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Pagaya Technologies .(PGY) - 2024 Q2 - Quarterly Report
PGYPagaya Technologies .(PGY)2024-08-09 20:03
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Financial Performance - Total assets increased to 1,452,977thousandasofJune30,2024,comparedto1,452,977 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 479,598thousand,upfrom479,598 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 96,008thousand,comparedto96,008 thousand, compared to 92,268 thousand in the same period in 2023[10] - Operating income for the six months ended June 30, 2024, was 12,717thousand,comparedtoanoperatinglossof12,717 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 167,502thousand,comparedto167,502 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 495,620thousand,upfrom495,620 thousand, up from 382,250 thousand in the same period in 2023[10] - Net loss for the period ending June 30, 2024, was 82.679million,comparedtoanetlossof82.679 million, compared to a net loss of 114.341 million in the previous period[14] - Net loss including noncontrolling interests decreased to 114.3millioninH12024from114.3 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 36.0millioninH12024fromanetcashusedof36.0 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 61.6millionforClassAsharesand61.6 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 1.41forbothClassAandClassBshares[107]−NetlossattributabletoPagayaTechnologiesLtd.was1.41 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 31.3millioninthesameperiodin2023[150]−Non−GAAPadjustednetincomeimprovedto31.3 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 0.9millioninthesameperiodin2023[150]−NetLossAttributabletoPagayaTechnologiesLtd.forthethreemonthsendedJune30,2024was0.9 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)inthesameperiodin2023[188]RevenueandFees−RevenuefromfeesforthesixmonthsendedJune30,2024,was(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 360,939thousandinthesameperiodin2023[10]−TotalrevenueandotherincomeforthesixmonthsendedJune30,2024,was360,939 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 382,250thousandinthesameperiodin2023[10]−NetworkAIfeesgrew36.0382,250 thousand in the same period in 2023[10] - Network AI fees grew 36.0% to 437.1 million in H1 2024 from 321.5millioninH12023[30]−Contractfeesincreased7.9321.5 million in H1 2023[30] - Contract fees increased 7.9% to 42.5 million in H1 2024 compared to 39.4millioninH12023[33]−TotalrevenuefromfeesforthethreemonthsendedJune30,2024was39.4 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 185.7millioninthesameperiodin2023[37]−ForthesixmonthsendedJune30,2024,totalrevenuefromfeeswas185.7 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 360.9millionintheprioryearperiod[37]−RevenuefromrelatedpartiesforthesixmonthsendedJune30,2024,reached360.9 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 302.0millioninthesameperiodin2023[73]−Revenuefromfeesincreasedby302.0 million in the same period in 2023[73] - Revenue from fees increased by 56.9 million, or 31%, to 242.6million,primarilyduetoa242.6 million, primarily due to a 54.3 million increase in Network AI fees, with Network Volume growing by 19.1% to 2.3billion[154]−Totalrevenueandotherincomeincreasedby2.3 billion[154] - Total revenue and other income increased by 113.4 million (30%) to 495.6millionforthesixmonthsendedJune30,2024,drivenbya495.6 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 115.6millionto115.6 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 4.8billion[168]−RevenuefromfeesforthethreemonthsendedJune30,2024was4.8 billion[168] - Revenue from fees for the three months ended June 30, 2024 was 242,594, a 31% increase from 185,685inthesameperiodin2023[187]AssetsandLiabilities−Totalassetsincreasedto185,685 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 1,208,376thousandasofDecember31,2023[9]−Totalcurrentliabilitiesincreasedto1,208,376 thousand as of December 31, 2023[9] - Total current liabilities increased to 241,254 thousand as of June 30, 2024, from 74,925thousandasofDecember31,2023[9]−Cashandcashequivalentsincreasedto74,925 thousand as of December 31, 2023[9] - Cash and cash equivalents increased to 233,593 thousand as of June 30, 2024, from 186,478thousandasofDecember31,2023[9]−Totalnon−currentassetsincreasedto186,478 thousand as of December 31, 2023[9] - Total non-current assets increased to 1,091,780 thousand as of June 30, 2024, from 904,974thousandasofDecember31,2023[9]−Totalshareholders′equityasofJune30,2024,was904,974 thousand as of December 31, 2023[9] - Total shareholders' equity as of June 30, 2024, was 615.574 million, down from 665.749millionatDecember31,2023[14]−AccumulateddeficitasofJune30,2024,was665.749 million at December 31, 2023[14] - Accumulated deficit as of June 30, 2024, was 638.645 million, up from 542.637millionatDecember31,2023[14]−Non−controllinginterestsasofJune30,2024,were542.637 million at December 31, 2023[14] - Non-controlling interests as of June 30, 2024, were 89.592 million, down from 106.028millionatDecember31,2023[14]−Totalshareholders′equityasofJune30,2023,was106.028 million at December 31, 2023[14] - Total shareholders' equity as of June 30, 2023, was 