Pagaya Technologies .(PGY)

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Pagaya Technologies .(PGY) - 2024 Q2 - Quarterly Report
2024-08-09 20:03
Financial Performance - Total assets increased to $1,452,977 thousand as of June 30, 2024, compared to $1,208,376 thousand as of December 31, 2023[9] - Revenue from fees for the six months ended June 30, 2024, was $479,598 thousand, up from $360,939 thousand in the same period in 2023[10] - Net loss attributable to Pagaya Technologies Ltd. for the six months ended June 30, 2024, was $96,008 thousand, compared to $92,268 thousand in the same period in 2023[10] - Operating income for the six months ended June 30, 2024, was $12,717 thousand, compared to an operating loss of $35,214 thousand in the same period in 2023[10] - Comprehensive loss attributable to Pagaya Technologies Ltd. for the six months ended June 30, 2024, was $167,502 thousand, compared to $89,592 thousand in the same period in 2023[12] - Total revenue and other income for the six months ended June 30, 2024, was $495,620 thousand, up from $382,250 thousand in the same period in 2023[10] - Net loss for the period ending June 30, 2024, was $82.679 million, compared to a net loss of $114.341 million in the previous period[14] - Net loss including noncontrolling interests decreased to $114.3 million in H1 2024 from $130.8 million in H1 2023, reflecting a 12.6% improvement[16] - Net cash provided by operating activities improved significantly to $36.0 million in H1 2024 from a net cash used of $25.5 million in H1 2023[16] - Net loss attributable to Pagaya Technologies Ltd. ordinary shareholders for the three months ended June 30, 2024, was $61.6 million for Class A shares and $13.2 million for Class B shares[107] - Net loss per share attributable to ordinary shareholders for the six months ended June 30, 2024, was $1.41 for both Class A and Class B shares[107] - Net loss attributable to Pagaya Technologies Ltd. was $74.8 million for the three months ended June 30, 2024, compared to $31.3 million in the same period in 2023[150] - Non-GAAP adjusted net income improved to $7.2 million for the three months ended June 30, 2024, compared to $0.9 million in the same period in 2023[150] - Net Loss Attributable to Pagaya Technologies Ltd. for the three months ended June 30, 2024 was $(74,785), compared to $(31,297) in the same period in 2023[188] Revenue and Fees - Revenue from fees for the six months ended June 30, 2024, was $479,598 thousand, up from $360,939 thousand in the same period in 2023[10] - Total revenue and other income for the six months ended June 30, 2024, was $495,620 thousand, up from $382,250 thousand in the same period in 2023[10] - Network AI fees grew 36.0% to $437.1 million in H1 2024 from $321.5 million in H1 2023[30] - Contract fees increased 7.9% to $42.5 million in H1 2024 compared to $39.4 million in H1 2023[33] - Total revenue from fees for the three months ended June 30, 2024 was $242.6 million, a 30.6% increase from $185.7 million in the same period in 2023[37] - For the six months ended June 30, 2024, total revenue from fees was $479.6 million, up 32.9% from $360.9 million in the prior year period[37] - Revenue from related parties for the six months ended June 30, 2024, reached $353.8 million, compared to $302.0 million in the same period in 2023[73] - Revenue from fees increased by $56.9 million, or 31%, to $242.6 million, primarily due to a $54.3 million increase in Network AI fees, with Network Volume growing by 19.1% to $2.3 billion[154] - Total revenue and other income increased by $113.4 million (30%) to $495.6 million for the six months ended June 30, 2024, driven by a $118.7 million (33%) increase in revenue from fees[167] - Network AI fees increased by $115.6 million to $437.1 million for the six months ended June 30, 2024, driven by improved economics in AI integration fees and a 25% increase in Network Volume to $4.8 billion[168] - Revenue from fees for the three months ended June 30, 2024 was $242,594, a 31% increase from $185,685 in the same period in 2023[187] Assets and Liabilities - Total assets increased to $1,452,977 thousand as of June 30, 2024, compared to $1,208,376 thousand as of December 31, 2023[9] - Total current liabilities increased to $241,254 thousand as of June 30, 2024, from $74,925 thousand as of December 31, 2023[9] - Cash and cash equivalents increased to $233,593 thousand as of June 30, 2024, from $186,478 thousand as of December 31, 2023[9] - Total non-current assets increased to $1,091,780 thousand as of June 30, 2024, from $904,974 thousand as of December 31, 2023[9] - Total shareholders' equity as of June 30, 2024, was $615.574 million, down from $665.749 million at December 31, 2023[14] - Accumulated deficit as of June 30, 2024, was $638.645 million, up from $542.637 million at December 31, 2023[14] - Non-controlling interests as of June 30, 2024, were $89.592 million, down from $106.028 million at December 31, 2023[14] - Total shareholders' equity as of June 30, 2023, was $703.123 million, down from $765.423 million at December 31, 2022[15] - Accumulated deficit as of June 30, 2023, was $506.467 million, up from $414.199 million at December 31, 2022[15] - Non-controlling interests as