Pagaya Reports First Quarter 2024 Results
- Delivered another record quarter, exceeding guidance on all metrics:
- Record Network Volume of
$2.42 billion - Record Total Revenue and Other Income of
$245 million - Record Adjusted EBITDA of
$40 million
- Record Network Volume of
- Onboarding a bank partner in our point-of-sale product
For additional information, view
“Disciplined execution drove another record quarter across our key metrics. We began onboarding a bank partner in our POS vertical, enhanced our unit economics and strengthened our funding capabilities,” said
First Quarter 2024 Highlights
All comparisons are made versus the same period in 2023 and on a year-over-year basis unless otherwise stated.
- Record network volume of
$2.42 billion (exceeding outlook of$2.2 billion to$2.4 billion ) grew by 31% year-over-year. - The Company expanded its POS business with a bank partner, set to go live on our network in the second half of 2024.
Pagaya continues to expand its presence in one of the fastest-growing consumer credit markets in theU.S. , demonstrating the strength of its enterprise-grade product. - The Company raised
$1.9 billion across 5 transactions and expanded its funding network by 18 new investors, for a total of 116 funding partners. - Record total revenue and other income of
$245 million (exceeding outlook of$225 million to$240 million ) increased by 31% year-over-year, driven by a 35% increase in revenue from fees. - Record revenue from fees less production costs (“FRLPC”) of
$92 million increased by 84% year-over-year, driven by improved economics with our most scaled personal loan lending partners. FRLPC as a percentage of network volume (“FRLPC margin”) improved 109 basis points year-over-year to 3.8%. - Record adjusted EBITDA of
$40 million (exceeding outlook of$32 million to$38 million ) increased by$38 million compared to the prior year period, benefiting from the growth in FRLPC and operating leverage as the business scales. GAAP operating income of$8 million represents the third consecutive quarter of positive GAAP operating income. - Adjusted net income of
$13 million , which excludes the impact of non-cash items such as share-based compensation expense, represents the fourth consecutive quarter of positive adjusted net income. - Cash flow from operating activities of
$20 million represents the third consecutive quarter of positive operating cash flow. - Net loss attributable to
Pagaya shareholders of$21 million improved by$40 million compared to the first quarter of 2023. - Executed on the next phase of evolution as a public company, raising
$330 million of proceeds from our corporate debt and equity raises this quarter, further strengthening the Company’s capital position.Pagaya executed several initiatives to enhance the marketability of its stock to theU.S. investment community. PGY shares began trading on a reverse split-adjusted basis at the beginning of March. The Company moved its headquarters toNew York City and is aligning reporting standards toU.S. domestic issuers, with the filing of its first Form 10-K in April and its first Form 10-Q this quarter.
Second Quarter 2024 Outlook
|
2Q24 |
Network Volume |
Expected to be between |
Total Revenue and Other Income |
Expected to be between |
Adjusted EBITDA |
Expected to be between |
Full Year 2024 Outlook
|
FY24 |
Network Volume |
Expected to be between |
Total Revenue and Other Income |
Expected to be between |
Adjusted EBITDA |
Expected to be between |
Webcast
The Company will hold a webcast and conference call today,
