing Assets and Liabilities

Loan Servicing Assets and Liabilities

Prosper accounts for servicing assets and liabilities at their estimated fair values with changes in fair values recorded in servicing fees. The initial asset or liability is recognized when Prosper sells Borrower Loans to unrelated third-party buyers through the Whole Loan Channel and the servicing rights are retained. The servicing assets and liabilities are measured at fair value throughout the servicing period. The total gains and losses recognized on the sale of such Borrower Loans for the three months ended June 30, 2018 was a gain of $4.2 million and a loss of $20.6 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium (as defined in Note 16). The total gains and losses recognized on the sale of such Borrower Loans for the six months ended June 30, 2018 was a gain of $7.5 million and a loss of $35.9 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium. The total gains recognized on the sale of such Borrower Loans were $3.8 million during the three months ended June 30, 2017, which included rebates provided to members of the Consortium prior to the closing of the Consortium transaction and a loss of $16.9 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium after the closing of the Consortium transaction. The total gains recognized on the sale of such Borrower Loans were $3.5 million during the six months ended June 30, 2017, which included rebates provided to members of the Consortium prior to the closing of the Consortium transaction and a loss of $20.2 million from the Fair Value of Warrants Vested on the Sale of Borrower Loans to the Consortium after the closing of the Consortium transaction.

As of June 30, 2018, Borrower Loans that were sold but for which Prosper retained servicing rights had a total outstanding principal balance of $3.9 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through June 2023. At December 31, 2017, Borrower Loans that were sold but for which Prosper retained servicing rights had a total outstanding principal balance of $3.7 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through December 2022.

$21.6 million and $18.2 million of contractually specified servicing fees and ancillary fees are included on our condensed consolidated statements of operations in Servicing Fees, Net for the six months ended June 30, 2018 and June 30, 2017, respectively.

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 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 below are those that Prosper considers significant to the estimated fair values of the level 3 servicing assets and liabilities. 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. Prosper estimated 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 a backup service provider.

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 used a range of discount rates for the servicing assets and liabilities 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 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 we expect to collect fees on the Borrower Loans, which is used to project future servicing revenues.

Prosper Funding LLC

Entity Information [Line Items]

Loan Servicing Assets and Liabilities

Loan Servicing Assets and Liabilities

Prosper Funding accounts for servicing assets and liabilities at their estimated fair values with changes in fair values recorded in servicing fees. The initial asset or liability is recognized when Prosper Funding sells Borrower Loans to unrelated third-party buyers through the Whole Loan Channel and the servicing rights are retained. The total losses recognized on the sale of such Borrower Loans were a loss of $16.2 million and $13.1 million for the three months ended June 30, 2018 and June 30, 2017, respectively. The total gains and losses recognized on the sale of such Borrower Loans were a loss of $27.8 million and $16.7 million for the six months ended June 30, 2018 and June 30, 2017, respectively.

As of June 30, 2018, Borrower Loans that were sold, but for which Prosper Funding retained servicing rights, had a total outstanding principal balance of $3.9 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through June 2023. At December 31, 2017, Borrower Loans that were sold, but for which Prosper Funding retained servicing rights, had a total outstanding principal balance of $3.7 billion, original terms of either 36 or 60 months, monthly payments with fixed interest rates ranging from 5.31% to 35.52%, and various maturity dates through December 2022.

$11.2 million and $9.2 million of contractually specified servicing fees and ancillary fees are included on our condensed consolidated statements of operations in Servicing Fees, Net for the three months ended June 30, 2018 and June 30, 2017, respectively. $21.8 million and $17.9 million of contractually specified servicing fees and ancillary fees are included on our condensed consolidated statements of operations in Servicing Fees, Net for the six months ended June 30, 2018 and June 30, 2017, respectively.

Fair Value

Valuation Method. Prosper Funding 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 below are those that Prosper Funding considers significant to the estimated fair values of the level 3 servicing assets and liabilities. The following is a description of the significant unobservable inputs provided in the table.

Market Servicing Rate. Prosper Funding 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. Prosper Funding estimated 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 Funding sells and services and information from a backup service provider.

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 used a range of discount rates for the servicing assets and liabilities 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 Funding’s servicing assets.

DefaultRate. 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 we expect to collect fees on the Borrower Loans, which is used to project future servicing revenues.

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Available for Sale Investments, at Fair Value

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Available for Sale Investments, at Fair Value

Available for Sale Investments, at Fair Value 

Available for sale investments are recorded at fair value and unrealized gains and losses are reported, net of taxes, in accumulated other comprehensive income (loss) included in stockholders' equity unless management determines that an investment is other-than-temporarily impaired . 

The amortized cost, gross unrealized gains and losses, and fair value of available for sale investments as of June 30, 2018 and December 31, 2017, are as follows (in thousands): 

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturity securities:
Treasury Bills	20,668		—		(23		)	20,645
US Treasury securities	14,232		—		(36		)	14,196
Total Available for Sale Investments	$	34,900	$	—	$	(59	)	$	34,841

December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturity securities:
Treasury Bills	$	34,014	$	—	$	(36	)	$	33,978
US Treasury securities	19,207		—		(38		)	19,169
Total Available for Sale Investments	$	53,221	$	—	$	(74	)	$	53,147

A summary of available for sale investments with unrealized losses as of June 30, 2018, and December 31, 2017, aggregated by category and period of continuous unrealized loss, is as follows (in thousands):

	Less than 12 months					12 months or longer				Total
June 30, 2018	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
Treasury Bills	$	20,645	$	(23	)	$	—	$	—	$	20,645	$	(23	)
US Treasury securities	$	14,196	$	(36	)	$	—	$	—	$	14,196	$	(36	)
Total Investments with Unrealized Losses	$	34,841	$	(59	)	$	—	$	—	$	34,841	$	(59	)

	Less than 12 months					12 months or longer				Total
December 31, 2017	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
Treasury Bills	$	33,978	$	(36	)	$	—	$	—	$	33,978	$	(36	)
US Treasury securities	$	19,169	$	(38	)	$	—	$	—	$	19,169	$	(38	)
Total Investments with Unrealized Losses	$	53,147	$	(74	)	$	—	$	—	$	53,147	$	(74	)

There were no impairment charges recognized during the six months ended June 30, 2018. 

The maturities of available for sale investments at June 30, 2018 and December 31, 2017 are as follows (in thousands):

June 30, 2018	Within 1 year		After 1 year through 5 years		After 5 years to 10 years		After 10 years		Total
Treasury Bills	20,645		—		—		—		20,645
US Treasury securities	14,196		—		—		—		14,196
Total Fair Value	$	34,841	$	—	$	—	$	—	$	34,841
Total Amortized Cost	$	34,900	$	—	$	—	$	—	$	34,900

December 31, 2017	Within 1 year		After 1 year through 5 years		After 5 years to 10 years		After 10 years		Total
Treasury Bills	33,978		—		—		—		33,978
US Treasury securities	14,947		4,222		—		—		19,169
Total Fair Value	$	48,925	$	4,222	$	—	$	—	$	53,147
Total Amortized Cost	$	48,992	$	4,229	$	—	$	—	$	53,221

During the six months ended June 30, 2018, Prosper sold $0 of investments which resulted in a realized gain of $0.

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Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Fair Value of Assets and Liabilities

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. We apply 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, Loans Held for Sale, 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, Loans Held for Sale and Notes include default rates derived from historical performance and discount rates applied to each credit grade based on the perceived credit risk of each credit grade.

Investments held at fair value consist of available for sale investments. The available for sale investments may consist of corporate debt securities, commercial paper, U.S. Treasury securities, Treasury bills, agency bonds and short term bond funds. When available, Prosper uses quoted prices in active markets to measure the fair value of securities available for sale. When utilizing market data and bid-ask spreads, Prosper uses the price within the bid-ask spread that best represents fair value. When quoted prices do not exist, Prosper uses prices obtained from independent third-party pricing services to measure the fair value of investment assets. Prosper's primary independent pricing service provides prices based on observable trades and discounted cash flows that incorporate observable information, such as yields for similar types of securities (a benchmark interest rate plus observable spreads) and weighted-average maturity for the same or similar securities. Prosper compares the prices obtained from its primary independent pricing service to the prices obtained from the additional independent pricing services to determine if the price obtained from the primary independent pricing service is reasonable. Prosper does not adjust the prices received from independent third-party pricing services unless such prices are inconsistent with the definition of fair value and result in a material difference in the recorded amounts. 

The Convertible Preferred Stock Warrant Liability is valued using a Black-Scholes option pricing model. Refer to Note 12 for further details.

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

June 30, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans					$	277,361	$	277,361
Loans Held for Sale					116,817		116,817
Available for Sale Investments, at Fair Value			34,841		—		34,841
Servicing Assets					15,644		15,644
Total Assets	—		34,841		409,822		444,663
Liabilities:
Notes					$	277,425	$	277,425
Servicing Liabilities					28		28
Convertible Preferred Stock Warrant Liability					143,676		143,676
Loan Trailing Fee Liability					3,078		3,078
Total Liabilities	$	—	$	—	$	424,207	$	424,207

December 31, 2017	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	293,005	$	293,005
Loans Held for Sale	—		—		49		49
Available for Sale Investments, at Fair Value	—		53,147		—		53,147
Servicing Assets	—		—		14,711		14,711
Total Assets	—		53,147		307,765		360,912
Liabilities:
Notes	$	—	$	—	$	293,948	$	293,948
Servicing Liabilities	—		—		59		59
Convertible Preferred Stock Warrant Liability	—		—		116,366		116,366
Loan Trailing Fee Liability	—		—		2,595		2,595
Total Liabilities	$	—	$	—	$	412,968	$	412,968

As Prosper’s Borrower Loans, Loans Held for Sale, Notes, and loan servicing rights do not trade in an active market with readily observable prices, Prosper 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.

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs used for Prosper’s level 3 fair value measurements at June 30, 2018 and December 31, 2017:

Borrower Loans, Loans Held for Sale and Notes:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	4.4% - 13.9%	4.0% - 14.4%
Default rate	2.0% - 15.6%	2.0% - 15.4%

Servicing Rights

	Range
Unobservable Input	June 30, 2018		December 31, 2017
Discount rate	15% - 25%		15% - 25%
Default rate	1.6% - 16.5%		1.5% - 16.1%
Prepayment rate	15.2% - 32.9%		13.5% - 30.2%
Market servicing rate	0.625	%	0.625	%

Loan Trailing Fee Liability:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	15% - 25%	15% - 25%
Default rate	1.6% - 16.5%	1.5% - 16.1%
Prepayment rate	15.2% - 32.9%	13.5% - 30.2%

At June 30, 2018, the discounted cash flow methodology used to estimate the Note fair values used the same projected cash flows as the related Borrower Loans. As demonstrated in the following table, 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.

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)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2018	$	293,005		$	(293,948	)	$	49		$	(894	)
Purchase of Borrower Loans/Issuance of Notes	91,075			(90,693		)	1,324,100			1,324,482
Principal repayments	(88,947		)	91,525			(14,265		)	(11,687		)
Borrower Loans sold to third parties	(2,016		)	—			(1,193,651		)	(1,195,667		)
Other changes	(338		)	633			796			1,091
Change in fair value	(15,418		)	15,058			(212		)	(572		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	116,817		$	116,753

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2017	$	315,627		$	(316,236	)	$	624		$	15
Purchase of Borrower Loans/Issuance of Notes	106,940			(106,506		)	1,245,826			1,246,260
Principal repayments	(97,492		)	100,274			(42		)	2,740
Borrower Loans sold to third parties	(1,990		)	—			(1,246,316		)	(1,248,306		)
Other changes	9			266			(3		)	272
Change in fair value	(10,822		)	10,792			6			(24		)
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2018	$	285,584		$	(285,095	)	$	82,803		$	83,292
Purchase of Borrower Loans/Issuance of Notes	44,799			(44,468		)	728,901			729,232
Principal repayments	(43,990		)	44,423			(10,416		)	(9,983		)
Borrower Loans sold to third parties	(950		)	—			(683,547		)	(684,497		)
Other changes	(202		)	86			255			139
Change in fair value	(7,880		)	7,629			(1,179		)	(1,430		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	116,817		$	116,753

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2017	$	317,536		$	(316,944	)	$	109		$	701
Purchase of Borrower Loans/Issuance of Notes	50,260			(49,692		)	721,829			722,397
Principal repayments	(48,048		)	48,695			(14		)	633
Borrower Loans sold to third parties	(869		)	—			(721,829		)	(722,698		)
Other changes	10			(156		)	—			(146		)
Change in fair value	(6,617		)	6,687			—			70
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

The following tables present additional information about level 3 servicing assets and liabilities measured at fair value on a recurring basis (in thousands):

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2018	14,711		59
Additions	7,502		—
Less: Changes in fair value	(6,569	)	(31	)
Fair Value at June 30, 2018	15,644		28

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2017	12,786		198
Additions	6,532		—
Less: Changes in fair value	(5,829	)	(87	)
Fair Value at June 30, 2017	13,489		111

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2018	14,754		41
Additions	4,163		—
Less: Changes in fair value	(3,273	)	(13	)
Fair Value at June 30, 2018	15,644		28

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2017	12,436		147
Additions	3,768		—
Less: Changes in fair value	(2,715	)	(36	)
Fair Value at June 30, 2017	13,489		111

The following table presents additional information about level 3 Preferred Stock Warrant Liability measured at fair value on a recurring basis (in thousands):

Balance as of January 1, 2018	$	116,366
Add Issuances of Preferred Stock Warrant	35,912
Change in fair value of the preferred stock warrant liability	(8,602		)
Balance at June 30, 2018	$	143,676

Balance as of January 1, 2017	$	—
Add Issuances of Preferred Stock Warrant	47,297
Change in fair value of the preferred stock warrant liability	22,817
Balance at June 30, 2017	$	70,114

Balance as of April 1, 2018	$	127,041
Add Issuances of Preferred Stock Warrant	20,633
Change in fair value of the preferred stock warrant liability	(3,998		)
Balance at June 30, 2018	$	143,676

Balance as of April 1, 2017	$	30,811
Add Issuances of Preferred Stock Warrant	16,887
Change in fair value of the preferred stock warrant liability	22,416
Balance at June 30, 2017	$	70,114

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 defaults rates using a discounted cash flow model.

The following table presents additional information about level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):

Balance at January 1, 2018	2,595
Issuances	1,529
Cash payment of Loan Trailing Fee	(1,206	)
Change in fair value	160
Balance as of June 30, 2018	3,078

Significant Recurring Level 3 Fair Value Asset and Liability Input Sensitivity

Key economic assumptions and the sensitivity of the current fair value to immediate changes in those assumptions at June 30, 2018 for Borrower Loans, Loans Held for Sale and Notes funded through the Note Channel are presented in the following table (in thousands, except percentages):

	Borrower Loans and Loans Held for Sale				Notes
Fair Value as of June 30, 2018	$394,178				$277,425
Discount rate assumption:	7.52		%	*	7.52		%	*
Resulting fair value from:
100 basis point increase	$	390,255			$	274,660
200 basis point increase	386,431				271,964
Resulting fair value from:
100 basis point decrease	$	398,202			$	280,262
200 basis point decrease	402,333				283,173
Default rate assumption:	13.11		%	*	13.11		%	*
Resulting fair value from:
100 basis point increase	$	389,288			$	273,967
200 basis point increase	384,542				270,612
Resulting fair value from:
100 basis point decrease	$	399,107			$	280,911
200 basis point decrease	404,079				284,428

* Represents weighted average assumptions considering all credit grades.

The following table presents the estimated impact on Prosper’s estimated fair value of servicing assets and liabilities, calculated using different market servicing rates and different default rates as of June 30, 2018 (in thousands, except percentages).

	Servicing Assets			Servicing Liabilities
Fair Value as of June 30, 2018	$15,644			$28
Market servicing rate assumptions	0.625		%	0.625		%
Resulting fair value from:
Market servicing rate increase to 0.65%	$	14,691		$	31
Market servicing rate decrease to 0.60%	$	16,634		$	25
Weighted average prepayment assumptions	19.98		%	19.98		%
Resulting fair value from:
Applying a 1.1 multiplier to prepayment rate	$	15,471		$	28
Applying a 0.9 multiplier to prepayment rate	$	15,857		$	29
Weighted average default assumptions	12.66		%	12.66		%
Resulting fair value from:
Applying a 1.1 multiplier to default rate	$	15,473		$	28
Applying a 0.9 multiplier to default rate	$	15,857		$	28

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.

Financial Instruments, Assets and Liabilities not Recorded at Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value (in thousands):

June 30, 2018	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and Cash Equivalents	$	58,652	$	58,652	$	—	$	—	$	58,652
Restricted Cash	134,552		—		134,552		—		134,552
Accounts Receivable	3,539		—		3,539		—		3,539
Total Assets	196,743		58,652		138,091		—		196,743
Liabilities:
Accounts Payable and Accrued Liabilities	$	14,652	$	—	$	14,652	$	—	$	14,652
Payable to Investors	112,580		—		112,580		—		112,580
Warehouse Line	103,553		—		103,553		—		103,553
Total Liabilities	$	230,785	$	—	$	230,785	$	—	$	230,785

Prosper Funding LLC

Entity Information [Line Items]

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Prosper Funding 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. We apply 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, Loans Held for Sale 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, Loans Held for Sale and Notes include default rates derived from historical performance and discount rates applied to each credit grade based on the perceived credit risk of each credit grade.

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

June 30, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	277,361	$	277,361
Servicing Assets	—		—		16,162		16,162
Loans Held for Sale	—		—		31		31
Total Assets	—		—		293,554		293,554
Liabilities:
Notes	$	—	$	—	$	277,425	$	277,425
Servicing Liabilities	—		—		28		28
Loan Trailing Fee Liability	—		—		3,078		3,078
Total Liabilities	$	—	$	—	$	280,531	$	280,531

December 31, 2017	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	293,005	$	293,005
Servicing Assets	—		—		14,598		14,598
Loans Held for Sale	—		—		49		49
Total Assets	—		—		307,652		307,652
Liabilities:
Notes	$	—	$	—	$	293,948	$	293,948
Servicing Liabilities	—		—		59		59
Loan Trailing Fee Liability	—		—		2,595		2,595
Total Liabilities	$	—	$	—	$	296,602	$	296,602

As Prosper Funding’s Borrower Loans, Loans Held for Sale, Notes and loan servicing rights do not trade in an active market with readily observable prices, Prosper Funding 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.

Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs used for Prosper Funding’s level 3 fair value measurements at June 30, 2018 and December 31, 2017: 

Borrower Loans, Loans Held for Sale and Notes:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	4.4% - 13.9%	4.0% - 14.4%
Default rate	2.0% - 15.6%	2.0% - 15.4%

Servicing Assets and Liabilities:

	Range
Unobservable Input	June 30, 2018		December 31, 2017
Discount rate	15% - 25%		15% - 25%
Default rate	1.6% - 16.5%		1.5% - 16.1%
Prepayment rate	15.2% - 32.9%		13.5% - 30.2%
Market servicing rate	0.625	%	0.625	%

Loan Trailing Fee Liability:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	15% - 25%	15% - 25%
Default rate	1.6% - 16.5%	1.5% - 16.1%
Prepayment rate	15.2% - 32.9%	13.5% - 30.2%

The changes in the Borrower Loans, Loans Held for Sale and Notes, which are level 3 assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2018	$	293,005		$	(293,948	)	$	49		$	(894	)
Originations	91,075			(90,693		)	1,324,100			1,324,482
Principal repayments	(88,947		)	91,525			(14		)	2,564
Borrower Loans sold to third parties	(2,016		)	—			(1,324,100		)	(1,326,116		)
Other changes	(338		)	633			—			295
Change in fair value	(15,418		)	15,058			(4		)	(364		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	31		$	(33	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2017	$	315,627		$	(316,236	)	$	624		$	15
Originations	106,940			(106,506		)	1,245,826			1,246,260
Principal repayments	(97,492		)	100,274			(42		)	2,740
Borrower Loans sold to third parties	(1,990		)	—			(1,246,316		)	(1,248,306		)
Other changes	9			266			(3		)	272
Change in fair value	(10,822		)	10,792			6			(24		)
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2018	$	285,584		$	(285,095	)	$	41		$	530
Originations	44,799			(44,468		)	728,901			729,232
Principal repayments	(43,990		)	44,423			(6		)	427
Borrower Loans sold to third parties	(950		)	—			(728,901		)	(729,851		)
Other changes	(202		)	86			—			(116		)
Change in fair value	(7,880		)	7,629			(4		)	(255		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	31		$	(33	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2017	$	317,536		$	(316,944	)	$	109		$	701
Originations	50,260			(49,692		)	721,829			722,397
Principal repayments	(48,048		)	48,695			(14		)	633
Borrower Loans sold to third parties	(869		)	—			(721,829		)	(722,698		)
Other changes	10			(156		)	—			(146		)
Change in fair value	(6,617		)	6,687			—			70
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

The following table presents additional information about level 3 servicing assets and liabilities recorded at fair value for the three months ended June 30, 2018 (in thousands).