of June 30, 2023, were $179.940 million, down from $211.903 million at December 31, 2022[15] - Cash, cash equivalents and restricted cash decreased by 19.2% to $267.9 million as of June 30, 2024 from $331.4 million as of June 30, 2023[17] - Secured borrowings increased to $400.2 million as of June 30, 2024, up from $271.7 million at December 31, 2023[40] - The outstanding principal balance under repurchase agreements was $367.7 million as of June 30, 2024, compared to $251.4 million at December 31, 2023[41] - Long-term debt outstanding was $232.6 million as of June 30, 2024, with aggregate future maturities totaling $248.6 million[45][46] - The fair value of investments in loans and securities was $911.4 million as of June 30, 2024, up from $716.8 million at December 31, 2023[49][50] - Investments in loans and securities, available for sale, totaled $1,150.8 million in amortized cost and $911.4 million in fair value as of June 30, 2024[53] - The balance of allowance for credit losses was $(178.1) million as of June 30, 2024, compared to $(100.9) million at the beginning of the period[58] - Equity method and other investments totaled $26.6 million as of June 30, 2024, up slightly from $26.4 million as of December 31, 2023[61] - Consolidated VIEs had net assets of $111.2 million as of June 30, 2024, down from $132.7 million as of December 31, 2023[63] - The company's direct interest in unconsolidated VIEs was $807.0 million in carrying amount and maximum exposure to loss as of June 30, 2024, up from $591.0 million as of December 31, 2023[65] - Total fee receivables from related parties increased to $88.5 million as of June 30, 2024, up from $84.8 million at the end of 2023[71] - Investments in loans and securities (Level 3) increased to $853.418 million as of June 30, 2024, up from $626.368 million at the end of 2023[82] - Cash, cash equivalents, and restricted cash increased from $222.5 million as of December 31, 2023, to $267.9 million as of June 30, 2024[86][87] - Total assets grew from $336.2 million as of December 31, 2023, to $394.4 million as of June 30, 2024[86][87] - Cash, cash equivalents and restricted cash as of June 30, 2024 was $267.9 million, a 20% increase from $222.5 million as of December 31, 2023[189] Investments and Loans - Investments in loans and securities increased by 49.5% to $408.5 million in H1 2024 compared to $273.3 million in H1 2023[16] - The fair value of investments in loans and securities was $911.4 million as of June 30, 2024, up from $716.8 million at December 31, 2023[49][50] - Gross unrealized losses on investments in loans and securities totaled $12.6 million as of June 30, 2024, compared to $3.8 million at December 31, 2023[52] - Investments in loans and securities, available for sale, totaled $1,150.8 million in amortized cost and $911.4 million in fair value as of June 30, 2024[53] - Proceeds from sales/maturities/prepayments of investments in loans and securities were $66.8 million for the six months ended June 30, 2024, down from $91.4 million in the same period of 2023[57] - Additions to allowance for credit losses were $(79.9) million for the six months ended June 30, 2024, compared to $(85.6) million in the same period of 2023[57] - The company purchased $19.5 million of loan principal from Financing Vehicles in the six months ended June 30, 2024, recognizing an $18.4 million loss[65] - Investments in loans and securities (Level 3) increased to $853.418 million as of June 30, 2024, up from $626.368 million at the end of 2023[82] - The weighted average discount rate for Level 3 fair value measurements increased to 15.4% as of June 30, 2024, from 15.0% at the end of 2023[84][85] - The company purchased $19.5 million of loan principal from Financing Vehicles in the first six months of 2024, resulting in a loss of $18.4 million[74] Cash Flow and Financing - Net cash provided by operating activities improved significantly to $36.0 million in H1 2024 from a net cash used of $25.5 million in H1 2023[16] - The company raised $244.7 million from long-term debt and $89.9 million from ordinary shares sale in H1 2024[16] - Cash, cash equivalents and restricted cash decreased by 19.2% to $267.9 million as of June 30, 2024 from $331.4 million as of June 30, 2023[17] - The Receivables Facility maximum principal amount was increased from $32 million to $45 million in June 2024, with the term extended until June 2026[42] - The Company entered into a new Credit Agreement in February 2024, providing for a $35 million revolving credit facility and a $255 million term loan facility[43] - Net cash provided by operating activities for the six months ended June 30, 2024 was $35,961, compared to $(25,513) in the same period in 2023[201] - Net cash used in investing activities for the six months ended June 30, 2024 was $(351,287), compared to $(190,867) in the same period in 2023[201] - Net cash provided by financing activities for the six months ended June 30, 2024 was $362,434, a 70% increase from $213,359 in the same period in 2023[201] - The company issued 298,057 shares under the Equity Financing Purchase Agreement for net proceeds of $5.2 million during the six months ended June 30, 2024[198] - Net cash provided by operating activities