The conference call can also be accessed by dialing 1-844-826-3035 or 1-412-317-5195. The telephone replay can be accessed by dialing 1-844-512-2921 or 1-412-317-6671 and providing the conference ID# 10187845. The telephone replay will be available starting shortly after the call until
About
Cautionary Note About Forward-Looking Statements
This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These forward-looking statements generally are identified by the words “anticipate,” “believe,” “continue,” “can,” “could,” “estimate,” “expect,” “intend,” “may,” “opportunity,” “future,” “strategy,” “might,” “outlook,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. All statements other than statements of historical fact are forward-looking statements, including statements regarding: The Company’s strategy and future operations, including the Company’s ability to continue to deliver consistent results for its lending partners and investors; the Company’s ability to continue to drive sustainable gains in profitability; the Company’s ability to achieve continued momentum in its business; the Company’s ability to achieve positive net cash flow by 2025; and the Company’s financial outlook for Network Volume, Total Revenue and Other Income and Adjusted EBITDA for the full year 2024. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Risks, uncertainties and assumptions include factors relating to: the Company's ability to attract new partners and to retain and grow its relationships with existing partners to support the underlying investment needs for its securitizations and funds products; the need to maintain a consistently high level of trust in its brand; the concentration of a large percentage of its investment revenue with a small number of partners and platforms; its ability to sustain its revenue growth rate or the growth rate of its related key operating metrics; its ability to improve, operate and implement its technology, its existing funding arrangements for the Company and its affiliates that may not be renewed or replaced or its existing funding sources that may be unwilling or unable to provide funding to it on terms acceptable to it, or at all; the performance of loans facilitated through its model; changes in market interest rates; its securitizations, warehouse credit facility agreements; the impact on its business of general economic conditions, including, but not limited to rising interest rates, inflation, supply chain disruptions, exchange rate fluctuations and labor shortages; the effect of and uncertainties related to public health crises such as the COVID-19 pandemic (including any government responses thereto); geopolitical conflicts such as the war in
Financial Information; Non-GAAP Financial Measures
Some of the unaudited financial information and data contained in this press release and Form 8-K, such as Fee Revenue Less Production Costs (“FRLPC”), FRLPC Margin, Adjusted EBITDA and Adjusted Net Income (Loss), have not been prepared in accordance with
Non-GAAP financial measures include the following items:
Fee Revenue Less Production Costs (“FRLPC”) is defined as revenue from fees less production costs. FRLPC Margin is defined as FRLPC divided by Network Volume.
Adjusted Net Income (Loss) is defined as net income (loss) attributable to Pagaya Technologies Ltd.’s shareholders excluding share-based compensation expense, change in fair value of warrant liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions.
