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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________

Commission File Number: 001-41430

Pagaya Technologies Ltd.
(Exact name of registrant as specified in its charter)

Israel
87-3083236
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
90 Park Ave, 20th Floor
New York, New York
10016
(Address of principal executive offices)(Zip Code)

(646) 710-7714
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Ordinary Shares, no par valuePGYThe NASDAQ Stock Market LLC
Warrants to purchase Class A Ordinary Shares PGYWWThe NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
 If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of April 30, 2024, the registrant had 58,247,909 Class A Ordinary Shares, no par value, outstanding and 12,652,310 Class B Ordinary Shares, no par value, outstanding, and 5,000,000 Series A Preferred Shares, no par value, outstanding.





Table of Contents
TABLE OF CONTENTS

Page
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Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements that involve substantial risks and uncertainties. The Private Securities Litigation Reform Act of 1995, or the PSLRA, provides safe harbor protections for forward-looking statements in order to encourage companies to provide prospective information about their business. Forward-looking statements include, without limitation, our expectations concerning the outlook for our business, productivity, plans and goals for future operational improvements and capital investments, operational performance, future market conditions or economic performance and developments in the capital and credit markets and expected future financial performance, as well as any information concerning possible or assumed future results of operations.

Pagaya desires to take advantage of the safe harbor provisions of the PSLRA and is including this cautionary statement in connection with this safe harbor legislation. All statements other than statements of historical facts contained in this Annual Report, including statements regarding our future financial position, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements by words such as “estimate,” “plan,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “strategy,” “future,” “opportunity,” “may,” “target,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters.

Forward-looking statements involve a number of risks, uncertainties and assumptions, and actual results or events may differ materially from those implied in those statements. Important factors that could cause such differences include, but are not limited to:

the ability to implement business plans and other expectations;

the impact of the continuation of or changes in the short-term and long-term interest rate environment;

uncertain market or political conditions;

the availability and cost of capital, including the financing of risk retention investments;
our ability to service our debt financing and meet associated covenants;

our ability to develop and maintain a diverse and robust funding network;

the impact of fair value changes in our risk retention investments in our Financing Vehicles;

our uncertain future prospects and rate of growth due to our relatively limited operating history;

the performance of our technology to consistently meet return expectations of asset investors in Financing Vehicles;

our ability to improve, operate and implement our AI technology, including as we expand into new asset classes;

competition in attracting and onboarding new Partners and raising capital from asset investors through Financing Vehicles given the current limited number of Partners that account for a substantial portion of the total number of the financial products facilitated with the assistance of our AI technology;

potential difficulties in retaining our current management team and other key employees and independent contractors, including highly-skilled technical experts;

our estimates of our future financial performance;

changes in the political, legal and regulatory framework related to AI technology, machine learning; financial institutions and consumer protection;

the impact of health epidemics, including the ongoing COVID-19 pandemic;

our ability to realize the potential benefits of past or future acquisitions;

conditions related to our operations in Israel;

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risks related to data, security and privacy;

changes to accounting principles and guidelines;

our ability to develop and maintain effective internal controls;

the ability to maintain the listing of our securities on Nasdaq;

the price of our securities has been and may continue to be volatile;

unexpected costs or expenses;

future issuances, sales or resales of our Class A Ordinary Shares;

an active public trading market for our Class A Ordinary Shares may not be sustained; and

the other matters described in “Risk Factors” in our Annual Report on Form 10-K

We caution you not to rely on forward-looking statements, which reflect current beliefs and are based on information currently available as of the date a forward-looking statement is made. Forward-looking statements set forth herein speak only as of the date of this Annual Report. We undertake no obligation to revise forward-looking statements to reflect future events, changes in circumstances or changes in beliefs except to the extent required by law. In the event that any forward-looking statement is updated, no inference should be made that we will make additional updates with respect to that statement, related matters, or any other forward-looking statements except to the extent required by law. Any corrections or revisions and other important assumptions and factors that could cause actual results to differ materially from forward-looking statements, including discussions of significant risk factors, may appear in our public filings with the SEC, which are or will be (as appropriate) accessible at www.sec.gov, and which you are advised to consult.