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2018	14,598		59
Additions	8,147		—
Less: Changes in fair value	(6,583	)	(31	)
Fair Value at June 30, 2018	16,162		28

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2017	12,461		198
Additions	6,532		—
Less: Changes in fair value	(5,696	)	(87	)
Fair Value at June 30, 2017	13,297		111

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2018	15,023		41
Additions	4,452		—
Less: Changes in fair value	(3,313	)	(13	)
Fair Value at June 30, 2018	16,162		28

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2017	12,190		147
Additions	3,768		—
Less: Changes in fair value	(2,661	)	(36	)
Fair Value at June 30, 2017	13,297		111

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 defaults rates using a discounted cash flow model.

The following table presents additional information about level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):

Balance at January 1, 2018	2,595
Issuances	1,529
Cash payment of Loan Trailing Fee	(1,206	)
Change in fair value	160
Balance as of June 30, 2018	3,078

Significant Recurring Level 3 Fair Value Asset and Liability Input Sensitivity

Key economic assumptions and the sensitivity of the current fair value to immediate changes in those assumptions at June 30, 2018 for Borrower Loans, Loans Held for Sale and Notes funded are presented in the following table (in thousands, except percentages):

	Borrower Loans and Loans Held for Sale				Notes
Fair Value as of June 30, 2018	$	277,392			$	277,425
Discount rate assumption:	7.52		%	*	7.52		%	*
Resulting fair value from:
100 basis point increase	$	274,662			$	274,660
200 basis point increase	271,970				271,964
Resulting fair value from:
100 basis point decrease	$	280,255			$	280,262
200 basis point decrease	283,162				283,173
Default rate assumption:	13.11		%	*	13.11		%	*
Resulting fair value from:
100 basis point increase	$	273,981			$	273,967
200 basis point increase	270,641				270,612
Resulting fair value from:
100 basis point decrease	$	280,892			$	280,911
200 basis point decrease	284,391				284,428

 * Represents weighted average assumptions considering all credit grades.

Servicing Asset and Liability Fair Value Input Sensitivity:

The following table presents the estimated impact on Prosper Funding’s estimated fair value of servicing assets and liabilities, calculated using different market servicing rates and different default rates as of June 30, 2018 (in thousands, except percentages).

	Servicing Assets			Servicing Liabilities
Fair Value as of June 30, 2018	$	16,162		$	28
Market servicing rate assumptions	0.625		%	0.625		%
Resulting fair value from:
Market servicing rate increase to 0.65%	15,160			31
Market servicing rate decrease to 0.60%	17,165			25
Weighted average prepayment assumptions	19.98		%	19.98		%
Resulting fair value from:
Applying a 1.1 multiplier to prepayment rate	15,964			28
Applying a 0.9 multiplier to prepayment rate	16,363			29
Weighted average default assumptions	12.66		%	12.66		%
Resulting fair value from:
Applying a 1.1 multiplier to default rate	15,967			28
Applying a 0.9 multiplier to default rate	16,362			28

These sensitivities are hypothetical and should be evaluated with care. The effect on fair value of a 10% 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.

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Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Goodwill 

Prosper’s goodwill balance of $36.4 million at June 30, 2018 did not change during the six months ended June 30, 2018. We did not record any goodwill impairment expense for the six months ended June 30, 2018.

Other Intangible Assets 

The following table presents the detail of other intangible assets for the period presented (dollars in thousands):

	June 30, 2018
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Remaining Useful Life (In Years)
Developed technology	$	3,060	$	(3,060	)	$	—	—
User base and customer relationships	5,050		(3,873		)	$	1,177	6.8
Brand name	60		(60		)	—		—
Total intangible assets subject to amortization	$	8,170	$	(6,993	)	$	1,177

Prosper’sintangible asset balance was $1.2 million and $1.4 million at June 30, 2018 and December 31, 2017, respectively. During the six months ended June 30, 2017, certain intangible assets were made available for sale and as a result they were written down to fair value. This resulted in an impairment loss of $6.3 million, which is recorded in Other Expenses on the Condensed Consolidated Statement of Operations.

The user base and customer relationship intangible assets are being amortized on an accelerated basis over a three to ten year period. The technology and brand name intangible assets are being amortized on a straight line basis over three to five years and one year, respectively.

Amortization expense for the three months ended June 30, 2018 and June 30, 2017 was $0.1 million and $0.2 million, respectively. Amortization expense for the six months ended June 30, 2018 and June 30, 2017 was $0.2 million and $1.0 million, respectively. Estimated amortization of purchased intangible assets for future periods is as follows (in thousands):

Year Ending December 31,
Remainder of 2018	$	178
2019	279
2020	220
2021	172
2022	136
Thereafter	$	192
Total	$	1,177

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Other Liabilities

6 Months Ended

Jun. 30, 2018

Other Liabilities [Abstract]

Other Liabilities

Other Liabilities

Other Liabilities includes the following:

	June 30, 2018		December 31, 2017
Loan trailing fee	3,078		2,595
Deferred revenue	436		452
Servicing liabilities	28		59
Deferred income tax liability	244		225
Deferred rent	3,651		3,904
Restructuring liability	3,457		3,355
Other	2,824		2,079
Total Other Liabilities	$	13,718	$	12,669

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Debt

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Debt

Debt

Warehouse Line

On January 19, 2018, through a wholly-owned subsidiary, Prosper Warehouse I Trust ("PWIT"), Prosper entered into an agreement (the "Warehouse Agreement") for a committed revolving line of credit (the "Warehouse Line"). In connection with the Warehouse Agreement, PWIT entered into a security agreement with a bank as administrative agent and a national banking association as collateral trustee and paying agent. Proceeds under the Warehouse Line may only be used to purchase certain unsecured consumer loans and related rights and documents from the Company and to pay fees and expenses related to the Warehouse Line. Effective June 12, 2018 the Warehouse Agreement was amended. The amendments included increasing the committed line of credit from $100 million to $200 million, extending the term of the Warehouse line (including the final maturity date), amending the monthly unused commitment fee, and reducing the rate at which the Warehouse Line bears interest.

Under the amended agreement, proceeds of loans made under the Warehouse Line may be borrowed, repaid, and reborrowed until the earlier of June 12, 2020 and the occurrence of any accelerated amortization event or event of default. Repayment of any outstanding proceeds will be made over the 24 month period ending June 12, 2022, excluding the occurrence of any accelerated amortization event or event of default.

Under the amended agreement, the Warehouse Line bears interest at a rate of LIBOR plus 3.00% and has an advance rate of 89%. Additionally, the Warehouse Line bears a monthly unused commitment fee, depending on utilization, of 0.50% or 0.75% per annum on the undrawn portion available under the Warehouse Line.

The Warehouse Agreement contains certain covenants applicable to PWIT, including restrictions on PWIT’s ability to incur indebtedness, pledge assets, merge or consolidate, and enter into certain affiliate transactions. The Warehouse Line also requires Prosper to maintain a minimum tangible net worth of $25 million, minimum net liquidity of $15 million and a maximum leverage ratio of 5:1. Tangible net worth is defined as the sum of (i) (A) convertible preferred stock, (B) total stockholders’ deficit and (C) convertible preferred stock warrant liability, less the sum of (ii) (A) goodwill and (B) intangible assets. Net liquidity is defined as the sum of cash, cash equivalents and available for sale investments. The leverage ratio is defined as the ratio of total consolidated indebtedness other than non-recourse securitization indebtedness, non-recourse or limited recourse warehouse indebtedness, and borrower dependent notes, to tangible net worth. As of June 30, 2018, Prosper was in compliance with the covenants under the Warehouse Agreement.

As of June 30, 2018, Prosper had $103.6 million in debt outstanding and accrued interest under the Warehouse Line. This debt is secured by an aggregate outstanding principal balance of $116.2 million included in "Loans Held for Sale, at Fair Value" on the Condensed Consolidated Balance Sheet. At June 30, 2018 the undrawn portion available under the Warehouse Line was $96.9 million. Prosper incurred $1.6 million of capitalized debt issuance costs, which will be recognized as interest expense through June 12, 2022.

Prosper has also purchased swaptions to limit our exposure to increases in LIBOR. The swaptions are recorded on the Condensed Consolidated Balance Sheet at fair value in Prepaids and Other Assets. Any changes in the fair value are recorded in the Change in Fair Value of Loans, Loans Held for Sale and Notes, Net on the Condensed Consolidated Statement of Operations. The fair value of the swaptions was not material at June 30, 2018.

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Net Loss Per Share

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

The weighted average shares used in calculating basic and diluted net loss per share excludes certain shares that are disclosed as outstanding shares in the condensed consolidated balance sheets because such shares are restricted as they were associated with options that were early exercised and continue to remain unvested.

Basic and diluted net loss per share was calculated as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Numerator:
Net loss available to common stockholders for basic    and diluted EPS	$	(12,599	)	$	(41,405	)	$	(24,000	)	$	(65,426	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share	70,362,716			69,691,841			70,333,145			69,436,365
Basic and diluted net loss per share	$	(0.18	)	$	(0.59	)	$	(0.34	)	$	(0.94	)

The following common stock equivalents were excluded from the computation of diluted net 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,
	2018	2017	2018	2017
	(shares)	(shares)	(shares)	(shares)
Excluded securities:
Convertible preferred stock issued and outstanding	214,637,925	177,388,428	214,637,925	177,388,428
Stock options issued and outstanding	75,206,928	60,938,265	66,403,696	53,040,604
Unvested stock options exercised	2,190	20,940	2,190	20,940
Restricted stock units	—	—	—	—
Warrants issued and outstanding	1,080,349	1,199,403	1,082,917	1,199,403
Series E-1 convertible preferred stock warrants	35,544,141	35,544,141	35,544,141	35,544,141
Series F convertible preferred stock warrants	177,720,704	177,720,704	177,720,704	177,720,704
Total common stock equivalents excluded from diluted    net loss per common share computation	504,192,237	452,811,881	495,391,573	444,914,220

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Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit

Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit

Convertible Preferred Stock and Warrants

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

On February 27, 2017, PMI issued to Pinecone Investments LLC a second warrant (the “Second Series E-1 Warrant,” and together with a previously issued First Series E-1 Warrant, the “Series E-1 Warrants”) to purchase 15,277,006 shares of Series E-1 convertible preferred stock at an exercise price of $0.01 per share. The Series E-1 Warrants are immediately exercisable, in whole or in part, by paying in cash the full purchase price payable in respect of the number of shares purchased. The Series E-1 Warrants were issued pursuant to the Warrant Agreement, dated December 16, 2016, between PMI and Colchis Capital Management, L.P. ("Colchis"), as previously described in PMI’s Current Report on Form 8-K as filed with the SEC on December 22, 2016.

In connection with the Consortium Purchase Agreement (as defined in Note 16) entered into with affiliates of the Consortium (as defined in Note 16, such affiliates, "Warrant Holders'") a warrant agreement was signed (the "Warrant Agreement"). Pursuant to the Warrant Agreement, PMI issued to the Consortium, three warrants (together, the “Series F Warrant”) to purchase up to an aggregate of 177,720,706 shares of PMI’s Series F convertible preferred stock at an exercise price of $0.01 per share (the “Warrant Shares”).

The Warrant Holders' right to exercise the Series F Warrant is subject to monthly vesting during the term of the Consortium Purchase Agreement based upon the volume of loans the Consortium elects to purchase (if any) in each month, subject to certain cure rights such as offering additional loans for sale in subsequent periods. Under the terms of the Warrant Agreement, the Warrant Shares may also vest in full upon a change of control of PMI, insolvency of PMI or PFL certain breaches of contract by PMI or PFL that are not cured within a defined cure period and upon the occurrence of certain events set forth in the Warrant Agreement.

The Series F Warrant will be exercisable with respect to vested Warrant Shares, in whole or in part, at any time prior to the tenth anniversary of its date of issuance. The number of shares underlying the Series F Warrant may be adjusted following certain events such as stock splits, dividends, reclassifications, and certain other issuances by PMI.

On September 20, 2017, Prosper issued and sold 37,249,497 shares of Series G convertible preferred stock in a private placement at a purchase price of $1.34 per share for proceeds of approximately $47.9 million, net of issuance costs. The Series G convertible preferred stock was sold in reliance on the exemption from the registration requirements of the Securities Act set forth in Section 4(a)(2) of the Securities Act regarding sales by an issuer not involving a public offering. The purpose of the Series G private placement was to raise funds for general corporate purposes.

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, 2018 are disclosed in the table below (amounts in thousands except share and per share amounts): 

Convertible Preferred Stock	Par Value		Authorized Shares	Outstanding and Issued Shares	Liquidation Preference (Outstanding Shares)
Series A	$	0.01	68,558,220	68,558,220	$	19,774
Series A-1	0.01		24,760,915	24,760,915	49,522
Series B	0.01		35,775,880	35,775,880	21,581
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	—	—
Series E-2	0.01		16,858,078	—	—
Series F	0.01		177,720,707	3	—
Series G	0.01		37,249,497	37,249,497	50,000
			444,760,848	214,637,925	$	375,952

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 of Directors. 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 the 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 (“IPO”) 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. 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 its Board of Directors. At present, each of the Series A, Series B, Series C, Series D, Series E-1, Series E-2, Series F and the Series G convertible preferred stock converts into PMI common stock at a 1:1 ratio while the Series A-1 convertible preferred stock converts into common stock at a 1,000,000:1 ratio.

The conversion price of the Series G convertible preferred stock shall be 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) were exercisable or exercised as of the Series G Preferred Stock closing date.

LiquidationRights

PMI’s convertible preferred stock has been classified as temporary equity on the 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 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 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 Bylaws of PMI. 

Convertible Preferred Stock Warrant Liability

SeriesE-1 Warrants

In connection with the Settlement and Release Agreement dated November 17, 2016 among PMI, PFL and Colchis, on December 16, 2016, PMI issued the First Series E-1 Warrant. 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 defined in Note 16) on February 27, 2017. The warrants expire ten years from the date of issuance. For the three months ended June 30, 2018, Prosper recognized $1.1 million of income from the re-measurement of the fair value of the warrants. For the six months ended June 30, 2018, Prosper recognized $2.5 million of income from the re-measurement of the fair value of the warrants. The income is recorded through change in fair value of convertible preferred stock warrants in the condensed consolidated statement of operations.

To determine the fair value of the Series E-1 Warrants, the Company first determined the value of a share of a Series E-1 convertible preferred stock. To determine the fair value of the convertible preferred stock, the Company first derived the business enterprise value (“BEV”) of the Company using valuation methods, including a combination of 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 the Company’s equity, including the Company’s 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.

The Company determined the fair value of the outstanding convertible Series E-1 preferred stock warrants utilizing the following assumptions as of the following dates:

	June 30, 2018	December 31, 2017
Volatility	40%	40%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8.55	9.04
Dividend yield	0%	0%

The above assumptions were determined as follows:

Volatility. The volatility is derived from historical volatilities of several unrelated publicly listed peer companies over a period approximately equal to the term of the warrant because the Company has limited information on the volatility of the preferred stock since there is currently no trading history. When making the selections of industry peer companies to be used in the volatility calculation, the Company considered the size, operational, and economic similarities to the Company’s principal business operations.

Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield in effect as of the period end date and for zero coupon U.S. Treasury notes with maturities approximately equal to the term of the warrant.

Remaining Contractual Term. The remaining contractual term represents the time from the date of the valuation to the expiration of the warrant.

Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about the Company’s anticipated dividend policy.

Series F Warrants

In connection with the Consortium Purchase Agreement (as described in Note 16), PMI issued warrants to purchase up to 177,720,706 shares of PMI's Series F convertible preferred stock at $0.01 per share. For the three months ended June 30, 2018, Prosper recognized $2.9 million of income from the re-measurement of the fair value of the warrants. For the six months ended June 30, 2018, Prosper recognized $6.1 million of income from the re-measurement of the fair value of the warrants. The income is recorded through change in fair value of convertible preferred stock warrants in the condensed consolidated statement of operations.

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

The Company determined the fair value of the outstanding convertible Series F preferred stock warrants utilizing the following assumptions as of the following dates:

	June 30, 2018	December 31, 2017
Volatility	40%	40%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8.66	9.16
Dividend yield	0%	0%

The above assumptions were determined as follows:

Volatility. The volatility is derived from historical volatilities of several unrelated publicly listed peer companies over a period approximately equal to the term of the warrant because the Company has limited information on the volatility of the preferred stock since there is currently no trading history. When making the selections of industry peer companies to be used in the volatility calculation, the Company considered the size, operational, and economic similarities to the Company’s principal business operations.

Risk-Free Interest Rate. The risk-free interest rate is based on the U.S. Treasury yield in effect as of the period end date and for zero coupon U.S. Treasury notes with maturities approximately equal to the term of the warrant.

Remaining Contractual Term.The remaining contractual term represents the time from the date of the valuation to the expiration of the warrant.

Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about the Company’s anticipated dividend policy.

The combined activity of the Convertible Preferred Stock Warrant Liability for the six months ended June 30, 2018 is as follows (in thousands):

Balance at January 1, 2018	$	116,366
Warrants Vested	35,912
Change in Fair Value	(8,602		)
Balance as of June 30, 2018	$	143,676

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. The total number of shares of stock which PMI has the authority to issue is 1,069,760,848, consisting of 625,000,000 shares of common stock, $0.01 par value per share, and 444,760,848 shares of preferred stock, $0.01 par value per share. As of June 30, 2018, 71,317,926 shares of common stock were issued and 70,381,991 shares of common stock were outstanding. As of December 31, 2017, 71,226,934 shares of common stock were issued and 70,290,999 shares of common stock were outstanding. Each holder of common stock is entitled to one vote for each share of common stock held.

Common Stock Issued upon Exercise of Stock Options

During the six months ended June 30, 2018, PMI issued 82,792 shares of common stock upon the exercise of vested options for cash proceeds of $18 thousand. Certain options are eligible for exercise prior to vesting. These unvested options may be exercised for restricted shares of common stock that have the same vesting schedule as the options. Prosper records a liability for the exercise price paid upon the exercise of unvested options, which is reclassified to common stock and additional paid-in capital as the shares vest. Should the optionholder’s employment be terminated, the unvested restricted shares are subject to repurchase by PMI at an amount equal to the exercise price paid for such shares. At June 30, 2018 and December 31, 2017, there were 2,190 and 11,565 shares, respectively, of restricted stock outstanding that remain unvested and subject to PMI’s right of repurchase.

For the six months ended June 30, 2018, PMI repurchased no shares of restricted stock upon termination of employment of employees.

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Share Based Incentive Plan and Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share Based Incentive Plan and Compensation

Share Based Incentive Plan and Compensation

PMI grants equity awards primarily through its Amended and Restated 2005 Stock Option Plan (the “2005 Plan”), which was approved as amended and restated by its stockholders on December 1, 2010; and its 2015 Equity Incentive Plan, which was approved by its stockholders on April 7, 2015 and subsequently amended by an Amendment No. 1 and Amendment No. 2,which were approved by PMI's stockholders on February 15, 2016 and May 31, 2016, respectively (as amended, the "2015 Plan"). In March 2015, the 2005 Plan expired, except that any awards granted under the 2005 Plan prior to its expiration remain in effect pursuant to their terms.

As of June 30, 2018, up to 93,468,710 shares of common stock are reserved for issuance under the 2015 Plan, and may be granted to employees, directors, and consultants by PMI’s board of directors and stockholders to promote the success of Prosper’s business. Options generally vest (i) 25%1 year from the vesting commencement date and 1/48th per month thereafter, (ii) 50%one year from the vesting date and 1/48th per month thereafter, (iii) 50%two years from the vesting commencement date and 1/48th per month thereafter, or (iv) 1/36th per month from the vesting commencement date. In no event are options exercisable more than 10 years after the date of grant.

At June 30, 2018, there were 22,824,771 shares available for grant under the 2015 Plan and zero shares available for grant under the 2005 Plan.

Stock Option Reprice

On May 3, 2016, the Compensation Committee of the Board of Directors of PMI approved a stock option repricing program (the “2016 Reprice”), authorizing PMI’s officers to reprice certain outstanding stock options held by employees and directors that have exercise prices above the current fair market value of PMI’s common stock.  The repricing was effected on May 16, 2016 for eligible directors and employees located in the United States and on May 19, 2016 for eligible employees located in Israel.

On March 17, 2017, the Compensation Committee of the Board of Directors of PMI approved a stock option repricing program (the “2017 Reprice” and together with the 2016 Reprice, the "Repricings"), authorizing PMI’s officers to reprice certain outstanding stock options held by employees and directors that have exercise prices above the current fair market value of PMI’s common stock.  The repricing was effected on March 17, 2017 for eligible directors and employees.

Prosper believes that the Repricings will encourage the continued service of valued employees and directors, and motivate such service providers to perform at high levels, both of which are critical to Prosper’s continued success. Prosper expects to incur additional stock based compensation charges as a result of the Repricings.

The financial statement impact of the above Repricings is $0.2 million in the three months ended June 30, 2018 and $0.7 million (net of forfeitures) that will be recognized over the remaining weighted average vesting period of 1.1 years.

Early Exercised Stock Options

The balance of stock options that were early exercised under the 2005 Plan as of June 30, 2018 is not material.