Adjusted EBITDA is defined as net income (loss) attributable to Pagaya Technologies Ltd.’s shareholders excluding share-based compensation expense, change in fair value of warrant liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions, interest expense, depreciation expense, and income tax expense (benefit).
These items are excluded from our Adjusted Net Income (Loss) and Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items is unpredictable, is not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful.
We believe FRLPC, FRLPC Margin, Adjusted Net Income (Loss) and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance. Moreover, we have included FRLPC, FRLPC Margin, Adjusted Net Income (Loss) and Adjusted EBITDA because these are key measurements used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting. However, this non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with
In addition,
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
|||||||
(In thousands, except share and per share data) |
|||||||
|
Three Months Ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Revenue |
|
|
|
||||
Revenue from fees |
$ |
237,004 |
|
|
$ |
175,254 |
|
Other Income |
|
|
|
||||
Interest income |
|
7,744 |
|
|
|
10,397 |
|
Investment income (loss) |
|
528 |
|
|
|
987 |
|
Total Revenue and Other Income |
|
245,276 |
|
|
|
186,638 |
|
Production costs |
|
144,881 |
|
|
|
125,057 |
|
Technology, data and product development (1) |
|
19,380 |
|
|
|
21,131 |
|
Sales and marketing (1) |
|
10,257 |
|
|
|
14,300 |
|
General and administrative (1) |
|
63,068 |
|
|
|
51,126 |
|
Total Costs and Operating Expenses |
|
237,586 |
|
|
|
211,614 |
|
Operating Income (Loss) |
|
7,690 |
|
|
|
(24,976 |
) |
Other income (expense), net |
|
(34,349 |
) |
|
|
(66,980 |
) |
Income (Loss) Before Income Taxes |
|
(26,659 |
) |
|
|
(91,956 |
) |
Income tax expense (benefit) |
|
5,003 |
|
|
|
6,667 |
|
Net Income (Loss) Including Noncontrolling Interests |
|
(31,662 |
) |
|
|
(98,623 |
) |
Less: Net income (loss) attributable to noncontrolling interests |
|
(10,439 |
) |
|
|
(37,652 |
) |
Net Income (Loss) Attributable to |
$ |
(21,223 |
) |
|
$ |
(60,971 |
) |
|
|
|
|
||||
Per share data: |
|
|
|
||||
Net loss per share: |
|
|
|
||||
Basic and Diluted (3) |
$ |
(0.33 |
) |
|
$ |
(1.03 |
) |
|
|
|
|
||||
Non-GAAP adjusted net income (loss) (2) |
$ |
13,331 |
|
|
$ |
(11,015 |
) |
Non-GAAP adjusted net income (loss) per share: |
|
|
|
||||
Basic (3) |
$ |
0.21 |
|
|
$ |
(0.19 |
) |
Diluted (3) |
$ |
0.20 |
|
|
$ |
(0.19 |
) |
|
|
|
|
||||
Weighted average shares outstanding: |
|
|
|
||||
Basic (3) |
|
64,504,458 |
|
|
|
59,255,864 |
|
Diluted (3) |
|
65,890,518 |
|
|
|
59,972,806 |
|
(1) |
The following table sets forth share-based compensation for the periods indicated below: |
|
Three Months Ended |
||||
|
|
2024 |
|
|
2023 |
Technology, data and product development |
$ |
2,905 |
|
$ |
2,458 |
Selling and marketing |
|
2,852 |
|
|
2,754 |
General and administrative |
|
9,718 |
|
|
11,155 |
Total |
$ |
15,475 |
|
$ |
16,367 |
(2) |
See “Reconciliation of Non-GAAP Financial Measures.” |
|
(3) |
Share amounts have been retroactively adjusted to reflect the 1-for-12 reverse share split effected on |
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED) |
|||||||
(In thousands) |
|||||||
|
|
|
|
||||
|
|
2024 |
|
|
|
2023 |
|
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
274,495 |
|
|
$ |
186,478 |
|
Restricted cash |
|
16,872 |
|
|
|
16,874 |
|
Fees and other receivables |
|
87,370 |
|
|
|
79,526 |
|
Investments in loans and securities |
|
1,298 |
|
|
|
2,490 |
|
Prepaid expenses and other current assets |
|
19,059 |
|
|
|
18,034 |