for the six months ended June 30, 2024 was $36.0 million, an increase of $61.5 million from net cash used in operating activities of $25.5 million for the same period in 2023[202] - Net cash used in investing activities for the six months ended June 30, 2024 was $351.3 million, primarily due to purchases of risk retention assets of $408.5 million[205] - Net cash provided by financing activities for the six months ended June 30, 2024 was $362.4 million, including $230.4 million from issuance of long-term debt and $90.0 million from the ordinary share offering[206] - The company entered into a Credit Agreement on February 2, 2024, providing a $25 million revolving credit facility and a $255 million term loan facility[206] Expenses and Costs - Depreciation and amortization expenses increased 67.3% to $13.4 million in H1 2024 from $8.0 million in H1 2023[16] - Share-based compensation decreased 8.4% to $33.5 million in H1 2024 from $36.6 million in H1 2023[16] - Share-based compensation for the period ending June 30, 2024, was $20.093 million, down from $37.710 million in the previous period[14] - Share-based compensation for the period ending June 30, 2023, was $22.395 million, down from $39.691 million in the previous period[15] - Rent expense was $5.8 million for the six months ended June 30, 2024, down from $6.8 million in the same period of 2023[66] - Sublease income was $2.0 million for the six months ended June 30, 2024, down slightly from $2.1 million in the same period of 2023[66] - Total operating lease liabilities amount to $45.956 million as of 2024, with imputed interest deducted at $10.283 million[67] - The company has a remaining contractual obligation of $6.1 million with a third-party cloud computing provider, of which $4.9 million is due within the next 12 months[69] - The maximum potential future payments under guarantees total $29.2 million as of June 30, 2024[70] - Production costs increased by $25.0 million, or 21%, to $145.6 million, driven by increases in Network Volume and new Partners onboarded[158][159] - Technology, data, and product development costs increased by $4.3 million, or 24%, to $21.9 million, primarily due to higher depreciation of capitalized software[160] - Sales and marketing costs decreased by $1.2 million, or 8%, to $13.3 million, driven by reduced compensation expenses and marketing-related costs[162] - General and administrative costs increased by $11.4 million, or 22%, to $64.4 million, excluding a $13.4 million loss from loan purchases, costs decreased by $2.0 million[163] - Production costs increased by $44.8 million (18%) to $290.5 million for the six months ended June 30, 2024, due to higher Network Volume and new Partners onboarded[172] - Technology, data and product development costs increased by $2.5 million (6%) to $41.3 million for the six months ended June 30, 2024, primarily due to higher depreciation of capitalized software[173] - Sales and marketing costs decreased by $5.3 million (18%) to $23.6 million for the six months ended June 30, 2024, driven by lower compensation expenses[175] - General and administrative costs increased by $23.4 million (22%) to $127.5 million for the six months ended June 30, 2024, excluding a $18.4 million loss from loan purchases[176] - Other expense, net increased by $23.7 million (28%) to $107.5 million for the six months ended June 30, 2024, due to higher interest expenses and credit-related impairment losses[177] - Non-cash charges for the six months ended June 30, 2024 included impairment losses on investments in loans and securities, which increased by $1.6 million[203] - Share-based compensation decreased by $3.1 million, while depreciation and amortization increased by $5.4 million primarily from capitalized software[203] Shareholder Equity and Compensation - Total shareholders' equity as of June 30, 2024, was $615.574 million, down from $665.749 million at December 31, 2023[14] - Share-based compensation for the period ending June 30, 2024, was $20.093 million, down from $37.710 million in the previous period[14] - Share-based
Pagaya Technologies Ltd. (PGY) Q2 Earnings: Taking a Look at Key Metrics Versus Estimates
ZACKS· 2024-08-09 14:30
Pagaya Technologies Ltd. (PGY) reported $250.34 million in revenue for the quarter ended June 2024, representing a year-over-year increase of 34.8%. EPS of $0.10 for the same period compares to $0.00 a year ago. The reported revenue compares to the Zacks Consensus Estimate of $239.16 million, representing a surprise of +4.68%. The company delivered an EPS surprise of -50.00%, with the consensus EPS estimate being $0.20. While investors scrutinize revenue and earnings changes year-over-year and how they comp ...
Pagaya Technologies Ltd. (PGY) Q2 Earnings Lag Estimates
ZACKS· 2024-08-09 13:35
Pagaya Technologies Ltd. (PGY) came out with quarterly earnings of $0.10 per share, missing the Zacks Consensus Estimate of $0.20 per share. This compares to break-even earnings per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of -50%. A quarter ago, it was expected that this company would post earnings of $0.16 per share when it actually produced earnings of $0.20, delivering a surprise of 25%. Over the last four quarters, the c ...