703.123 million, down from 765.423millionatDecember31,2022[15]−AccumulateddeficitasofJune30,2023,was765.423 million at December 31, 2022[15] - Accumulated deficit as of June 30, 2023, was 506.467 million, up from 414.199millionatDecember31,2022[15]−Non−controllinginterestsasofJune30,2023,were414.199 million at December 31, 2022[15] - Non-controlling interests as of June 30, 2023, were 179.940 million, down from 211.903millionatDecember31,2022[15]−Cash,cashequivalentsandrestrictedcashdecreasedby19.2211.903 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 331.4millionasofJune30,2023[17]−Securedborrowingsincreasedto331.4 million as of June 30, 2023[17] - Secured borrowings increased to 400.2 million as of June 30, 2024, up from 271.7millionatDecember31,2023[40]−Theoutstandingprincipalbalanceunderrepurchaseagreementswas271.7 million at December 31, 2023[40] - The outstanding principal balance under repurchase agreements was 367.7 million as of June 30, 2024, compared to 251.4millionatDecember31,2023[41]−Long−termdebtoutstandingwas251.4 million at December 31, 2023[41] - Long-term debt outstanding was 232.6 million as of June 30, 2024, with aggregate future maturities totaling 248.6million[45][46]−Thefairvalueofinvestmentsinloansandsecuritieswas248.6 million[45][46] - The fair value of investments in loans and securities was 911.4 million as of June 30, 2024, up from 716.8millionatDecember31,2023[49][50]−Investmentsinloansandsecurities,availableforsale,totaled716.8 million at December 31, 2023[49][50] - Investments in loans and securities, available for sale, totaled 1,150.8 million in amortized cost and 911.4millioninfairvalueasofJune30,2024[53]−Thebalanceofallowanceforcreditlosseswas911.4 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)millionatthebeginningoftheperiod[58]−Equitymethodandotherinvestmentstotaled(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 26.4millionasofDecember31,2023[61]−ConsolidatedVIEshadnetassetsof26.4 million as of December 31, 2023[61] - Consolidated VIEs had net assets of 111.2 million as of June 30, 2024, down from 132.7millionasofDecember31,2023[63]−Thecompany′sdirectinterestinunconsolidatedVIEswas132.7 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 591.0millionasofDecember31,2023[65]−Totalfeereceivablesfromrelatedpartiesincreasedto591.0 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 84.8millionattheendof2023[71]−Investmentsinloansandsecurities(Level3)increasedto84.8 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 626.368millionattheendof2023[82]−Cash,cashequivalents,andrestrictedcashincreasedfrom626.368 million at the end of 2023[82] - Cash, cash equivalents, and restricted cash increased from 222.5 million as of December 31, 2023, to 267.9millionasofJune30,2024[86][87]−Totalassetsgrewfrom267.9 million as of June 30, 2024[86][87] - Total assets grew from 336.2 million as of December 31, 2023, to 394.4millionasofJune30,2024[86][87]−Cash,cashequivalentsandrestrictedcashasofJune30,2024was394.4 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 222.5millionasofDecember31,2023[189]InvestmentsandLoans−Investmentsinloansandsecuritiesincreasedby49.5222.5 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 273.3millioninH12023[16]−Thefairvalueofinvestmentsinloansandsecuritieswas273.3 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 716.8millionatDecember31,2023[49][50]−Grossunrealizedlossesoninvestmentsinloansandsecuritiestotaled716.8 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 3.8millionatDecember31,2023[52]−Investmentsinloansandsecurities,availableforsale,totaled3.8 million at December 31, 2023[52] - Investments in loans and securities, available for sale, totaled 1,150.8 million in amortized cost and 911.4millioninfairvalueasofJune30,2024[53]−Proceedsfromsales/maturities/prepaymentsofinvestmentsinloansandsecuritieswere911.4 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 91.4millioninthesameperiodof2023[57]−Additionstoallowanceforcreditlosseswere91.4 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)millioninthesameperiodof2023[57]−Thecompanypurchased(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 18.4millionloss[65]−Investmentsinloansandsecurities(Level3)increasedto18.4 million loss[65] - Investments in loans and securities (Level 3) increased to 853.418 million as of June 30, 2024, up from 626.368millionattheendof2023[82]−TheweightedaveragediscountrateforLevel3fairvaluemeasurementsincreasedto15.4626.368 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 18.4million[74]CashFlowandFinancing−Netcashprovidedbyoperatingactivitiesimprovedsignificantlyto18.4 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 25.5millioninH12023[16]−Thecompanyraised25.5 million in H1 2023[16] - The company raised 244.7 million from long-term debt and 89.9millionfromordinarysharessaleinH12024[16]−Cash,cashequivalentsandrestrictedcashdecreasedby19.289.9 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 331.4millionasofJune30,2023[17]−TheReceivablesFacilitymaximumprincipalamountwasincreasedfrom331.4 million as of June 30, 2023[17] - The Receivables Facility maximum principal amount was increased from 32 million to 