Pagaya Technologies (PGY)·Q4 2025 Earnings Summary

Pagaya Beats Q4 Across the Board, But Soft Q1 Guide Sends Shares Down 17%

February 9, 2026 · by Fintool AI Agent

Pagaya Technologies delivered a clean beat across all metrics in Q4 2025, posting record GAAP profitability and its fourth consecutive quarter in the black. But the celebration was short-lived — shares plunged 17% after hours as management guided to a softer Q1 2026, citing proactive credit risk reduction in the face of "persistent uncertainty."

The AI-powered lending platform reported total revenue of $335M (+20% YoY), record GAAP net income of $34M (swinging from a $238M loss a year ago), and Adjusted EBITDA of $98M (+53% YoY). For the full year, Pagaya achieved $81M in GAAP net income — a $483M improvement from FY2024's loss.

Did Pagaya Beat Earnings?

Yes — Pagaya beat consensus estimates on every key metric for Q4 2025:

*Values retrieved from S&P Global

The company also hit its own internal outlook ranges on all metrics. CEO Gal Krubiner called out the operational improvements:

"Our fourth quarter and full-year results demonstrate, again, the benefits of years of work to position our company for long-term durable growth with a focus on increasing profitability, benefitting from our prior investments across the entire enterprise."

Profitability Transformation

The shift from deep losses to sustained profitability has been dramatic:

Source: Company filings

What Did Management Guide?

This is where the stock broke down. While FY2026 guidance implies continued growth, Q1 2026 will be a transitional quarter as credit risk actions take hold.

Q1 2026 Guidance (Soft)

Source: Company guidance

FY2026 Guidance (Constructive)

Source: Company guidance

The guidance contemplates a ~$1.2-1.8B reduction in "profitable volume with higher credit risk" that management proactively cut late in Q4.

What Changed From Last Quarter?

The Credit Pullback

Management made a deliberate decision to reduce exposure to higher-risk credit segments. While Pagaya's own credit performance remains "in line with expectations," the company observed changing risk appetites among lending partners amid market uncertainty.

The action reduced Q4 volume by approximately $100-150 million without impacting quarterly profitability targets — translating to ~$1.5 billion on an annualized basis. The pullback was primarily across personal loans and auto, while POS continued its secular growth trajectory.

"While our data does not indicate consumer deterioration, we have the privilege of being able to pivot our production to focus on prudence and discipline."

CEO Gal Krubiner explained the rationale in the Q&A:

"When you see losses, it's a little bit too late. And when you are taking it proactive before, that's the way to be disciplined. So you don't need always to look on deterioration of your outcomes on the CNLs to say, 'Now, I need to take action.'"

Volume Mix (Q4 2025)

Source: Earnings call

Product Diversification Accelerating

Beyond decline monetization, Pagaya's product suite is gaining traction:

• LendingClub adopted the marketing affiliate offering and became a multi-product partner
• Affiliate Optimizer Engine expanding to include Experian Activate platform with first partner launched
• Direct Marketing Engine — largest existing partners signed definitive term sheets, now scaling across direct mail and email prescreen campaigns
• Three new partners onboarded: Achieve, GLS (Global Lending Services — 20,000 franchises/dealerships), and a leading BNPL provider
• Long-term agreements signed with largest partners in auto and personal loans with volume, fee, and flow commitments

How Did the Stock React?

PGY shares closed at $18.64 (+6.9%) ahead of the earnings release, but cratered 17% to $15.53 in after-hours trading on the soft Q1 guide.

Historical Earnings Reactions

The pattern is clear: beating estimates isn't enough — guidance drives the stock. PGY trades at ~$1.5B market cap, down from a 52-week high of $44.