Pagaya Technologies .(PGY) - 2024 Q2 - Quarterly Results
2024-08-09 11:15
Overall Performance and Outlook Pagaya delivered record Q2 2024 financial results, exceeding outlooks, expanding its network, and raising full-year guidance, positioning for future self-funded growth and profitability [Q2 2024 Financial & Business Highlights](index=2&type=section&id=Q2%20Financial%20%26%20Business%20Highlights) Pagaya delivered record Q2 2024 financial results, exceeding outlooks with strong network volume, revenue, and adjusted EBITDA, alongside network expansion and capital efficiency enhancements | Financial Metric | Q2 2024 Result | Growth / Note | | :--- | :--- | :--- | | Network Volume | $2.3 billion | 19% YoY | | Total Revenue & Other Income | $250 million | 28% YoY, exceeded outlook | | Revenue from Fees | $243 million | 31% YoY | | FRLPC | $97 million | 49% YoY | | FRLPC % of Network Volume | 4.2% | +84 bps YoY, an all-time high | | Adjusted EBITDA | $50 million | Nearly 3x higher than Q2 2023, exceeded outlook | | Adjusted Net Income | $7 million | 5th consecutive quarter of positive adjusted net income | | GAAP Operating Income | $5 million | 4th consecutive quarter of positive GAAP operating income | | Cash Flow from Operations | $15 million | 4th consecutive quarter of positive operating cash flow | | Net Loss Attributable to Pagaya | ($75 million) | Impacted by non-cash items | - The company continued to expand its lending network, onboarding a new **top 5 bank** in the point-of-sale (POS) vertical and signing an enterprise deal with OneMain Financial to support its auto and personal loan businesses[3](index=3&type=chunk) - Achieved a record **FRLPC percentage of 4.2%**, leading the company to raise its target range for the remainder of 2024 to **3.5% - 4.5%** from the previous **3.0% - 4.0%**[3](index=3&type=chunk) - Enhanced capital efficiency by signing a **$1 billion forward flow purchase agreement** with Castlelake and achieving a first-ever **AAA rating** on its personal loan ABS program, which is expected to lower the cost of capital and reduce risk retention[4](index=4&type=chunk) - A business reorganization is expected to reduce core operating expenses by **$25 million** on an annualized basis, with **$10 million** in savings anticipated in the second half of 2024[5](index=5&type=chunk) [Shareholder Letter (CEO & CFO Commentary)](index=4&type=section&id=Shareholder%20Letter%20%28CEO%20%26%20CFO%20Commentary%29) CEO and CFO commentary highlights strong business momentum, positive incremental cash flow, and strategic priorities for network expansion and capital efficiency, targeting self-funded growth and GAAP profitability - The company has reached a critical inflection point where fees earned from network volume (FRLPC) are now higher than the capital required for risk retention, generating **positive incremental cash flow**[6](index=6&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk) - Pagaya is on track to become **cash flow positive** and achieve **GAAP net income profitability in 2025**[8](index=8&type=chunk)[24](index=24&type=chunk) - The company is running at an annualized rate of approximately **$1 billion in total revenue**, **$400 million in FRLPC**, and **$200 million in adjusted EBITDA**[7](index=7&type=chunk) [Strategic Execution & Growth](index=5&type=section&id=Strategic%20Execution%20%26%20Growth) Pagaya is executing its growth strategy by expanding its lender network with new enterprise partners and focusing on the Point-of-Sale (POS) segment as a key growth frontier - The company is successfully expanding its network, adding enterprise lenders like OneMain Financial and a new **top 5 bank** in the POS vertical, in line with its goal of adding **2-4 new partners annually**[9](index=9&type=chunk)[10](index=10&type=chunk) - Point-of-Sale (POS) lending is a major growth opportunity, with a target to become **more than 30% of the business** at scale. The partnership with Elavon is on track to go live in Q4, and the company joined Mastercard's Engage program as the sole POS credit enabler[13](index=13&type=chunk)[15](index=15&type=chunk) - The partnership with Klarna is accelerating, with Q2 2024 network originations up approximately **2x** compared to Q2 2023[15](index=15&type=chunk)[16](index=16&type=chunk) - The company is developing a pre-screen product to offer existing customers of its lending partners pre-approved access to new credit, with positive initial results from a beta test[20](index=20&type=chunk) [Capital & Financial Strategy](index=7&type=section&id=Capital%20%26%20Financial%20Strategy) The company's financial strategy emphasizes capital efficiency through a $1 billion forward flow agreement and optimized ABS structures, aiming for cash flow positivity by early 2025 - Signed a **$1 billion, 12-month forward flow arrangement** with Castlelake to fund personal loan purchases, significantly improving capital efficiency[4](index=4&type=chunk)[18](index=18&type=chunk) - Achieved a first-ever **AAA rating** on its personal loan ABS program, which helps lower investor cost of capital and reduces the company's risk retention requirements going forward[4](index=4&type=chunk)[18](index=18&type=chunk) - The pending acquisition of Theorem Technology Inc. will create a combined credit fund platform with over **$3 billion in AUM**, strengthening the funding ecosystem[4](index=4&type=chunk)[18](index=18&type=chunk) - Credit performance of recent loan vintages remains stable and strong, with early-stage delinquencies at their lowest levels since the 2021 peak[18](index=18&type=chunk) [Q2 2024 Detailed Financial Results](index=9&type=section&id=Second%20Quarter%202024%20Results) Q2 