Stock Option Activity

Stock option activity under the 2005 Plan and 2015 Plan is summarized for the six months ended June 30, 2018 below: 

	Options Issued and Outstanding		Weighted- Average Exercise Price
Balance as of January 1, 2018	58,628,039		$	0.25
Options issued	18,703,551		0.54
Options exercised – vested	(82,792	)	0.22
Options forfeited	(3,879,249	)	0.37
Balance as of June 30, 2018	73,369,549		$	0.32
Options vested and expected to vest as of June 30, 2018	60,048,513		0.32
Options vested and exercisable at June 30, 2018	34,914,602		0.22

Other Information Regarding Stock Options

Additional information regarding common stock options outstanding as of June 30, 2018 is as follows: 

		Options Outstanding				Options Vested and Exercisable
	Range of Exercise Prices	Number Outstanding	Weighted – Avg. Remaining Life	Weighted –Avg. Exercise Price		Number Vested	Weighted – Avg. Exercise Price
$	0.02 - 0.20	4,768,290	5.55	$	0.11	4,768,290	$	0.11
	0.21 - 0.50	45,281,131	8.25	0.23		28,602,923	0.22
	0.51 - 1.13	23,320,128	9.60	0.54		1,543,389	0.54
$	0.02 - 1.13	73,369,549	8.51	$	0.32	34,914,602	$	0.22

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 Prosper 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, Prosper 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 Prosper. 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. Prosper uses an expected dividend yield of zero as it does not anticipate paying any dividends in the foreseeable future.  

Prosper also estimates forfeitures of unvested stock options. Expected forfeitures are based on Prosper’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 value of PMI’s stock option awards granted during the three and six months ended June 30, 2018 and June 30, 2017 was estimated at the date of grant using the Black-Scholes model with the following average assumptions:

	Three Months Ended June 30,			Six Months Ended June 30,
	2018		2017	2018		2017
Volatility of common stock	44.43	%	N/A	44.12	%	50.28	%
Risk-free interest rate	2.85	%	N/A	2.75	%	2.12	%
Expected life (in years)	6.0 years		N/A	6.0 years		5.7 years
Dividend yield	0	%	N/A	0	%	0	%

Restricted Stock Unit Activity

During the six months ended June 30, 2018, PMI granted restricted stock units (“RSUs”) to certain employees that are subject to three-year vesting terms or four-year vesting terms and the occurrence of a liquidity event.

The aggregate fair value of the RSUs granted was $1.9 million. The following table summarizes the activities for PMI’s RSUs during the six months ended June 30, 2018:

	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested - January 1, 2018	1,399,180		$	2.16
Granted	3,569,586		0.54
Vested	—		—
Forfeited	(100,500	)	2.17
Unvested - June 30, 2018	4,868,266		$	0.96

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 during the three and six months ended June 30, 2018 and June 30, 2017 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30, 2018
	2018		2017		2018		2017
Origination and servicing	$	241	$	328	$	456	$	545
Sales and marketing	108		141		216		311
General and administrative	1,904		2,843		3,912		5,956
Total stock based compensation	$	2,253	$	3,312	$	4,584	$	6,812

During the three months ended June 30, 2018 and June 30, 2017, Prosper capitalized $0.1 million and $0.1 million, respectively, of stock-based compensation as internal use software and website development costs. As of June 30, 2018, the unamortized stock-based compensation expense adjusted for forfeiture estimates related to Prosper’s employees’ unvested stock-based awards was approximately $10.4 million, which will be recognized over the remaining weighted-average vesting period of approximately 2 years.

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Restructuring

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Restructuring

Restructuring    

Summary of Restructuring Plan

During 2016, Prosper adopted a strategic restructuring of its business. This restructuring was intended to streamline our operations and support future growth efforts. Under this restructuring, Prosper closed its Salt Lake City, Utah location and its Tel Aviv, Israel location.

In the six months ended June 30, 2018 Prosper's only restructuring activities related to office space that is no longer needed. Other than accretion and changes in sublease loss estimates, Prosper does not expect any additional restructuring charges related to this restructuring.

The following table summarizes the activities related to Prosper's restructuring plan (in thousands):

	Facilities Related			Total
Balance January 1, 2018	$	3,244		$	3,244
Adjustments to expense	591			591
Sublease cash receipts	316			316
Less: Cash paid	(775		)	(775		)
Balance June 30, 2018	$	3,376		$	3,376

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Income Taxes

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Income Taxes

Income Taxes

For the three months ended June 30, 2018 and June 30, 2017, Prosper recognized $9 thousand and $97 thousand of income tax expense, respectively. For the six months ended June 30, 2018 and June 30, 2017, Prosper recognized $19 thousand and $262 thousand of income tax expense, 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 or six month periods ended June 30, 2018 and June 30, 2017 due to a full valuation allowance recorded against our 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. On the basis of this evaluation, it is not more likely than not that our deferred tax assets will be realized and therefore a full valuation allowance has been recorded.

Prosper Funding LLC

Entity Information [Line Items]

Income Taxes

Income Taxes

Prosper Funding incurred no income tax provision for the six months ended June 30, 2018 and June 30, 2017. Prosper Funding is a US disregarded entity and its income and loss is included in the return of its parent, PMI. Since PMI is in a loss position, is not currently subject to income taxes, and has fully reserved its deferred tax asset, the net effective tax rate for Prosper Funding is 0%.

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Consortium Purchase Agreement

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Consortium Purchase Agreement

Consortium Purchase Agreement

On February 27, 2017, Prosper entered into a series of agreements (the "Consortium Purchase Agreement") with a consortium of investors (the "Consortium"), pursuant to which the Consortium has agreed to purchase borrower loans in an aggregate principal amount of up to $5.0 billion (including certain loans purchased by one of the investors prior to the date of the Consortium Purchase Agreement). PFL will be obligated to offer for purchase minimum monthly volumes of eligible loans to the Consortium, for the Consortium to elect to purchase.

In connection with the Consortium Purchase Agreement, PMI issued to the Consortium, three warrants to purchase up to an aggregate 177,720,706 shares of PMI’s Series F Preferred Stock at an exercise price of $0.01 per share (the “Warrant Shares”).

The Consortium’s right to exercise the Series F Warrant is subject to monthly vesting during the term of the Consortium Purchase Agreement based upon the volume of loans the Consortium elects to purchase (if any) in each month, subject to certain cure rights such as offering additional loans for sale in subsequent periods. Pursuant to these cure rights, if the Consortium fails to respond to offers for allocation, purchase or funding, the Consortium can take advantage of a designated period of time to cure such failure. There have been no such failures by the Consortium to date. Under the terms of the Warrant Agreement, the Warrant Shares may also vest in full upon a change of control of PMI, insolvency of PMI or PFL, certain breaches of contract by PMI or PFL that are not cured within a defined cure period and upon the occurrence of certain other events set forth in the Warrant Agreement.

On vesting of the Series F warrants, Prosper records a liability as "Convertible Preferred Stock Warrant Liability" on the Condensed Consolidated Balance Sheet at fair value and a corresponding amount as "Fair Value of Warrants Vested on Sale of Borrower Loans" on the Condensed Consolidated Statement of Operations. Subsequent changes in the fair value of the vested warrants are recorded in "Change in Fair Value of Convertible Preferred Stock Warrants" on the Condensed Consolidated Statement of Operations. Additionally, in connection with the execution of the Consortium Purchase Agreement, certain previously issued rebates were settled by an issuance of vested Series F Convertible Preferred Stock Warrants. The difference in fair value of these warrants over the cash settlement price is recorded in "Change in Fair Value of Convertible Preferred Stock Warrants" on the Condensed Consolidated Statement of Operations.

The following represents the loans purchased and warrants vested under the Consortium Purchase Agreement:

	Loans Acquired (in thousands)		Warrants Vested
Total as of December 31, 2017	$	1,826,527	75,186,002
Loans Purchased by the Consortium during the six months ended June 30, 2018	831,097		36,830,278
Total as of June 30, 2018	$	2,657,624	112,016,280

In addition to the $2.7 billion above, warrants vested on signing of the Consortium Purchase Agreement were issued to settle certain rebates on $0.3 billion of whole loan purchases by members of the Consortium prior to the signing of the Consortium Purchase Agreement. This $0.3 billion also reduces the up to $5.0 billion aggregate amount under the Consortium Purchase Agreement.

Commitments and Contingencies

Future Minimum Lease Payments

Prosper has entered into various non-cancelable operating leases for certain offices with contractual lease periods expiring between 2022 and 2027.

The table below presents future minimum rental payments, net of minimum sublease rentals of $6.5 million, for the remaining terms of the operating leases (in thousands):

Remainder of 2018	2,939
2019	6,026
2020	6,193
2021	6,170
2022	6,076
Thereafter	8,480
Total	$	35,884

The payments in the above table include amounts that have been accrued for as part of the restructuring liability in Note 14 – Restructuring. Accrual balances related to operating facility leases were $3.4 million at June 30, 2018.

Rental expense under operating lease arrangements was $1.0 million and $1.2 million for the three months ended June 30, 2018 and June 30, 2017, respectively. Rental expense under operating lease arrangements was $2.1 million and $2.5 million for the six months ended June 30, 2018 and June 30, 2017, respectively. 

Operating Commitments

Prosper has entered into an agreement with WebBank, under which all Borrower Loans originated through the marketplace are made by WebBank under its bank charter. Pursuant to the 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 $143,500, Prosper is required to pay WebBank an amount equal to such deficiency. Accordingly, the minimum fee for the remaining six months of 2018 is $0.9 million. The minimum fee is $0.9 million for the year 2019.

Additionally, under the agreement with WebBank, Prosper is required to maintain a 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, 2018, Prosper was in compliance with the covenant.

Loan Purchase Commitments

Prosper has entered into an agreement with WebBank to purchase $31.5 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2018 and the first business day of the quarter ending September 30, 2018. Prosper will purchase these Borrower Loans within the first three business days of the quarter ending September 30, 2018.

Repurchase and Indemnification Contingency

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 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 and the initial fair value is insignificant. Prosper 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 obligation is the outstanding balances of the Borrower Loans issued through the Whole Loan Channel, which at June 30, 2018 is $3.9 billion. Prosper has accrued $1.3 million and $0.8 million as of June 30, 2018 and December 31, 2017, 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, we record the amount we consider to be the best estimate within the range of potential losses that are both probable and estimable; however, if we cannot quantify the amount of the estimated loss, then we record the low end of the range of those potential losses.

SEC Inquiry

In April and May of 2017, we became aware of an error in the annualized net return and seasoned annualized net return numbers displayed to note investors. Although we have since corrected the error, we are currently subject to an investigation by the Securities and Exchange Commission (the “SEC”) as to whether violations of federal securities laws have occurred in connection with this error. We have been fully and voluntarily cooperating with the SEC.

We cannot predict the outcome of the investigation at this time and any potential fines or penalties, if any, that may arise from the investigation. Further, we are unable at this time to estimate a range of outcomes and as a result no accrual has been made.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Commitments and Contingencies

Consortium Purchase Agreement

On February 27, 2017, Prosper entered into a series of agreements (the "Consortium Purchase Agreement") with a consortium of investors (the "Consortium"), pursuant to which the Consortium has agreed to purchase borrower loans in an aggregate principal amount of up to $5.0 billion (including certain loans purchased by one of the investors prior to the date of the Consortium Purchase Agreement). PFL will be obligated to offer for purchase minimum monthly volumes of eligible loans to the Consortium, for the Consortium to elect to purchase.

In connection with the Consortium Purchase Agreement, PMI issued to the Consortium, three warrants to purchase up to an aggregate 177,720,706 shares of PMI’s Series F Preferred Stock at an exercise price of $0.01 per share (the “Warrant Shares”).

The Consortium’s right to exercise the Series F Warrant is subject to monthly vesting during the term of the Consortium Purchase Agreement based upon the volume of loans the Consortium elects to purchase (if any) in each month, subject to certain cure rights such as offering additional loans for sale in subsequent periods. Pursuant to these cure rights, if the Consortium fails to respond to offers for allocation, purchase or funding, the Consortium can take advantage of a designated period of time to cure such failure. There have been no such failures by the Consortium to date. Under the terms of the Warrant Agreement, the Warrant Shares may also vest in full upon a change of control of PMI, insolvency of PMI or PFL, certain breaches of contract by PMI or PFL that are not cured within a defined cure period and upon the occurrence of certain other events set forth in the Warrant Agreement.

On vesting of the Series F warrants, Prosper records a liability as "Convertible Preferred Stock Warrant Liability" on the Condensed Consolidated Balance Sheet at fair value and a corresponding amount as "Fair Value of Warrants Vested on Sale of Borrower Loans" on the Condensed Consolidated Statement of Operations. Subsequent changes in the fair value of the vested warrants are recorded in "Change in Fair Value of Convertible Preferred Stock Warrants" on the Condensed Consolidated Statement of Operations. Additionally, in connection with the execution of the Consortium Purchase Agreement, certain previously issued rebates were settled by an issuance of vested Series F Convertible Preferred Stock Warrants. The difference in fair value of these warrants over the cash settlement price is recorded in "Change in Fair Value of Convertible Preferred Stock Warrants" on the Condensed Consolidated Statement of Operations.

The following represents the loans purchased and warrants vested under the Consortium Purchase Agreement:

	Loans Acquired (in thousands)		Warrants Vested
Total as of December 31, 2017	$	1,826,527	75,186,002
Loans Purchased by the Consortium during the six months ended June 30, 2018	831,097		36,830,278
Total as of June 30, 2018	$	2,657,624	112,016,280

In addition to the $2.7 billion above, warrants vested on signing of the Consortium Purchase Agreement were issued to settle certain rebates on $0.3 billion of whole loan purchases by members of the Consortium prior to the signing of the Consortium Purchase Agreement. This $0.3 billion also reduces the up to $5.0 billion aggregate amount under the Consortium Purchase Agreement.

Commitments and Contingencies

Future Minimum Lease Payments

Prosper has entered into various non-cancelable operating leases for certain offices with contractual lease periods expiring between 2022 and 2027.

The table below presents future minimum rental payments, net of minimum sublease rentals of $6.5 million, for the remaining terms of the operating leases (in thousands):

Remainder of 2018	2,939
2019	6,026
2020	6,193
2021	6,170
2022	6,076
Thereafter	8,480
Total	$	35,884

The payments in the above table include amounts that have been accrued for as part of the restructuring liability in Note 14 – Restructuring. Accrual balances related to operating facility leases were $3.4 million at June 30, 2018.

Rental expense under operating lease arrangements was $1.0 million and $1.2 million for the three months ended June 30, 2018 and June 30, 2017, respectively. Rental expense under operating lease arrangements was $2.1 million and $2.5 million for the six months ended June 30, 2018 and June 30, 2017, respectively. 

Operating Commitments

Prosper has entered into an agreement with WebBank, under which all Borrower Loans originated through the marketplace are made by WebBank under its bank charter. Pursuant to the 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 $143,500, Prosper is required to pay WebBank an amount equal to such deficiency. Accordingly, the minimum fee for the remaining six months of 2018 is $0.9 million. The minimum fee is $0.9 million for the year 2019.

Additionally, under the agreement with WebBank, Prosper is required to maintain a 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, 2018, Prosper was in compliance with the covenant.

Loan Purchase Commitments

Prosper has entered into an agreement with WebBank to purchase $31.5 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2018 and the first business day of the quarter ending September 30, 2018. Prosper will purchase these Borrower Loans within the first three business days of the quarter ending September 30, 2018.

Repurchase and Indemnification Contingency

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 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 and the initial fair value is insignificant. Prosper 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 obligation is the outstanding balances of the Borrower Loans issued through the Whole Loan Channel, which at June 30, 2018 is $3.9 billion. Prosper has accrued $1.3 million and $0.8 million as of June 30, 2018 and December 31, 2017, 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, we record the amount we consider to be the best estimate within the range of potential losses that are both probable and estimable; however, if we cannot quantify the amount of the estimated loss, then we record the low end of the range of those potential losses.

SEC Inquiry

In April and May of 2017, we became aware of an error in the annualized net return and seasoned annualized net return numbers displayed to note investors. Although we have since corrected the error, we are currently subject to an investigation by the Securities and Exchange Commission (the “SEC”) as to whether violations of federal securities laws have occurred in connection with this error. We have been fully and voluntarily cooperating with the SEC.

We cannot predict the outcome of the investigation at this time and any potential fines or penalties, if any, that may arise from the investigation. Further, we are unable at this time to estimate a range of outcomes and as a result no accrual has been made.

Prosper Funding LLC

Entity Information [Line Items]

Commitments and Contingencies

Commitments and Contingencies

Operating Commitments

Prosper has entered into an agreement with WebBank, under which all Borrower Loans originated through the marketplace are made by WebBank under its bank charter. Pursuant to the 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 $143,500, Prosper is required to pay WebBank an amount equal to such deficiency.  Accordingly, the minimum fee for the remaining six months of 2018 is $0.9 million. The minimum fee is $0.9 million for the year 2019.

Loan Purchase Commitments

Under the terms of Prosper Funding’s agreement with WebBank, Prosper Funding is committed to purchase $31.5 million of Borrower Loans that WebBank originated during the last two business days of the quarter ended June 30, 2018 and first business day of the quarter ending September 30, 2018. Prosper Funding will purchase these Borrower Loans within the first three business days of the quarter ending September 30, 2018.

Repurchase and Indemnification Contingency

Under the terms of the loan purchase agreements between Prosper Funding and investors that participate in the Whole Loan Channel, Prosper Funding 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 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. Prosper Funding 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 obligation is the outstanding balances of the Borrower Loans issued through the Whole Loan Channel, which at June 30, 2018 is $3.9 billion. Prosper Funding had accrued $1.3 million and $0.8 million as of June 30, 2018 and December 31, 2017, 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, we record the amount we consider to be the best estimate within the range of potential losses that are both probable and estimable; however, if we cannot quantify the amount of the estimated loss, then we record the low end of the range of those potential losses.

SEC Inquiry

In April and May of 2017, we became aware of an error in the annualized net return and seasoned annualized net return numbers displayed to note investors. Although we have since corrected the error, we are currently subject to an investigation by the Securities and Exchange Commission (the “SEC”) as to whether violations of federal securities laws have occurred in connection with this error. We have been fully and voluntarily cooperating with the SEC.

We cannot predict the outcome of the investigation at this time and any potential fines or penalties, if any, that may arise from the investigation. Further, we are unable at this time to estimate a range of outcomes and as a result no accrual has been made.

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Related Parties

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Related Parties

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 and Borrower Loans. The aggregate amount of the Notes and Borrower Loans 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, 2018 and June 30, 2017, as well as the Notes and Borrower Loans outstanding as of June 30, 2018 and December 31, 2017 are summarized below (in thousands):

	Aggregate Amount of Notes and Borrower Loans Purchased Six Months Ended June 30,				Interest Earned on Notes and Borrower Loans Six Months Ended June 30,
Related Party	2018		2017		2018		2017
Executive officers and management	$	9	$	10	$	1	$	81
Directors (excluding executive officers and management)	208		174		22		20
Total	$	217	$	184	$	23	$	101

	Aggregate Amount of Notes and Borrower Loans Purchased Three Months Ended March 31,				Interest Earned on Notes and Borrower Loans Three Months Ended March 31,
Related Party	2018		2017		2018		2017
Executive officers and management	$	3	$	5	$	—	$	35
Directors (excluding executive officers and management)	107		85		11		10
Total	$	110	$	90	$	11	$	45

	Notes balance as of
Related Party	June 30, 2018		December 31, 2017
Executive officers and management	$	17	$	38
Directors (excluding executive officers and management)	560		553
	$	577	$	591

Prosper Funding LLC

Entity Information [Line Items]

Related Parties

Related Parties

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

Prosper Funding’s executive officers and directors who are not executive officers participate in its marketplace by placing bids and purchasing Notes and Borrower Loans. The aggregate amount of the Notes and Borrower Loans purchased and the income earned by parties deemed to be related parties of Prosper Funding as of June 30, 2018 and December 31, 2017 are summarized below (in thousands):

	Aggregate Amount of Notes and Borrower Loans Purchased				Interest Earned on Notes and Borrower Loans
	Six Months Ended June 30,				Six Months Ended June 30,
Related Party	2018		2017		2018		2017
Executive officers and management	$	9	$	10	$	1	$	81
Directors (excluding executive officers and management)	—		—		—		—
Total	$	9	$	10	$	1	$	81

	Aggregate Amount of Notes and Borrower Loans Purchased				Interest Earned on Notes and Borrower Loans
	Three Months Ended March 31,				Three Months Ended March 31,
Related Party	2018		2017		2018		2017
Executive officers and management	$	3	$	5	$	—	$	35
Directors (excluding executive officers and management)	—		—		—		—
Total	$	3	$	5	$	—	$	35

	Note and Borrower Loan Balance as of
Related Party	June 30, 2018		December 31, 2017
Executive officers and management	$	17	$	38
Directors  (excluding executive officers and management)	—		—
	$	17	$	38

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Significant Concentrations

6 Months Ended

Jun. 30, 2018

Risks and Uncertainties [Abstract]

Significant Concentrations

Significant Concentrations

Prosper is dependent on third party funding sources such as banks, assets managers, and investment funds to provide the funds to allow WebBank to originate Borrower Loans that the third party funding sources will later purchase. Of all Borrower Loans originated in the six months ended June 30, 2018, the largest party purchased a total of 52% of those loans. This compares to 52%, 14% and 8% for the three largest parties for the six months ended June 30, 2017. The party purchasing 14% for the six months ended June 30, 2017 is a member of the Consortium and purchased these loans prior to the closing of the Consortium Agreement on February 27, 2017. Further, a significant portion of our business is dependent on funding through the Whole Loan Channel, for which 93% and 92% of Borrower Loans were originated through the Whole Loan Channel in the six months ended June 30, 2018 and June 30, 2017, respectively.  