45millioninJune2024,withthetermextendeduntilJune2026[42]−TheCompanyenteredintoanewCreditAgreementinFebruary2024,providingfora45 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 255milliontermloanfacility[43]−NetcashprovidedbyoperatingactivitiesforthesixmonthsendedJune30,2024was255 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)inthesameperiodin2023[201]−NetcashusedininvestingactivitiesforthesixmonthsendedJune30,2024was(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)inthesameperiodin2023[201]−NetcashprovidedbyfinancingactivitiesforthesixmonthsendedJune30,2024was(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 213,359inthesameperiodin2023[201]−Thecompanyissued298,057sharesundertheEquityFinancingPurchaseAgreementfornetproceedsof213,359 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 36.0million,anincreaseof36.0 million, an increase of 61.5 million from net cash used in operating activities of 25.5millionforthesameperiodin2023[202]−NetcashusedininvestingactivitiesforthesixmonthsendedJune30,2024was25.5 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 408.5million[205]−NetcashprovidedbyfinancingactivitiesforthesixmonthsendedJune30,2024was408.5 million[205] - Net cash provided by financing activities for the six months ended June 30, 2024 was 362.4 million, including 230.4millionfromissuanceoflong−termdebtand230.4 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 25millionrevolvingcreditfacilityanda25 million revolving credit facility and a 255 million term loan facility[206] Expenses and Costs - Depreciation and amortization expenses increased 67.3% to 13.4millioninH12024from13.4 million in H1 2024 from 8.0 million in H1 2023[16] - Share-based compensation decreased 8.4% to 33.5millioninH12024from33.5 million in H1 2024 from 36.6 million in H1 2023[16] - Share-based compensation for the period ending June 30, 2024, was 20.093million,downfrom20.093 million, down from 37.710 million in the previous period[14] - Share-based compensation for the period ending June 30, 2023, was 22.395million,downfrom22.395 million, down from 39.691 million in the previous period[15] - Rent expense was 5.8millionforthesixmonthsendedJune30,2024,downfrom5.8 million for the six months ended June 30, 2024, down from 6.8 million in the same period of 2023[66] - Sublease income was 2.0millionforthesixmonthsendedJune30,2024,downslightlyfrom2.0 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 45.956millionasof2024,withimputedinterestdeductedat45.956 million as of 2024, with imputed interest deducted at 10.283 million[67] - The company has a remaining contractual obligation of 6.1millionwithathird−partycloudcomputingprovider,ofwhich6.1 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 29.2millionasofJune30,2024[70]−Productioncostsincreasedby29.2 million as of June 30, 2024[70] - Production costs increased by 25.0 million, or 21%, to 145.6million,drivenbyincreasesinNetworkVolumeandnewPartnersonboarded[158][159]−Technology,data,andproductdevelopmentcostsincreasedby145.6 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 21.9million,primarilyduetohigherdepreciationofcapitalizedsoftware[160]−Salesandmarketingcostsdecreasedby21.9 million, primarily due to higher depreciation of capitalized software[160] - Sales and marketing costs decreased by 1.2 million, or 8%, to 13.3million,drivenbyreducedcompensationexpensesandmarketing−relatedcosts[162]−Generalandadministrativecostsincreasedby13.3 million, driven by reduced compensation expenses and marketing-related costs[162] - General and administrative costs increased by 11.4 million, or 22%, to 64.4million,excludinga64.4 million, excluding a 13.4 million loss from loan purchases, costs decreased by 2.0million[163]−Productioncostsincreasedby2.0 million[163] - Production costs increased by 44.8 million (18%) to 290.5millionforthesixmonthsendedJune30,2024,duetohigherNetworkVolumeandnewPartnersonboarded[172]−Technology,dataandproductdevelopmentcostsincreasedby290.5 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 41.3millionforthesixmonthsendedJune30,2024,primarilyduetohigherdepreciationofcapitalizedsoftware[173]−Salesandmarketingcostsdecreasedby41.3 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 23.6millionforthesixmonthsendedJune30,2024,drivenbylowercompensationexpenses[175]−Generalandadministrativecostsincreasedby23.6 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 127.5millionforthesixmonthsendedJune30,2024,excludinga127.5 million for the six months ended June 30, 2024, excluding a 18.4 million loss from loan purchases[176] - Other expense, net increased by 23.7million(2823.7 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 1.6million[203]−Share−basedcompensationdecreasedby1.6 million[203] - Share-based compensation decreased by 3.1 million, while depreciation and amortization increased by 5.4millionprimarilyfromcapitalizedsoftware[203]ShareholderEquityandCompensation−Totalshareholders′equityasofJune30,2024,was5.4 million primarily from capitalized software[203] Shareholder Equity and Compensation - Total shareholders' equity as of June 30, 2024, was 615.574 million, down from 665.749millionatDecember31,2023[14]−Share−basedcompensationfortheperiodendingJune30,2024,was665.749 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