2024 saw significant growth in Network Volume, Total Revenue, and FRLPC, with strong operating leverage leading to a near tripling of Adjusted EBITDA | Metric | Q2 2024 | Q2 2023 | YoY Change | | :--- | :--- | :--- | :--- | | Network Volume | $2.3B | $2.0B | +19% | | Total Revenue & Other Income | $250M | $196M | +28% | | FRLPC | $97M | $65M | +49% | | FRLPC % | 4.2% | 3.3% | +84 bps | | Adjusted EBITDA | $50M | $17M | +188% | - FRLPC growth significantly outpaced network volume growth, driven by a higher FRLPC % in the personal loan vertical, which reached **6.2% in Q2 2024**[27](index=27&type=chunk)[28](index=28&type=chunk) - The company demonstrated strong operating leverage, with core operating expenses flat year-over-year at **$55 million**, representing **22% of total revenue**, down from **28%** in the prior year[31](index=31&type=chunk) - The funding network expanded to **120 institutional investors** with the addition of **22 new funding partners** since the start of the year[35](index=35&type=chunk) - Net loss attributable to Pagaya was **$75 million**, compared to a **$31 million loss** in Q2 2023, primarily impacted by higher interest expense and non-cash fair value adjustments on the risk retention portfolio[33](index=33&type=chunk) [2024 Financial Outlook](index=14&type=section&id=2024%20Financial%20Outlook) Pagaya raised its full-year 2024 guidance for Total Revenue and Adjusted EBITDA, reflecting strong performance and an increased FRLPC target range | Metric | Q3 2024 Outlook | Full Year 2024 Outlook | | :--- | :--- | :--- | | Network Volume | $2.3B to $2.5B | $9.25B to $10.25B | | Total Revenue & Other Income | $250M to $260M | $975M to $1,050M | | Adjusted EBITDA | $50M to $60M | $180M to $210M | - The target range for FRLPC % was increased to **3.5% to 4.5%** for the remainder of 2024, up from the previous range of **3.0% to 4.0%**[42](index=42&type=chunk) Financial Statements & Reconciliations This section presents Pagaya's consolidated financial statements, including statements of operations, financial position, cash flows, and reconciliations of non-GAAP financial measures [Consolidated Statements of Operations](index=18&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2024, Pagaya reported increased Total Revenue and achieved Operating Income, despite a Net Loss attributable to the company due to other expenses | (In thousands) | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | | :--- | :--- | :--- | | Total Revenue and Other Income | $250,344 | $195,612 | | Total Costs and Operating Expenses | $245,317 | $205,850 | | **Operating Income (Loss)** | **$5,027** | **($10,238)** | | Other income (expense), net | ($73,194) | ($16,895) | | **Net Loss Attributable to Pagaya** | **($74,785)** | **($31,297)** | [Consolidated Statements of Financial Position](index=19&type=section&id=Consolidated%20Statements%20of%20Financial%20Position) As of June 30, 2024, Pagaya's total assets increased to $1.45 billion, primarily due to investments, while total liabilities also rose, impacting shareholders' equity | (In thousands) | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $233,593 | $186,478 | | Investments in loans and securities | $911,425 | $716,793 | | **Total Assets** | **$1,452,977** | **$1,208,376** | | Secured borrowing (current & non-current) | $400,221 | $271,713 | | Long-term debt (current & non-current) | $232,592 | $0 | | **Total Liabilities** | **$763,153** | **$468,377** | | **Total Shareholders' Equity** | **$615,574** | **$665,749** | [Consolidated Statements of Cash Flows](index=20&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2024, Pagaya generated positive cash flow from operations, with investing activities primarily funding loans and securities, and financing activities providing substantial cash | (In thousands) | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $35,961 | ($25,513) | | Net cash used in investing activities | ($351,287) | ($190,867) | | Net cash provided by financing activities | $362,434 | $213,359 | | **Net increase (decrease) in cash** | **$45,385** | **($5,708)** | [Reconciliation of Non-GAAP Financial Measures](index=21&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) In Q2 2024, Pagaya reconciled its GAAP Net Loss to positive Adjusted Net Income and Adjusted EBITDA, primarily adjusting for non-cash items and interest expense | (In thousands) | Three Months Ended June 30, 2024 | | :--- | :--- | | **Net Loss Attributable to Pagaya** | **($74,785)** | | Share-based compensation | $18,044 | | Impairment loss on certain investments | $58,179 | | Other adjustments | $5,750 | | **Adjusted Net Income (Loss)** | **$7,188** | | Interest expenses | $21,563 | | Income tax expense (benefit) | $14,512 | | Depreciation and amortization | $7,042 | | **Adjusted EBITDA** | **$50,305** | | (In thousands, unless otherwise noted) | Three Months Ended June 30, 2024 | | :--- | :--- | | Revenue from fees | $242,594 | | Production costs | $145,602 | | **Fee Revenue Less Production Costs (FRLPC)** | **$96,992** | | Network Volume (in millions) | $2,331 | | **FRLPC %** | **4.2%** |
Why Pagaya Stock Jumped 21% in May
The Motley Fool· 2024-06-05 11:56
Generally accepted accounting principles (GAAP) net income is still in the red at $21 million, but that was an improvement of $40 million from last year. Wall Street expects Pagaya to become net profitable on a GAAP basis next year. It delivered another solid quarter, but it's also recently done some interesting things that investors need to know about. Artificial intelligence (AI) credit company Pagaya Technologies (PGY -0.54%) stock jumped 21% in May according to data provided by S&P Global Market Intelli ...