Key Business Highlights

Funding Diversification

The company meaningfully diversified its funding base in 2025:

• $2.9B issued in ABS in Q4 across seven transactions
• Forward flow agreements now span all three asset classes — inaugural agreements with Castlelake (auto) and Sound Point (POS)
• $3B revolving capacity via three new structures: $350M revolving personal loan ABS with 26North plus two POS revolvers
• Strong demand validation: Recent $800M ABS deal upsized 33% from $600M and still oversubscribed

Credit Performance Stable

Despite the cautious positioning, credit metrics remain solid:

• Personal Loan CNLs: 30-40% below Q4 2021 peak levels
• Auto CNLs: 50-70% below comparable 2022 periods
• POS: Stable and in line with expectations

Balance Sheet Strength

Cash and liquidity improved:

Source: Company filings

What to Watch

Growth Drivers for FY2026

1. New Partner Ramp: Record pipeline — expect 7-8 new partners onboarded by end of Q2 2026
2. Existing Partner Penetration: Long-term agreements signed with two largest partners in auto and personal loans with volume/fee commitments
3. Product Adoption: Direct Marketing Engine and Affiliate Optimizer expanding — top 5 partners already on these new products
4. FRLPC Margin: Expected 4.0-5.0% for FY2026, reverting lower from current 4.9% due to POS mix shift and new partner ramps
5. Tax Rate: ~20% assumed for FY2026 modeling

Risks

• Consumer Credit Uncertainty: Management cited "persistent uncertainty" multiple times
• Partner Concentration: Large percentage of revenue from limited partners
• Guidance Execution: Wide FY2026 ranges suggest visibility remains limited

Q&A Highlights

On Partner Behavior (Hal Goetsch, B. Riley)

Asked why Pagaya pulled back when macro trends (falling inflation, lower rates, solid jobs) seemed favorable, management clarified it wasn't about credit deterioration — it was about partner sentiment shifts:

"What we were observing very specifically from our 31 lending partner platform was some of the partners that had been talking about credit expansion in the middle of the year were feeling less certain about credit expansion by the third, fourth quarter because of the sheer uncertainty in the market."

On Funding Environment (Kyle Joseph, Stephens)

Private credit concerns haven't impacted Pagaya's funding:

"Demand for our product and production is very robust... The platforms that have a very robust and very diversified set of investors that they work with, like Pagaya, we're benefiting from all of these."

Recent ABS execution validated this — an $800M deal was upsized from $600M and "still oversubscribed."

On Products Beyond Decline Monetization (John Hecht, Jefferies)

President Sanjiv Das highlighted the economics shift:

"The dynamics of the Direct Marketing Engine where we essentially help our partners grow their originations is very, very strong... The performance is also substantially better. Same with the Affiliate Optimizer Engine... the economics in these are substantially better than what we have traditionally provided because of better risk performance."

On Partner Relationships (Hal Goetsch follow-up)

Unlike 2023 when the company was still building credibility, partners now support conservative positioning:

"From them, 15% growth in the midpoint and a stronger Pagaya is much better than a 20%-25% growth. But then in three months, six months, nine months, we take it down on them. So stability is key more than the actual growth number."

On New Partner Pipeline

Management expects a record number of onboardings: "By the end of the second quarter, we will have onboarded maybe 7, potentially 8 new partners, which will be like a record for Pagaya."

The Bottom Line

Pagaya delivered an operationally clean quarter — record profitability, beat estimates, and validated the turnaround story. But management's decision to proactively pull back on higher-risk credit segments signals caution about the consumer lending environment that spooked investors.

The bull case: This is disciplined risk management from a company that has learned from prior cycles, positioning for sustainable growth.

The bear case: The soft Q1 guide and wide FY2026 ranges suggest the business model remains highly sensitive to credit conditions, and the stock at $15 (down 65% from 52-week highs) may have further to fall.

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Conference Call: February 9, 2026 at 8:30 AM ET — Investor Relations

Next Earnings: ~May 2026 (Q1 2026 results)

Data sources: Pagaya 8-K filed February 9, 2026; Q4 2025 Earnings Call Transcript; S&P Global estimates