|
Total current assets |
|
399,094 |
|
|
|
303,402 |
|
Restricted cash |
|
18,681 |
|
|
|
19,189 |
|
Fees and other receivables |
|
35,230 |
|
|
|
34,181 |
|
Investments in loans and securities |
|
892,853 |
|
|
|
714,303 |
|
Equity method and other investments |
|
26,911 |
|
|
|
26,383 |
|
Right-of-use assets |
|
53,631 |
|
|
|
55,729 |
|
Property and equipment, net |
|
42,757 |
|
|
|
41,557 |
|
|
|
10,945 |
|
|
|
10,945 |
|
Intangible assets |
|
1,913 |
|
|
|
2,550 |
|
Prepaid expenses and other assets |
|
1,172 |
|
|
|
137 |
|
Total non-current assets |
|
1,084,093 |
|
|
|
904,974 |
|
Total Assets |
$ |
1,483,187 |
|
|
$ |
1,208,376 |
|
Liabilities and Shareholders’ Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
3,136 |
|
|
$ |
1,286 |
|
Accrued expenses and other liabilities |
|
36,712 |
|
|
|
28,562 |
|
Current maturities of operating lease liabilities |
|
6,663 |
|
|
|
6,931 |
|
Current portion of long-term debt |
|
12,750 |
|
|
|
— |
|
Secured borrowing |
|
108,054 |
|
|
|
37,685 |
|
Income taxes payable |
|
2,069 |
|
|
|
461 |
|
Total current liabilities |
|
169,384 |
|
|
|
74,925 |
|
Non-current liabilities: |
|
|
|
||||
Warrant liability |
|
1,342 |
|
|
|
3,242 |
|
Revolving credit facility |
|
— |
|
|
|
90,000 |
|
Long-term debt |
|
222,298 |
|
|
|
— |
|
Secured borrowing |
|
223,102 |
|
|
|
234,028 |
|
Operating lease liabilities |
|
41,838 |
|
|
|
43,940 |
|
Long-term tax liabilities |
|
24,955 |
|
|
|
22,135 |
|
Deferred tax liabilities, net |
|
107 |
|
|
|
107 |
|
Total non-current liabilities |
|
513,642 |
|
|
|
393,452 |
|
Total Liabilities |
|
683,026 |
|
|
|
468,377 |
|
Redeemable convertible preferred shares |
|
74,250 |
|
|
|
74,250 |
|
Shareholders’ equity: |
|
|
|
||||
Additional paid-in capital |
|
1,214,969 |
|
|
|
1,101,914 |
|
Accumulated other comprehensive income (loss) |
|
(24,279 |
) |
|
|
444 |
|
Accumulated deficit |
|
(563,860 |
) |
|
|
(542,637 |
) |
|
|
626,830 |
|
|
|
559,721 |
|
Noncontrolling interests |
|
99,081 |
|
|
|
106,028 |
|
Total shareholders’ equity |
|
725,911 |
|
|
|
665,749 |
|
Total Liabilities, Redeemable Convertible Preferred Shares, and Shareholders’ Equity |
$ |
1,483,187 |
|
|
$ |
1,208,376 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
|||||||
(In thousands) |
|||||||
|
Three Months Ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Cash flows from operating activities |
|
|
|
||||
Net loss including noncontrolling interests |
$ |
(31,662 |
) |
|
$ |
(98,623 |
) |
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
|
|
|
||||
Equity method income (loss) |
|
(528 |
) |
|
|
(987 |
) |
Depreciation and amortization |
|
6,317 |
|
|
|
3,516 |
|
Share-based compensation |
|
15,475 |
|
|
|
16,367 |
|
Fair value adjustment to warrant liability |
|
(1,900 |
) |
|
|
(190 |
) |
Impairment loss on investments in loans and securities |
|
26,851 |
|
|
|
68,347 |
|
Write-off of capitalized software |
|
408 |
|
|
|
1,549 |
|
Other non-cash items |
|
739 |
|
|
|
— |
|
Change in operating assets and liabilities: |
|
|
|
||||
Fees and other receivables |
|
(8,875 |
) |
|
|
(345 |
) |
Deferred tax liabilities, net |
|
— |
|
|
|
(45 |
) |
Prepaid expenses and other assets |
|
(1,936 |
) |
|
|
3,528 |
|
Right-of-use assets |
|
1,879 |
|
|
|
2,197 |
|
Accounts payable |
|
1,885 |
|
|
|
999 |
|
Accrued expenses and other liabilities |
|
8,298 |
|
|
|
(22,573 |
) |
Operating lease liability |
|
(1,524 |
) |
|
|
(3,530 |
) |
Income tax receivable / payable |
|
5,043 |
|
|
|
6,117 |
|
Net cash provided by (used in) operating activities |
|
20,470 |
|
|
|
(23,673 |
) |