Pagaya: Patience Should Pay Off
seekingalpha.com· 2024-05-23 22:09
Core Viewpoint - Pagaya Technologies Ltd. presents an intriguing investment opportunity in the fintech sector, despite its stock trading at all-time lows due to market complexities and reliance on funding partners [1][10]. Financial Performance - Pagaya reported a strong Q1 with revenues increasing by 31% to $245 million, surpassing analyst estimates by $17 million and beating EPS targets by $0.04 [2]. - The company achieved record network volumes of $2.4 billion and improved Fee Revenue Less Production Costs (FRLPC) to $92 million, resulting in a 3.8% margin [2]. - Adjusted EBITDA rose significantly to $38 million from just $2 million in Q1 '23, driven by an 84% year-over-year growth in cost efficiency [3]. Funding and Capital Structure - Pagaya relies heavily on bank partners for funding new loan originations, attracting $1.9 billion in funding across five transactions during the quarter [4]. - The company has a net loan and securities balance of $804 million and a cash balance of $310 million, offset by $458 million in debt, resulting in a net capital position of $656 million [7]. - A recent equity offering raised $95 million, part of a larger strategy to secure $330 million in capital for loan retention [6]. Market Valuation - The stock has a market cap of approximately $800 million, with 2024 revenue guidance approaching $1 billion and targeted adjusted EBITDA of $150 to $190 million, indicating a valuation of less than 5x targets [8]. - Investors are effectively paying a minimal amount for the AI lending platform, which generates nearly $1 billion in fee income [8]. Strategic Initiatives - Pagaya is developing a new point-of-sale (POS) product as an alternative to traditional buy now, pay later solutions, with U.S. Bank's Merchant Services recently signing on [5]. - The company faces challenges in scaling its lending platform, similar to other fintechs that have either acquired digital banks or built their own to diversify income sources [9]. Investor Considerations - The stock's low valuation, combined with strong revenue growth, presents a compelling investment case, although patience may be required as fintech stocks are currently out of favor [11].
New Institutional And Technical Trends Bode Well For Pagaya
seekingalpha.com· 2024-05-23 00:20
Klaus Vedfelt/DigitalVision via Getty Images In my previous article, I approached Pagaya (NASDAQ:PGY) from the standpoint of a new company dealing with numerous short-term negatives, during possibly the most volatile chapter in its exceedingly volatile history. I am happy to say that its recent earnings report has allayed many fears and attracted a large number of new institutional investors. Institutional Purchases I follow a particular site, Fintel, that tracks institutional investments (13 F filings) in ...
Pagaya Technologies .(PGY) - 2024 Q1 - Quarterly Report
2024-05-09 20:14
Financial Performance - Net loss including noncontrolling interests for Q1 2024 was $31.66 million, compared to $98.62 million in Q1 2023, representing a significant improvement[22] - Total revenue and other income for Q1 2024 was $245.28 million, up 31.4% from $186.64 million in Q1 2023[19] - Revenue from fees in Q1 2024 was $237.00 million, a 35.2% increase from $175.25 million in Q1 2023[19] - Operating income for Q1 2024 was $7.69 million, a turnaround from an operating loss of $24.98 million in Q1 2023[19] - Net loss attributable to Pagaya Technologies Ltd. for Q1 2024 was $21.22 million, compared to $60.97 million in Q1 2023[19] - Basic and diluted net loss per share for Q1 2024 was $0.33, improved from $1.03 in Q1 2023[19] - Comprehensive loss attributable to Pagaya Technologies Ltd. for Q1 2024 was $45.95 million, compared to $61.52 million in Q1 2023[22] - Net loss for the three months ended March 31, 2024, was $31.662 million, compared to a net loss of $21.223 million for the same period in 2023[25] - Net Loss Attributable to Pagaya Technologies Ltd. improved to $21.2 million in Q1 2024 from $61.0 million in Q1 2023[182] - Adjusted Net Income improved to $13.3 million in Q1 2024 from a loss of $11.0 million in Q1 2023[204] - Adjusted EBITDA rose to $39.8 million in Q1 2024 from $2.0 million in Q1 2023[204] - Net loss per share attributable to ordinary shareholders for Class A and Class B shares was $0.33 for the three months ended March 31, 2024, compared to $1.03 for the same period in 2023[127] Revenue and Fees - Revenue from fees for Q1 2024 increased by $61.8 million (35%) to $237.0 million, driven by a $65.1 million increase in Network AI fees[186] - Network AI fees totaled $215.3 million for Q1 2024, up from $150.2 million in Q1 2023[43] - Contract fees for Q1 2024 were $21.7 million, down from $25.1 million in Q1 2023[45] - Total revenue from fees for Q1 2024 was $237.0 million, compared to $175.3 million in Q1 2023[50] - Revenue from related parties totaled $178.5 million for Q1 2024, up from $153.8 million in Q1 2023, primarily from securitization vehicles[90] - Revenue from fees grew by 35% to $237.0 million in Q1 2024 compared to $175.3 million in Q1 2023[185] - Total Revenue and Other Income increased by 31% to $245.3 million in Q1 2024 from $186.6 million in Q1 2023[185] - Interest income decreased by 26% to $7.7 million in Q1 2024 from $10.4 million in Q1 2023[185] - Investment income declined by 46% to $528,000 in Q1 2024 from $987,000 in Q1 2023[185] - Fee Revenue Less Production Cost (FRLPC) increased to $92.1 million in Q1 2024 from $50.2 million in Q1 2023[204] Expenses and Costs - Production Costs rose to $144.9 million in Q1 2024, up from $125.1 million in Q1 2023, driven by increased Network Volume[173] - Technology, data, and product development expenses decreased to $19.4 million in Q1 2024 from $21.1 million in Q1 2023[182] - Sales and marketing expenses dropped to $10.3 million in Q1 2024 from $14.3 million in Q1 2023[182] - General and administrative expenses increased to $63.1 million in Q1 2024 from $51.1 million in Q1 2023[182] - General and administrative costs rose by $11.9 million (23%) to $63.1 million in Q1 2024, driven by transaction-related expenses and miscellaneous costs[195] - Other expense, net decreased by $32.6 million (49%) in Q1 2024, primarily due to lower credit-related impairment losses[196] - Share-based compensation expense was $17.30 million in Q1 2023[24] - Share-based compensation expense for the three months ended March 31, 2024, was $15.5 million, compared to $16.4 million for the same period in 2023[119] Balance Sheet and Assets - Total cash, cash equivalents, and restricted cash decreased to $310.048 million as of March 31, 2024, compared to $316.762 million as of December 31, 2023[28] - Total assets increased to $1.483 billion as of March 31, 2024, up from $1.208 billion as of December 31, 2023[17] - Total liabilities rose to $683.026 million as of March 31, 2024, compared to $468.377 million as of December 31, 2023[17] - Shareholders' equity increased to $725.911 million as of March 31, 2024, up from $665.749 million as of December 31, 2023[17] - Cash and cash equivalents increased to $274.495 million as of March 31, 2024, up from $186.478 million as of December 31, 2023[17] - Investments in loans and securities increased to $892.853 million as of March 31, 2024, compared to $714.303 million as of December 31, 2023[17] - Secured borrowing increased to $331.156 million as of March 31, 2024, up from $271.713 million as of December 31, 2023[17] - Accumulated deficit increased to $563.860 million as of March 31, 2024, compared to $542.637 million as of December 31, 2023[17] - Secured borrowings as of March 31, 2024, were $331.2 million, up from $271.7 million as of December 31, 2023[54] - The outstanding principal balance under repurchase agreements was $310.1 million as of March 31, 2024, with a weighted average interest rate of approximately 14%[55] - Investments in loans and securities available for sale had unrealized losses of $3.166 million as of March 31, 2024[68] - The allowance for credit losses for investments in loans and securities was $126.36 million as of March 31, 2024[70] - Proceeds from sales/maturities/prepayments of investments in loans and securities were $35.897 million for Q1 2024[70] - Total investments in Pagaya SmartResi F1 Fund, LP and other proprietary investments amounted to $26.9 million as of March 31, 2024, up from $26.4 million in December 2023[71][72] - The company's consolidated VIEs (Risk Retention Entities) held net assets of $122.9 million as of March 31, 2024, down from $132.7 million in December 2023[76] - The company's direct interest in unconsolidated VIEs had a carrying amount of $777.5 million and maximum exposure to loss of $777.5 million as of March 31, 2024, up from $591.0 million in December 2023[79] - Operating lease liabilities totaled $48.5 million as of March 31, 2024, with maturities of $59.7 million through 2032[82] - The company has a remaining contractual obligation of $7.3 million with a cloud computing provider, with $4.9 million due in the next 12 months[84] - The maximum potential future payments under guarantees totaled $29.0 million as of March 31, 2024[85] - Investments in loans and securities available for sale had a fair value of $894.2 million as of March 31, 2024, with gross unrealized losses of $31.3 million[65] - The warrant liability decreased to $1.3 million as of March 31, 2024 from $3.2 million in December 2023 due to a $1.9 million change in fair value[95] - The company's long-term debt outstanding was $235.0 million as of March 31, 2024[61] - Cash, cash equivalents, and restricted cash increased to $310.0 million as of March 31, 2024, up from $222.5 million as of December 31, 2023[100] - Total assets not measured at fair value on a recurring basis were $432.6 million as of March 31, 2024, compared to $336.2 million as of December 31, 2023[100] - Investments in loans and securities available for sale increased to $894.2 million as of March 31, 2024, up from $507.2 million as of March 31, 2023[97] Capital and Financing - The company completed a 1-for-12 reverse share split on March 8, 2024, with all share amounts retroactively adjusted[31] - The company entered into a Credit Agreement on February 2, 2024, providing a $25 million Revolving Credit Facility, later increased to $35 million, and a $255 million Term Loan Facility[57] - As of March 31, 2024, the company had $10.0 million in letters of credit issued and $25.0 million remaining capacity under the Revolving Credit Facility[62] - The company issued 298,057 shares under the Equity Financing Purchase Agreement for net proceeds of $5.2 million during Q1 2024[108] - The company priced an offering of 7,500,000 Class A Ordinary Shares, raising approximately $90.0 million in net proceeds[109] - The company has the right to sell up to $300 million of Class A Ordinary Shares to B. Riley Principal Capital