Group 1 - Pagaya Technologies Ltd. (PGY) closed at $14.96, with a 49.8% gain over the past four weeks, and a mean price target of $22.69 suggests a 51.7% upside potential [1] - The average price targets from analysts range from a low of $13.75 to a high of $36, with a standard deviation of $7.04, indicating variability in estimates [2] - Analysts show strong agreement on PGY's ability to report better earnings, which supports the potential for stock upside [4][11] Group 2 - The Zacks Consensus Estimate for PGY's current year earnings has increased by 2.8% over the last 30 days, with no negative revisions [12] - PGY holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimates [13] - While consensus price targets may not be reliable for predicting exact gains, they can indicate potential price movement direction [13]

Core Viewpoint - The article discusses the potential resurgence of the bull market, highlighting opportunities in lesser-known tech stocks alongside established names like the Magnificent 7 and leading AI companies [1] Group 1: Under-the-Radar Tech Stocks - Three tech stocks, Sezzle Inc. (SEZL), Pagaya Technologies Ltd. (PGY), and AppLovin (APP), are identified as having significant growth potential and are showing strong momentum [2][3] - These companies are characterized as high-growth innovators with robust growth forecasts and favorable stock price movements, supported by a top Zacks Rank [2] Group 2: Pagaya Technologies Ltd. - Pagaya Technologies operates at the intersection of AI and financial technology, utilizing machine learning to improve credit decision-making and underwriting in consumer lending [4] - Despite a setback following a disappointing Q1 earnings report, Pagaya has shown a strong recovery, with analysts raising earnings forecasts and achieving a Zacks Rank 1 (Strong Buy) [5] - The stock trades at a forward earnings multiple of 8.3x, with projected sales growth of 20% this year and 16% next year, alongside expected earnings growth of 112% in 2025 and 39% in 2026 [6] Group 3: Sezzle Inc. - Sezzle operates in the Buy Now, Pay Later (BNPL) sector, providing flexible financing options while focusing on profitability and disciplined growth [8] - The stock, despite a significant rally, remains attractively valued at 26.9x forward earnings, with projected sales growth of 62% this year and 20.8% next year, and earnings expected to rise 76% in 2025 and 30% in 2026 [9][10] - Sezzle also holds a Zacks Rank 1 (Strong Buy), reflecting a positive earnings revision trend with significant increases in earnings estimates for 2025 and 2026 [10] Group 4: AppLovin - AppLovin provides a mobile app marketing and monetization platform powered by machine learning, aiding app developers in revenue optimization [11] - The company has experienced substantial growth, with recent upward earnings revisions of 19.2% for the current quarter and 12.5% for the full year [12] - Although trading at a premium valuation of 42.5x forward earnings, the growth outlook is strong, with projected sales increases of 24.3% in 2025 and 16.3% in 2026, and earnings expected to grow by 70.6% this year and 44.8% next year [13][16] Group 5: Investment Considerations - For investors seeking high-growth tech exposure beyond major names, Pagaya Technologies, Sezzle, and AppLovin present a compelling mix of momentum, earnings strength, and long-term potential, supported by rising analyst estimates and top Zacks Ranks [17]

[Part I - Financial Information](index=6&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements for Q1 2025 and related notes [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects a slight decrease in total assets and liabilities with relatively stable shareholders' equity | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | | Total Assets | $1,278,365 | $1,291,072 | $(12,707) | | Total Liabilities | $763,312 | $775,276 | $(11,964) | | Total Shareholders' Equity | $440,803 | $441,546 | $(743) | | Cash and cash equivalents | $186,797 | $187,921 | $(1,124) | | Investments in loans and securities (non-current) | $740,828 | $756,322 | $(15,494) | | Secured borrowing (current) | $118,058 | $109,079 | $8,979 | | Long-term debt (non-current) | $300,169 | $303,567 | $(3,398) | [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) The company achieved profitability in Q1 2025, reversing a prior-year net loss through strong revenue growth | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Revenue from fees | $282,704 | $237,004 | $45,700 | 19.3% | | Total Revenue and Other Income | $289,989 | $245,276 | $44,713 | 18.2% | | Production costs | $167,083 | $144,881 | $22,202 | 15.3% | | Total Costs and Operating Expenses | $242,304 | $237,586 | $4,718 | 2.0% | | Operating Income | $47,685 | $7,690 | $39,995 | 520.1% | | Loss Before Income Taxes | $(48) | $(26,659) | $26,611 | -99.8% | | Net Income (Loss) Attributable to Pagaya Technologies Ltd. | $7,893 | $(21,223) | $29,116 | -137.2% | | Basic EPS | $0.10 | $(0.33) | $0.43 | -130.3% | | Diluted EPS | $0.10 | $(0.33) | $0.43 | -130.3% | [Condensed Consolidated Statements of Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Comprehensive loss decreased significantly due to a shift to net income and smaller unrealized losses on securities | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Net Income (Loss) Including Noncontrolling Interests | $2,492 | $(31,662) | $34,154 | -107.9% | | Unrealized loss on securities available for sale, net | $(15,784) | $(21,531) | $5,747 | -26.7% | | Comprehensive Loss Including Noncontrolling Interests | $(13,292) | $(53,193) | $39,901 | -75.0% | | Comprehensive Loss Attributable to Pagaya Technologies Ltd. | $(7,989) | $(45,946) | $37,957 | -82.6% | [Condensed Consolidated Statements of Changes in Redeemable Convertible Preferred Shares and Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Convertible%20Preferred%20Shares%20and%20Shareholders'%20Equity) Total shareholders' equity remained stable, with share-based compensation offsetting other comprehensive losses | Metric | December 31, 2024 (in thousands) | March 31, 2025 (in thousands) | Change (in thousands) | | :------------------------------------------------ | :----------------------------- | :---------------------------- | :-------------------- | | Redeemable Convertible Preferred Shares | $74,250 | $74,250 | $0 | | Additional Paid-In Capital | $1,282,022 | $1,299,010 | $16,988 | | Accumulated Other Comprehensive Loss | $(11,488) | $(27,370) | $(15,882) | | Accumulated Deficit | $(944,043) | $(936,150) | $7,893 | | Total Pagaya Technologies Ltd. Shareholders' Equity | $326,491 | $335,490 | $8,999 | | Noncontrolling Interests | $115,055 | $105,313 | $(9,742) | | Total Shareholders' Equity | $441,546 | $440,803 | $(743) | [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased significantly, while financing activities shifted from a source to a use of cash | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash provided by operating activities | $34,427 | $17,709 | $16,718 | | Net cash used in investing activities | $(26,886) | $(228,125) | $201,239 | | Net cash (used in) provided by financing activities | $(3,779) | $298,743 | $(302,522) | | Net increase in cash, cash equivalents and restricted cash | $3,116 | $87,507 | $(84,391) | | Cash, cash equivalents and restricted cash, end of period | $229,634 | $310,048 | $(80,414) | [Notes to the Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) This section details the company's accounting policies, revenue, borrowings, investments, and other key disclosures - No material changes to significant accounting policies were disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[32](index=32&type=chunk) - Certain prior year amounts were reclassified to conform to the current period presentation[33](index=33&type=chunk) - As an "emerging growth company," the Jumpstart Our Business Startups Act ("JOBS Act") allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies[34](index=34&type=chunk) - The Company has elected to use this extended transition period under the JOBS Act[34](index=34&type=chunk) [NOTE 1 - BUSINESS DESCRIPTION](index=13&type=section&id=NOTE%201%20-%20BUSINESS%20DESCRIPTION) Pagaya is an AI-driven technology company that facilitates financial product extensions and asset acquisitions - Pagaya is a technology company deploying data science and proprietary AI to enhance results for financial services providers, their customers, and asset investors[27](index=27&type=chunk) - Partners (financial technology companies, banks, auto finance, real estate) use Pagaya's network to extend financial products, with assets acquired by Pagaya's Financing Vehicles[27](index=27&type=chunk) [NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%202%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Financial statements are prepared under U.S. GAAP, consolidating subsidiaries and VIEs, with no material policy changes - Financial statements are prepared under U.S. GAAP, consolidating subsidiaries and VIEs, with certain disclosures condensed for interim reporting[29](index=29&type=chunk)[30](index=30&type=chunk) - **No material changes** to significant accounting policies were made since the December 31, 2024, Annual Report on Form 10-K[32](index=32&type=chunk) - Pagaya, as an "emerging growth company," has elected to **delay adoption of new accounting pronouncements** until applicable to private companies[34](index=34&type=chunk) [NOTE 3 - REVENUE](index=14&type=section&id=NOTE%203%20-%20REVENUE) Revenue from fees grew to $282.7 million in Q1 2025, driven primarily by Network AI and Contract fees - Revenue from fees is comprised of **Network AI fees** (AI integration and capital markets execution) and **Contract fees** (administration, management, performance, servicing)[38](index=38&type=chunk)[41](index=41&type=chunk) | Revenue Type | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Network AI Fees | $253,400 | $215,300 | $38,100 | 17.7% | | Contract Fees | $29,300 | $21,700 | $7,600 | 35.0% | | Total Revenue from Fees | $282,704 | $237,004 | $45,700 | 19.3% | - Two related parties represented approximately **35% of total revenue** for Q1 2025, down from four customers (three related parties) totaling 57% in Q1 2024[50](index=50&type=chunk) [NOTE 4 - BORROWINGS](index=15&type=section&id=NOTE%204%20-%20BORROWINGS) Total borrowings remained stable at $643.6 million, with the company in compliance with all debt covenants | Borrowing Type | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | | :------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Secured borrowings | $178,749 | $176,089 | $2,660 | | Long-term debt | $317,919 | $321,317 | $(3,398) | | Exchangeable notes | $146,925 | $146,342 | $583 | | Total Borrowings | $643,593 | $643,748 | $(155) | - The company was **in compliance with all debt covenants** as of March 31, 2025[51](index=51&type=chunk) - The Revolving Credit Facility was increased to **$58 million** in February 2025, and the Term Loan Facility was increased to **$355 million** in November 2024[55](index=55&type=chunk) [NOTE 5 - INVESTMENTS](index=17&type=section&id=NOTE%205%20-%20INVESTMENTS) Investments in loans and securities totaled $760.5 million at fair value, with a significant allowance for credit losses | Investment Type | March 31, 2025 (Fair Value, in thousands) | December 31, 2024 (Fair Value, in thousands) | Change (in thousands) | | :------------------------------------------ | :---------------------------------------- | :---------------------------------------- | :-------------------- | | Securitization notes | $244,204 | $240,273 | $3,931 | | Securitization certificates | $513,997 | $533,243 | $(19,246) | | Other loans and receivables | $2,292 | $4,893 | $(2,601) | | Total Investments in loans and securities | $760,493 | $778,409 | $(17,916) | | Allowance for Credit Losses | $(466,520) | $(510,294) | $43,774 | | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Proceeds from sales/maturities/prepayments | $58,674 | $38,658 | | Gross investment gains from sales and maturities | $(5,894) | $0 | | Reductions (additions) to allowance for credit losses | $43,338 | $(26,851) | [NOTE 6 - CONSOLIDATION AND VARIABLE INTEREST ENTITIES](index=20&type=section&id=NOTE%206%20-%20CONSOLIDATION%20AND%20VARIABLE%20INTEREST%20ENTITIES) Pagaya consolidates its Risk Retention Entities but not other securitization trusts, with a maximum loss exposure of $627.5 million - Pagaya consolidates VIEs (Risk Retention Entities) where it is the **primary beneficiary**, having both power to direct activities and obligation/right to absorb losses/benefits[71](index=71&type=chunk)[72](index=72&type=chunk) - The company **does not consolidate securitization trusts**, as it does not control the most significant activity (loan servicing)[74](index=74&type=chunk) | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Consolidated VIEs Net Assets | $131,111 | $142,584 | | Unconsolidated VIEs Carrying Amount (Direct Interest) | $627,469 | $628,038 | | Unconsolidated VIEs Maximum Exposure to Loss | $627,469 | $628,038 | | Unconsolidated VIEs Assets | $10,382,325 | $10,708,146 | [NOTE 7 - LEASES](index=21&type=section&id=NOTE%207%20-%20LEASES) The company holds operating leases expiring through 2032 with total liabilities of $35.1 million - The company leases office space in New York, Israel, and other locations, with leases expiring through 2032[78](index=78&type=chunk) | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------- | :--------------------------------------------- | :--------------------------------------------- | | Rent