Cash flows from investing activities |
|
|
|
||||
Proceeds from the sale/maturity/prepayment of: |
|
|
|
||||
Investments in loans and securities |
|
35,897 |
|
|
|
25,985 |
|
Cash and restricted cash acquired from |
|
— |
|
|
|
1,608 |
|
Payments for the purchase of: |
|
|
|
||||
Investments in loans and securities |
|
(261,638 |
) |
|
|
(121,732 |
) |
Property and equipment |
|
(5,145 |
) |
|
|
(5,526 |
) |
Net cash used in investing activities |
|
(230,886 |
) |
|
|
(99,665 |
) |
Cash flows from financing activities |
|
|
|
||||
Proceeds from sale of ordinary shares, net of issuance costs |
|
89,938 |
|
|
|
— |
|
Proceeds from long-term debt |
|
244,725 |
|
|
|
— |
|
Proceeds from secured borrowing |
|
97,448 |
|
|
|
82,031 |
|
Proceeds received from noncontrolling interests |
|
2,815 |
|
|
|
10,128 |
|
Proceeds from revolving credit facility |
|
44,000 |
|
|
|
100,000 |
|
Proceeds from exercise of stock options |
|
161 |
|
|
|
484 |
|
Proceeds from issuance of ordinary shares from the Equity Financing Purchase Agreement |
|
5,338 |
|
|
|
— |
|
Distributions made to noncontrolling interests |
|
(2,515 |
) |
|
|
(12,194 |
) |
Payments made to revolving credit facility |
|
(134,000 |
) |
|
|
(20,000 |
) |
Payments made to secured borrowing |
|
(38,005 |
) |
|
|
(57,425 |
) |
Payments made to long-term debt |
|
(3,188 |
) |
|
|
— |
|
Long-term debt issuance costs |
|
(7,974 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
298,743 |
|
|
|
103,024 |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(820 |
) |
|
|
— |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
87,507 |
|
|
|
(20,314 |
) |
Cash, cash equivalents and restricted cash, beginning of period |
|
222,541 |
|
|
|
337,076 |
|
Cash, cash equivalents and restricted cash, end of period |
$ |
310,048 |
|
|
$ |
316,762 |
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)
($ in thousands, unless otherwise noted)
|
Three Months Ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Net Loss Attributable to |
$ |
(21,223 |
) |
|
$ |
(60,971 |
) |
Adjusted to exclude the following: |
|
|
|
||||
Share-based compensation |
|
15,475 |
|
|
|
16,367 |
|
Fair value adjustment to warrant liability |
|
(1,900 |
) |
|
|
(190 |
) |
Impairment loss on certain investments |
|
19,483 |
|
|
|
26,412 |
|
Write-off of capitalized software |
|
— |
|
|
|
1,524 |
|
Restructuring expenses |
|
820 |
|
|
|
3,820 |
|
Transaction-related expenses |
|
400 |
|
|
|
— |
|
Non-recurring expenses |
|
276 |
|
|
|
2,023 |
|
Adjusted Net Income (Loss) |
$ |
13,331 |
|
|
$ |
(11,015 |
) |
Adjusted to exclude the following: |
|
|
|
||||
Interest expenses |
|
15,164 |
|
|
|
2,880 |
|
Income tax expense (benefit) |
|
5,003 |
|
|
|
6,667 |
|
Depreciation and amortization |
|
6,317 |
|
|
|
3,516 |
|
Adjusted EBITDA |
$ |
39,815 |
|
|
$ |
2,048 |
|
|
Three Months Ended |
||||||
|
|
2024 |
|
|
|
2023 |
|
Fee Revenue Less Production Costs (FRLPC): |
|
|
|
||||
Revenue from fees |
$ |
237,004 |
|
|
$ |
175,254 |
|
Production costs |
|
144,881 |
|
|
|
125,057 |
|
Fee Revenue Less Production Costs (FRLPC) |
$ |
92,123 |
|
|
$ |
50,197 |
|
|
|
|
|
||||
Fee Revenue Less Production Costs Margin (FRLPC Margin): |
|
|
|
||||
Fee Revenue Less Production Costs (FRLPC) |
$ |
92,123 |
|
|
$ |
50,197 |
|
Network Volume (in millions) |
|
2,419 |
|
|
|
1,850 |
|
Fee Revenue Less Production Costs Margin (FRLPC Margin) |
|
3.8 |
% |
|
|
2.7 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240508751651/en/
Investors & Analysts
Head of Investor Relations
IR@pagaya.com
Media & Press
Head of
Press@pagaya.com
Source: