Pagaya Technologies .(US:PGY)2023-05-16 19:03Financial Data and Key Metrics Changes - Network volume for Q1 2023 was $1.85 billion, a 12% increase year-over-year, driving total revenue and other income to $187 million, which is 9% higher than last year [28] - Adjusted EBITDA for the quarter was $2 million, with a like-for-like improvement of $14 million sequentially compared to Q1 2022, excluding the impact of the Darwin acquisition [28][89] - The FRLPC margin declined to 2.7% in Q1, below the target of 3% to 4%, but is expected to increase above 3% in Q2 2023 [24][36] Business Line Data and Key Metrics Changes - Application volume for the auto business grew by 51% year-over-year, supported by a large bank onboarded in 2022, with network volume for that partner increasing by 4x since its first quarter on the network [19][50] - Approximately 26% of total origination volumes from the top three personal loan partners were created using the company's network, up from 10% in Q1 2021 [19] Market Data and Key Metrics Changes - The company raised over $16 billion in funding across all financial vehicles since 2020, maintaining a robust funding capability even during market dislocations [20] - The company became the top issuer of personal loan ABS in the U.S. in Q1 2023, holding over 30% market share [29] Company Strategy and Development Direction - The company aims to reach $25 billion in network volume and $1 billion in fee revenues by enhancing value for existing partners, adding new partners, and achieving a 3% to 4% FRLPC margin [30][50] - The acquisition of Darwin is expected to enhance the company's SFR platform and contribute meaningfully to business growth in the future [89] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute through volatility and emphasized a focus on sustainable profitable growth [16][36] - The company is maintaining its full-year guidance due to uncertainties in the macro environment, despite exceeding expectations in Q1 [76][93] Other Important Information - AI integration fees grew by 230 basis points from 5.5% to 7.8% of network volume, reflecting the company's ability to monetize its network effectively [29][35] - The company has onboarded two major asset managers to its network, strengthening relationships with long-term funding investors [29] Q&A Session Summary Question: What is the trajectory of application demand from new platforms? - Management indicated that new partnerships typically start with low application volumes but can grow significantly over time as relationships develop [9][10] Question: How does the company plan to utilize the recent capital raise? - The capital raise is intended to provide resources for potential M&A transactions and to support growth initiatives [4][91] Question: What is the outlook for the conversion rate? - Management believes the conversion rate has bottomed out and expects it to improve as market conditions stabilize [60] Question: How does the company view the impact of regional bank challenges? - The company sees opportunities to utilize its technology to help banks and credit unions improve their funding positions [78] Question: What is the expected normal percentage of partner volume in a more normalized environment? - Management discussed the importance of integration and the potential for continued growth in partner volume, suggesting that the trend is upward [79][97]