expense | $2,839 | $2,909 | | Variable lease payments | $135 | $94 | | Sublease income | $1,164 | $1,005 | | Operating Lease Liabilities Maturity (in thousands) | Amount | | :------------------------------------------------ | :----- | | 2025 | $7,021 | | 2026 | $9,244 | | 2027 | $7,788 | | 2028 | $5,082 | | 2029 | $5,167 | | Thereafter | $9,904 | | Total Operating Lease Liabilities | $35,148 | [NOTE 8 - COMMITMENTS AND CONTINGENCIES](index=22&type=section&id=NOTE%208%20-%20COMMITMENTS%20AND%20CONTINGENCIES) The company has a $2.4 million cloud computing commitment and potential guarantee payments of $60.3 million - **No material indemnification liability** or significant costs for legal claims were incurred as of March 31, 2025[85](index=85&type=chunk) - Remaining cloud computing purchase commitment is approximately **$2.4 million** for the next 12 months[83](index=83&type=chunk) | Contingency | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Contingent consideration liability (Theorem acquisition) | $2,902 | $6,090 | | Unfunded maximum potential amount of undiscounted future payments under guarantees | $60,300 | N/A | | Segregated cash for guarantee contracts | $39,800 | N/A | [NOTE 9 - TRANSACTIONS WITH RELATED PARTIES](index=22&type=section&id=NOTE%209%20-%20TRANSACTIONS%20WITH%20RELATED%20PARTIES) Pagaya engages in significant transactions with related parties, primarily securitization and other Financing Vehicles | Related Party Transaction | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | Total fee receivables from related parties | $90,700 | $99,400 | | Prepaid expenses and other assets from related parties | $15,700 | $15,200 | | Related Party Revenue | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | | :-------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Total revenue from related parties | $167,900 | $178,500 | | Loan principal purchased from Financing Vehicles | $3,800 | $5,000 | | Loss on purchased loans | $3,500 | $5,000 | [NOTE 10 - FAIR VALUE MEASUREMENT](index=23&type=section&id=NOTE%2010%20-%20FAIR%20VALUE%20MEASUREMENT) The company measures certain assets and liabilities at fair value, with significant use of Level 3 unobservable inputs - Fair value measurements are categorized into **Level 1** (quoted prices), **Level 2** (observable inputs), and **Level 3** (unobservable inputs)[91](index=91&type=chunk)[92](index=92&type=chunk) | Asset/Liability (March 31, 2025, in thousands) | Level 1 | Level 2 | Level 3 | Total | | :--------------------------------------------- | :------ | :------ | :------ | :------ | | Investments in loans and securities (Notes) | $118,875 | $0 | $125,328 | $244,203 | | Investments in loans and securities (Certificates and Other loans) | $0 | $0 | $516,289 | $516,289 | | Warrant liability | $1,992 | $0 | $0 | $1,992 | | Contingent consideration liability | $0 | $0 | $2,902 | $2,902 | | Unobservable Input (March 31, 2025) | Minimum | Maximum | Weighted Average | | :---------------------------------- | :------ | :------ | :--------------- | | Discount rate | 5.0% | 15.0% | 15.0% | | Loss rate | 5.7% | 34.2% | 18.1% | | Prepayment rate | 0.0% | 63.0% | 10.6% | [NOTE 11 - ORDINARY SHARES AND ORDINARY SHARE WARRANTS](index=25&type=section&id=NOTE%2011%20-%20ORDINARY%20SHARES%20AND%20ORDINARY%20SHARE%20WARRANTS) The company has a dual-class share structure and has reserved 57.2 million shares for future issuance | Share Class (March 31, 2025) | Authorized Shares | Issued and Outstanding Shares | | :----------------------------- | :---------------- | :---------------------------- | | Preferred Shares | 6,666,666 | 5,000,000 | | Class A Ordinary Shares | 666,666,666 | 62,778,642 | | Class B Ordinary Shares | 166,666,666 | 12,652,310 | - **Class B Ordinary Shares** carry 10 votes per share and are convertible to Class A Ordinary Shares[103](index=103&type=chunk) | Reserved Shares (March 31, 2025) | Number of Shares | | :--------------------------------- | :--------------- | | Share options | 3,611,995 | | Options to restricted shares | 19,923,756 | | RSUs | 3,959,356 | | Ordinary share warrants | 2,599,862 | | Redeemable convertible preferred shares | 5,000,000 | | Exchangeable notes | 11,434,704 | | Shares available for future grant of equity awards | 9,917,226 | | Shares reserved for issuance under the ESPP | 776,837 | | Total shares of ordinary share reserved | 57,223,736 | - As of March 31, 2025, there were **1,229,166 public warrants** expiring in June 2027 with an exercise price of $138 per share[107](index=107&type=chunk) [NOTE 12 - SHARE BASED COMPENSATION](index=26&type=section&id=NOTE%2012%20-%20SHARE%20BASED%20COMPENSATION) Share-based compensation expense was $13.2 million in Q1 2025, with $62.1 million in unrecognized expense remaining | Share-Based Compensation Expense (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Technology, data and product development | $1,097 | $2,905 | | Selling and marketing | $4,780 | $2,852 | | General and administrative | $7,295 | $9,718 | | Total | $13,172 | $15,475 | - Unrecognized compensation expense for unvested share options is **$14.5 million** (1.1 years remaining), for RSUs is **$38.3 million** (0.9 years remaining), and for options to restricted shares is **$9.3 million** (1.3 years remaining)[112](index=112&type=chunk)[114](index=114&type=chunk)[117](index=117&type=chunk) [NOTE 13 - INCOME TAXES](index=28&type=section&id=NOTE%2013%20-%20INCOME%20TAXES) Pagaya benefits from a reduced 12% tax rate in Israel due to its Preferred Technological Enterprise status - Israeli corporate tax rate is 23%, but Pagaya benefits from a **12% rate** due to Preferred Technological Enterprise (PTE) status, which is being renewed[120](index=120&type=chunk) | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Loss before income taxes | $(48) | $(26,659) | | Income tax (benefit) expense | $(2,540) | $5,003 | | Effective tax rate | NM | NM | - The company regularly assesses the need for a **valuation allowance** against its deferred tax assets due to the uncertainty of realizing future tax benefits from its net operating loss carryforwards and other deferred tax assets[124](index=124&type=chunk)[125](index=125&type=chunk) [NOTE 14 - EARNINGS (LOSS) PER SHARE](index=29&type=section&id=NOTE%2014%20-%20EARNINGS%20(LOSS)%20PER%20SHARE) The company reported basic and diluted EPS of $0.10 for Q1 2025, a significant improvement from a loss of $(0.33) in Q1 2024 | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net income (loss) attributable to Pagaya Technologies Ltd. ordinary shares | $7,404 | $(21,223) | | Basic EPS | $0.10 | $(0.33) | | Diluted EPS | $0.10 | $(0.33) | | Weighted average shares outstanding (Basic) | 75,765,080 | 64,504,458 | | Weighted average shares outstanding (Diluted) | 77,043,464 | 64,504,458 | - Potentially dilutive securities (share options, options to restricted shares, RSUs, ordinary share warrants, exchangeable notes) were **excluded from diluted EPS calculation** in Q1 2024 due to their anti-dilutive effect[128](index=128&type=chunk) [NOTE 15 - SUBSEQUENT EVENTS](index=30&type=section&id=NOTE%2015%20-%20SUBSEQUENT%20EVENTS) No subsequent events requiring adjustment or disclosure were identified after the balance sheet date - **No subsequent events** requiring adjustment or disclosure were identified after March 31, 2025[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's business, economic model, financial results, liquidity, and capital resources [Company Overview](index=31&type=section&id=Company%20Overview) Pagaya's AI and data network expands financial opportunities for partners, their customers, and asset investors - Pagaya's mission is to deliver more financial opportunity by being a trusted lending technology partner, leveraging its **AI and data network**[132](index=132&type=chunk)[133](index=133&type=chunk) - The company's network enables Partners (fintechs, banks, auto finance) to extend financial products to more customers, with assets acquired by Pagaya's Financing Vehicles[134](index=134&type=chunk) - Pagaya's solution drives benefits for Partners (revenue growth, brand affinity), customers (enhanced access to financial products), and investors (exposure to AI-assisted assets)[136](index=136&type=chunk) [Emerging Growth Company Status](index=31&type=section&id=Emerging%20Growth%20Company%20Status) As an "emerging growth company," Pagaya benefits from certain exemptions from standard reporting requirements - Pagaya is an "emerging growth company" under the JOBS Act, benefiting from exemptions like not requiring auditor attestation for internal controls[138](index=138&type=chunk) - The company has elected to use the **extended transition period** for complying with new or revised financial accounting standards, meaning it adopts them when private companies do[139](index=139&type=chunk) [Foreign Private Issuer Exemptions](index=32&type=section&id=Foreign%20Private%20Issuer%20Exemptions) Pagaya voluntarily files on U.S. domestic issuer forms despite its "foreign private issuer" status - Pagaya is a "foreign private issuer" but voluntarily files on U.S. domestic issuer forms (10-Q, 8-K, 10-K) and complies with Regulation FD and SEC proxy rules since 2024[142](index=142&type=chunk) - The company retains the option to revert to FPI reporting, which would allow **less frequent reporting** and exemptions from certain SEC rules (e.g., proxy solicitation, Section 16 reporting)[143](index=143&type=chunk) [Our Economic Model](index=32&type=section&id=Our%20Economic%20Model) The company's revenue is primarily driven by Network Volume, with FRLPC serving as a key efficiency metric - Revenues are primarily derived from **Network Volume**, which is the gross dollar value of assets originated by Partners with AI assistance[145](index=145&type=chunk) - Revenue streams include Network AI fees (AI integration and capital markets execution), contract fees (management, performance), interest income, and investment income[145](index=145&type=chunk)[146](index=146&type=chunk)[148](index=148&type=chunk) - **Production Costs**, highly correlated to Network Volume, compensate Partners for acquiring and originating assets[149](index=149&type=chunk) - **FRLPC** (fee revenue less Production Costs) is a key operating metric to evaluate the success and operational efficiency of the economic model[149](index=149&type=chunk) [Key Factors Affecting Our Performance](index=33&type=section&id=Key%20Factors%20Affecting%20Our%20Performance) Performance is driven by partner adoption, AI technology improvements, funding availability, and macroeconomic conditions - Performance is driven by increased usage from existing Partners and the adoption of the network by **new Partners** (e.g., OneMain Financial, Avvance)[152](index=152&type=chunk)[153](index=153&type=chunk) - Continuous improvements to **AI technology**, fueled by a deepening proprietary data network and R&D specialists, enhance efficiency and Network Volume[154](index=154&type=chunk)[155](index=155&type=chunk) - Availability and pricing of funding from a diverse investor network are critical, with the **top 5 ABS investors** contributed approximately 53% of total ABS funding in Q1 2025[156](index=156&type=chunk) - **Macroeconomic conditions** (inflation, interest rates, geopolitical tensions) affect consumer demand, Partner application volume, and funding availability/cost, though Pagaya's platform has shown resilience[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) [Key Operating Metric](index=35&type=section&id=Key%20Operating%20Metric) Network Volume, the gross dollar value of AI-assisted asset originations, is a key indicator of scale and reach - **Network Volume** is a key operating metric, representing the gross dollar value of assets originated by Partners with AI technology, and is a proxy for overall scale and reach[165](index=165&type=chunk) - Network Volume directly influences FRLPC and highlights the scalability and operational leverage of the business[165](index=165&type=chunk) | Metric | Three Months Ended March 31, 2025 (in millions) | Three Months Ended March 31, 2024 (in millions) | Change (in millions) | % Change | | :------------- | :-------------------------------------------- | :-------------------------------------------- | :------------------- | :------- | | Network Volume | $2,400 | $2,419 | $(19) | -0.8% | [Components of Results of Operations](index=35&type=section&id=Components%20of%20Results%20of%20Operations) This section details the components of revenue and operating expenses, with personnel costs being a significant factor - Revenue consists of Network AI fees (AI integration, capital markets execution), Contract fees (administration, management, performance), interest income, and investment income[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk) - Costs and operating expenses include Production Costs, technology/data/product development, sales/marketing, and general/administrative expenses[172](index=172&type=chunk) - **Salaries and personnel-related costs** are a significant component of several expense categories, with some non-share-based compensation in NIS, leading to potential variability[172](index=172&type=chunk) [Results of Operations](index=37&type=section&id=Results%20of%20Operations) The company achieved net income of $7.9 million in Q1 2025, a significant turnaround from a $21.2 million loss in Q1 2024 | Metric | Three Months Ended March 31, 2025 (in thousands) | Three Months Ended March 31, 2024 (in thousands) | Change (in thousands) | % Change | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Total Revenue and Other Income | $289,989 | $245,276 | $44,713 | 18% | | Total Costs and Operating Expenses | $242,304 | $237,586 | $4,718 | 2% | | Operating Income | $47,685 | $7,690 | $39,995 | 520% | | Net Income (Loss) Attributable to Pagaya Technologies Ltd. | $7,893 | $(21,223) | $29,116 | -137% | [Total Revenue and Other Income](index=38&type=section&id=Total%20Revenue%20and%20Other%20Income) Total revenue increased by 18% to $290.0 million, driven by a 19% rise in revenue from fees | Revenue Component (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Revenue from fees | $282,704 | $237,004 | $45,700 | 19% | | Interest income | $7,676 | $7,744 | $(68) | (1)% | | Investment (loss) income | $(391) | $528 | $(919) | (174)% | | Total Revenue and Other Income | $289,989 | $245,276 | $44,713 | 18% | - **Network AI fees increased by $38.1 million** to $253.4 million, primarily due to improved economics of AI integration fees from certain Partners (up 25%)[185](index=185&type=chunk) - **Contract fees increased by $7.6 million** to $29.3 million, driven by higher net asset values of Financing Vehicles and increased performance fees[186](index=186&type=chunk) [Costs and Operating Expenses](index=38&type=section&id=Costs%20and%20Operating%20Expenses) Total costs and operating expenses rose by 2%, with higher production costs offset by a significant drop in G&A expenses | Expense Category (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :------------------------------------ | :-------------------------------- | :-------------------------------- | :----- | :------- | | Production costs | $167,083 | $144,881 | $22,202 | 15% | | Technology, data and product development | $19,444 | $19,380 | $64 | 0% | | Sales and marketing | $9,594 | $10,257 | $(663) | (6)% | | General and administrative | $46,183 | $63,068 | $(16,885) | (27)% | | Total Costs and Operating Expenses | $242,304 | $237,586 | $4,718 | 2% | - **General and administrative costs decreased by $16.9 million (27%)**, primarily due to a $12.5 million decrease in transaction costs and a $3.0 million decrease in compensation expenses[193](index=193&type=chunk) [Other Expense, Net](index=40&type=section&id=Other%20Expense,%20Net) Other expense, net, increased by 39% to $(47.7) million due to higher interest expense and impairment losses | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Other expense, net | $(47,733) | $(34,349) | $(13,384) | (39)% | - Increase primarily due to **$8.7 million higher interest expenses** from long-term debt and exchangeable notes, and **$7.9 million higher credit-related impairment loss** on investments[194](index=194&type=chunk) - Partially offset by a **$3.2 million favorable impact** from changes in contingent consideration liability[194](index=194&type=chunk) [Income Tax Expense](index=40&type=section&id=Income%20Tax%20Expense) Income tax shifted from a $5.0 million expense to a $(2.5) million benefit due to changes in uncertain tax positions | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Income tax (benefit) expense | $(2,540) | $5,003 | $(7,543) | (151)% | - Decrease primarily driven by discrete tax expenses related to a change in the reserve for an **uncertain tax position** related to credit loss on investments in loans and securities[195](index=195&type=chunk) [Net Loss Attributable to Noncontrolling Interests](index=40&type=section&id=Net%20Loss%20Attributable%20to%20Noncontrolling%20Interests) Net loss attributable to noncontrolling interests decreased by 48% to $(5.4) million, reflecting losses from consolidated VIEs | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :-------------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Net loss attributable to noncontrolling interests | $(5,401) | $(10,439) | $5,038 | 48% | - The decrease was driven by the net loss generated by consolidated VIEs, including **$1.8 million interest income** and **$6.8 million credit-related impairment loss** on risk retention holdings[196](index=196&type=chunk) [Reconciliation of Non-GAAP Financial Measures](index=40&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) Non-GAAP metrics like FRLPC, Adjusted Net Income, and Adjusted EBITDA showed significant year-over-year improvement - Non-GAAP measures (FRLPC, FRLPC %, Adjusted Net Income, Adjusted EBITDA) are used to supplement GAAP, providing insights into **core financial performance** and operational efficiency[198](index=198&type=chunk)[203](index=203&type=chunk) | Non-GAAP Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :----------------------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Fee Revenue Less Production Cost (FRLPC) | $115,621 | $92,123 | $23,498 | 25.5% | | Fee Revenue Less Production Costs % (FRLPC %) | 4.8% | 3.8% | 1.0 pp | 26.3% | | Adjusted Net Income | $53,189 | $13,331 | $39,858 | 298.9% | | Adjusted EBITDA | $79,583 | $39,815 | $39,768 | 99.9% | - **FRLPC** assesses operational efficiency by measuring fee revenue against production costs, excluding other operating expenses, to highlight platform scalability[201](index=201&type=chunk) - **Adjusted Net Income and Adjusted EBITDA** exclude non-cash or unpredictable items like share-based compensation, fair value adjustments, and impairment losses to provide a clearer view of core operations[202](index=202&type=chunk) [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company believes its $229.6 million in cash and equivalents is sufficient for the next twelve months | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | Change (in millions) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :------------------- | | Cash, cash equivalents and restricted cash | $229.6 | $226.5 | $3.1 | - Primary liquidity requirements include purchasing and financing **risk retention**, investing in technology and product development, attracting employees, and funding potential strategic acquisitions[208](index=208&type=chunk) - The company expects to fund operations with existing cash, cash generated from operations, and additional secured borrowings, potentially raising further capital through equity or debt[212](index=212&type=chunk) - The likelihood that warrant holders will exercise their public warrants and private placement warrants, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of Class A Ordinary Shares[214](index=214&type=chunk) - If the market price for our Class A Ordinary Shares is **less than $138 per share**, we believe warrant holders will be unlikely to exercise on a cash basis[215](index=215&type=chunk) [Securitizations](index=43&type=section&id=Securitizations) Pagaya sponsors securitization vehicles and retains at least 5% of the credit risk to comply with regulations - Pagaya sponsors securitization vehicles to purchase Partner-originated loans and **retains at least 5% of the credit risk** of issued securities to meet risk retention requirements[217](index=217&type=chunk) - Risk retention balances are financed through arrangements like repurchase agreements, and cash deposits may be made to collateralize guarantees[218](index=218&type=chunk) [The Committed Equity Financing](index=44&type=section&id=The%20Committed%20Equity%20Financing) The Equity Financing Purchase Agreement with B. Riley was terminated in September 2024 - The Equity Financing Purchase Agreement with B. Riley Principal Capital II, allowing sales of up to **$300 million** in Class A Ordinary Shares, was terminated in September 2024[219](index=219&type=chunk)[220](index=220&type=chunk) - In Q1 2024, 298,057 shares were issued under this agreement for net proceeds of **$5.2 million**[220](index=220&type=chunk) [Shelf Registration Statement](index=44&type=section&id=Shelf%20Registration%20Statement) A shelf registration allows the company to offer and sell up to $500 million in securities - A shelf registration statement on Form F-3, effective October 16, 2023, allows Pagaya to offer and sell up to **$500 million** in Class A Ordinary Shares, debt securities, and/or warrants[221](index=221&type=chunk) [Ordinary Share Offering](index=44&type=section&id=Ordinary%20Share%20Offering) A March 2024 share offering generated approximately $90.0 million in net proceeds - On March 13, 2024, an offering of 7,500,000 Class A Ordinary Shares generated approximately **$90.0 million** in net proceeds[222](index=222&type=chunk) [Cash Flows](index=44&type=section&id=Cash%20Flows) Operating cash flow increased, investing cash use decreased, and financing activities shifted to a net cash outflow | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----- | | Net cash provided by operating activities | $34,427 | $17,709 | $16,718 | | Net cash used in investing activities | $(26,886) | $(228,125) | $201,239 | | Net cash (used in) provided by financing activities | $(3,779) | $298,743 | $(302,522) | [Operating Activities](index=44&type=section&id=Operating%20Activities) Net cash from operating activities rose to $34.4 million, driven by net income and non-cash charges - Net cash provided by operating activities **increased by $16.7 million** to $34.4 million in Q1 2025[225](index=225&type=chunk) - This increase reflects net income and **$56.0 million in non-cash charges**, including higher impairment losses on investments ($10.1 million increase) and a $3.0 million increase in fair value adjustment to warrant liability[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk) - The company **reduced headcount by over 20%** across Israel and U.S. offices in Q1 and Q2 2024, streamlining operations and generating cost savings[224](index=224&type=chunk) [Investing Activities](index=45&type=section&id=Investing%20Activities) Net cash used in investing activities decreased significantly due to lower purchases of risk retention assets - Net cash used in investing activities **decreased by $201.2 million** to $26.9 million in Q1 2025[230](index=230&type=chunk) - This was mainly due to a **$179.7 million decrease** in purchases of risk retention assets, partially offset by a $20.0 million increase in proceeds from existing risk retention assets[230](index=230&type=chunk) [Financing Activities](index=45&type=section&id=Financing%20Activities) Financing activities shifted to a net cash use of $3.8 million, driven by debt repayments - Net cash used in financing activities was **$3.8 million** in Q1 2025, a shift from $298.7 million provided in Q1 2024[231](index=231&type=chunk) - Key outflows included **$46.9 million** in secured borrowing payments, **$4.4 million** in noncontrolling interest distributions, and **$4.4 million** in long-term debt repayments[231](index=231&type=chunk) - These outflows were partially offset by **$49.2 million** in proceeds from secured borrowing[231](index=231&type=chunk) [Indebtedness](index=45&type=section&id=Indebtedness) The company's debt structure includes Exchangeable Senior Notes and an expanded Credit Agreement - Pagaya issued **$160 million in 6.125% Exchangeable Senior Notes** due 2029 to repay higher-cost debt and for general corporate purposes[232](index=232&type=chunk) - The Notes are exchangeable for cash, Class A Ordinary Shares, or a combination, at the company's discretion, under certain conditions[235](index=235&type=chunk) - The Revolving Credit Facility was increased to **$58 million** and the Term Loan Facility to **$355 million**, with borrowings bearing interest at base rate + 6.50% or SOFR + 7.50%[239](index=239&type=chunk)[243](index=243&type=chunk) - The company's obligations under the Credit Agreement are guaranteed by subsidiaries and secured by a first priority lien on substantially all assets[244](index=244&type=chunk) [Contractual Obligations, Commitments and Contingencies](index=47&type=section&id=Contractual%20Obligations,%20Commitments%20and%20Contingencies) The company has operating lease liabilities of $44.2 million and a cloud computing commitment of $2.4 million | Obligation Type | Total Remaining Contractual Obligations (in thousands) | Next 12 Months (in thousands) | | :------------------------------------ | :------------------------------------------- | :---------------------------- | | Operating lease liabilities | $44,206 | $7,021 | | Cloud computing purchase commitment | $2,400 | $2,400 | - Unfunded maximum potential amount of undiscounted future payments under guarantees totaled **$60.3 million**, with **$39.8 million** segregated as restricted cash[250](index=250&type=chunk) [Off-Balance Sheet Arrangements](index=47&type=section&id=Off-Balance%20Sheet%20Arrangements) Pagaya engages with unconsolidated VIEs and retains at least 5% of the credit risk of their issued securities - Pagaya engages with unconsolidated VIEs (sponsored securitization vehicles) and **retains at least 5% of the credit risk** of issued securities to comply with risk retention regulations[252](index=252&type=chunk) - The company may, but is not obligated to, purchase assets from Financing Vehicles, which could expose it to loss[252](index=252&type=chunk) [Critical Accounting Policies and Estimates](index=47&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No significant changes were made to critical accounting policies and estimates during the first quarter of 2025 - **No significant changes** were identified in critical accounting policies and estimates during Q1 2025, as reassessed from the Annual Report on Form 10-K[254](index=254&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=47&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is primarily exposed to credit