Prosper receives all of its transaction fee revenue from WebBank. Prosper earns a transaction fee from WebBank for our 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. No individual borrower or investor accounted for 10% or more of consolidated net revenue for any of the periods presented.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Basis of Presentation

Basis of Presentation

Prosper Marketplace, Inc. (“PMI”) 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 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, 2017. The balance sheet at December 31, 2017 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.

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 and its wholly-owned subsidiaries. All intercompany balances have been eliminated in consolidation.

Fair Value Measurements

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Available for Sale Investments at Fair Value, Borrower Loans, Loans Held for Sale, Accounts Receivable, Accounts Payable and Accrued Liabilities, Payable to Investors, Convertible Preferred Stock Warrant Liability 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.

Restricted Cash

Restricted Cash

Restricted cash consists primarily of cash deposits 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 or Prosper has on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

Borrower Loans, Loans Held for Sale and Notes

Borrower Loans, Loans Held for Sale and Notes

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. We choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. Management believes that the fair value option is more meaningful for the readers of the financial statements and it allows both the Borrower Loans and Notes to be valued using the same methodology. The fair value election, with respect to an item, may not be revoked once an election is made. Prosper estimates the fair value of such Borrower Loans and Notes using discounted cash flow methodologies that take into account expected prepayments, losses, recoveries and default rates. The Borrower Loans are not derecognized when a corresponding Note is issued as Prosper maintains the ability to sell the Borrower Loans without the approval of the holders of the corresponding Notes.

Debt

Debt

For debt instruments carried at amortized cost, the Company defers specific incremental costs directly related to issuing debt or entering into revolving debt arrangements. Debt issuance costs associated with revolving debt arrangements are presented as an asset and subsequently amortized over the term of the revolving debt arrangement.

Revenues

Revenues

Revenue primarily results from fees and net interest income earned. Fees include transaction fees for our services performed on behalf of WebBank to originate a loan. We also have other smaller sources of revenue reported as other revenue, including referral fees and securitization fees. For more information about Prosper's revenues, see Note 2 of the Notes to the Consolidated Financial Statements in Part IV, Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2017.

Transaction Fees

Prosper has a customer contract with WebBank to facilitate the origination of all Borrower Loans through Prosper’s marketplace. In exchange for these services, Prosper earns a transaction fee from WebBank that is recognized when performance is complete, which is upon the successful origination of a Borrower Loan and which is similar to the recognition prior to the adoption of ASC 606. The transaction fee Prosper earns is determined by the term and credit grade of the Borrower Loan that is facilitated on Prosper’s marketplace, and ranges from 1.00% to 5.00% of the original principal amount of such Borrower Loan that WebBank originates. Prosper records the transaction fee net of any fees paid to WebBank because Prosper does not receive an identifiable benefit from WebBank other than the Borrower Loan that has been recognized at fair value.

Other Revenues

Other Revenues consist primarily of securitization fees and credit referral fees. Credit referral fees are where partner companies pay us an agreed upon amount for successful referrals of customers from our marketplace. The transaction price is a fixed amount per referral and is recognized by the Company upon a successful referral which is similar to the recognition prior to the adoption of ASC 606. Securitization fees represent fees Prosper earns to facilitate securitizations for purchasers of Borrower Loans and is recognized as other revenue when the securitization is completed which is similar to the recognition prior to the adoption of ASC 606. In some instances Prosper may also provide a guarantee, which requires us to first determine the fair value of the guarantee and allocate the remaining transaction price to the securitization performance obligation.

As of June 30, 2018 Prosper had no material contract assets, contract liabilities or deferred contract costs. As of June 30, 2018, Prosper had no unsatisfied performance obligations related to transaction fee or other revenues.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in U.S. GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. Prosper adopted the requirements of the ASU as of January 1, 2018, utilizing the modified retrospective approach. Transaction fees, securitization fees and credit referral fees are included in the scope of the new guidance, while servicing fees, net interest income and gain or loss on the sale of loans remain within the scope of ASC topic 860, Transfers and Servicing or ASC topic 310. The impact of adopting the ASU did not result in a material cumulative effect adjustment upon the date of adoption. Additionally, the impact of adoption on the Consolidated Financial Statements for the current period is insignificant.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. Prosper adopted the standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

In October 2016, the FASB issued ASU No. 2016-16, "Income Taxes (Topic 740): Intra-Entity Transfers Other than Inventory (ASU 2016-16)," which requires companies to recognize the income-tax consequences of an intra-entity transfer

of an asset other than inventory. Prosper adopted the standard effective January 1, 2018, the adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (ASU2016-18)," which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prosper adopted the standard effective January 1, 2018. Prosper had $134.6 million and $179.3 million of restricted cash on its consolidated balance sheet as of June 30, 2018 and June 30, 2017, respectively, whose cash flow statement classification changed to align with the new guidance.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Prosper adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper’s consolidated financial statements.

Accounting Standards Issued, To Be Adopted By The Company In Future Periods

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures.  This guidance will be effective for us in the first quarter of our fiscal year 2019, and early adoption is permitted. Prosper is currently evaluating the impact that this guidance will have on its consolidated financial statements. We do expect that this guidance will have a material impact on Prosper's consolidated financial statements. As of June 30, 2018 Prosper had a total of $35.9 million in non-cancelable operating lease commitments.

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The standard eliminates Step 2 from the goodwill impairment test, which requires a hypothetical purchase price allocation. Prosper will continue to have the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The standard is effective for interim and annual periods beginning after December 15, 2019 and early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The standard should be applied on a prospective basis. Prosper is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

In June 2018, the FASB issued ASU No. 2018-07, "Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting."The ASU is intended to reduce the cost and complexity and to improve financial reporting for nonemployee share-based payments. The ASU expands the scope of Topic 718, Compensation-Stock Compensation,which currently only includes share-based payments to employees, to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year and early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. Prosper is currently evaluating the impact of this accounting standard update on its consolidated financial statements.

Prosper Funding LLC

Entity Information [Line Items]

Basis of Presentation

Basis of Presentation

Prosper Funding LLC (“PFL”) was formed in the state of Delaware on February 17, 2012 as a limited liability company with the sole equity member being Prosper Marketplace, Inc. (“PMI”). Except as the context otherwise requires, as used in these Notes to the condensed consolidated financial statements of Prosper Funding LLC, “Prosper Funding,” “we,” “us,” and “our” refers to PFL and its wholly owned subsidiaries, Prosper Asset Holdings LLC (“PAH”), a Delaware limited liability company, and 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, 2017. The balance sheet at December 31, 2017 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.

Prosper Funding did not have any items of other comprehensive income (loss) during any of the periods presented in the condensed consolidated financial statements as of and for the six months ended June 30, 2018 and June 30, 2017.

The preparation of Prosper Funding'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.

Fair Value Measurements

Fair Value Measurements

Financial instruments consist principally of Cash and Cash Equivalents, Restricted Cash, Short Term Investments, 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.

Restricted Cash

Restricted Cash

Restricted cash consists primarily of cash deposits 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 or Prosper has on our marketplace that has not yet been invested in Borrower Loans or disbursed to the investor.

Borrower Loans, Loans Held for Sale and Notes

Borrower Loans, Loans Held for Sale and Notes

Through the Note Channel, Prosper Funding 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 Prosper Funding’s consolidated balance sheets as assets and liabilities, respectively. We choose to measure certain financial instruments and certain other items at fair value on an instrument-by-instrument basis with unrealized gains and losses on items for which the fair value option has been elected reported in earnings. Management believes that the fair value option is more meaningful for the readers of the financial statements and it allows both the Borrower Loans and Notes to be valued using the same methodology. The fair value election, with respect to an item, may not be revoked once an election is made. Prosper Funding estimates the fair value of such Borrower Loans and Notes using discounted cash flow methodologies that take into account expected prepayments, losses, recoveries and default rates. The Borrower Loans are not derecognized when a corresponding Note is issued as Prosper Funding maintains the ability to sell the Borrower Loans without the approval of the holders of the corresponding Notes. 

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Accounting Standards Adopted In The Current Period

In May 2014, as part of its ongoing efforts to assist in the convergence of US GAAP and International Financial Reporting Standards (“IFRS”), the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers.” The new guidance sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety and is intended to eliminate numerous industry-specific pieces of revenue recognition guidance that have historically existed in US GAAP. The underlying principle of the new standard is that a business or other organization will recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects what it expects in exchange for the goods or services. The standard also requires more detailed disclosures and provides additional guidance for transactions that were not addressed completely in the prior accounting guidance. Prosper Funding adopted the requirements of the ASU as of January 1, 2018, utilizing the modified retrospective approach. Administration fees are included in the scope of the new guidance, while servicing fees and gain or loss on the sale of loans remain within the scope of ASC topic 860, Transfers and Servicing. The impact of adopting the ASU is not significant to the Consolidated Financial Statements in the current period.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments.” The standard provides guidance for eight targeted changes with respect to how cash receipts and cash payments are classified in the statements of cash flows, with the objective of reducing diversity in practice. Prosper Funding adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper Funding’s consolidated financial statements. 

In November 2016, the FASB issued ASU 2016-18, "Statement of Cash Flows (Topic 230): Restricted Cash (ASU2016-18)," which requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. Prosper Funding adopted standard effective January 1, 2018. Prosper Funding has $120.2 million and $165.6 million of restricted cash on its consolidated balance sheet as of June 30, 2018 and 2017, respectively, whose cash flow statement classification changed to align with the new guidance.

In January 2016, the FASB issued ASU 2016-01, "Financial Instruments - Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities," which addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. Prosper Funding adopted standard effective January 1, 2018. The adoption of this standard did not have a material impact on Prosper Funding’s consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown in the condensed consolidated statements of cash flows:

	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
Cash and Cash Equivalents	$	58,652	45,795		$	34,667	$	22,337
Restricted Cash	134,552		152,668		179,331		163,907
Total Cash, Cash Equivalents and Restricted Cash shown in the consolidated statements of cash flows	$	193,204	$	198,463	$	213,998	$	186,244

Prosper Funding LLC

Entity Information [Line Items]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amount shown in the consolidated statements of cash flows:

	June 30, 2018		December 31, 2017		June 30, 2017		December 31, 2016
Cash and Cash Equivalents	$	10,892	8,223		$	12,384	$	6,929
Restricted Cash	120,152		140,092		165,628		147,983
Total Cash, Cash Equivalents and Restricted Cash show in the consolidated statements of cash flows	$	131,044	$	148,315	$	178,012	$	154,912

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Property and Equipment, Net (Tables)

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Property and Equipment, Net

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

	June 30, 2018			December 31, 2017
Property and equipment:
Computer equipment	$	14,785		$	14,499
Internal-use software and website development costs	21,372			19,910
Office equipment and furniture	3,010			3,010
Leasehold improvements	7,078			7,078
Assets not yet placed in service	1,893			1,216
Property and equipment	48,138			45,713
Less accumulated depreciation and amortization	(32,057		)	(27,577		)
Total property and equipment, net	$	16,081		$	18,136

Prosper Funding LLC

Entity Information [Line Items]

Property and Equipment, Net

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

	June 30, 2018			December 31, 2017
Property and equipment:
Internal-use software and web site development costs	$	21,372		$	19,911
Less accumulated depreciation and amortization	(14,400		)	(11,958		)
Total property and equipment, net	$	6,972		$	7,953

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Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value (Tables)

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Aggregate Principal Balances Outstanding and Fair Values of Borrower Loans, Notes and Loans Held for Sale

The aggregate principal balances outstanding and fair values of Borrower Loans, Loans Held for Sale, and Notes as of June 30, 2018 and December 31, 2017, are presented in the following table (in thousands):

	Borrower Loans						Notes						Loans Held for Sale
	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
Aggregate principal balance outstanding	$	280,852		$	296,668		$	(284,011	)	$	(300,922	)	$	117,028		$	59
Fair value adjustments	(3,491		)	(3,663		)	6,586			6,974			(211		)	(10		)
Fair value	$	277,361		$	293,005		$	(277,425	)	$	(293,948	)	$	116,817		$	49

Prosper Funding LLC

Entity Information [Line Items]

Aggregate Principal Balances Outstanding and Fair Values of Borrower Loans, Notes and Loans Held for Sale

The aggregate principal balances outstanding and fair values of Borrower Loans, Loans Held for Sale, and Notes as of June 30, 2018 and December 31, 2017, are presented in the following table (in thousands):

	Borrower Loans						Notes						Loans Held for Sale
	June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017			June 30, 2018			December 31, 2017
Aggregate principal balance outstanding	$	280,852		$	296,668		$	(284,011	)	$	(300,922	)	$	44		$	59
Fair value adjustments	(3,491		)	(3,663		)	6,586			6,974			(13		)	(10		)
Fair value	$	277,361		$	293,005		$	(277,425	)	$	(293,948	)	$	31		$	49

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Available for Sale Investments, at Fair Value (Tables)

6 Months Ended

Jun. 30, 2018

Investments, Debt and Equity Securities [Abstract]

Schedule of Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Securities Available for Sale

The amortized cost, gross unrealized gains and losses, and fair value of available for sale investments as of June 30, 2018 and December 31, 2017, are as follows (in thousands): 

June 30, 2018	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturity securities:
Treasury Bills	20,668		—		(23		)	20,645
US Treasury securities	14,232		—		(36		)	14,196
Total Available for Sale Investments	$	34,900	$	—	$	(59	)	$	34,841

December 31, 2017	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Fixed maturity securities:
Treasury Bills	$	34,014	$	—	$	(36	)	$	33,978
US Treasury securities	19,207		—		(38		)	19,169
Total Available for Sale Investments	$	53,221	$	—	$	(74	)	$	53,147

Summary of Securities Available for Sale of Continuous Unrealized Loss

A summary of available for sale investments with unrealized losses as of June 30, 2018, and December 31, 2017, aggregated by category and period of continuous unrealized loss, is as follows (in thousands):

	Less than 12 months					12 months or longer				Total
June 30, 2018	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
Treasury Bills	$	20,645	$	(23	)	$	—	$	—	$	20,645	$	(23	)
US Treasury securities	$	14,196	$	(36	)	$	—	$	—	$	14,196	$	(36	)
Total Investments with Unrealized Losses	$	34,841	$	(59	)	$	—	$	—	$	34,841	$	(59	)

	Less than 12 months					12 months or longer				Total
December 31, 2017	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Fixed maturity securities:
Treasury Bills	$	33,978	$	(36	)	$	—	$	—	$	33,978	$	(36	)
US Treasury securities	$	19,169	$	(38	)	$	—	$	—	$	19,169	$	(38	)
Total Investments with Unrealized Losses	$	53,147	$	(74	)	$	—	$	—	$	53,147	$	(74	)

Schedule of Maturities of Securities Available for Sale

The maturities of available for sale investments at June 30, 2018 and December 31, 2017 are as follows (in thousands):

June 30, 2018	Within 1 year		After 1 year through 5 years		After 5 years to 10 years		After 10 years		Total
Treasury Bills	20,645		—		—		—		20,645
US Treasury securities	14,196		—		—		—		14,196
Total Fair Value	$	34,841	$	—	$	—	$	—	$	34,841
Total Amortized Cost	$	34,900	$	—	$	—	$	—	$	34,900

December 31, 2017	Within 1 year		After 1 year through 5 years		After 5 years to 10 years		After 10 years		Total
Treasury Bills	33,978		—		—		—		33,978
US Treasury securities	14,947		4,222		—		—		19,169
Total Fair Value	$	48,925	$	4,222	$	—	$	—	$	53,147
Total Amortized Cost	$	48,992	$	4,229	$	—	$	—	$	53,221

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Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value

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

June 30, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans					$	277,361	$	277,361
Loans Held for Sale					116,817		116,817
Available for Sale Investments, at Fair Value			34,841		—		34,841
Servicing Assets					15,644		15,644
Total Assets	—		34,841		409,822		444,663
Liabilities:
Notes					$	277,425	$	277,425
Servicing Liabilities					28		28
Convertible Preferred Stock Warrant Liability					143,676		143,676
Loan Trailing Fee Liability					3,078		3,078
Total Liabilities	$	—	$	—	$	424,207	$	424,207

December 31, 2017	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	293,005	$	293,005
Loans Held for Sale	—		—		49		49
Available for Sale Investments, at Fair Value	—		53,147		—		53,147
Servicing Assets	—		—		14,711		14,711
Total Assets	—		53,147		307,765		360,912
Liabilities:
Notes	$	—	$	—	$	293,948	$	293,948
Servicing Liabilities	—		—		59		59
Convertible Preferred Stock Warrant Liability	—		—		116,366		116,366
Loan Trailing Fee Liability	—		—		2,595		2,595
Total Liabilities	$	—	$	—	$	412,968	$	412,968

Quantitative Information About Significant Unobservable Inputs

Borrower Loans, Loans Held for Sale and Notes:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	4.4% - 13.9%	4.0% - 14.4%
Default rate	2.0% - 15.6%	2.0% - 15.4%

Significant Unobservable Inputs Fair Value

Servicing Rights

	Range
Unobservable Input	June 30, 2018		December 31, 2017
Discount rate	15% - 25%		15% - 25%
Default rate	1.6% - 16.5%		1.5% - 16.1%
Prepayment rate	15.2% - 32.9%		13.5% - 30.2%
Market servicing rate	0.625	%	0.625	%

Loan Trailing Fee Liability:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	15% - 25%	15% - 25%
Default rate	1.6% - 16.5%	1.5% - 16.1%
Prepayment rate	15.2% - 32.9%	13.5% - 30.2%

Assets and Liabilities Measured at Fair Value 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)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2018	$	293,005		$	(293,948	)	$	49		$	(894	)
Purchase of Borrower Loans/Issuance of Notes	91,075			(90,693		)	1,324,100			1,324,482
Principal repayments	(88,947		)	91,525			(14,265		)	(11,687		)
Borrower Loans sold to third parties	(2,016		)	—			(1,193,651		)	(1,195,667		)
Other changes	(338		)	633			796			1,091
Change in fair value	(15,418		)	15,058			(212		)	(572		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	116,817		$	116,753

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2017	$	315,627		$	(316,236	)	$	624		$	15
Purchase of Borrower Loans/Issuance of Notes	106,940			(106,506		)	1,245,826			1,246,260
Principal repayments	(97,492		)	100,274			(42		)	2,740
Borrower Loans sold to third parties	(1,990		)	—			(1,246,316		)	(1,248,306		)
Other changes	9			266			(3		)	272
Change in fair value	(10,822		)	10,792			6			(24		)
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2018	$	285,584		$	(285,095	)	$	82,803		$	83,292
Purchase of Borrower Loans/Issuance of Notes	44,799			(44,468		)	728,901			729,232
Principal repayments	(43,990		)	44,423			(10,416		)	(9,983		)
Borrower Loans sold to third parties	(950		)	—			(683,547		)	(684,497		)
Other changes	(202		)	86			255			139
Change in fair value	(7,880		)	7,629			(1,179		)	(1,430		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	116,817		$	116,753

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2017	$	317,536		$	(316,944	)	$	109		$	701
Purchase of Borrower Loans/Issuance of Notes	50,260			(49,692		)	721,829			722,397
Principal repayments	(48,048		)	48,695			(14		)	633
Borrower Loans sold to third parties	(869		)	—			(721,829		)	(722,698		)
Other changes	10			(156		)	—			(146		)
Change in fair value	(6,617		)	6,687			—			70
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Schedule of Servicing Assets and Liabilities Measured at Fair Value

The following table presents additional information about level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):

Balance at January 1, 2018	2,595
Issuances	1,529
Cash payment of Loan Trailing Fee	(1,206	)
Change in fair value	160
Balance as of June 30, 2018	3,078

The following tables present additional information about level 3 servicing assets and liabilities measured at fair value on a recurring basis (in thousands):

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2018	14,711		59
Additions	7,502		—
Less: Changes in fair value	(6,569	)	(31	)
Fair Value at June 30, 2018	15,644		28

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2017	12,786		198
Additions	6,532		—
Less: Changes in fair value	(5,829	)	(87	)
Fair Value at June 30, 2017	13,489		111

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2018	14,754		41
Additions	4,163		—
Less: Changes in fair value	(3,273	)	(13	)
Fair Value at June 30, 2018	15,644		28

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2017	12,436		147
Additions	3,768		—
Less: Changes in fair value	(2,715	)	(36	)
Fair Value at June 30, 2017	13,489		111

The following table presents additional information about level 3 Preferred Stock Warrant Liability measured at fair value on a recurring basis (in thousands):

Balance as of January 1, 2018	$	116,366
Add Issuances of Preferred Stock Warrant	35,912
Change in fair value of the preferred stock warrant liability	(8,602		)
Balance at June 30, 2018	$	143,676

Balance as of January 1, 2017	$	—
Add Issuances of Preferred Stock Warrant	47,297
Change in fair value of the preferred stock warrant liability	22,817
Balance at June 30, 2017	$	70,114

Balance as of April 1, 2018	$	127,041
Add Issuances of Preferred Stock Warrant	20,633
Change in fair value of the preferred stock warrant liability	(3,998		)
Balance at June 30, 2018	$	143,676

Balance as of April 1, 2017	$	30,811
Add Issuances of Preferred Stock Warrant	16,887
Change in fair value of the preferred stock warrant liability	22,416
Balance at June 30, 2017	$	70,114

Fair Value Assumptions for Loans Held for Sale, Borrower Loans and Notes

Key economic assumptions and the sensitivity of the current fair value to immediate changes in those assumptions at June 30, 2018 for Borrower Loans, Loans Held for Sale and Notes funded through the Note Channel are presented in the following table (in thousands, except percentages):

	Borrower Loans and Loans Held for Sale				Notes
Fair Value as of June 30, 2018	$394,178				$277,425
Discount rate assumption:	7.52		%	*	7.52		%	*
Resulting fair value from:
100 basis point increase	$	390,255			$	274,660
200 basis point increase	386,431				271,964
Resulting fair value from:
100 basis point decrease	$	398,202			$	280,262
200 basis point decrease	402,333				283,173
Default rate assumption:	13.11		%	*	13.11		%	*
Resulting fair value from:
100 basis point increase	$	389,288			$	273,967
200 basis point increase	384,542				270,612
Resulting fair value from:
100 basis point decrease	$	399,107			$	280,911
200 basis point decrease	404,079				284,428

* Represents weighted average assumptions considering all credit grades.

Schedule of Prosper's and Prosper Funding's Estimated Fair Value of Servicing Assets and Liabilities

The following table presents the estimated impact on Prosper’s estimated fair value of servicing assets and liabilities, calculated using different market servicing rates and different default rates as of June 30, 2018 (in thousands, except percentages).

	Servicing Assets			Servicing Liabilities
Fair Value as of June 30, 2018	$15,644			$28
Market servicing rate assumptions	0.625		%	0.625		%
Resulting fair value from:
Market servicing rate increase to 0.65%	$	14,691		$	31
Market servicing rate decrease to 0.60%	$	16,634		$	25
Weighted average prepayment assumptions	19.98		%	19.98		%
Resulting fair value from:
Applying a 1.1 multiplier to prepayment rate	$	15,471		$	28
Applying a 0.9 multiplier to prepayment rate	$	15,857		$	29
Weighted average default assumptions	12.66		%	12.66		%
Resulting fair value from:
Applying a 1.1 multiplier to default rate	$	15,473		$	28
Applying a 0.9 multiplier to default rate	$	15,857		$	28

Financial Instruments, Assets And Liabilities Not Recorded At Fair Value

The following tables present the fair value hierarchy for financial instruments, assets, and liabilities not recorded at fair value (in thousands):

June 30, 2018	Carrying Amount		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Balance at Fair Value
Assets:
Cash and Cash Equivalents	$	58,652	$	58,652	$	—	$	—	$	58,652
Restricted Cash	134,552		—		134,552		—		134,552
Accounts Receivable	3,539		—		3,539		—		3,539
Total Assets	196,743		58,652		138,091		—		196,743
Liabilities:
Accounts Payable and Accrued Liabilities	$	14,652	$	—	$	14,652	$	—	$	14,652
Payable to Investors	112,580		—		112,580		—		112,580
Warehouse Line	103,553		—		103,553		—		103,553
Total Liabilities	$	230,785	$	—	$	230,785	$	—	$	230,785

Prosper Funding LLC

Entity Information [Line Items]

Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value

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

June 30, 2018	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	277,361	$	277,361
Servicing Assets	—		—		16,162		16,162
Loans Held for Sale	—		—		31		31
Total Assets	—		—		293,554		293,554
Liabilities:
Notes	$	—	$	—	$	277,425	$	277,425
Servicing Liabilities	—		—		28		28
Loan Trailing Fee Liability	—		—		3,078		3,078
Total Liabilities	$	—	$	—	$	280,531	$	280,531

December 31, 2017	Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total
Assets:
Borrower Loans	$	—	$	—	$	293,005	$	293,005
Servicing Assets	—		—		14,598		14,598
Loans Held for Sale	—		—		49		49
Total Assets	—		—		307,652		307,652
Liabilities:
Notes	$	—	$	—	$	293,948	$	293,948
Servicing Liabilities	—		—		59		59
Loan Trailing Fee Liability	—		—		2,595		2,595
Total Liabilities	$	—	$	—	$	296,602	$	296,602

Quantitative Information About Significant Unobservable Inputs

The following tables present quantitative information about the significant unobservable inputs used for Prosper Funding’s level 3 fair value measurements at June 30, 2018 and December 31, 2017: 

Borrower Loans, Loans Held for Sale and Notes:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	4.4% - 13.9%	4.0% - 14.4%
Default rate	2.0% - 15.6%	2.0% - 15.4%

Significant Unobservable Inputs Fair Value

Servicing Assets and Liabilities:

	Range
Unobservable Input	June 30, 2018		December 31, 2017
Discount rate	15% - 25%		15% - 25%
Default rate	1.6% - 16.5%		1.5% - 16.1%
Prepayment rate	15.2% - 32.9%		13.5% - 30.2%
Market servicing rate	0.625	%	0.625	%

Loan Trailing Fee Liability:

	Range
Unobservable Input	June 30, 2018	December 31, 2017
Discount rate	15% - 25%	15% - 25%
Default rate	1.6% - 16.5%	1.5% - 16.1%
Prepayment rate	15.2% - 32.9%	13.5% - 30.2%

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The changes in the Borrower Loans, Loans Held for Sale and Notes, which are level 3 assets and liabilities measured at fair value on a recurring basis are as follows (in thousands):

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2018	$	293,005		$	(293,948	)	$	49		$	(894	)
Originations	91,075			(90,693		)	1,324,100			1,324,482
Principal repayments	(88,947		)	91,525			(14		)	2,564
Borrower Loans sold to third parties	(2,016		)	—			(1,324,100		)	(1,326,116		)
Other changes	(338		)	633			—			295
Change in fair value	(15,418		)	15,058			(4		)	(364		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	31		$	(33	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at January 1, 2017	$	315,627		$	(316,236	)	$	624		$	15
Originations	106,940			(106,506		)	1,245,826			1,246,260
Principal repayments	(97,492		)	100,274			(42		)	2,740
Borrower Loans sold to third parties	(1,990		)	—			(1,246,316		)	(1,248,306		)
Other changes	9			266			(3		)	272
Change in fair value	(10,822		)	10,792			6			(24		)
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2018	$	285,584		$	(285,095	)	$	41		$	530
Originations	44,799			(44,468		)	728,901			729,232
Principal repayments	(43,990		)	44,423			(6		)	427
Borrower Loans sold to third parties	(950		)	—			(728,901		)	(729,851		)
Other changes	(202		)	86			—			(116		)
Change in fair value	(7,880		)	7,629			(4		)	(255		)
Balance at June 30, 2018	$	277,361		$	(277,425	)	$	31		$	(33	)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
	Borrower  Loans			Notes			Loans Held for Sale			Total
Balance at April 1, 2017	$	317,536		$	(316,944	)	$	109		$	701
Originations	50,260			(49,692		)	721,829			722,397
Principal repayments	(48,048		)	48,695			(14		)	633
Borrower Loans sold to third parties	(869		)	—			(721,829		)	(722,698		)
Other changes	10			(156		)	—			(146		)
Change in fair value	(6,617		)	6,687			—			70
Balance at June 30, 2017	$	312,272		$	(311,410	)	$	95		$	957

Schedule of Servicing Assets and Liabilities Measured at Fair Value

The following table presents additional information about level 3 servicing assets and liabilities recorded at fair value for the three months ended June 30, 2018 (in thousands).

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2018	14,598		59
Additions	8,147		—
Less: Changes in fair value	(6,583	)	(31	)
Fair Value at June 30, 2018	16,162		28

	Servicing Assets		Servicing Liabilities
Fair Value at January 1, 2017	12,461		198
Additions	6,532		—
Less: Changes in fair value	(5,696	)	(87	)
Fair Value at June 30, 2017	13,297		111

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2018	15,023		41
Additions	4,452		—
Less: Changes in fair value	(3,313	)	(13	)
Fair Value at June 30, 2018	16,162		28

	Servicing Assets		Servicing Liabilities
Fair Value at April 1, 2017	12,190		147
Additions	3,768		—
Less: Changes in fair value	(2,661	)	(36	)
Fair Value at June 30, 2017	13,297		111

The following table presents additional information about level 3 Loan Trailing Fee Liability measured at fair value on a recurring basis (in thousands):

Balance at January 1, 2018	2,595
Issuances	1,529
Cash payment of Loan Trailing Fee	(1,206	)
Change in fair value	160
Balance as of June 30, 2018	3,078

Fair Value Assumptions for Loans Held for Sale, Borrower Loans and Notes

Key economic assumptions and the sensitivity of the current fair value to immediate changes in those assumptions at June 30, 2018 for Borrower Loans, Loans Held for Sale and Notes funded are presented in the following table (in thousands, except percentages):

	Borrower Loans and Loans Held for Sale				Notes
Fair Value as of June 30, 2018	$	277,392			$	277,425
Discount rate assumption:	7.52		%	*	7.52		%	*
Resulting fair value from:
100 basis point increase	$	274,662			$	274,660
200 basis point increase	271,970				271,964
Resulting fair value from:
100 basis point decrease	$	280,255			$	280,262
200 basis point decrease	283,162				283,173
Default rate assumption:	13.11		%	*	13.11		%	*
Resulting fair value from:
100 basis point increase	$	273,981			$	273,967
200 basis point increase	270,641				270,612
Resulting fair value from:
100 basis point decrease	$	280,892			$	280,911
200 basis point decrease	284,391				284,428

 * Represents weighted average assumptions considering all credit grades.

Schedule of Prosper's and Prosper Funding's Estimated Fair Value of Servicing Assets and Liabilities

The following table presents the estimated impact on Prosper Funding’s estimated fair value of servicing assets and liabilities, calculated using different market servicing rates and different default rates as of June 30, 2018 (in thousands, except percentages).

	Servicing Assets			Servicing Liabilities
Fair Value as of June 30, 2018	$	16,162		$	28
Market servicing rate assumptions	0.625		%	0.625		%
Resulting fair value from:
Market servicing rate increase to 0.65%	15,160			31
Market servicing rate decrease to 0.60%	17,165			25
Weighted average prepayment assumptions	19.98		%	19.98		%
Resulting fair value from:
Applying a 1.1 multiplier to prepayment rate	15,964			28
Applying a 0.9 multiplier to prepayment rate	16,363			29
Weighted average default assumptions	12.66		%	12.66		%
Resulting fair value from:
Applying a 1.1 multiplier to default rate	15,967			28
Applying a 0.9 multiplier to default rate	16,362			28

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Other Intangible Assets for the Period Presented

The following table presents the detail of other intangible assets for the period presented (dollars in thousands):

	June 30, 2018
	Gross Carrying Value		Accumulated Amortization			Net Carrying Value		Remaining Useful Life (In Years)
Developed technology	$	3,060	$	(3,060	)	$	—	—
User base and customer relationships	5,050		(3,873		)	$	1,177	6.8
Brand name	60		(60		)	—		—
Total intangible assets subject to amortization	$	8,170	$	(6,993	)	$	1,177

Summary of Estimated Amortization of Purchased Intangible Assets

Estimated amortization of purchased intangible assets for future periods is as follows (in thousands):

Year Ending December 31,
Remainder of 2018	$	178
2019	279
2020	220
2021	172
2022	136
Thereafter	$	192
Total	$	1,177

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Other Liabilities (Tables)

6 Months Ended

Jun. 30, 2018

Other Liabilities [Abstract]

Schedule of Other Liabilities

Other Liabilities includes the following:

	June 30, 2018		December 31, 2017
Loan trailing fee	3,078		2,595
Deferred revenue	436		452
Servicing liabilities	28		59
Deferred income tax liability	244		225
Deferred rent	3,651		3,904
Restructuring liability	3,457		3,355
Other	2,824		2,079
Total Other Liabilities	$	13,718	$	12,669

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Net Loss Per Share (Tables)

6 Months Ended

Jun. 30, 2018

Earnings Per Share [Abstract]

Basic and Diluted Net Loss Per Share

Basic and diluted net loss per share was calculated as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018			2017
Numerator:
Net loss available to common stockholders for basic    and diluted EPS	$	(12,599	)	$	(41,405	)	$	(24,000	)	$	(65,426	)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share	70,362,716			69,691,841			70,333,145			69,436,365
Basic and diluted net loss per share	$	(0.18	)	$	(0.59	)	$	(0.34	)	$	(0.94	)

Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share

The following common stock equivalents were excluded from the computation of diluted net 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,
	2018	2017	2018	2017
	(shares)	(shares)	(shares)	(shares)
Excluded securities:
Convertible preferred stock issued and outstanding	214,637,925	177,388,428	214,637,925	177,388,428
Stock options issued and outstanding	75,206,928	60,938,265	66,403,696	53,040,604
Unvested stock options exercised	2,190	20,940	2,190	20,940
Restricted stock units	—	—	—	—
Warrants issued and outstanding	1,080,349	1,199,403	1,082,917	1,199,403
Series E-1 convertible preferred stock warrants	35,544,141	35,544,141	35,544,141	35,544,141
Series F convertible preferred stock warrants	177,720,704	177,720,704	177,720,704	177,720,704
Total common stock equivalents excluded from diluted    net loss per common share computation	504,192,237	452,811,881	495,391,573	444,914,220

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Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit (Tables)

6 Months Ended

Jun. 30, 2018

Stockholders' Equity Note [Abstract]

Summary of Shares Authorized, Issued, Outstanding, Par Value and Liquidation Preference of Convertible Preferred Stock

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, 2018 are disclosed in the table below (amounts in thousands except share and per share amounts): 

Convertible Preferred Stock	Par Value		Authorized Shares	Outstanding and Issued Shares	Liquidation Preference (Outstanding Shares)
Series A	$	0.01	68,558,220	68,558,220	$	19,774
Series A-1	0.01		24,760,915	24,760,915	49,522
Series B	0.01		35,775,880	35,775,880	21,581
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	—	—
Series E-2	0.01		16,858,078	—	—
Series F	0.01		177,720,707	3	—
Series G	0.01		37,249,497	37,249,497	50,000
			444,760,848	214,637,925	$	375,952

Schedule of Assumptions Used

The Company determined the fair value of the outstanding convertible Series F preferred stock warrants utilizing the following assumptions as of the following dates:

	June 30, 2018	December 31, 2017
Volatility	40%	40%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8.66	9.16
Dividend yield	0%	0%

The Company determined the fair value of the outstanding convertible Series E-1 preferred stock warrants utilizing the following assumptions as of the following dates:

	June 30, 2018	December 31, 2017
Volatility	40%	40%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8.55	9.04
Dividend yield	0%	0%

Schedule of Stockholders' Equity Note, Warrants or Rights

The combined activity of the Convertible Preferred Stock Warrant Liability for the six months ended June 30, 2018 is as follows (in thousands):

Balance at January 1, 2018	$	116,366
Warrants Vested	35,912
Change in Fair Value	(8,602		)
Balance as of June 30, 2018	$	143,676

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Share Based Incentive Plan and Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summarized Option Activity under Option Plan

Stock option activity under the 2005 Plan and 2015 Plan is summarized for the six months ended June 30, 2018 below: 

	Options Issued and Outstanding		Weighted- Average Exercise Price
Balance as of January 1, 2018	58,628,039		$	0.25
Options issued	18,703,551		0.54
Options exercised – vested	(82,792	)	0.22
Options forfeited	(3,879,249	)	0.37
Balance as of June 30, 2018	73,369,549		$	0.32
Options vested and expected to vest as of June 30, 2018	60,048,513		0.32
Options vested and exercisable at June 30, 2018	34,914,602		0.22

Additional Information Regarding Common Stock Options Outstanding

Additional information regarding common stock options outstanding as of June 30, 2018 is as follows: 

		Options Outstanding				Options Vested and Exercisable
	Range of Exercise Prices	Number Outstanding	Weighted – Avg. Remaining Life	Weighted –Avg. Exercise Price		Number Vested	Weighted – Avg. Exercise Price
$	0.02 - 0.20	4,768,290	5.55	$	0.11	4,768,290	$	0.11
	0.21 - 0.50	45,281,131	8.25	0.23		28,602,923	0.22
	0.51 - 1.13	23,320,128	9.60	0.54		1,543,389	0.54
$	0.02 - 1.13	73,369,549	8.51	$	0.32	34,914,602	$	0.22

Fair Value of Stock Option Awards

The fair value of PMI’s stock option awards granted during the three and six months ended June 30, 2018 and June 30, 2017 was estimated at the date of grant using the Black-Scholes model with the following average assumptions:

	Three Months Ended June 30,			Six Months Ended June 30,
	2018		2017	2018		2017
Volatility of common stock	44.43	%	N/A	44.12	%	50.28	%
Risk-free interest rate	2.85	%	N/A	2.75	%	2.12	%
Expected life (in years)	6.0 years		N/A	6.0 years		5.7 years
Dividend yield	0	%	N/A	0	%	0	%

Summarized Activities for RSU's

The following table summarizes the activities for PMI’s RSUs during the six months ended June 30, 2018:

	Number of Shares		Weighted-Average Grant Date Fair Value
Unvested - January 1, 2018	1,399,180		$	2.16
Granted	3,569,586		0.54
Vested	—		—
Forfeited	(100,500	)	2.17
Unvested - June 30, 2018	4,868,266		$	0.96

Stock Based Compensation Included in Consolidated Statements of Operations

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 during the three and six months ended June 30, 2018 and June 30, 2017 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30, 2018
	2018		2017		2018		2017
Origination and servicing	$	241	$	328	$	456	$	545
Sales and marketing	108		141		216		311
General and administrative	1,904		2,843		3,912		5,956
Total stock based compensation	$	2,253	$	3,312	$	4,584	$	6,812

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Restructuring (Tables)

6 Months Ended

Jun. 30, 2018

Restructuring and Related Activities [Abstract]

Summary of Activities Related to Prosper's Restructuring Plan

The following table summarizes the activities related to Prosper's restructuring plan (in thousands):

	Facilities Related			Total
Balance January 1, 2018	$	3,244		$	3,244
Adjustments to expense	591			591
Sublease cash receipts	316			316
Less: Cash paid	(775		)	(775		)
Balance June 30, 2018	$	3,376		$	3,376

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Consortium Purchase Agreement (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Consortium Purchase Agreement

The following represents the loans purchased and warrants vested under the Consortium Purchase Agreement:

	Loans Acquired (in thousands)		Warrants Vested
Total as of December 31, 2017	$	1,826,527	75,186,002
Loans Purchased by the Consortium during the six months ended June 30, 2018	831,097		36,830,278
Total as of June 30, 2018	$	2,657,624	112,016,280

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Lease Payments

The table below presents future minimum rental payments, net of minimum sublease rentals of $6.5 million, for the remaining terms of the operating leases (in thousands):

Remainder of 2018	2,939
2019	6,026
2020	6,193
2021	6,170
2022	6,076
Thereafter	8,480
Total	$	35,884

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Related Parties (Tables)

6 Months Ended

Jun. 30, 2018

Entity Information [Line Items]

Aggregate Amount of Notes Purchased and the Income Earned

The aggregate amount of the Notes and Borrower Loans 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, 2018 and June 30, 2017, as well as the Notes and Borrower Loans outstanding as of June 30, 2018 and December 31, 2017 are summarized below (in thousands):

	Aggregate Amount of Notes and Borrower Loans Purchased Six Months Ended June 30,				Interest Earned on Notes and Borrower Loans Six Months Ended June 30,
Related Party	2018		2017		2018		2017
Executive officers and management	$	9	$	10	$	1	$	81
Directors (excluding executive officers and management)	208		174		22		20
Total	$	217	$	184	$	23	$	101

	Aggregate Amount of Notes and Borrower Loans Purchased Three Months Ended March 31,				Interest Earned on Notes and Borrower Loans Three Months Ended March 31,
Related Party	2018		2017		2018		2017
Executive officers and management	$	3	$	5	$	—	$	35
Directors (excluding executive officers and management)	107		85		11		10
Total	$	110	$	90	$	11	$	45

	Notes balance as of
Related Party	June 30, 2018		December 31, 2017
Executive officers and management	$	17	$	38
Directors (excluding executive officers and management)	560		553
	$	577	$	591

Prosper Funding LLC

Entity Information [Line Items]

Aggregate Amount of Notes Purchased and the Income Earned

The aggregate amount of the Notes and Borrower Loans purchased and the income earned by parties deemed to be related parties of Prosper Funding as of June 30, 2018 and December 31, 2017 are summarized below (in thousands):

