Financial Data and Key Metrics Changes - In Q4 2025, the company achieved GAAP net income of $34 million and operating cash flow of $80 million, marking a significant turnaround from a loss of $238 million in the previous year [5][30] - For the full year 2025, revenues reached $1.3 billion, up 26% year-over-year, with adjusted EBITDA of $371 million, up 76% year-over-year, and GAAP net income of $81 million, an improvement of $483 million compared to 2024 [5][23][30] - The fourth quarter revenue was $335 million, with a 29% adjusted EBITDA margin, and FRLPC (Fee Revenue Less Production Costs) was $131 million, up 12% year-over-year [24][26] Business Line Data and Key Metrics Changes - Personal loans accounted for approximately 65% of total network volume, growing 10% year-over-year, while auto and point-of-sale (POS) represented 19% and 16% of quarterly network volume, respectively [24] - The company reported a total network volume of $2.7 billion for Q4, up 3% year-over-year, with full-year network volume at $10.5 billion, up 9% [24][25] Market Data and Key Metrics Changes - The company has diversified its funding sources, creating almost $3 billion of revolving capacity through ABS (Asset-Backed Securities) structures across personal loans and point-of-sale [12][33] - The capital markets environment remains supportive, with strong demand from insurance funds and traditional asset managers, despite increased volatility in private credit [19][55] Company Strategy and Development Direction - The company is focused on sustainable, profitable growth, emphasizing prudent risk management over short-term gains, and aims to build a B2B2C platform that integrates into the U.S. financial ecosystem [6][13][14] - Future growth is expected to come from deepening existing partner relationships and onboarding new partners, with a robust pipeline of new partnerships [9][10][14] Management's Comments on Operating Environment and Future Outlook - Management noted that while consumer performance remains strong, there is increased uncertainty in the market, prompting a cautious approach to credit exposure [6][19][60] - The guidance for 2026 reflects a cautious outlook, with expected GAAP net income ranging from $100 million to $150 million, and a focus on maintaining profitability while managing risk [39][46] Other Important Information - The company has made significant investments in data and risk infrastructure, enhancing its ability to manage credit risk effectively [21][22] - The fourth quarter saw proactive steps taken to reduce exposure to higher-risk segments, which impacted network volumes but did not affect profitability targets [20][25] Q&A Session Summary Question: Can you elaborate on the decision to move away from variable outcomes? - Management emphasized the importance of prudent risk management over short-term growth, highlighting the ability to proactively manage risk based on data from multiple lenders [39][40] Question: How is the funding environment affecting your outlook for 2026? - The company noted strong demand for its products and a more disciplined private credit market, which is beneficial for its funding strategy [55] Question: What specific actions were taken to pull back on credit exposure? - The company indicated that the pullback was across the entire portfolio, with a focus on personal and auto loans due to the growth seen in POS [63]

PAGAYA TECHNOLOGIES LTD. 4Q'25 Earnings Supplement February 9, 2026 1 Forward Looking Statements and Non-GAAP Information 01 Financial Metrics Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the Pagaya website, or from Pagaya Investor Relations. Any forward-looking statement made in this presentation speaks only as of the date on which it is made. The Company assumes no obligation to update or revise any forward-look ...

