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Pagaya Technologies Ltd. (PGY)·Q3 2025 Earnings Summary

Executive Summary

  • Record quarter with Total Revenue & Other Income of $350.2M (+36% YoY, +7% QoQ), Adjusted EBITDA of $107.0M (+91% YoY), and GAAP net income of $22.5M (third straight positive quarter), driven by fee growth, operating leverage, and normalized impairments .
  • FY25 guidance raised for Total Revenue ($1.30–$1.325B), Adjusted EBITDA ($372–$382M), and GAAP Net Income ($72–$82M), with implied Q4 revenue of $333–$358M, Adjusted EBITDA of $99–$109M, and GAAP Net Income of $25–$35M .
  • Funding and liquidity inflected: issued $500M 8.875% senior unsecured notes, expanded RCF with four new banks and cut pricing to SOFR+350, taking substantially all borrowings to or below 8.875% coupon; expect ~$12M annual interest savings, ~$40M cash flow benefit, and released >$100M collateral .
  • Estimate context: Revenue beat S&P consensus ($350.2M vs $341.3M), Primary EPS beat ($1.02 vs $0.659), while standard EBITDA missed ($81.8M vs $93.6M)*. Company-reported Adjusted EBITDA of $107.0M exceeded its own guidance . Values marked with * from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Monetization and operating leverage: FRLPC rose to $139.3M (+39% YoY), with FRLPC% at a record 5.0% (+70 bps YoY); Adjusted EBITDA hit $107.0M and margin reached 30.6%, with core opex at 34% of FRLPC (lowest since IPO) .
  • Diversified growth and funding: $1.8B of ABS issued across four deals; inaugural $500M Auto forward flow with Castlelake; second $300M AAA POSH ABS; plus corporate revolver expansion at SOFR+350, bringing most borrowings to or below 8.875% .
  • Strategic pipeline: record number of partners in onboarding; POS and Auto now 32% of volume vs 9% a year ago; management reinforced B2B enterprise discipline and multi-year partner contracts .

What Went Wrong

  • Non-operating headwinds: credit-related fair value loss of ~$20M, $25M loss from debt extinguishment, and $5M non-cash warrant expense, partly offset by a $20M one-time tax benefit .
  • Near-term FRLPC% expected to normalize from 5.0% toward 4–5% range as mix shifts to POS/Auto and funding mix diversifies; implies less margin expansion from mix tailwinds .
  • Standard EBITDA fell below S&P consensus despite strong company-reported Adjusted EBITDA; continued credit-related impairments are assumed within outlook ($100–$150M rolling 12 months) . EBITDA consensus comparison from S&P Global*.

Financial Results

Core P&L, unit economics, and volumes (oldest → newest)

MetricQ3 2024Q2 2025Q3 2025
Total Revenue & Other Income ($M)$257.234 $326.398 $350.165
Revenue from Fees ($M)$249.283 $317.714 $339.887
GAAP Net Income ($M)$(67.476) $16.655 $22.545
GAAP Diluted EPS ($)$(0.93) $0.20 $0.23
Adjusted Net Income ($M)$33.122 $50.624 $92.754
Adjusted Diluted EPS ($)$0.44 $0.64 $1.02
Adjusted EBITDA ($M)$56.085 $86.283 $107.038
Fee Revenue Less Production Costs, FRLPC ($M)$100.318 $126.249 $139.313
Network Volume ($M)$2,351 $2,648 $2,802
FRLPC % (of volume)4.3% 4.8% 5.0%

Revenue breakdown (Q3 2025)

ComponentQ3 2025
Revenue from Fees ($M)$339.887
Interest Income ($M)$14.918
Investment Loss, net ($M)$(4.640)
Total Revenue & Other Income ($M)$350.165

Margins (select)

MetricQ2 2025Q3 2025
Adjusted EBITDA Margin (%)26.4% 30.6%

KPIs and operating context (oldest → newest)

KPIQ1 2025Q2 2025Q3 2025
Network Volume ($M)$2,400 $2,648 $2,802
Total Revenue & Other Income ($M)$289.989 $326.398 $350.165
FRLPC ($M)$115.621 $126.249 $139.313
FRLPC %4.8% 4.8% 5.0%
Adjusted EBITDA ($M)$79.583 $86.283 $107.038
GAAP Net Income ($M)$7.893 $16.655 $22.545
App-to-Fund Conversion~1% ~1% ~1%

Results vs S&P Global Consensus (Q3 2025)

MetricConsensusActualSurprise
Revenue ($M)$341.273*$350.165*+$8.892 / +2.6%*
Primary EPS ($)$0.6587*$1.02*+$0.3613*
EBITDA ($M)$93.567*$81.794*-$11.773*

