Pagaya Technologies .(PGY) - 2025 Q3 - Quarterly Results

Financial Performance - Record network volume reached $2.8 billion, growing 19% year-over-year, exceeding the outlook of $2.75 - $2.95 billion[3] - Total revenue and other income hit a record $350 million, a 36% year-over-year increase, surpassing the outlook of $330 - $350 million[4] - Revenue from fees less production costs (FRLPC) was $139 million, up 39% year-over-year, with FRLPC as a percentage of network volume improving to 5.0%[5] - Adjusted EBITDA reached a record $107 million, growing 91% year-over-year, with an adjusted EBITDA margin of 31%[6] - GAAP net income attributable to shareholders was $23 million, a 6% margin, significantly up from $10 - $20 million outlook[7] - Total revenue for Q3 2025 reached $350 million, a 36% year-over-year increase, with fee revenue contributing 97% of total revenue[57] - GAAP net income for Q3 2025 was $23 million, compared to a net loss of $67 million in Q3 2024, reflecting a significant improvement in profitability[67] - Revenue for Q3 2025 reached $350.165 million, a 36.1% increase from $257.234 million in Q3 2024[103] - Net income attributable to Pagaya Technologies Ltd. was $22.545 million in Q3 2025, compared to a loss of $67.476 million in Q3 2024[103] - Non-GAAP adjusted net income for the nine months ended September 30, 2025, was $196.567 million, up from $53.641 million in the same period of 2024[105] - Adjusted EBITDA for Q3 2025 was $107,038 thousand, up from $56,085 thousand in Q3 2024, reflecting a 91% year-over-year increase[107] - The company's operating income increased to $79,958 thousand in Q3 2025, compared to $22,384 thousand in Q3 2024, marking a 258% increase[107] - The adjusted net income for the nine months ended September 30, 2025, was $196,567 thousand, compared to $53,641 thousand for the same period in 2024, indicating a substantial increase[107] Funding and Capital Structure - The company issued $1.8 billion in ABS across four transactions, enhancing funding momentum and diversification[11] - A public bond offering raised $500 million in corporate debt, improving balance sheet efficiency and reducing funding costs by 400bps[13] - The company issued $1.8 billion in ABS during Q3 2025, enhancing its funding capabilities and diversifying its funding sources[79] - The balance sheet as of September 30, 2025, included $265 million in cash and $888 million in investments in loans and securities[81] - Total liabilities increased to $889.438 million as of September 30, 2025, from $775.276 million at the end of 2024[104] - The company expects to achieve $12 million in annualized interest expense savings due to recent refinancing efforts[71] - Interest expense is projected to trend lower due to a recent refinancing notes transaction[87] Growth and Market Position - The onboarding pipeline reached a record number of partners, indicating strong demand and growth potential[14] - Approximately 50% of current volumes come from newer products and features, showcasing the effectiveness of product expansion strategies[42] - Annualized Point-of-Sale volumes grew to $1.4 billion, up from $1.2 billion in the previous quarter, while Auto volumes increased to $2.2 billion from $2 billion[51] - The company anticipates an annual run rate of over $120 million of GAAP income in Q4, reflecting continued operational momentum[15] - The full-year 2025 outlook anticipates Network Volume between $10.5 billion and $10.75 billion, with an implied 4Q'25 volume of $2.65 billion to $2.9 billion[88] - Total Revenue & Other Income is projected to be between $1.3 billion and $1.325 billion for FY25, with 4Q'25 expected to range from $333 million to $358 million[88] - Adjusted EBITDA for FY25 is estimated between $372 million and $382 million, with an implied 4Q'25 range of $99 million to $109 million[88] - GAAP Net Income is forecasted to be between $72 million and $82 million for FY25, with 4Q'25 expected to be between $25 million and $35 million[88] - The company expects Fee Revenue Less Production Costs (FRLPC) to grow steadily, ranging from 4.0% to 5.0% as a percentage of network volume in 4Q'25, compared to 3Q'25[87] Operational Efficiency - Core operating expenses as a percentage of FRLPC improved to 34% in Q3 2025, down from 52% in Q3 2024, demonstrating enhanced operational efficiency[107] - Operating expenses decreased to $69,633 thousand in Q3 2025 from $85,885 thousand in Q3 2024, a reduction of 19%[107] - The company incurred $18,606 thousand in impairment losses on certain investments in Q3 2025, down from $81,827 thousand in Q3 2024, showing a reduction in investment-related losses[107] Strategic Focus - The company emphasizes a focus on profitable growth while monitoring market volatility closely[86] - The company plans to maintain a cautious stance amid ongoing economic uncertainties[86] - Future credit-related impairments are considered in the guidance, reflecting potential scenarios[87] - Pagaya utilizes machine learning and a vast data network to enhance its financial products and services[91] - Pagaya Technologies Ltd. completed the acquisition of Theorem Technology, Inc., which is expected to enhance its market position[105]