	Aggregate Amount of Notes and Borrower Loans Purchased				Interest Earned on Notes and Borrower Loans
	Six Months Ended June 30,				Six Months Ended June 30,
Related Party	2018		2017		2018		2017
Executive officers and management	$	9	$	10	$	1	$	81
Directors (excluding executive officers and management)	—		—		—		—
Total	$	9	$	10	$	1	$	81

	Aggregate Amount of Notes and Borrower Loans Purchased				Interest Earned on Notes and Borrower Loans
	Three Months Ended March 31,				Three Months Ended March 31,
Related Party	2018		2017		2018		2017
Executive officers and management	$	3	$	5	$	—	$	35
Directors (excluding executive officers and management)	—		—		—		—
Total	$	3	$	5	$	—	$	35

	Note and Borrower Loan Balance as of
Related Party	June 30, 2018		December 31, 2017
Executive officers and management	$	17	$	38
Directors  (excluding executive officers and management)	—		—
	$	17	$	38

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Summary of Significant Accounting Policies - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Entity Information [Line Items]
Cash and Cash Equivalents	$ 58,652	$ 45,795	$ 34,667	$ 22,337
Restricted Cash	134,552	152,668	179,331	163,907
Total Cash, Cash Equivalents and Restricted Cash shown in the consolidated statements of cash flows	193,204	198,463	213,998	186,244
Prosper Funding LLC
Entity Information [Line Items]
Cash and Cash Equivalents	10,892	8,223	12,384	6,929
Restricted Cash	120,152	140,092	165,628	147,983
Total Cash, Cash Equivalents and Restricted Cash shown in the consolidated statements of cash flows	$ 131,044	$ 148,315	$ 178,012	$ 154,912

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Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Entity Information [Line Items]
Restricted Cash	$ 134,552	$ 152,668	$ 179,331	$ 163,907
Non-cancelable operating lease commitments	$ 35,884
Minimum
Entity Information [Line Items]
Transaction fee percent	1.00%
Maximum
Entity Information [Line Items]
Transaction fee percent	5.00%
Prosper Funding LLC
Entity Information [Line Items]
Restricted Cash	$ 120,152	$ 140,092	$ 165,628	$ 147,983

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Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Property, Plant and Equipment [Line Items]
Property and equipment	$ 48,138		$ 48,138		$ 45,713
Less accumulated depreciation and amortization	(32,057)		(32,057)		(27,577)
Total property and equipment, net	16,081		16,081		18,136
Depreciation expense			5,334	$ 6,270
Property Plant And Equipment
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	2,400	$ 2,700	5,100	5,200
Computer equipment
Property, Plant and Equipment [Line Items]
Property and equipment	14,785		14,785		14,499
Internal-use software and website development costs
Property, Plant and Equipment [Line Items]
Property and equipment	21,372		21,372		19,910
Capitalized internal-use software and website development costs	1,400	1,000	2,500	2,100
Office equipment and furniture
Property, Plant and Equipment [Line Items]
Property and equipment	3,010		3,010		3,010
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment	7,078		7,078		7,078
Assets not yet placed in service
Property, Plant and Equipment [Line Items]
Property and equipment	1,893		1,893		1,216
Prosper Funding LLC
Property, Plant and Equipment [Line Items]
Less accumulated depreciation and amortization	(14,400)		(14,400)		(11,958)
Total property and equipment, net	6,972		6,972		7,953
Depreciation expense	1,400	$ 1,400	2,991	$ 2,637
Prosper Funding LLC | Internal-use software and website development costs
Property, Plant and Equipment [Line Items]
Property and equipment	$ 21,372		$ 21,372		$ 19,911

XML

Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value - Aggregate Principal Balances Outstanding and Fair Values of Borrower Loans, Notes and Loans Held for Sale (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Borrower Loans, at Fair Value	$ 277,361	$ 293,005
Notes, at Fair Value	(277,425)	(293,948)
Loans Held for Sale, at Fair Value	116,817	49
Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Borrower Loans, at Fair Value	277,361	293,005
Notes, at Fair Value	(277,425)	(293,948)
Loans Held for Sale, at Fair Value	31	49
Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Aggregate principal balance outstanding, Notes	(284,011)	(300,922)
Fair value adjustments, Notes	6,586	6,974
Notes, at Fair Value	(277,425)	(293,948)
Notes | Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Aggregate principal balance outstanding, Notes	(284,011)	(300,922)
Fair value adjustments, Notes	6,586	6,974
Notes, at Fair Value	(277,425)	(293,948)
Borrower Loans
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Aggregate principal balance outstanding, Borrower Loans	280,852	296,668
Fair value adjustments, Borrower Loans and Loans Held for Sale	(3,491)	(3,663)
Borrower Loans, at Fair Value	277,361	293,005
Borrower Loans | Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Aggregate principal balance outstanding, Borrower Loans	280,852	296,668
Fair value adjustments, Borrower Loans and Loans Held for Sale	(3,491)	(3,663)
Borrower Loans, at Fair Value	277,361	293,005
Loans Held for Sale
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Fair value adjustments, Borrower Loans and Loans Held for Sale	(211)	(10)
Aggregate principal balance outstanding, Loans Held for Sale	117,028	59
Loans Held for Sale, at Fair Value	116,817	49
Loans Held for Sale | Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Fair value adjustments, Borrower Loans and Loans Held for Sale	(13)	(10)
Aggregate principal balance outstanding, Loans Held for Sale	44	59
Loans Held for Sale, at Fair Value	$ 31	$ 49

XML

Borrower Loans, Loans Held for Sale, and Notes Held at Fair Value - Additional Information (Details) - USD ($) $ in Millions	6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loss related to credit risks on borrower loans	$ 0.6	$ 1.2
Minimum number of days for which loans originated were delinquent	90 days		90 days
Aggregate principal amount of loans originated	$ 2.6		$ 3.5
Fair value of loans originated	$ 1.1		1.3
Non accrual status past due date	120 days
Borrower loans receivable	$ 0.3		$ 0.3
Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Loss related to credit risks on borrower loans	$ 0.6
Minimum number of days for which loans originated were delinquent	90 days		90 days
Aggregate principal amount of loans originated	$ 2.6		$ 3.5
Fair value of loans originated	$ 1.1		1.3
Non accrual status past due date	120 days
Borrower loans receivable	$ 0.3		$ 0.3
Loans Held For Sale Borrower Loans And Underlying Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Fixed interest rate, minimum	5.31%		5.31%
Fixed interest rate, maximum	32.32%		32.32%
Loans Held For Sale Borrower Loans And Underlying Notes | Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Fixed interest rate, minimum	5.31%		5.31%
Fixed interest rate, maximum	32.32%		32.32%
Minimum | Loans Held For Sale Borrower Loans And Underlying Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Maturity, in months	36 months		36 months
Minimum | Loans Held For Sale Borrower Loans And Underlying Notes | Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Maturity, in months	36 months		36 months
Maximum | Loans Held For Sale Borrower Loans And Underlying Notes
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Maturity, in months	60 months		60 months
Maximum | Loans Held For Sale Borrower Loans And Underlying Notes | Prosper Funding LLC
Fair Value Balance Sheet Grouping Financial Statement Captions [Line Items]
Maturity, in months	60 months		60 months

XML

Loan Servicing Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Servicing Assets And Liabilities Fair Value [Line Items]
Gain (loss) on sale of borrower loans	$ 4,163	$ 3,803	$ 7,512	$ 3,485
Fair value of warrants vested on sale of borrower loans	20,633	16,887	35,912	20,194
Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Gain (loss) on sale of borrower loans	(16,181)	(13,084)	(27,754)	(16,709)
Borrower Loans
Servicing Assets And Liabilities Fair Value [Line Items]
Outstanding principle	3,900,000		$ 3,900,000		$ 3,700,000
Fixed interest rate, minimum			5.31%		5.31%
Fixed interest rate, maximum			35.52%		35.52%
Contractually specified servicing fees, late charges and ancillary fees			$ 21,600	18,200
Borrower Loans | Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Outstanding principle	3,900,000		$ 3,900,000		$ 3,700,000
Fixed interest rate, minimum			5.31%		5.31%
Fixed interest rate, maximum			35.52%		35.52%
Contractually specified servicing fees, late charges and ancillary fees	$ 11,200	9,200	$ 21,800	17,900
Minimum | Borrower Loans
Servicing Assets And Liabilities Fair Value [Line Items]
Maturity, in months			36 months		36 months
Minimum | Borrower Loans | Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Maturity, in months			36 months		36 months
Maximum | Borrower Loans
Servicing Assets And Liabilities Fair Value [Line Items]
Maturity, in months			60 months		60 months
Maximum | Borrower Loans | Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Maturity, in months			60 months		60 months
Borrower Loans
Servicing Assets And Liabilities Fair Value [Line Items]
Gain (loss) on sale of borrower loans		$ 3,800		$ 3,500

XML

Available for Sale Investments, at Fair Value - Schedule of Amortized Cost, Gross Unrealized Gains and Losses and Fair Value of Available for Sale Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Fair Value	$ 34,841	$ 53,147
Fixed Maturity Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	34,900	53,221
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(59)	(74)
Fair Value	34,841	53,147
Treasury Bills | Fixed Maturity Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	20,668	34,014
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(23)	(36)
Fair Value	20,645	33,978
US Treasury securities | Fixed Maturity Securities
Schedule Of Available For Sale Securities [Line Items]
Amortized Cost	14,232	19,207
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(36)	(38)
Fair Value	$ 14,196	$ 19,169

XML

Available for Sale Investments, at Fair Value - Summary of Available for Sale Investments of Continuous Unrealized Loss (Details) - Fixed Maturity Securities - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Fair value, less than 12 months	$ 34,841	$ 53,147
Unrealized losses, less than 12 months	(59)	(74)
Fair value, 12 months or longer	0	0
Unrealized losses, 12 months or longer	0	0
Fair Value	34,841	53,147
Unrealized Losses	(59)	(74)
Treasury Bills
Schedule Of Available For Sale Securities [Line Items]
Fair value, less than 12 months	20,645	33,978
Unrealized losses, less than 12 months	(23)	(36)
Fair value, 12 months or longer	0	0
Unrealized losses, 12 months or longer	0	0
Fair Value	20,645	33,978
Unrealized Losses	(23)	(36)
US Treasury securities
Schedule Of Available For Sale Securities [Line Items]
Fair value, less than 12 months	14,196	19,169
Unrealized losses, less than 12 months	(36)	(38)
Fair value, 12 months or longer	0	0
Unrealized losses, 12 months or longer	0	0
Fair Value	14,196	19,169
Unrealized Losses	$ (36)	$ (38)

XML

Available for Sale Investments, at Fair Value - Additional Information (Details) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Investments, Debt and Equity Securities [Abstract]
Impairment charges recognized during period	$ 0
Proceeds from investments	0	$ 16,163,000
Available-for-sale investments, realized gains	$ 0

XML

Available for Sale Investments, at Fair Value - Schedule of Maturities of Available for Sale Investments (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Schedule Of Available For Sale Securities [Line Items]
Total	$ 34,841	$ 53,147
Fixed Maturity Securities
Schedule Of Available For Sale Securities [Line Items]
Within 1 year	34,841	48,925
After 1 year through 5 years	0	4,222
After 5 years to 10 years	0	0
After 10 years	0	0
Total	34,841	53,147
Amortized cost within 1 year	34,900	48,992
Amortized cost after 1 year through 5 years	0	4,229
Amortized cost after 5 years to 10 years	0	0
Amortized cost after 10 years	0	0
Amortized Cost	34,900	53,221
Treasury Bills | Fixed Maturity Securities
Schedule Of Available For Sale Securities [Line Items]
Within 1 year	20,645	33,978
After 1 year through 5 years	0	0
After 5 years to 10 years	0	0
After 10 years	0	0
Total	20,645	33,978
Amortized Cost	20,668	34,014
US Treasury securities | Fixed Maturity Securities
Schedule Of Available For Sale Securities [Line Items]
Within 1 year	14,196	14,947
After 1 year through 5 years	0	4,222
After 5 years to 10 years	0	0
After 10 years	0	0
Total	14,196	19,169
Amortized Cost	$ 14,232	$ 19,207

XML

Fair Value of Assets and Liabilities - Fair Value Hierarchy for Assets and Liabilities Measured at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Assets:
Borrower Loans	$ 277,361	$ 293,005
Loans Held for Sale	116,817	49
Available for Sale Investments, at Fair Value	34,841	53,147
Servicing Assets	15,644	14,711
Total Assets	444,663	360,912
Liabilities:
Notes	277,425	293,948
Servicing Liabilities	28	59
Convertible Preferred Stock Warrant Liability	143,676	116,366
Loan Trailing Fee Liability	3,078	2,595
Total Liabilities	424,207	412,968
Prosper Funding LLC
Assets:
Borrower Loans	277,361	293,005
Loans Held for Sale	31	49
Servicing Assets	16,162	14,598
Total Assets	293,554	307,652
Liabilities:
Notes	277,425	293,948
Servicing Liabilities	28	59
Loan Trailing Fee Liability	3,078	2,595
Total Liabilities	280,531	296,602
Level 1 Inputs
Assets:
Borrower Loans		0
Loans Held for Sale		0
Available for Sale Investments, at Fair Value		0
Servicing Assets		0
Total Assets	0	0
Liabilities:
Notes		0
Servicing Liabilities		0
Convertible Preferred Stock Warrant Liability		0
Loan Trailing Fee Liability		0
Total Liabilities	0	0
Level 1 Inputs | Prosper Funding LLC
Assets:
Borrower Loans	0	0
Loans Held for Sale	0	0
Servicing Assets	0	0
Total Assets	0	0
Liabilities:
Notes	0	0
Servicing Liabilities	0	0
Loan Trailing Fee Liability	0	0
Total Liabilities	0	0
Level 2 Inputs
Assets:
Borrower Loans		0
Loans Held for Sale		0
Available for Sale Investments, at Fair Value	34,841	53,147
Servicing Assets		0
Total Assets	34,841	53,147
Liabilities:
Notes		0
Servicing Liabilities		0
Convertible Preferred Stock Warrant Liability		0
Loan Trailing Fee Liability		0
Total Liabilities	0	0
Level 2 Inputs | Prosper Funding LLC
Assets:
Borrower Loans	0	0
Loans Held for Sale	0	0
Servicing Assets	0	0
Total Assets	0	0
Liabilities:
Notes	0	0
Servicing Liabilities	0	0
Loan Trailing Fee Liability	0	0
Total Liabilities	0	0
Level 3 Inputs
Assets:
Borrower Loans	277,361	293,005
Loans Held for Sale	116,817	49
Available for Sale Investments, at Fair Value	0	0
Servicing Assets	15,644	14,711
Total Assets	409,822	307,765
Liabilities:
Notes	277,425	293,948
Servicing Liabilities	28	59
Convertible Preferred Stock Warrant Liability	143,676	116,366
Loan Trailing Fee Liability	3,078	2,595
Total Liabilities	424,207	412,968
Level 3 Inputs | Prosper Funding LLC
Assets:
Borrower Loans	277,361	293,005
Loans Held for Sale	31	49
Servicing Assets	16,162	14,598
Total Assets	293,554	307,652
Liabilities:
Notes	277,425	293,948
Servicing Liabilities	28	59
Loan Trailing Fee Liability	3,078	2,595
Total Liabilities	$ 280,531	$ 296,602

XML

Fair Value of Assets and Liabilities - Borrower Loans, Loans Held For Sale and Notes - Quantitative Information about the Significant Unobservable Inputs (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Minimum
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	4.40%	4.00%
Default rate	2.00%	2.00%
Minimum | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	4.40%	4.00%
Default rate	2.00%	2.00%
Maximum
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	13.90%	14.40%
Default rate	15.60%	15.40%
Maximum | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	13.90%	14.40%
Default rate	15.60%	15.40%

XML

Fair Value of Assets and Liabilities - Servicing Rights - Quantitative Information about the Significant Unobservable Inputs (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Servicing Liabilities at Fair Value [Line Items]
Market servicing rate	0.625%	0.625%
Prosper Funding LLC
Servicing Liabilities at Fair Value [Line Items]
Market servicing rate	0.625%	0.625%
Minimum
Servicing Liabilities at Fair Value [Line Items]
Discount rate	15.00%	15.00%
Default rate	1.60%	1.50%
Prepayment rate	15.20%	13.50%
Minimum | Prosper Funding LLC
Servicing Liabilities at Fair Value [Line Items]
Discount rate	15.00%	15.00%
Default rate	1.60%	1.50%
Prepayment rate	15.20%	13.50%
Maximum
Servicing Liabilities at Fair Value [Line Items]
Discount rate	25.00%	25.00%
Default rate	16.50%	16.10%
Prepayment rate	32.90%	30.20%
Maximum | Prosper Funding LLC
Servicing Liabilities at Fair Value [Line Items]
Discount rate	25.00%	25.00%
Default rate	16.50%	16.10%
Prepayment rate	32.90%	30.20%

XML

Fair Value of Assets and Liabilities - Loan Trailing Fee Liability (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	4.40%	4.00%
Default rate	2.00%	2.00%
Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	13.90%	14.40%
Default rate	15.60%	15.40%
Prosper Funding LLC | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	4.40%	4.00%
Default rate	2.00%	2.00%
Prosper Funding LLC | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	13.90%	14.40%
Default rate	15.60%	15.40%
Obligations | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	15.00%	15.00%
Default rate	1.60%	1.50%
Prepayment rate	15.20%	13.50%
Obligations | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	25.00%	25.00%
Default rate	16.50%	16.10%
Prepayment rate	32.90%	30.20%
Obligations | Prosper Funding LLC | Minimum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	15.00%	15.00%
Default rate	1.60%	1.50%
Prepayment rate	15.20%	13.50%
Obligations | Prosper Funding LLC | Maximum
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Discount rate	25.00%	25.00%
Default rate	16.50%	16.10%
Prepayment rate	32.90%	30.20%

XML

Fair Value of Assets and Liabilities - Summary of Level 3 Borrower Loans, Loans Held for Sale and Notes, Measured at Fair Value on a Recurring Basis (Details) - Recurring - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Fair Value Measurement With Unobservable Inputs Reconciliations Recurring Basis Asset And Liability [Roll Forward]
Beginning balance, Total	$ 83,292	$ 701	$ (894)	$ 15
Purchase of Borrower Loans/Issuance of Notes	729,232	722,397	1,324,482	1,246,260
Principal repayments	(9,983)	633	(11,687)	2,740
Borrower Loans sold to third parties	(684,497)	(722,698)	(1,195,667)	(1,248,306)
Other changes	139	(146)	1,091	272
Change in fair value	(1,430)	70	(572)	(24)
Ending balance, Total	116,753	957	116,753	957
Prosper Funding LLC
Fair Value Measurement With Unobservable Inputs Reconciliations Recurring Basis Asset And Liability [Roll Forward]
Beginning balance, Total	530	701	(894)	15
Originations	729,232	722,397	1,324,482	1,246,260
Principal repayments	427	633	2,564	2,740
Borrower Loans sold to third parties	(729,851)	(722,698)	(1,326,116)	(1,248,306)
Other changes	(116)	(146)	295	272
Change in fair value	(255)	70	(364)	(24)
Ending balance, Total	(33)	957	(33)	957
Notes
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance, Liabilities	(285,095)	(316,944)	(293,948)	(316,236)
Purchase of Borrower Loans/Issuance of Notes	(44,468)	(49,692)	(90,693)	(106,506)
Principal repayments	44,423	48,695	91,525	100,274
Borrower Loans sold to third parties	0	0	0	0
Other changes	86	(156)	633	266
Change in fair value	7,629	6,687	15,058	10,792
Ending balance, Liabilities	(277,425)	(311,410)	(277,425)	(311,410)
Notes | Prosper Funding LLC
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance, Liabilities	(285,095)	(316,944)	(293,948)	(316,236)
Originations	(44,468)	(49,692)	(90,693)	(106,506)
Principal repayments	44,423	48,695	91,525	100,274
Borrower Loans sold to third parties	0	0	0	0
Other changes	86	(156)	633	266
Change in fair value	7,629	6,687	15,058	10,792
Ending balance, Liabilities	(277,425)	(311,410)	(277,425)	(311,410)
Borrower Loans
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract]
Beginning balance, Assets	285,584	317,536	293,005	315,627
Purchase of Borrower Loans/Issuance of Notes	44,799	50,260	91,075	106,940
Principal repayments	(43,990)	(48,048)	(88,947)	(97,492)
Borrower Loans sold to third parties	(950)	(869)	(2,016)	(1,990)
Other changes	(202)	10	(338)	9
Change in fair value	(7,880)	(6,617)	(15,418)	(10,822)
Ending balance, Assets	277,361	312,272	277,361	312,272
Borrower Loans | Prosper Funding LLC
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract]
Beginning balance, Assets	285,584	317,536	293,005	315,627
Originations	44,799	50,260	91,075	106,940
Principal repayments	(43,990)	(48,048)	(88,947)	(97,492)
Borrower Loans sold to third parties	(950)	(869)	(2,016)	(1,990)
Other changes	(202)	10	(338)	9
Change in fair value	(7,880)	(6,617)	(15,418)	(10,822)
Ending balance, Assets	277,361	312,272	277,361	312,272
Loans Held for Sale
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract]
Beginning balance, Assets	82,803	109	49	624
Purchase of Borrower Loans/Issuance of Notes	728,901	721,829	1,324,100	1,245,826
Principal repayments	(10,416)	(14)	(14,265)	(42)
Borrower Loans sold to third parties	(683,547)	(721,829)	(1,193,651)	(1,246,316)
Other changes	255	0	796	(3)
Change in fair value	(1,179)	0	(212)	6
Ending balance, Assets	116,817	95	116,817	95
Loans Held for Sale | Prosper Funding LLC
Changes in Level 3 assets measured at fair value on a recurring basis [Abstract]
Beginning balance, Assets	41	109	49	624
Originations	728,901	721,829	1,324,100	1,245,826
Principal repayments	(6)	(14)	(14)	(42)
Borrower Loans sold to third parties	(728,901)	(721,829)	(1,324,100)	(1,246,316)
Other changes	0	0	0	(3)
Change in fair value	(4)	0	(4)	6
Ending balance, Assets	$ 31	$ 95	$ 31	$ 95