risk, interest rate risk, and foreign exchange risk [Credit Risk](index=48&type=section&id=Credit%20Risk) Pagaya manages credit risk from borrower defaults through performance monitoring and proprietary AI technology - Credit risk arises from individual borrower defaults, affecting investments in loans, securitization notes, and residual certificates[257](index=257&type=chunk) - Risk is managed through borrower payment monitoring and **proprietary AI technology** for credit risk evaluation[257](index=257&type=chunk) | Metric | March 31, 2025 (in millions) | December 31, 2024 (in millions) | | :------------------------------------------------ | :----------------------------- | :----------------------------- | | Total exposure to credit risk on investments in loans and securities | $760 | $764 | | Net exposure (exclusive of non-controlling interests) | $656 | $659 | [Interest Rate Risk](index=48&type=section&id=Interest%20Rate%20Risk) The company is exposed to interest rate risk through its floating-rate credit facilities and securitization activities - Higher interest rates could **negatively impact collections** on underlying loans, leading to increased delinquencies and defaults[260](index=260&type=chunk) - **Floating-rate interest payments** on credit facilities and fixed-coupon securitization notes expose the company to interest rate fluctuations, affecting interest expense and returns on risk retention investments[261](index=261&type=chunk)[262](index=262&type=chunk) [Foreign Exchange Risk](index=48&type=section&id=Foreign%20Exchange%20Risk) Foreign exchange risk is not material but is monitored due to expenses denominated in Israeli Shekel - Foreign exchange risk is **not material** but is monitored due to NIS-denominated compensation and non-compensation expenses[263](index=263&type=chunk) [Item 4. Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes in internal controls [Evaluation of Disclosure Controls and Procedures](index=48&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of March 31, 2025 - As of March 31, 2025, disclosure controls and procedures were evaluated and **deemed effective** by management, including the CEO and CFO[264](index=264&type=chunk)[265](index=265&type=chunk) [Changes in Internal Control over Financial Reporting](index=49&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) No material changes to internal control over financial reporting occurred during the first quarter of 2025 - **No material changes** in internal control over financial reporting occurred during Q1 2025[266](index=266&type=chunk) [Inherent Limitations on Effectiveness of Internal Control](index=49&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Internal%20Control) The company acknowledges that internal control systems provide reasonable, not absolute, assurance - Internal control systems have **inherent limitations**, providing only reasonable assurance due to factors like judgment, misconduct, and changing conditions[267](index=267&type=chunk) [Part II - Other Information](index=49&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=49&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings not expected to have a material adverse effect - Pagaya is subject to ordinary course legal proceedings, but **no current matters are expected to have a material adverse effect**[269](index=269&type=chunk)[270](index=270&type=chunk) - Litigation outcomes are uncertain and can incur costs and divert management resources[270](index=270&type=chunk) [Item 1A. Risk Factors](index=49&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors disclosed in the company's Annual Report on Form 10-K - Readers are referred to the "Risk Factors" section in the **Annual Report on Form 10-K** for a comprehensive discussion of risks[271](index=271&type=chunk)[272](index=272&type=chunk) - **No material changes** to the previously disclosed risk factors have occurred[273](index=273&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[274](index=274&type=chunk) [Item 3. Defaults Upon Senior Securities](index=49&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities to report for the period - No defaults upon senior securities to report[274](index=274&type=chunk) [Item 4. Mine Safety Disclosures](index=49&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Mine safety disclosures are **not applicable**[275](index=275&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) A director entered into a Rule 10b5-1 trading plan to sell up to 129,397 shares - Directors and executive officers may adopt **Rule 10b5-1 trading plans** for Class A Ordinary Shares[276](index=276&type=chunk) - Tami Rosen, a director and Chief Development Officer, entered a 10b5-1 Plan on March 11, 2025, to sell up to **129,397 shares** by September 30, 2025[277](index=277&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications and XBRL documents - Exhibits include amended Articles of Association, an executive employment agreement amendment, CEO/CFO certifications (Sarbanes-Oxley Act), and Inline XBRL documents[278](index=278&type=chunk) [Signatures](index=52&type=section&id=Signatures) [Signatures](index=52&type=section&id=Signatures) The report is certified and signed by the Chief Executive Officer and Chief Financial Officer - The report was signed by **Gal Krubiner (CEO)** and **Evangelos Perros (CFO)** on May 7, 2025[281](index=281&type=chunk)

For the quarter ended March 2025, Pagaya Technologies Ltd. (PGY) reported revenue of $289.99 million, up 22.4% over the same period last year. EPS came in at $0.69, compared to $0.20 in the year-ago quarter.The reported revenue represents a surprise of +1.63% over the Zacks Consensus Estimate of $285.33 million. With the consensus EPS estimate being $0.40, the EPS surprise was +72.50%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to ...

Pagaya Technologies Ltd. (PGY) came out with quarterly earnings of $0.69 per share, beating the Zacks Consensus Estimate of $0.40 per share. This compares to earnings of $0.20 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 72.50%. A quarter ago, it was expected that this company would post earnings of $0.32 per share when it actually produced earnings of $0.17, delivering a surprise of -46.88%.Over the last four quarters, the ...

Pagaya Technologies (PGY) Q1 2025 Earnings Call May 07, 2025 08:30 AM ET Company Participants Josh Fagen - Head of Investor Relations & COO of FinanceGal Krubiner - Co-Founder, CEO & DirectorSanjiv Das - Co-Founder and PresidentEvangelos Perros - Chief Financial OfficerJohn Hecht - Managing DirectorJake Kooyman - Equity Research AssociateJoseph Vafi - Managing Director, Equity Research Conference Call Participants Pete Christiansen - Equity Research AnalystDavid Scharf - Analyst Operator Greetings, and welc ...