Core Insights - Pagaya Technologies Ltd. reported strong financial results for Q4 and the full year 2025, highlighting significant growth in net income and revenue, driven by strategic investments and improved operational efficiency [2][5][6]. Q4 2025 Highlights - Record GAAP net income attributable to Pagaya shareholders reached $34 million, an increase of $272 million year-over-year, surpassing the outlook of $25 million to $35 million [5]. - Network volume was $2.7 billion, a 3% increase year-over-year, or 34% excluding SFR [5]. - Total revenue and other income amounted to $335 million, reflecting a 20% year-over-year increase [5]. - Revenue from fees less production costs (FRLPC) was $131 million, up 12% year-over-year, driven by improved performance in Personal Loan and Auto verticals [5]. - Adjusted EBITDA for Q4 was $98 million, an increase of $34 million compared to the prior year [5]. Full Year 2025 Highlights - Full-year GAAP net income attributable to Pagaya shareholders was $81 million, up $483 million year-over-year, exceeding the outlook of $72 million to $82 million [5]. - Network volume for the year reached $10.5 billion, a 9% increase year-over-year [5]. - Total revenue and other income for the year was $1.3 billion, a 26% increase year-over-year [5]. - FRLPC for the year was $512 million, a 26% increase year-over-year [5]. - Adjusted EBITDA for the full year was $371 million, an increase of $161 million compared to the previous year [5]. Future Outlook - For Q1 2026, the company expects network volume to be between $2.5 billion and $2.7 billion, with total revenue projected between $315 million and $335 million [6]. - For the full year 2026, network volume is expected to be between $11.25 billion and $13 billion, with total revenue projected between $1.4 billion and $1.575 billion [7].

Financial Performance - Q4 network volume reached $2.7 billion, growing 3% year-over-year and 34% excluding SFR, surpassing the outlook of $2.65 - $2.9 billion[3] - Total revenue and other income for Q4 was $335 million, a 20% year-over-year increase, exceeding the forecast of $333 - $358 million[4] - Adjusted EBITDA for Q4 was $98 million, reflecting a 53% year-over-year growth and an adjusted EBITDA margin increase of over 6 points to 29%[6] - GAAP net income for Q4 was $34 million, representing a 10% margin and a significant increase of $272 million year-over-year, driven by fee revenue growth[7] - The company achieved a record full-year revenue of $1.3 billion, growing 26% year-over-year, with adjusted EBITDA for the year at $371 million, up 76%[15] - Full year 2025 revenue reached $1,301 million, up 26% year-over-year, with adjusted EBITDA of $371 million, reflecting a 76% increase compared to 2024[52] - Total revenue for Q4 2025 reached $334.8 million, a 19.8% increase from $279.4 million in Q4 2024[101] - Net income attributable to Pagaya Technologies Ltd. was $34.3 million in Q4 2025, compared to a net loss of $237.9 million in Q4 2024[101] - Operating income for the year ended December 31, 2025, was $263.8 million, significantly up from $66.8 million in 2024[101] - Non-GAAP adjusted net income for the year was $275.3 million, compared to $66.9 million in 2024, reflecting a substantial increase[102] Funding and Investments - The company issued $2.9 billion in ABS across 7 transactions in Q4, enhancing funding capacity and diversifying funding sources[9] - The company diversified its funding structure, with about two-thirds of personal loan business funded by ABS in 2025, compared to almost entirely in 2024[41] - The company announced a $350 million revolving Personal Loans ABS transaction, providing up to approximately $3 billion of funding capacity[79] - Discretionary investments in loans and securities totaled approximately $171 million during 2025, enhancing liquidity and interest income[81] - The company is leveraging its capital structure to make opportunistic investments, with one-third of Investments in Loans and Securities being discretionary[81] Operational Efficiency - Approximately half of Q4 originations came from outside decline monetization, indicating a successful conversion of a core Personal Loan partner into a multi-product relationship[13] - The onboarding pipeline is the most robust in the company's history, with three new partners launched and multiple additional partners expected to go live in the coming quarters[36] - The company signed several long-term agreements with leading partners to enhance application flow size and quality, which is expected to unlock accelerated growth[40] - The company experienced a significant reduction in general and administrative expenses, decreasing from $240.8 million in 2024 to $159.6 million in 2025[101] - Core operating expenses as a percentage of FRLPC improved to 36% in 2025 from 56% in 2024, demonstrating enhanced operational efficiency[109] Future Outlook - For 2026, the company anticipates more measured volume and revenue growth, prioritizing credit risk over market share gains[27] - The company expects 2026 revenue to be between $11.25 billion and $13.0 billion, supported by new products and partner growth[58] - For Q1 2026, the company expects Network Volume between $2.5 billion and $2.7 billion, and Total Revenue & Other Income between $315 million and $335 million[87] - The full-year 2026 outlook includes Total Revenue & Other Income projected between $1.4 billion and $1.575 billion, with GAAP Net Income expected between $100 million and $150 million[87] - The FRLPC margin is expected to be between 4.0% and 5.0% for the year, reflecting potential credit-related impairments[86] Credit Performance - Credit performance remains stable, with cumulative net losses for personal loans trending approximately 30% - 40% lower than peak levels in Q4 2021[70] Shareholder Returns - The company repurchased approximately $7 million of its 8.875% senior unsecured notes at a discount of approximately 12.5% to par[82] - The weighted average shares outstanding for basic shares increased to 81.9 million in 2025 from 74.3 million in 2024[102]

Core Insights - Pagaya Technologies (PGY) utilizes AI for decision-making and underwriting, enhancing credit approval efficiency for banks and fintech partners, leading to increased approval rates and credit volume [1][11] - The company experienced a significant turnaround in 2025, achieving three consecutive quarters of positive net income after previous losses, indicating improved fundamentals and profitability [2][11] - Pagaya's diversified model includes 145 institutional funding partners, allowing multiple revenue streams and reducing reliance on any single lender or product [4][11] Business Model - Pagaya does not retain most loans on its balance sheet; instead, it securitizes them, transferring credit risk to institutional investors, which supports a capital-light and scalable business model [5][11] - The company benefits from a data flywheel effect, where increased loan applications enhance the AI model's accuracy and performance [5][11] Competitive Landscape - Upstart Holdings, Inc. (UPST) operates similarly as an AI-powered lending marketplace but temporarily holds loans on its balance sheet, contrasting with Pagaya's capital-light approach [6][7] - LendingTree (TREE) functions as a financial services marketplace, matching consumers with providers without underwriting or holding loans, focusing on a fee-based model [8][9] Financial Performance - Pagaya's stock has increased by 33.2% over the past year, outperforming the industry's decline of 23.9% [10][11] - The current price-to-sales ratio for PGY is 0.84X, significantly below the industry average of 3.02X, indicating potential undervaluation [12][11] - The Zacks Consensus Estimate for PGY's earnings is $3.10 for 2025 and $3.41 for 2026, reflecting year-over-year growth of 273.5% and 10%, respectively [13][16]

Core Viewpoint - Pagaya Technologies Ltd. (PGY) is identified as a top small-cap investment opportunity for 2026, despite its stock being down 63% from its 52-week high [1] Company Summary - Pagaya Technologies is set to report its Q4 earnings next week, indicating an upcoming event that may impact its stock performance [1] - The company is currently experiencing significant stock price depreciation, which may present a buying opportunity for investors [1] Analyst Background - The analysis is backed by a former managing editor with experience in financial media focused on mid and small-cap companies, providing credibility to the investment insights [1] - The analyst's academic background in financial markets and institutions enhances the depth of research and analysis presented [1]

Core Viewpoint - KBRA has assigned preliminary ratings to eight classes of notes issued by Pagaya AI Debt Grantor Trust 2026-R1 and Pagaya AI Debt Trust 2026-R1, indicating a structured approach to evaluating the creditworthiness of this unsecured consumer loan ABS transaction [1] Group 1: Credit Enhancement - The initial hard credit enhancement levels for the Class A Notes are set at 47.00%, while the Class E Notes have a lower enhancement level of 5.85% [1] - Credit enhancement is composed of overcollateralization, subordination (excluding Class E Notes), and cash reserve accounts [1]

Group 1 - Seeking Alpha welcomes a new contributing analyst, Brock Liolios, encouraging others to share investment ideas for publication and potential earnings [1] - A finance student from the University of Georgia expresses a strong interest in public markets and aims to work in the hedge fund space, focusing on disciplined self-study and deep analysis of businesses [2] - The student emphasizes a bottom-up fundamental research approach, valuing process and sound judgment over fitting predefined investing labels [2] Group 2 - The student aims to produce transparency about assumptions and risks in their research, seeking to gain real experience and build a collection of work for future opportunities [2] - The article reflects the student's motivation and seriousness about learning the art of investing, welcoming feedback and professional connections [2] - The analyst discloses a beneficial long position in PGY shares, indicating personal investment interest [3]

Core Insights - Pagaya Technologies Ltd. (PGY) is set to announce its fourth-quarter and 2025 earnings on February 9, with expectations of continued strong performance following a 36% year-over-year revenue increase in Q3 to $350.2 million driven by fees and interest income [1][2]. Revenue and Growth Estimates - The company anticipates fourth-quarter revenues and other income to be between $333 million and $358 million, with full-year expectations ranging from $1.3 billion to $1.325 billion [2]. - The Zacks Consensus Estimate for Q4 revenues is $348.4 million, reflecting a 24.7% year-over-year increase, while the full-year revenue estimate of $1.32 billion indicates a 28.4% growth [3]. Earnings Estimates - The consensus estimate for Q4 earnings remains unchanged at 75 cents, indicating significant growth from the previous year, while the 2025 earnings estimate is projected at $3.10 [4][5]. Earnings Surprise History - Pagaya has a mixed earnings surprise history, having outperformed the Zacks Consensus Estimate in only two of the last four quarters, with an average surprise of 20.7% [5][6]. Performance and Valuation - PGY shares fell 30.1% in Q4, underperforming the industry average decline of 13.6%, and are currently trading at a trailing 12-month price/book (P/B) ratio of 2.96, slightly below the industry average of 3.00 [11][15]. - Compared to peers, PGY trades at a premium to LendingClub (P/B of 1.33) but at a discount to LendingTree (P/B of 5.55) [17]. Business Model and Strategy - The company's growth strategy includes expanding product offerings, enhancing monetization of existing partnerships, and adding new enterprise lending partners, particularly large U.S. banks and auto captives [2][18]. - Pagaya's AI-driven platform and diversified revenue streams provide resilience against market volatility and credit risks, positioning the company for continued growth [18]. Cost Trends - Despite strong revenue growth, Pagaya has experienced a persistent increase in expenses, with a compound annual growth rate of 26.2% in total costs and operating expenses over the past three years [19].

Core Insights - Pagaya Technologies Ltd. (PGY) experienced a daily increase of 1.75% to $19.73, outperforming the S&P 500's gain of 0.54% [1] - The company has seen a decline of 12.97% in its share price over the past month, while the Finance sector has lost 0.18% and the S&P 500 has gained 0.74% during the same period [1] Financial Performance Expectations - Pagaya Technologies Ltd. is set to announce its earnings on February 9, 2026, with an expected EPS of $0.75, reflecting a significant increase of 341.18% compared to the same quarter last year [2] - Revenue is forecasted to be $348.35 million, indicating a growth of 24.68% year-over-year [2] Annual Projections - For the entire fiscal year, earnings are projected at $3.1 per share, representing a growth of 273.49%, while revenue is expected to remain stable at $1.32 billion [3] - Recent changes to analyst estimates suggest a positive outlook for the company's business and profitability [3] Analyst Ratings and Valuation - The Zacks Rank system currently rates Pagaya Technologies Ltd. as 3 (Hold), with the consensus EPS estimate remaining unchanged over the last 30 days [5] - The company is trading at a Forward P/E ratio of 5.69, significantly lower than the industry average of 11.7, indicating it is undervalued compared to its peers [6] Industry Context - Pagaya Technologies Ltd. operates within the Financial - Miscellaneous Services industry, which holds a Zacks Industry Rank of 85, placing it in the top 35% of over 250 industries [6] - The Zacks Industry Rank measures the strength of industry groups, with top-rated industries historically outperforming lower-rated ones by a factor of 2 to 1 [7]