XML

Fair Value of Assets and Liabilities - Schedule of Servicing Assets and Liabilities, Warrant Liability and Loan Trailing (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Servicing Asset at Fair Value, Beginning Balance			$ 14,711
Servicing Asset at Fair Value, Ending Balance	$ 15,644		15,644
Servicing Liability at Amortized Cost [Roll Forward]
Servicing Liability at Fair Value, Beginning Balance			59
Servicing Liability at Fair Value, Ending Balance	28		28
Prosper Funding LLC
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Servicing Asset at Fair Value, Beginning Balance			14,598
Servicing Asset at Fair Value, Ending Balance	16,162		16,162
Servicing Liability at Amortized Cost [Roll Forward]
Servicing Liability at Fair Value, Beginning Balance			59
Servicing Liability at Fair Value, Ending Balance	28		28
Servicing Assets
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Servicing Asset at Fair Value, Beginning Balance	14,754	$ 12,436	14,711	$ 12,786
Additions	4,163	3,768	7,502	6,532
Less: Changes in fair value	3,273	2,715	(6,569)	(5,829)
Servicing Asset at Fair Value, Ending Balance	15,644	13,489	15,644	13,489
Servicing Assets | Prosper Funding LLC
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Servicing Asset at Fair Value, Beginning Balance	15,023	12,190	14,598	12,461
Additions	4,452	3,768	8,147	6,532
Less: Changes in fair value	(3,313)	(2,661)	(6,583)	(5,696)
Servicing Asset at Fair Value, Ending Balance	16,162	13,297	16,162	13,297
Servicing Liabilities
Servicing Liability at Amortized Cost [Roll Forward]
Servicing Liability at Fair Value, Beginning Balance	41	147	59	198
Additions	0	0	0	0
Less: Changes in fair value	13	36	(31)	(87)
Servicing Liability at Fair Value, Ending Balance	28	111	28	111
Servicing Liabilities | Prosper Funding LLC
Servicing Liability at Amortized Cost [Roll Forward]
Servicing Liability at Fair Value, Beginning Balance	41	147	59	198
Additions	0	0	0	0
Less: Changes in fair value	(13)	(36)	(31)	(87)
Servicing Liability at Fair Value, Ending Balance	28	111	28	111
Preferred Stock Warrant
Servicing Liability at Amortized Cost [Roll Forward]
Beginning balance	127,041	30,811	116,366	0
Issuances	20,633	16,887	35,912	47,297
Change in fair value	(3,998)	22,416	(8,602)	22,817
Ending balance	143,676	$ 70,114	143,676	$ 70,114
Trailing Fee
Servicing Liability at Amortized Cost [Roll Forward]
Beginning balance			2,595
Issuances			1,529
Cash payment of Loan Trailing Fee			(1,206)
Change in fair value			160
Ending balance	3,078		3,078
Trailing Fee | Prosper Funding LLC
Servicing Liability at Amortized Cost [Roll Forward]
Beginning balance			2,595
Issuances			1,529
Cash payment of Loan Trailing Fee			1,206
Change in fair value			160
Ending balance	3,078		3,078
Level 3 Inputs
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Servicing Asset at Fair Value, Beginning Balance			14,711
Servicing Asset at Fair Value, Ending Balance	15,644		15,644
Servicing Liability at Amortized Cost [Roll Forward]
Servicing Liability at Fair Value, Beginning Balance			59
Servicing Liability at Fair Value, Ending Balance	28		28
Level 3 Inputs | Prosper Funding LLC
Servicing Asset at Amortized Cost, Balance [Roll Forward]
Servicing Asset at Fair Value, Beginning Balance			14,598
Servicing Asset at Fair Value, Ending Balance	16,162		16,162
Servicing Liability at Amortized Cost [Roll Forward]
Servicing Liability at Fair Value, Beginning Balance			59
Servicing Liability at Fair Value, Ending Balance	$ 28		$ 28

XML

Fair Value of Assets and Liabilities - Fair Value Assumptions for Borrower Loans, Loans Held for Sale and Notes (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes at Fair Value	$ 277,425	$ 293,948
Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes at Fair Value	277,425	$ 293,948
Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes at Fair Value	277,425
Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes at Fair Value	277,425
Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes at Fair Value	394,178
Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes at Fair Value	$ 277,392
Discount rate assumption | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	7.52%
Discount rate assumption | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	7.52%
Discount rate assumption | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	7.52%
Discount rate assumption | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Discount rate	7.52%
Discount rate assumption | 100 basis point increase | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	$ 274,660
Discount rate assumption | 100 basis point increase | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	274,660
Discount rate assumption | 100 basis point increase | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	390,255
Discount rate assumption | 100 basis point increase | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	274,662
Discount rate assumption | 200 basis point increase | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	271,964
Discount rate assumption | 200 basis point increase | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	271,964
Discount rate assumption | 200 basis point increase | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	386,431
Discount rate assumption | 200 basis point increase | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	271,970
Discount rate assumption | 100 basis point decrease | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	280,262
Discount rate assumption | 100 basis point decrease | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	280,262
Discount rate assumption | 100 basis point decrease | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	398,202
Discount rate assumption | 100 basis point decrease | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	280,255
Discount rate assumption | 200 basis point decrease | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	283,173
Discount rate assumption | 200 basis point decrease | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	283,173
Discount rate assumption | 200 basis point decrease | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	402,333
Discount rate assumption | 200 basis point decrease | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	$ 283,162
Default rate assumption | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Default rate	13.11%
Default rate assumption | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Default rate	13.11%
Default rate assumption | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Default rate	13.11%
Default rate assumption | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Default rate	13.11%
Default rate assumption | 100 basis point increase | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	$ 273,967
Default rate assumption | 100 basis point increase | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	273,967
Default rate assumption | 100 basis point increase | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	389,288
Default rate assumption | 100 basis point increase | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	273,981
Default rate assumption | 200 basis point increase | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	270,612
Default rate assumption | 200 basis point increase | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	270,612
Default rate assumption | 200 basis point increase | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	384,542
Default rate assumption | 200 basis point increase | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	270,641
Default rate assumption | 100 basis point decrease | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	280,911
Default rate assumption | 100 basis point decrease | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	280,911
Default rate assumption | 100 basis point decrease | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	399,107
Default rate assumption | 100 basis point decrease | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	280,892
Default rate assumption | 200 basis point decrease | Notes
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	284,428
Default rate assumption | 200 basis point decrease | Notes | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Notes	284,428
Default rate assumption | 200 basis point decrease | Borrower Loans and Loans Held for Sale
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	404,079
Default rate assumption | 200 basis point decrease | Borrower Loans and Loans Held for Sale | Prosper Funding LLC
Fair Value Inputs Assets Quantitative Information [Line Items]
Borrower loans	$ 284,391

XML

Fair Value of Assets and Liabilities - Schedule of Prosper's and Prosper Funding's Estimated Fair Value of Servicing Assets and Liabilities (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Mar. 31, 2018	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2016
Servicing Assets And Liabilities Fair Value [Line Items]
Servicing Assets	$ 15,644	$ 14,711
Servicing Liabilities	$ 28	$ 59
Market servicing rate assumptions	0.625%	0.625%
Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Servicing Assets	$ 16,162	$ 14,598
Servicing Liabilities	$ 28	$ 59
Market servicing rate assumptions	0.625%	0.625%
Servicing Assets
Servicing Assets And Liabilities Fair Value [Line Items]
Servicing Assets	$ 15,644	$ 14,711	$ 14,754	$ 13,489	$ 12,436	$ 12,786
Market servicing rate assumptions	0.625%
Resulting fair value from:
Servicing Asset, Market servicing rate increase to 0.65%	$ 14,691
Servicing Asset, Market servicing rate decrease to 0.60%	$ 16,634
Weighted average prepayment assumptions	19.98%
Resulting fair value from:
Weighted average default assumptions	12.66%
Servicing Assets | Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Servicing Assets	$ 16,162	14,598	15,023	13,297	12,190	12,461
Market servicing rate assumptions	0.625%
Resulting fair value from:
Servicing Asset, Market servicing rate increase to 0.65%	$ 15,160
Servicing Asset, Market servicing rate decrease to 0.60%	$ 17,165
Weighted average prepayment assumptions	19.98%
Resulting fair value from:
Weighted average default assumptions	12.66%
Servicing Liabilities
Servicing Assets And Liabilities Fair Value [Line Items]
Servicing Liabilities	$ 28	59	41	111	147	198
Market servicing rate assumptions	0.625%
Resulting fair value from:
Servicing Liabilities, Market servicing rate increase to 0.65%	$ 31
Servicing Liabilities, Market servicing rate decrease to 0.60%	$ 25
Weighted average prepayment assumptions	19.98%
Resulting fair value from:
Weighted average default assumptions	12.66%
Servicing Liabilities | Prosper Funding LLC
Servicing Assets And Liabilities Fair Value [Line Items]
Servicing Liabilities	$ 28	$ 59	$ 41	$ 111	$ 147	$ 198
Market servicing rate assumptions	0.625%
Resulting fair value from:
Servicing Liabilities, Market servicing rate increase to 0.65%	$ 31
Servicing Liabilities, Market servicing rate decrease to 0.60%	$ 25
Weighted average prepayment assumptions	19.98%
Resulting fair value from:
Weighted average default assumptions	12.66%
Prepayment rate assumption | Servicing Assets | Applying a 1.1 multiplier to prepayment rate
Resulting fair value from:
Servicing Asset, Applying a 1.1 multiplier to prepayment rate	$ 15,471
Prepayment rate assumption | Servicing Assets | Applying a 1.1 multiplier to prepayment rate | Prosper Funding LLC
Resulting fair value from:
Servicing Asset, Applying a 1.1 multiplier to prepayment rate	15,964
Prepayment rate assumption | Servicing Assets | Applying a 0.9 multiplier to prepayment rate
Resulting fair value from:
Servicing Asset, Applying a 0.9 multiplier to prepayment rate	15,857
Prepayment rate assumption | Servicing Assets | Applying a 0.9 multiplier to prepayment rate | Prosper Funding LLC
Resulting fair value from:
Servicing Asset, Applying a 0.9 multiplier to prepayment rate	16,363
Prepayment rate assumption | Servicing Liabilities | Applying a 1.1 multiplier to prepayment rate
Resulting fair value from:
Servicing Liabilities, Applying a 1.1 multiplier to prepayment rate	28
Prepayment rate assumption | Servicing Liabilities | Applying a 1.1 multiplier to prepayment rate | Prosper Funding LLC
Resulting fair value from:
Servicing Liabilities, Applying a 1.1 multiplier to prepayment rate	28
Prepayment rate assumption | Servicing Liabilities | Applying a 0.9 multiplier to prepayment rate
Resulting fair value from:
Servicing Liabilities, Applying a 0.9 multiplier to prepayment rate	29
Prepayment rate assumption | Servicing Liabilities | Applying a 0.9 multiplier to prepayment rate | Prosper Funding LLC
Resulting fair value from:
Servicing Liabilities, Applying a 0.9 multiplier to prepayment rate	29
Default rate assumption | Servicing Assets | Applying a 1.1 multiplier to default rate
Applying Multiplier, Default Rate [Abstract]
Servicing Asset, Applying a 1.1 multiplier to default rate	15,473
Default rate assumption | Servicing Assets | Applying a 1.1 multiplier to default rate | Prosper Funding LLC
Applying Multiplier, Default Rate [Abstract]
Servicing Asset, Applying a 1.1 multiplier to default rate	15,967
Default rate assumption | Servicing Assets | Applying a 0.9 multiplier to default rate
Applying Multiplier, Default Rate [Abstract]
Servicing Asset, Applying a 0.9 multiplier to default rate	15,857
Default rate assumption | Servicing Assets | Applying a 0.9 multiplier to default rate | Prosper Funding LLC
Applying Multiplier, Default Rate [Abstract]
Servicing Asset, Applying a 0.9 multiplier to default rate	16,362
Default rate assumption | Servicing Liabilities | Applying a 1.1 multiplier to default rate
Applying Multiplier, Default Rate [Abstract]
Servicing Liabilities, Applying a 1.1 multiplier to default rate	28
Default rate assumption | Servicing Liabilities | Applying a 1.1 multiplier to default rate | Prosper Funding LLC
Applying Multiplier, Default Rate [Abstract]
Servicing Liabilities, Applying a 1.1 multiplier to default rate	28
Default rate assumption | Servicing Liabilities | Applying a 0.9 multiplier to default rate
Applying Multiplier, Default Rate [Abstract]
Servicing Liabilities, Applying a 0.9 multiplier to default rate	28
Default rate assumption | Servicing Liabilities | Applying a 0.9 multiplier to default rate | Prosper Funding LLC
Applying Multiplier, Default Rate [Abstract]
Servicing Liabilities, Applying a 0.9 multiplier to default rate	$ 28

XML

Fair Value of Assets and Liabilities - Schedule of Prosper's and Prosper Funding's Estimated Fair Value of Servicing Assets and Liabilities Additional Info (Details)	6 Months Ended
	Jun. 30, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rate increase	0.65%
Servicing rate decrease	0.60%
Prepayment rate assumption
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Prepayment rate increase	1.10%
Prepayment rate decrease	0.90%
Default rate assumption
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Default rate increase	1.10%
Default rate decrease	0.90%
Prosper Funding LLC
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Servicing rate increase	0.65%
Servicing rate decrease	0.60%
Prosper Funding LLC | Prepayment rate assumption
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Prepayment rate increase	1.10%
Prepayment rate decrease	0.90%
Prosper Funding LLC | Default rate assumption
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Default rate increase	1.10%
Default rate decrease	0.90%

XML

Fair Value of Assets and Liabilities - Financial Instruments, Assets and Liabilities not Recorded at Fair Value (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Jun. 30, 2017	Dec. 31, 2016
Assets
Cash and Cash Equivalents	$ 58,652	$ 45,795	$ 34,667	$ 22,337
Restricted Cash	134,552	152,668	$ 179,331	$ 163,907
Accounts Receivable	3,539	683
Total Assets	702,808	623,735
Liabilities:
Accounts Payable and Accrued Liabilities	14,652	11,942
Payable to Investors	112,580	132,432
Warehouse Line	103,553	0
Total Liabilities	665,604	$ 567,357
Carrying Amount
Assets
Total Assets	196,743
Liabilities:
Total Liabilities	230,785
Balance at Fair Value
Assets
Cash and Cash Equivalents	58,652
Restricted Cash	134,552
Accounts Receivable	3,539
Total Assets	196,743
Liabilities:
Accounts Payable and Accrued Liabilities	14,652
Payable to Investors	112,580
Warehouse Line	103,553
Total Liabilities	230,785
Level 1 Inputs
Assets
Cash and Cash Equivalents	58,652
Restricted Cash	0
Accounts Receivable	0
Total Assets	58,652
Liabilities:
Accounts Payable and Accrued Liabilities	0
Payable to Investors	0
Warehouse Line	0
Total Liabilities	0
Level 2 Inputs
Assets
Cash and Cash Equivalents	0
Restricted Cash	134,552
Accounts Receivable	3,539
Total Assets	138,091
Liabilities:
Accounts Payable and Accrued Liabilities	14,652
Payable to Investors	112,580
Warehouse Line	103,553
Total Liabilities	230,785
Level 3 Inputs
Assets
Cash and Cash Equivalents	0
Restricted Cash	0
Accounts Receivable	0
Total Assets	0
Liabilities:
Accounts Payable and Accrued Liabilities	0
Payable to Investors	0
Warehouse Line	0
Total Liabilities	$ 0

XML

Goodwill and Other Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Goodwill And Other Intangible Assets [Line Items]
Goodwill	$ 36,368,000		$ 36,368,000		$ 36,368,000
Goodwill impairment expense			0
Intangible assets, net	1,177,000		1,177,000		$ 1,377,000
Impairment loss			0	$ 6,319,000
Amortization of intangible assets	100,000	$ 200,000	200,000	$ 1,000,000
User base and customer relationships
Goodwill And Other Intangible Assets [Line Items]
Intangible assets, net	1,177,000		$ 1,177,000
Intangible assets amortized period			6 years 9 months 18 days
User base and customer relationships | Minimum
Goodwill And Other Intangible Assets [Line Items]
Intangible assets amortized period			3 years
User base and customer relationships | Maximum
Goodwill And Other Intangible Assets [Line Items]
Intangible assets amortized period			10 years
Developed technology
Goodwill And Other Intangible Assets [Line Items]
Intangible assets, net	0		$ 0
Developed technology | Minimum
Goodwill And Other Intangible Assets [Line Items]
Intangible assets amortized period			3 years
Developed technology | Maximum
Goodwill And Other Intangible Assets [Line Items]
Intangible assets amortized period			5 years
Brand name
Goodwill And Other Intangible Assets [Line Items]
Intangible assets, net	$ 0		$ 0
Intangible assets amortized period			1 year

XML

Goodwill and Other Intangible Assets - Summary of Other Intangible Assets for the Period Presented (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 8,170
Accumulated Amortization	(6,993)
Net Carrying Value	1,177	$ 1,377
Developed technology
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value	3,060
Accumulated Amortization	(3,060)
Net Carrying Value	0
User base and customer relationships
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value	5,050
Accumulated Amortization	(3,873)
Net Carrying Value	$ 1,177
Remaining Useful Life (In Years)	6 years 9 months 18 days
Brand name
Finite Lived Intangible Assets [Line Items]
Gross Carrying Value	$ 60
Accumulated Amortization	(60)
Net Carrying Value	$ 0
Remaining Useful Life (In Years)	1 year

XML

Goodwill And Other Intangible Assets - Summary of Estimated Amortization of Purchased Intangible Assets (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2018	$ 178
2019	279
2020	220
2021	172
2022	136
Thereafter	192
Net Carrying Value	$ 1,177

XML

Other Liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2018	Dec. 31, 2017
Other Liabilities [Abstract]
Loan trailing fee	$ 3,078	$ 2,595
Deferred revenue	436	452
Servicing liabilities	28	59
Deferred income tax liability	244	225
Deferred rent	3,651	3,904
Restructuring liability	3,457	3,355
Other	2,824	2,079
Total Other Liabilities	$ 13,718	$ 12,669

XML

Debt (Details) - USD ($)		6 Months Ended
	Jun. 12, 2018	Jun. 30, 2018	Jan. 19, 2018	Dec. 31, 2017
Line of Credit Facility [Line Items]
Warehouse Line		$ 103,553,000		$ 0
Loans Held for Sale, at Fair Value		116,817,000		$ 49,000
Warehouse Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 200,000,000		$ 100,000,000
Repayment period	24 months
Advance rate	89.00%
Warehouse Line		103,600,000
Minimum tangible net worth	$ 25,000,000
Minimum net liquidity	$ 15,000,000
Maximum leverage ratio	5
Undrawn portion		96,900,000
Capitalized debt issuance cost		1,600,000
Warehouse Agreement | Secured Debt
Line of Credit Facility [Line Items]
Loans Held for Sale, at Fair Value		$ 116,200,000
LIBOR | Warehouse Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Interest rate		3.00%
Minimum | Warehouse Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Commitment fee percent	0.50%
Maximum | Warehouse Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Commitment fee percent	0.75%

XML

Net Loss Per Share - Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Numerator:
Net loss available to common stockholders for basic and diluted EPS	$ (12,599)	$ (41,405)	$ (24,000)	$ (65,426)
Denominator:
Weighted average shares used in computing basic and diluted net loss per share (in shares)	70,362,716	69,691,841	70,333,145	69,436,365
Basic and diluted net loss per share (in dollars per share)	$ (0.18)	$ (0.59)	$ (0.34)	$ (0.94)

XML

Net Loss Per Share - Common Stock Equivalents Excluded from Computation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	504,192,237	452,811,881	495,391,573	444,914,220
Convertible preferred stock issued and outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	214,637,925	177,388,428	214,637,925	177,388,428
Stock options issued and outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	75,206,928	60,938,265	66,403,696	53,040,604
Unvested stock options exercised
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	2,190	20,940	2,190	20,940
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	0	0	0	0
Warrants issued and outstanding
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	1,080,349	1,199,403	1,082,917	1,199,403
Series E-1 convertible preferred stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	35,544,141	35,544,141	35,544,141	35,544,141
Series F convertible preferred stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total common stock equivalents excluded from diluted net loss per common share computation (in shares)	177,720,704	177,720,704	177,720,704	177,720,704

XML

Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit - Additional Information (Details) $ / shares in Units, $ in Thousands				3 Months Ended	6 Months Ended	12 Months Ended
	Sep. 20, 2017 USD ($) $ / shares shares	Dec. 16, 2016	Feb. 16, 2016	Jun. 30, 2018 USD ($) $ / shares shares	Jun. 30, 2018 USD ($) time $ / shares shares	Dec. 31, 2017 vote / shares $ / shares shares	Feb. 27, 2017 $ / shares shares
Class of Stock [Line Items]
Common and preferred stock, shares authorized (in shares)	1,069,760,848
Common stock, shares authorized (in shares)	625,000,000			625,000,000	625,000,000	625,000,000
Common stock, par value (in dollars per share) | $ / shares	$ 0.01			$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	444,760,848			444,760,848	444,760,848	444,760,848
Preferred stock, par value (in dollars per share) | $ / shares	$ 0.01
Common stock, shares issued (in shares)				71,317,926	71,317,926	71,226,934
Common stock, shares outstanding (in shares)				70,381,991	70,381,991	70,290,999
Common stock, vote per share | vote / shares						1
Common Stock
Class of Stock [Line Items]
Stock split conversion ratio			5
Exercise of stock options (in shares)					82,792
Cash proceeds | $					$ 18
Unvested restricted stock outstanding (in shares)				2,190	2,190	11,565
Stock repurchase upon termination of employment (in shares)					0
Series E-1
Class of Stock [Line Items]
Warrant to purchase (in of shares)							15,277,006
Exercise price (in dollars per share) | $ / shares							$ 0.01
Liquidation preference (in dollars per share) | $ / shares				$ 0.84	$ 0.84
Warrant expiration period		10 years
Income (expense) amount | $				$ 1,100	$ 2,500
Risk-free interest rate					2.83%	2.38%
Preferred stock, shares authorized (in shares)				35,544,141	35,544,141
Series E-2
Class of Stock [Line Items]
Preferred stock, liquidation preference, conversion basis					0.6667
Preferred stock, liquidation preference, conversion basis, after payment					0.3333
Liquidation preference (in dollars per share) | $ / shares				$ 0.84	$ 0.84
Preferred stock, shares authorized (in shares)				16,858,078	16,858,078
Series F
Class of Stock [Line Items]
Warrant to purchase (in of shares)							177,720,706
Exercise price (in dollars per share) | $ / shares							$ 0.01
Preferred stock, liquidation preference, conversion basis					0.6667
Preferred stock, liquidation preference, conversion basis, after payment					0.3333
Liquidation preference (in dollars per share) | $ / shares				$ 0.84	$ 0.84
Income (expense) amount | $				$ 2,900	$ 6,100
Risk-free interest rate					2.83%	2.38%
Preferred stock, shares authorized (in shares)				177,720,707	177,720,707
Series G
Class of Stock [Line Items]
Preferred stock issued and sold (in shares)	37,249,497
Purchase price (in dollars per share) | $ / shares	$ 1.34230000474906
Proceeds from issuance of preferred stock | $	$ 47,900
Voting power (at least)					60.00%
Liquidation preference (in dollars per share) | $ / shares				$ 1.34	$ 1.34
Preferred stock, shares authorized (in shares)				37,249,497	37,249,497
Series B
Class of Stock [Line Items]
IPO value (at least) | $					$ 2,000,000
Aggregate proceeds (at least) | $					$ 100,000
Voting power (at least)					60.00%
Liquidation preference (in dollars per share) | $ / shares				$ 0.60	$ 0.60
Preferred stock, shares authorized (in shares)				35,775,880	35,775,880
Series A-1
Class of Stock [Line Items]
Voting power (at least)					14.00%
Conversion ratio				1,000,000	1,000,000
Liquidation preference (in dollars per share) | $ / shares				$ 2.00	$ 2.00
Series A
Class of Stock [Line Items]
Conversion ratio				1	1
Times the original issue | time					3
Liquidation preference (in dollars per share) | $ / shares				$ 0.29	$ 0.29
Preferred stock, shares authorized (in shares)				68,558,220	68,558,220
Series C
Class of Stock [Line Items]
Liquidation preference (in dollars per share) | $ / shares				$ 2.87	$ 2.87
Preferred stock, shares authorized (in shares)				24,404,770	24,404,770
Series D
Class of Stock [Line Items]
Liquidation preference (in dollars per share) | $ / shares				$ 6.91	$ 6.91
Consortium Purchase Agreement | Series F Warrant
Class of Stock [Line Items]
Warrant to purchase (in of shares)							177,720,706
Exercise price (in dollars per share) | $ / shares							$ 0.01
US Treasury securities | Series E-1
Class of Stock [Line Items]
Risk-free interest rate					0.00%
US Treasury securities | Series F
Class of Stock [Line Items]
Risk-free interest rate					0.00%

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Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit - Summary of Shares Authorized, Issued, Outstanding, Par Value and Liquidation Preference of Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands	Jun. 30, 2018	Dec. 31, 2017	Sep. 20, 2017
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Convertible preferred stock, shares authorized (in shares)	444,760,848	444,760,848	444,760,848
Convertible preferred stock, shares outstanding (in shares)	214,637,925	214,637,925
Convertible preferred stock, shares issued (in shares)	214,637,925	214,637,925
Convertible preferred stock, aggregate liquidation preference	$ 375,952	$ 375,952
Series A
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	68,558,220
Convertible preferred stock, shares outstanding (in shares)	68,558,220
Convertible preferred stock, shares issued (in shares)	68,558,220
Convertible preferred stock, aggregate liquidation preference	$ 19,774
Series A-1
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	24,760,915
Convertible preferred stock, shares outstanding (in shares)	24,760,915
Convertible preferred stock, shares issued (in shares)	24,760,915
Convertible preferred stock, aggregate liquidation preference	$ 49,522
Series B
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	35,775,880
Convertible preferred stock, shares outstanding (in shares)	35,775,880
Convertible preferred stock, shares issued (in shares)	35,775,880
Convertible preferred stock, aggregate liquidation preference	$ 21,581
Series C
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	24,404,770
Convertible preferred stock, shares outstanding (in shares)	24,404,770
Convertible preferred stock, shares issued (in shares)	24,404,770
Convertible preferred stock, aggregate liquidation preference	$ 70,075
Series D
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	23,888,640
Convertible preferred stock, shares outstanding (in shares)	23,888,640
Convertible preferred stock, shares issued (in shares)	23,888,640
Convertible preferred stock, aggregate liquidation preference	$ 165,000
Series E-1
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	35,544,141
Convertible preferred stock, shares outstanding (in shares)	0
Convertible preferred stock, shares issued (in shares)	0
Convertible preferred stock, aggregate liquidation preference	$ 0
Series E-2
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	16,858,078
Convertible preferred stock, shares outstanding (in shares)	0
Convertible preferred stock, shares issued (in shares)	0
Convertible preferred stock, aggregate liquidation preference	$ 0
Series F
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	177,720,707
Convertible preferred stock, shares outstanding (in shares)	3
Convertible preferred stock, shares issued (in shares)	3
Convertible preferred stock, aggregate liquidation preference	$ 0
Series G
Class of Stock [Line Items]
Convertible preferred stock, par value (in dollars per share)	$ 0.01
Convertible preferred stock, shares authorized (in shares)	37,249,497
Convertible preferred stock, shares outstanding (in shares)	37,249,497
Convertible preferred stock, shares issued (in shares)	37,249,497
Convertible preferred stock, aggregate liquidation preference	$ 50,000

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Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit - Schedule of Assumptions Used (Details)	6 Months Ended	12 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Series E-1
Class of Stock [Line Items]
Volatility	40.00%	40.00%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8 years 6 months 18 days	9 years 15 days
Dividend yield	0.00%	0.00%
Series F
Class of Stock [Line Items]
Volatility	40.00%	40.00%
Risk-free interest rate	2.83%	2.38%
Remaining contractual term (in years)	8 years 7 months 28 days	9 years 1 month 28 days
Dividend yield	0.00%	0.00%

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Convertible Preferred Stock, Warrant Liability and Stockholders’ Deficit - Warrant Liability (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Warrants or Rights [Roll Forward]
Change in Fair Value	$ (8,602)	$ 22,817
Convertible Preferred Stock Warrant
Warrants or Rights [Roll Forward]
Balance at January 1, 2018	116,366
Warrants Vested	35,912
Change in Fair Value	(8,602)
Balance as of June 30, 2018	$ 143,676

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Share Based Incentive Plan and Compensation - Additional Information (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options exercisable, maximum period			10 years
Financial statement impact amount			$ 4,584,000	$ 6,812,000
Unamortized expense related to unvested stock-based awards	$ 10,400,000		$ 10,400,000
Dividend yield	0.00%		0.00%	0.00%
Unrecognized cost of unvested share-based compensation awards.	$ 0		$ 0
Remaining weighted average vesting period			2 years
Internal-use software and website development costs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation capitalized	100,000	$ 100,000
Stock option repricing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Financial statement impact amount	200,000
Unamortized expense related to unvested stock-based awards	$ 700,000		$ 700,000
Weighted average vesting period			1 year 1 month 6 days
Restricted stock units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Aggregate fair value			$ 1,900,000
Vesting period one
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percent			25.00%
Vesting period of the options			1 year
Incremental vesting percent			2.08%
Vesting period one | Restricted stock units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of the options			3 years
Vesting period two
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percent			50.00%
Vesting period of the options			1 year
Incremental vesting percent			2.08%
Vesting period two | Restricted stock units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting period of the options			4 years
Vesting period three
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percent			50.00%
Vesting period of the options			2 years
Incremental vesting percent			2.08%
Vesting period four
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incremental vesting percent			2.78%
2015 Stock Option Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of options made available in pool (in shares)	93,468,710		93,468,710
Shares available for grant under the plan (in shares)	22,824,771		22,824,771
2005 Stock Plan | Stock options issued and outstanding
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares available for grant under the plan (in shares)	0		0

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Share Based Incentive Plan and Compensation - Summarized Option Activity under Option Plan (Details) - 2005 Stock Plan and 2015 Stock Option Plan	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Options Issued and Outstanding
Options Issued and Outstanding, Beginning Balance (in shares) | shares	58,628,039
Options Issued and Outstanding, Options issued (in shares) | shares	18,703,551
Options Issued and Outstanding, Options exercised - vested (in shares) | shares	(82,792)
Options Issued and Outstanding, Options forfeited (in shares) | shares	(3,879,249)
Options Issued and Outstanding, Ending balance (in shares) | shares	73,369,549
Options Issued and Outstanding, Options vested and expected to vest (in shares) | shares	60,048,513
Options Issued and Outstanding, Options vested and/or exercisable (in shares) | shares	34,914,602
Weighted- Average Exercise Price
Weighted-Average Exercise Price, Beginning balance (in dollars per share) | $ / shares	$ 0.25
Weighted-Average Exercise Price, Options issued (in dollars per share) | $ / shares	0.54
Weighted-Average Exercise Price, Options exercised - vested (in dollars per share) | $ / shares	0.22
Weighted-Average Exercise Price, Options forfeited (in dollars per share) | $ / shares	0.37
Weighted-Average Exercise Price, Ending balance (in dollars per share) | $ / shares	0.32
Weighted-Average Exercise Price, Options vested and expected to vest (in dollars per share) | $ / shares	0.32
Weighted-Average Exercise Price, Options vested and/or exercisable (in dollars per share) | $ / shares	$ 0.22

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Share Based Incentive Plan and Compensation - Additional Information Regarding Common Stock Options Outstanding (Details) - Stock options issued and outstanding	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of Exercise Prices, Minimum (in dollars per share)	$ 0.02
Range of Exercise Prices, Maximum (in dollars per share)	$ 1.13
Number Outstanding (in shares) | shares	73,369,549
Weighted Avg. Remaining Life	8 years 6 months 4 days
Weighted Avg. Exercise Price (in dollars per share)	$ 0.32
Number Vested and Exercisable (in shares) | shares	34,914,602
Weighted-Avg. Exercise Price (in dollars per share)	$ 0.22
0.02 - 0.20
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of Exercise Prices, Minimum (in dollars per share)	0.02
Range of Exercise Prices, Maximum (in dollars per share)	$ 0.20
Number Outstanding (in shares) | shares	4,768,290
Weighted Avg. Remaining Life	5 years 6 months 18 days
Weighted Avg. Exercise Price (in dollars per share)	$ 0.11
Number Vested and Exercisable (in shares) | shares	4,768,290
Weighted-Avg. Exercise Price (in dollars per share)	$ 0.11
0.21 - 0.50
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of Exercise Prices, Minimum (in dollars per share)	0.21
Range of Exercise Prices, Maximum (in dollars per share)	$ 0.50
Number Outstanding (in shares) | shares	45,281,131
Weighted Avg. Remaining Life	8 years 3 months
Weighted Avg. Exercise Price (in dollars per share)	$ 0.23
Number Vested and Exercisable (in shares) | shares	28,602,923
Weighted-Avg. Exercise Price (in dollars per share)	$ 0.22
0.51 - 1.13
Share Based Compensation Shares Authorized Under Stock Option Plans Exercise Price Range [Line Items]
Range of Exercise Prices, Minimum (in dollars per share)	0.51
Range of Exercise Prices, Maximum (in dollars per share)	$ 1.13
Number Outstanding (in shares) | shares	23,320,128
Weighted Avg. Remaining Life	9 years 7 months 6 days
Weighted Avg. Exercise Price (in dollars per share)	$ 0.54
Number Vested and Exercisable (in shares) | shares	1,543,389
Weighted-Avg. Exercise Price (in dollars per share)	$ 0.54

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Share Based Incentive Plan and Compensation - Fair Value of Stock Option Awards (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Fair value of stock option awards [Abstract]
Volatility of common stock	44.43%	44.12%	50.28%
Risk-free interest rate	2.85%	2.75%	2.12%
Expected life (in years)	6 years	6 years	5 years 8 months 12 days
Dividend yield	0.00%	0.00%	0.00%

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Share Based Incentive Plan and Compensation - Summarized Activities for the Company's RSU's (Details) - Restricted stock units	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Number of Shares
Restricted stock unit, Unvested, Beginning Balance (in shares) | shares	1,399,180
Granted (in shares) | shares	3,569,586
Vested (in shares) | shares	0
Forfeited (in shares) | shares	(100,500)
Restricted stock unit, Unvested, Ending Balance (in shares) | shares	4,868,266
Weighted-Average Grant Date Fair Value
Restricted stock unit, Unvested, Beginning Balance (in dollars per share) | $ / shares	$ 2.16
Granted (in dollars per share) | $ / shares	0.54
Vested (in dollars per share) | $ / shares	0.00
Forfeited (in dollars per share) | $ / shares	2.17
Restricted stock unit, Unvested, Ending Balance (in dollars per share) | $ / shares	$ 0.96

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Share Based Incentive Plan and Compensation - Stock Based Compensation Included in Consolidated Statements of Operations (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation	$ 2,253	$ 3,312	$ 4,584	$ 6,812
Origination and servicing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation	241	328	456	545
Sales and marketing
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation	108	141	216	311
General and administrative
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock based compensation	$ 1,904	$ 2,843	$ 3,912	$ 5,956

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Restructuring - Summary of Activities Related to Prosper's Restructuring Plan (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2018 USD ($)
Restructuring Reserve [Roll Forward]
Balance January 1, 2018	$ 3,244
Adjustments to expense	591
Sublease cash receipts	316
Less: Cash paid	(775)
Balance June 30, 2018	3,376
Facilities Related
Restructuring Reserve [Roll Forward]
Balance January 1, 2018	3,244
Adjustments to expense	591
Sublease cash receipts	316
Less: Cash paid	(775)
Balance June 30, 2018	$ 3,376

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Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Taxes [Line Items]
Income tax expense	$ 9,000	$ 97,000	$ 19,000	$ 262,000
Prosper Funding LLC
Income Taxes [Line Items]
Income tax expense			$ 0	0
Net effective tax rate			0.00%
Valuation ​Allowance of Deferred ​Tax ​Assets
Income Taxes [Line Items]
Income tax expense			$ 0	$ 0

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Consortium Purchase Agreement - Narrative (Details) - Consortium Purchase Agreement - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017	Feb. 27, 2017
Other Commitments [Line Items]
Commitment to purchase borrower loans (up to)	$ 5,000,000		$ 5,000,000
Loans acquired	2,657,624	$ 1,826,527
Amount settled with rebates	$ 300,000
Series F Warrant
Other Commitments [Line Items]
Warrant to purchase up to (in shares)			3
Warrant to purchase (in of shares)			177,720,706
Exercise price (in dollars per share)			$ 0.01

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Consortium Purchase Agreement - Consortium Purchase Agreement Table (Details) - Consortium Purchase Agreement - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Other Commitments [Line Items]
Loans Acquired	$ 2,657,624	$ 1,826,527
Loans Purchased by the Consortium	$ 831,097
Series F Warrant
Other Commitments [Line Items]
Warrants Vested (in shares)	112,016,280	75,186,002
Warrants vested during the year (in shares)	36,830,278

XML

Commitments and Contingencies - Additional Information (Details) - USD ($)		3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Commitments And Contingencies [Line Items]
Minimum sublease rentals	$ 6,500,000	$ 6,500,000		$ 6,500,000
Restructuring Reserve	3,376,000	3,376,000		3,376,000		$ 3,244,000
Rental expense under operating lease arrangements		1,000,000	$ 1,200,000	2,100,000	$ 2,500,000
Designated Amount for loans (less than)	143,500	143,500		143,500
Minimum liquidity covenant	15,000,000	15,000,000		15,000,000
Purchase of borrower loans	31,500,000
Maximum potential future payments	3,900,000,000	3,900,000,000		3,900,000,000
Accrued repurchase and indemnification obligation	1,300,000	1,300,000		1,300,000		800,000
Prosper Funding LLC
Commitments And Contingencies [Line Items]
Designated Amount for loans (less than)	143,500	143,500		143,500
Minimum fee, remaining in current year	900,000	900,000		900,000
Minimum fee, year two	900,000	900,000		900,000
Purchase of borrower loans				31,500,000
Maximum potential future payments	3,900,000,000	3,900,000,000		3,900,000,000
Accrued repurchase and indemnification obligation	$ 1,300,000	$ 1,300,000		$ 1,300,000		$ 800,000

XML

Commitments and Contingencies - Future Minimum Lease Payments (Details) $ in Thousands	Jun. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Remainder of 2018	$ 2,939
2019	6,026
2020	6,193
2021	6,170
2022	6,076
Thereafter	8,480
Total	$ 35,884

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Related Parties - Additional Information (Details)	6 Months Ended
	Jun. 30, 2018
Related Party Transactions [Abstract]
Minimum percentage of voting securities considered for related parties	10.00%
Minimum percentage of stock holders considered for related parties	10.00%

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Related Parties - Aggregate Amount of Notes Purchased and the Income Earned (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Related Party Transaction [Line Items]
Aggregate Amount of Notes and Borrower Loans Purchased	$ 110	$ 90	$ 217	$ 184
Interest Earned on Notes and Borrower Loans	11	45	23	101
Notes balance	577		577		$ 591
Prosper Funding LLC
Related Party Transaction [Line Items]
Aggregate Amount of Notes and Borrower Loans Purchased	3	5	9	10
Interest Earned on Notes and Borrower Loans	0	35	1	81
Notes balance	17		17		38
Executive officers and management
Related Party Transaction [Line Items]
Aggregate Amount of Notes and Borrower Loans Purchased	3	5	9	10
Interest Earned on Notes and Borrower Loans	0	35	1	81
Notes balance	17		17		38
Executive officers and management | Prosper Funding LLC
Related Party Transaction [Line Items]
Aggregate Amount of Notes and Borrower Loans Purchased	3	5	9	10
Interest Earned on Notes and Borrower Loans	0	35	1	81
Notes balance	17		17		38
Directors (excluding executive officers and management)
Related Party Transaction [Line Items]
Aggregate Amount of Notes and Borrower Loans Purchased	107	85	208	174
Interest Earned on Notes and Borrower Loans	11	10	22	20
Notes balance	560		560		553
Directors (excluding executive officers and management) | Prosper Funding LLC
Related Party Transaction [Line Items]
Aggregate Amount of Notes and Borrower Loans Purchased	0	0	0	0
Interest Earned on Notes and Borrower Loans	0	$ 0	0	$ 0
Notes balance	$ 0		$ 0		$ 0

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Significant Concentrations (Details)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Concentration Risk [Line Items]
Percentage of funds originating in channel	93.00%	92.00%
Party One
Concentration Risk [Line Items]
Percentage of loan purchased	52.00%	52.00%
Party Two
Concentration Risk [Line Items]
Percentage of loan purchased		14.00%
Party Three
Concentration Risk [Line Items]
Percentage of loan purchased		8.00%