Pagaya Technologies Ltd. Reports Strong Earnings Growth

Pagaya Technologies Ltd. ((PGY)) has held its Q3 earnings call. Read on for the main highlights of the call.

Pagaya Technologies Ltd.’s recent earnings call exuded a sense of optimism, underscored by robust growth in network volume and profitability. The company showcased significant strides in partner onboarding and funding diversification, despite facing some non-recurring costs and credit-related losses. Overall, the strategic initiatives and performance metrics suggest a positive trajectory for the company.

Record-Breaking Network Volume

Pagaya Technologies Ltd. achieved a record quarterly network volume of $2.8 billion, marking a 19% year-over-year increase. This growth was particularly pronounced in the personal loans segment, which saw a remarkable 31% rise. This achievement underscores the company’s expanding market presence and its ability to capture increased demand.

Increased Profitability

The company reported a significant increase in profitability, with adjusted EBITDA rising by 91% to $107 million. Margins expanded by nine points to reach 30.6%. Operating income surged by 257% to $80 million, and operating cash flow reached a record $67 million, reflecting strong operational efficiency and financial health.

Expansion of Partner Network

Pagaya Technologies Ltd. is experiencing unprecedented growth in its partner network, with the highest number of partners in its onboarding queue in the company’s history. The firm plans to onboard up to eight partners across various asset classes, signaling a strategic expansion that could bolster its market position.

Diversified Funding Sources

The company has successfully diversified its funding sources, issuing $1.8 billion in ABS programs across four transactions and raising $500 million in corporate debt. Additionally, Pagaya expanded its corporate revolver with four major banks at a significantly lower cost, enhancing its financial flexibility and reducing interest expenses.

Credit-Related Fair Value Adjustments

Pagaya reported a $20 million loss in credit-related fair value adjustments, which, while higher than the previous quarter’s $14 million, is significantly lower than the prior year’s $78 million. This reflects an improvement in managing credit-related risks, despite the ongoing challenges.

Non-Recurring Costs

The company incurred one-time costs totaling $25 million related to the issuance of its corporate bond and the early retirement of existing debt, alongside a noncash warrant expense of $5 million. These costs, while impacting short-term financials, are part of strategic moves to optimize the company’s capital structure.

Forward-Looking Guidance

Looking ahead, Pagaya Technologies Ltd. provided robust financial guidance, projecting strong performance and growth prospects. The company expects full-year 2025 network volume to be between $10.5 and $10.75 billion, with total revenue ranging from $1.3 to $1.325 billion. Adjusted EBITDA is anticipated to be between $372 and $382 million, with GAAP net income projected to increase to $72 million to $82 million. These forecasts reflect the company’s disciplined growth strategy and strategic partnerships.

In summary, Pagaya Technologies Ltd.’s earnings call highlighted a strong performance trajectory, characterized by record-breaking network volume, increased profitability, and strategic expansions. Despite facing some financial challenges, the company’s forward-looking guidance suggests continued growth and resilience in the financial markets.