II under the Equity Financing Purchase Agreement, with 298,057 shares issued for net proceeds of $5.2 million in Q1 2024[220][221] - The company filed a shelf registration statement allowing it to offer and sell up to $500 million of Class A ordinary shares, debt securities, and/or warrants[222] - The company priced an offering of 7,500,000 Class A Ordinary Shares, generating approximately $90.0 million in proceeds after deducting underwriting discounts and fees[223] - The company expects to fund operations with existing cash, cash equivalents, and cash generated from operations, including cash flows from investments in loans and securities, and additional secured borrowings[215] - The company may raise additional capital through borrowings under a new credit facility entered into in February 2024, or through the sale or issuance of equity or debt securities, including up to 1,666,666 Series A Preferred Shares[215] - The company could receive up to $169.6 million in proceeds if all public and private placement warrants are exercised for cash, with each warrant entitling the holder to purchase one Class A Ordinary Share at $138 per share[217] - As of May 8, 2024, the price of the company's Class A Ordinary Shares was $10.50 per share, making it unlikely for warrant holders to exercise warrants if the market price remains below $138[218] Cash Flow - Net cash provided by operating activities was $20.47 million for Q1 2024, compared to a net cash outflow of $23.67 million in Q1 2023[224] - Net cash used in investing activities was $230.89 million in Q1 2024, compared to $99.67 million in Q1 2023[224] - Net cash provided by financing activities was $298.74 million in Q1 2024, compared to $103.02 million in Q1 2023[224] AI and Technology - The company has evaluated over $2.0 trillion in application volume since inception, driven by improvements in AI technology and data network[154] - The company's AI technology enables partners to increase originations by up to 25% in some cases[152] - The company's economic model is evaluated using the metric FRLPC (fee revenue less Production Costs), which is highly correlated to Network Volume[149] - Network Volume increased to $2,419 million in Q1 2024, up from $1,850 million in Q1 2023, reflecting a 30.8% growth[164] - Network Volume grew by 31% from $1.9 billion in Q1 2023 to $2.4 billion in Q1 2024[186] Taxes and Compensation - The company's income from Preferred Technological Enterprise (PTE) is subject to a 12% tax rate, effective for tax years 2020 through 2024[120] - The company's effective tax rate for the three months ended March 31, 2024, was -18.8%, compared to -7.3% for the same period in 2023[124] - The company's tax rate is affected by recurring items such as tax rates in foreign jurisdictions and the relative amounts of income earned in those jurisdictions[124] - Unrecognized compensation expense related to unvested share options was approximately $46.7 million as of March 31, 2024, expected to be recognized over 1.0 year[112] - Unrecognized compensation expense related to RSUs was approximately $31.2 million as of March 31, 2024, expected to be recognized over 0.9 years[114] - Unrecognized compensation expense related to options to restricted shares was approximately $18.0 million as of March 31, 2024, expected to be recognized over 1.5 years[117] Fair Value and Valuation - The weighted average discount rate for Level 3 fair value measurement of loans and securities as of March 31, 2024, was 16.7%, with a range of 8.0% to 20.0%[98] - The weighted average loss rate for Level 3 fair value measurement as of March 31, 2024, was 17.2%, with a range of 6.2% to 31.0%[98] - The weighted average prepayment rate for Level 3 fair value measurement as of March 31, 2024, was 9.1%, with a range of 0.0% to 40.0%[98] Related Party Transactions - Total fee receivables from related parties increased to $88.7 million as of March 31, 2024, up from $84.8 million as of December 31, 2023[88] - Revenue from related parties totaled $178.5 million for Q1 2024, up from $153.8 million in Q1 2023, primarily from securitization vehicles[90] Noncontrolling Interests - Net loss attributable to noncontrolling interests decreased by $27.2 million (72%) in Q1 2024, driven by consolidated VIEs' performance[199]
Pagaya Technologies .(PGY) - 2024 Q1 - Earnings Call Presentation
2024-05-09 14:05
1Q24 Earnings Supplement 01 Operating Metrics 01 *Note: See "Appendix" for a reconciliation of non-GAAP measures to the most comparable GAAP measure PA G AYA T E C H N O L O G I E S LT D. Contents 02 Non-GAAP Reconciliations 1Q'24 financial highlights 4 $270 $45 $250 $210 $170 In $ millions; % in YoY growth FRLPC $40 1Q23 1Q24 1Q23 1Q24 ද 12.0% 8.0% 4.0% 0.0% 9.5% 9.5% 9.5% 8.8% 9.8% 6.8% 6.2% 6.1%5.6% 6.0% 2.7% 3.3% 3.4% 3.2% 3.8% 3 -4 % FRLPC target range D PAGAYA % contribution from lending partner and i ...
Pagaya Technologies .(PGY) - 2024 Q1 - Quarterly Results
2024-05-09 11:07
2 PAGAYA PAGAYA TECHNOLOGIES LTD. Q1 Letter to Shareholders $2.42B Record network volume of $2.42 billion exceeded our outlook of $2.2 to $2.4 billion and grew 31% year-over-year. $245M Record total revenue and other income of $245M exceeded our outlook of $225 to $240 million and grew 31% year-over-year, driven primarily by a 35% growth in revenue from fees, as we continued to monetize our lending partner product. Q3 2024 Q2 2024 Q1 2024 DATE ISSUED May 9, 2024 Q4 2024 "Disciplined execution drove another ...