Financial Data and Key Metrics Changes - Revenue grew by 18% year over year, reaching an annualized run rate of nearly $1,200,000,000 [7] - Fee revenue less production costs (FRLPC) increased by 26%, reaching an annualized run rate of over $460,000,000 [7] - Adjusted EBITDA doubled year over year to an annualized equivalent of approximately $320,000,000 [7] - Achieved positive GAAP net income of $8,000,000, marking the first quarter of profitability as a public company [7][27] - Operating income rose to $48,000,000, up more than five times year over year [27] Business Line Data and Key Metrics Changes - Personal loans volume grew by 17% from year-ago levels, with stable application conversion rates at approximately 1% [25] - Auto loans volumes increased nearly 50% sequentially, reaching an annualized run rate of over $1,100,000,000 [19] - Point of sale lending remains robust, with expectations for continued growth as partnerships expand [20] Market Data and Key Metrics Changes - Network volume was $2,400,000,000, slightly below guidance due to lower SFR volume, but grew by 26% year over year excluding SFR [24] - The contribution of FRLPC from lending product fees rose to 77%, compared to 63% a year ago [26] Company Strategy and Development Direction - The company emphasizes a balanced and diversified growth strategy, focusing on profitable growth and efficient operations [6][10] - A commitment to responsible credit underwriting while driving consistent revenue and profitability is central to the company's strategy [14] - The introduction of proactive prescreen products aims to enhance value for lending partners and improve customer engagement [12][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledges heightened macroeconomic uncertainty but remains focused on long-term growth and stability [10][11] - The company is well-positioned to navigate potential changes in consumer health and credit performance, with a diversified funding mechanism [11] - Future guidance reflects cautious optimism, with expectations for continued growth in personal loans and auto lending, offset by a decrease in SFR volume [34] Other Important Information - The company raised $800,000,000 in April for personal loan and auto loan ABS programs, demonstrating strong capital efficiency [13][32] - The balance sheet is robust, with $230,000,000 in cash and $760,000,000 in investments in loans and securities as of March 31 [33] Q&A Session Summary Question: How does the company position itself for economic uncertainty at the product level? - Management emphasizes building a long-term business that balances growth and profitability, with a focus on responsible credit underwriting and diversified funding [39][41] Question: What is the scaling potential of the prescreen product? - The prescreen product is expected to significantly lower acquisition costs for partners, enhancing customer growth and engagement [50][53] Question: What are the key drivers behind the addressable markets of personal loans, auto, and POS? - The company aims to enhance customer acquisition and retention through advanced data analytics and seamless lending experiences across all three markets [60][62] Question: What is the outlook for fair value adjustments moving forward? - Management indicates that fair value adjustments will reflect the ongoing performance of the portfolio, with expectations for stability in the coming quarters [72][77] Question: What is the current state of the ABS market and any changes in pricing? - The company notes that while spreads have widened recently, it remains well-positioned to manage pricing and maintain profitability [84][86]

Financial Data and Key Metrics Changes - Revenue grew by 18% year over year, reaching an annualized run rate of nearly $1,200,000,000 [6] - Fee revenue less production costs (FRLPC) increased by 26%, reaching an annualized run rate of over $460,000,000 [6] - Adjusted EBITDA grew by 100% to an annualized equivalent of approximately $320,000,000 [6] - Achieved positive GAAP net income of $8,000,000, marking the first quarter of profitability as a public company [6][26] - Operating income increased to $48,000,000, up more than five times year over year [26] Business Line Data and Key Metrics Changes - Personal loans volume grew by 17% from year-ago levels, with stable application conversion rates at approximately 1% [24] - Auto loans volumes increased nearly 50% sequentially, with an annualized run rate exceeding $1,100,000,000 [19] - Point of sale lending remains robust, with expectations for continued growth in this segment [19] Market Data and Key Metrics Changes - Network volume was $2,400,000,000, slightly below guidance due to lower SFR volume, but grew by 26% year over year excluding SFR [23] - FRLPC as a percentage of network volume rose by 100 basis points year over year to 4.8% [25] - The contribution of lending product fees increased to 77% in the quarter compared to 63% a year ago [25] Company Strategy and Development Direction - The company is focused on responsible and profitable growth, balancing growth with profitability [14][15] - Emphasis on leveraging unique data advantages and investments in products to add value to lending partners [14] - The introduction of proactive prescreen products aims to enhance the value proposition for lending partners [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges heightened macroeconomic uncertainty but remains committed to a prudent growth strategy [10][11] - The company is well-positioned to navigate potential changes in consumer health and credit performance [11] - Full-year guidance reflects momentum and resilience, with expectations for continued growth in personal loans and auto lending [33] Other Important Information - The company raised $800,000,000 in April for personal loan and auto loan ABS programs, demonstrating strong capital efficiency [13] - The balance sheet is anchored by $230,000,000 in cash and $760,000,000 in investments in loans and securities [32] - The company does not plan to raise equity capital in the foreseeable future, indicating a self-funded business model [31][32] Q&A Session Summary Question: How does the company position itself for economic variability at the product level? - Management emphasizes building a long-term business that balances growth and profitability, with a focus on responsible credit underwriting and diversified funding mechanisms [39][40][44] Question: How should prescreening be viewed in terms of scaling and impact on volumes? - Prescreening is expected to significantly lower acquisition costs and enhance customer engagement, contributing positively to the personal loans business [51][52] Question: What are the key drivers behind the addressable markets of personal loans, auto, and POS? - The company aims to enhance customer acquisition and retention through improved marketing strategies and seamless lending experiences across all three markets [60][62]

PAGAYA TECHNOLOGIES LTD. 1Q'25 Earnings Supplement May 7, 2025 1 Forward Looking Statements and Non-GAAP Information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward looking statements are based on the Company's current assumptions regarding future business and financial performance. Those statements by their nature address matters that are uncertain to different degrees. Those statements involve a number o ...

PAGAYA Q1 Letter to Shareholders Gal Krubiner | Co-founder and CEO Q1 Financial Highlights $2.4B Network volume was flat year-over-year at $2.4 billion, vs. guidance of $2.5 - $2.7 billion, the shortfall attributable to lower SFR volume, due to our focus on profitable growth. Excluding SFR, total volume grew by 26% year-over-year and 6% quarter-over- quarter in line with our plan. $290M Record total revenue and other income of $290 million compared to our outlook of $280M - $295M and grew 18% year-over-year ...