Values marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious Guidance (Aug 7, 2025)Current Guidance (Nov 10, 2025)Change
Network VolumeFY25$10.5B–$11.5B $10.5B–$10.75B Narrowed; lowered top end
Total Revenue & Other IncomeFY25$1.25B–$1.325B $1.300B–$1.325B Raised low end
Adjusted EBITDAFY25$345M–$370M $372M–$382M Raised
GAAP Net IncomeFY25$55M–$75M $72M–$82M Raised
Network VolumeQ4’25 (Implied)—$2.65B–$2.9B New
Total Revenue & Other IncomeQ4’25 (Implied)—$333M–$358M New
Adjusted EBITDAQ4’25 (Implied)—$99M–$109M New
GAAP Net IncomeQ4’25 (Implied)—$25M–$35M New

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Product & AI/technologyLaunched prescreen/direct marketing engine; affiliate optimizer; B2B2C model; focus on product-led growth .Next 18 months focused on product-led growth; pre-built integrations; multi-product adoption; record onboarding pipeline .Accelerating expansion
Funding/capital structureFirst $500M 8.875% unsecured notes; AAA auto/POSH ABS; forward flows expanding .$1.8B ABS issued; inaugural $500M auto forward flow; expanded RCF to SOFR+350; majority borrowings ≤8.875% .Strengthening, lower cost
Credit & macroCNLs improving vs 2021/2022 peaks; conservative underwriting .Credit within tolerance; 2024 vintages well below peaks; maintained $100–$150M rolling 12M impairment assumption .Stable to improving
Partner onboarding & enterprise disciplineTerm sheets with regional banks; onboarding timelines and compliance rigor .Highest-ever onboarding queue; 31 partners; multi-year contracts progressing (3–5 late-stage) .Broadening
Segment mix (POS/Auto)POS/Auto 30% of volume vs 9% YoY; AAA ABS shelves .POS/Auto 32% of volume; annualized runs POS $1.4B, Auto $2.2B .Increasing diversification

Management Commentary

  • “Our pipeline has never been stronger as lenders across asset classes recognize the unique and powerful value proposition the Pagaya network provides.” — Gal Krubiner, CEO .
  • “Adjusted EBITDA increased 91% to a record $107 million... Core operating expenses as a percentage of FRLPC are at their lowest since going public, at 34%...” — Evangelos Perros, CFO .
  • “We were rated by all three major credit rating agencies and raised $500 million in corporate debt... expanded our corporate revolver... at a significantly lower cost, boosting our capital efficiency.” — Gal Krubiner .
  • “We now have the highest number of partners in our onboarding queue in the history of Pagaya… growing five accounts to over $1 billion relationships.” — Sanjiv Das, President .

Q&A Highlights

  • Credit quality: Management emphasized conservative underwriting and stable performance; 2024 personal loan CNLs ~35–40% below 4Q21 peaks (MOB 8–17); auto CNLs ~50–65% below comparable 2022 periods (MOB 9–18) .
  • Funding/risk retention: Mix roughly 60/40 ABS vs forward flows/pass-throughs; ability to increase retention if needed, supported by stronger cash generation .
  • Forward flow pipeline: Expanding across products and partners; targeting ~50/50 mix over time between ABS and other structures .
  • B2B vs B2C: Reinforced institutional, multi-year, fee-based B2B model with consumer risk disciplines; building long-term contracts with mega partners .
  • New markets: Evaluating expansions with criteria (TAM, partner interest, cyclicality); highlighted home improvement as an emerging opportunity under review .

Estimates Context

  • Q3 2025 vs S&P Global consensus: Revenue beat ($350.2M vs $341.3M); Primary EPS beat ($1.02 vs $0.659); EBITDA miss ($81.8M vs $93.6M)*. Note: Company-reported Adjusted EBITDA was $107.0M, ahead of its guidance . Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • The narrative is improving: third consecutive quarter of GAAP profitability, multiple record metrics, and a third consecutive FY guidance raise—key sentiment drivers .
  • Monetization remains strong (FRLPC% 5.0%), but management expects normalization toward 4–5% as POS/Auto scale and funding diversifies; focus shifts to growing FRLPC dollars .
  • Capital structure upgrade (8.875% notes, RCF repricing) should lower interest expense ($12M/yr) and bolster cash flow ($40M/yr), supporting durable profitability through cycles .
  • Watch the definitions in estimate comps: standard EBITDA missed S&P consensus*, but company’s Adjusted EBITDA substantially outperformed and exceeded internal guidance .
  • Credit and funding conditions remain supportive; rolling 12-month credit impairment assumption ($100–$150M) embedded in outlook provides cushion .
  • Pipeline and product velocity (direct marketing, affiliate optimizer, auto FastPass, dual-look) plus pre-built integrations should underpin 2026 volume and revenue growth .
  • Near-term trading: Raised FY25 guidance and funding cost inflection are likely positive catalysts; monitor FRLPC% normalization, any changes to impairment assumptions, and execution on partner onboarding and forward-flow diversification .

Notes: Values marked with * retrieved from S&P Global.