Market, ranking and industry data used throughout this Annual Report, including statements regarding market size and technology adoption rates, is based on the good faith estimates of our management, which in turn are based upon our management’s review of internal surveys, independent industry surveys and publications and other third-party research and publicly available information. These data involve a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. While we are not aware of any misstatements regarding the industry data presented herein, its estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under “Risk Factors” in our Annual Report on Form 10-K, which was filed with the SEC on April 25, 2024, and “Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report.


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PART I - Financial Information
Item 1. Financial Statements

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PAGAYA TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(In thousands, except share amounts)
March 31,December 31,
20242023
Assets
Current assets:
Cash and cash equivalents$274,495 $186,478 
Restricted cash16,872 16,874 
Fees and other receivables (including related party receivables of $53,916 and $51,036 as of March 31, 2024 and December 31, 2023, respectively)
87,370 79,526 
Investments in loans and securities1,298 2,490 
Prepaid expenses and other current assets (including related party assets of $7,090 and $7,896 as of March 31, 2024 and December 31, 2023, respectively)
19,059 18,034 
Total current assets399,094 303,402 
Restricted cash18,681 19,189 
Fees and other receivables (including related party receivables of $34,792 and $33,739 as of March 31, 2024 and December 31, 2023, respectively)
35,230 34,181 
Investments in loans and securities892,853 714,303 
Equity method and other investments26,911 26,383 
Right-of-use assets53,631 55,729 
Property and equipment, net42,757 41,557 
Goodwill10,945 10,945 
Intangible assets1,913 2,550 
Prepaid expenses and other assets1,172 137 
Total non-current assets1,084,093 904,974 
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 liabilities6,663 6,931 
Current portion of long-term debt12,750  
Secured borrowing108,054 37,685 
Income taxes payable2,069 461 
Total current liabilities169,384 74,925 
Non-current liabilities:
Warrant liability1,342 3,242 
Revolving credit facility 90,000 
Long-term debt222,298  
Secured borrowing223,102 234,028 
Operating lease liabilities41,838 43,940 
Long-term tax liabilities24,955 22,135 
Deferred tax liabilities, net107 107 
Total non-current liabilities513,642 393,452 
Total Liabilities683,026 468,377 
Redeemable convertible preferred shares, no par value, 6,666,666 shares authorized, 5,000,000 shares issued and outstanding as of March 31, 2024; aggregate liquidation preference of $150,000 as of March 31, 2024. (1)
74,250 74,250.00 
Shareholders’ equity:
Class A ordinary shares, no par value, 666,666,666 shares authorized, 57,950,053 and 49,390,936 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively. (1)
  
Class B ordinary shares, no par value, 166,666,666 shares authorized, 12,652,310 and 12,652,310 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively. (1)
  
Additional paid-in capital1,214,969 1,101,914 
Accumulated other comprehensive income (loss)(24,279)444 
Accumulated deficit(563,860)(542,637)
Total Pagaya Technologies Ltd. shareholders’ equity626,830 559,721 
Noncontrolling interests99,081 106,028 
Total shareholders’ equity725,911 665,749 
Total Liabilities, Redeemable Convertible Preferred Shares, and Shareholders’ Equity$1,483,187 $1,208,376 
(1) Share amounts have been retroactively adjusted to reflect the 1-for-12 reverse share split effected on March 8, 2024.
The accompanying notes are an integral part of these condensed consolidated financial statements
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PAGAYA TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(In thousands, except share and per share data)

Three Months Ended March 31,
20242023
Revenue
Revenue from fees (including related party revenues of $178,511 and $153,793 for the three months ended March 31, 2024 and 2023, respectively)
$237,004 $175,254 
Other Income
Interest income7,744 10,397 
Investment income (loss) (1)528 987 
Total Revenue and Other Income245,276 186,638 
Production costs144,881 125,057 
Technology, data and product development19,380 21,131 
Sales and marketing10,257 14,300 
General and administrative63,068 51,126 
Total Costs and Operating Expenses237,586 211,614 
Operating Income (Loss)7,690 (24,976)
Other income (expenses), net(34,349)(66,980)
Income (Loss) Before Income Taxes(26,659)(91,956)
Income tax expense (benefit)5,003 6,667 
Net Loss Including Noncontrolling Interests(31,662)(98,623)
Less: Net income (loss) attributable to noncontrolling interests(10,439)(37,652)
Net Income (Loss) Attributable to Pagaya Technologies Ltd.$(21,223)$(60,971)
Per share data:
Net income (loss) per share attributable to Pagaya Technologies Ltd.:
Basic and Diluted (2)
$(0.33)$(1.03)
Weighted average shares outstanding:
Basic and Diluted (2)
64,504,458 59,255,864 
(1) Includes income from proprietary investments.
(2) Share amounts have been retroactively adjusted to reflect the 1-for-12 reverse share split effected on March 8, 2024.

The accompanying notes are an integral part of these condensed consolidated financial statements
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PAGAYA TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)
(In thousands)

Three Months Ended March 31,
20242023
Net Loss Including Noncontrolling Interests$(31,662)$(98,623)
Other Comprehensive Income:
Unrealized gain (loss) on securities available for sale, net(21,531)15,792 
Comprehensive Loss Including Noncontrolling Interests$(53,193)$(82,831)
Less: Comprehensive income (loss) attributable to noncontrolling interests(7,247)(21,314)
Comprehensive Loss Attributable to Pagaya Technologies Ltd.$(45,946)$(61,517)

The accompanying notes are an integral part of these condensed consolidated financial statements
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PAGAYA TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN REDEEMABLE CONVERTIBLE PREFERRED SHARES AND SHAREHOLDERS’ EQUITY (UNAUDITED)
(In thousands, except share amounts)
Redeemable Convertible Preferred SharesOrdinary Shares
(Class A and Class B)
Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)Total Pagaya Technologies Ltd. Shareholders’ Equity (Deficit)Non-Controlling InterestsTotal Shareholders’ Equity
Shares (1)AmountShares (1)Amount
Balance – December 31, 2022
— $ 56,942,632 $— $968,432 $(713)$(414,199)$553,520 $211,903 $765,423 
Issuance of ordinary shares upon exercise of warrants— — 16,304 — — — — — — — 
Issuance of ordinary shares upon exercise of share options— — 171,609 — 484 — — 484 — 484 
Issuance of ordinary shares upon vesting of RSUs— — 27,079 — — — — — — — 
Share-based compensation— — — — 17,296 — — 17,296 — 17,296 
Issuance of ordinary shares in connection with the acquisition of Darwin Homes, Inc.— — 1,515,145 — 18,134 — — 18,134 — 18,134 
Contributions of interests in consolidated VIEs— — — — — — — — 10,128 10,128 
Return of capital to interests in consolidated VIEs— — — — — — — — (12,194)(12,194)
Other comprehensive income (loss)— — — — — (546)— (546)16,338 15,792 
Net income (loss)— — — — — — (60,971)(60,971)(37,652)(98,623)
Balance – March 31, 2023— $ 58,672,769 $— $1,004,346 $(1,259)$(475,170)$527,917 $188,523 $716,440 

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Redeemable Convertible Preferred SharesOrdinary Shares
(Class A and Class B)
Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained Earnings (Accumulated Deficit)Total Pagaya Technologies Ltd. Shareholders’ Equity (Deficit)Non-Controlling InterestsTotal Shareholders’ Equity
Shares (1)AmountShares (1)Amount
Balance – December 31, 2023— $74,250 62,043,246 $— $1,101,914 $444 $(542,637)$559,721 $106,028 $665,749 
Issuance of ordinary shares upon exercise of share options— — 100,613 — 161 — — 161 — 161 
Issuance of ordinary shares upon vesting of RSUs— — 660,447 — — — — — — — 
Share-based compensation— — — — 17,618 — — 17,618 — 17,618 
Issuance of ordinary shares, net of issuance cost of $5,312
— — 7,500,000 — 89,938 — — 89,938 — 89,938 
Issuance of ordinary shares from the Equity Financing Purchase Agreement— — 298,057 — 5,338 — — 5,338 — 5,338 
Contributions of interests in consolidated VIEs— — — — — — — — 2,815 2,815 
Return of capital to interests in consolidated VIEs— — — — — — — — (2,515)(2,515)
Other comprehensive income (loss)— — — — — (24,723)— (24,723)3,192 (21,531)
Net income (loss)— — — — — — (21,223)(21,223)(10,439)(31,662)
Balance – March 31, 2024— $74,250 70,602,363 $— $1,214,969 $(24,279)$(563,860)$626,830 $99,081 $725,911 
(1) Share amounts have been retroactively adjusted to reflect the 1-for-12 reverse share split effected on March 8, 2024.

The accompanying notes are an integral part of these condensed consolidated financial statements
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PAGAYA TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(In thousands)
Three Months Ended March 31,
20242023
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 amortization6,317 3,516 
Share-based compensation15,475 16,367 
Fair value adjustment to warrant liability(1,900)(190)
Impairment loss on investments in loans and securities26,851 68,347 
Write-off of capitalized software408 1,549 
Other non-cash items739  
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 assets1,879 2,197 
Accounts payable1,885 999 
Accrued expenses and other liabilities8,298 (22,573)
Operating lease liability(1,524)(3,530)
Income tax receivable / payable5,043 6,117 
Net cash provided by (used in) operating activities20,470 (23,673)
Cash flows from investing activities
Proceeds from the sale/maturity/prepayment of:
Investments in loans and securities35,897 25,985 
Cash and restricted cash acquired from Darwin Homes, Inc.  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 costs89,938  
Proceeds from long-term debt244,725  
Proceeds from secured borrowing97,448 82,031 
Proceeds received from noncontrolling interests2,815 10,128 
Proceeds from revolving credit facility44,000 100,000 
Proceeds from exercise of stock options161 484 
Proceeds from issuance of ordinary shares from the Equity Financing Purchase Agreement5,338  
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 activities298,743 103,024 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(820) 
Net increase (decrease) in cash, cash equivalents and restricted cash87,507 (20,314)
Cash, cash equivalents and restricted cash, beginning of period222,541 337,076 
Cash, cash equivalents and restricted cash, end of period$310,048 $316,762 
Reconciliation of cash, cash equivalents, and restricted cash within the consolidated balance sheet to the amounts shown in the statements of cash flow above:
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Cash and cash equivalents$274,495 $289,387 
Restricted cash - current16,872 22,542 
Restricted cash - non-current18,681 4,833 
Total cash, cash equivalents, and restricted cash$310,048 $316,762 

The accompanying notes are an integral part of these condensed consolidated financial statements

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NOTE 1 - BUSINESS DESCRIPTION

Pagaya Technologies Ltd. and its consolidated subsidiaries (together “we” “our” “Pagaya” or the “Company”) is a technology company that deploys sophisticated data science and proprietary AI technology to drive better results for financial services and other service providers, their customers, and asset investors. Services providers integrated with Pagaya’s network, which are referred to as “Partners,” range from high-growth financial technology companies to incumbent banks and financial institutions, auto finance providers and residential real estate service providers. Partners have access to Pagaya’s network in order to assist with extending financial products to their customers, in turn helping those customers fulfill their financial needs and dreams. These assets originated by Partners with the assistance of Pagaya’s AI technology are eligible to be acquired by (i) funds managed or advised by Pagaya or one of its affiliates, (ii) securitization vehicles sponsored or administered by Pagaya or one of its affiliates and (iii) other similar vehicles (“Financing Vehicles”).

Pagaya Technologies Ltd. was founded in 2016 and is organized under the laws of the State of Israel. Pagaya has its primary offices in Israel and the United States.

Reverse Share Split

Share amounts have been retrospectively adjusted to reflect the 1-for-12 reverse share split effected on March 8, 2024.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company, its wholly-owned subsidiaries, and consolidated variable interest entities (“VIEs”) if any.

The accompanying unaudited condensed consolidated financial statements were derived from the audited consolidated financial statements, but does not include all of the disclosures, including certain notes required by GAAP on an annual reporting basis. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto as of and for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K.

All intercompany accounts and transactions have been eliminated. The Company’s functional and reporting currency is the U.S. Dollar. In management’s opinion, the unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements, except as noted below, and reflect all adjustments, which include only normal recurring adjustments necessary for the fair presentation of the Company’s financial position as of March 31, 2024 and the Company’s consolidated results of operations and shareholders’ equity for the three months ended March 31, 2024 and 2023, and cash flows for the three months ended March 31, 2024 and 2023. The results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected for the full year ending December 31, 2024 or any other future interim or annual period.

Significant Accounting Policies

There were no material changes to our significant accounting policies as disclosed in Note 2, Summary of Significant Accounting Policies, in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, which was filed with the SEC on April 25, 2024.

Recent Accounting Pronouncements Not Yet Adopted

As an “emerging growth company,” the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced
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disclosures about significant segment expenses. Specifically, the new guidance requires disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker, and an amount for other segment items by reportable segment, with a description of its composition. In addition, the amendments enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, and provide new segment disclosure requirements for entities with a single reportable segment. This ASU is effective for the Company beginning in fiscal year 2024 and interim periods within fiscal year 2025, with early adoption permitted. The Company is currently evaluating the impact of the amendments to its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The amendments in this update require entities to disclose specific categories in the effective tax rate reconciliation and provide additional information for reconciling items where the effect of those reconciling items is equal to or greater than 5% of the amount computed by multiplying pretax income/loss by the applicable statutory income tax rate. In addition, entities are required to disclose the year-to-date amount of income taxes paid (net of refunds received) disaggregated by jurisdictions. This ASU is effective for the Company for annual periods beginning after December 15, 2025, with early adoption permitted. The Company is currently evaluating the impact of these amendments on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Adopted

In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity,” which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments. Either a modified retrospective method of transition or a fully retrospective method of transition is permissible for the adoption of this standard. The guidance became effective for the Company beginning January 1, 2024. The adoption of the guidance did not have a material impact on the Company’s financial statements.

NOTE 3 - REVENUE

Revenue From Fees
Revenue from fees is comprised of Network AI fees and Contract fees. Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. AI integration fees are earned for the creation and delivery of assets that comprise Network Volume. The Company utilizes multiple funding channels to enable the purchase of network assets from Partners, such as asset backed securitizations (“ABS”). Capital markets execution fees are earned from the market pricing of ABS transactions while contract fees are management, performance and similar fees. These fees are the result of agreements with customers and are recognized in accordance with FASB Accounting Standards Codification 606, “Revenue from Contracts with Customers” (“ASC 606”).
Revenue is generally recognized on a gross basis in accordance with ASC 606 related to reporting revenue on a gross basis as a principal versus on a net basis as an agent. This is because the Company is primarily responsible for integrating the various services fulfilled by Partners and is ultimately responsible to the Financing Vehicles for the fulfillment of the related services. To the extent the Company does not meet the criteria for recognizing revenue on a gross basis, the Company records revenue on a net basis.

Network AI fees, comprised of AI integration fees and capital markets execution fees, totaled $215.3 million and $150.2 million for the three months ended March 31, 2024 and 2023, respectively. The Company recognizes Network AI fees primarily at a point in time when the related performance obligation is satisfied. From time to time the Company may provide certain incentives to Financing Vehicles. When the Company determines that an incentive is consideration payable to a customer, the incentive is recorded as a reduction of revenue. Expenses to third parties for services that are integrated with the Company’s technology are recorded in the consolidated statements of operations as Production Costs.

Real estate fees, which are included in Network AI fees, are earned for the obligations to arrange for the purchase of real estate assets, provide administrative services, arrange for the eventual sale of the assets, and provide pre-and post-purchase services including the right to earn performance fees. All of these fees are recognized over time except for the purchase and sale obligations, which are satisfied at the point in time of the respective transactions. As the Company is a principal for these services, revenues are recorded on a gross basis.

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Contract fees include administration and management fees, performances fees, and servicing fees. Contract fees totaled $21.7 million and $25.1 million for the three months ended March 31, 2024 and 2023, respectively. The Company recognizes administration fees over the service period for the Financing Vehicles managed or administered by the Company.

Performance fees are earned when certain Financing Vehicles exceed contractual return thresholds. They are recognized only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur. An estimate is made by the Company based on a variety of factors including market conditions and expected loan performance. In the following period, the true performance is measured and then adjusted to ensure that the fees accurately represent actual performance. As such, there are revenues that result from performance obligations satisfied in the previous year. During the three months ended March 31, 2024, $3.3 million worth of fees represent performance obligations satisfied in 2023 that were greater than the original estimate. During the three months ended March 31, 2023, $1.7 million worth of fees represent performance obligations satisfied in 2022 that were lesser than the original estimate.
Servicing fees for the Financing Vehicles, which primarily involve collecting payments and providing reporting on the loans within the securitization vehicles, are recognized over the service period. These duties have been considered to be agent responsibilities and does not include acting as a loan servicer. Accordingly, servicing fees are recorded on a net basis.
The Company determines its contracts generally to not include a significant financing component since the Company's selling prices are not subjected to billing terms nor is its purpose to receive financing from its customers or to provide customers with financing. In addition, as a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between payment and the transfer of services is expected to be one year or less.
Once revenue is recognized, it is recorded on the balance sheet in fees and other receivables until the payment is received from the customer. The timing of the recognition depends on the type of service as described above.  
Three Months Ended March 31,
20242023
(in thousands)
Services transferred at a point in time$227,575 $162,415 
Services transferred over time9,429 12,839 
Total revenue from fees, net$237,004 $175,254 
The Company had no material contract assets, contract liabilities, or deferred contract costs recorded as of March 31, 2024 or December 31, 2023.

Concentrations of Credit Risk and Significant Customers

Financial instruments, which potentially subject the Company to concentration of credit risk, consist primarily of cash and cash equivalents, restricted cash and fees receivable. Cash and cash equivalents are principally maintained with major financial institutions, which management assesses to be of high credit quality. The Company has not experienced any losses on these deposits.

The Company’s fees receivable balances are predominantly with agreements with customers, and these are subject to normal credit risks which management believes to be not significant.

Significant customers are those which represent 10% or more of the Company’s total revenue for each respective period presented. Four related parties individually represented greater than 10% of total revenue and collectively totaled approximately 57% for three months ended March 31, 2024. Three related parties individually represented greater than 10% of total revenue and collectively totaled approximately 50% for the three months ended March 31, 2023.


NOTE 4 - BORROWINGS

As of March 31, 2024 and December 31, 2023, the Company had secured borrowings with an outstanding balance of $331.2 million and $271.7 million, respectively, a long-term debt with an outstanding balance of $235.0 million and $0.0 million, respectively, and a revolving credit facility with an outstanding balance of $0.0 million and $90.0 million, respectively. The Company was in compliance with all covenants as of March 31, 2024.
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Risk Retention Master Repurchase

In normal course of business, the Company, through consolidated VIEs, enters into repurchase agreements to finance the Company’s risk retention balance in notes and certificates retained from securitization transactions. Under these agreements, the Company pledges financial instruments as collateral. Our agreements with counterparties generally contain contractual provisions allowing the counterparty the right to sell or repledge the collateral. Pledged securities owned that can be sold or repledge by the counterparty are included in Investments in loans and securities in our balance sheet. As of March 31, 2024 and December 31, 2023, the outstanding principal balance under the repurchase agreements was $310.1 million and $251.4 million, respectively, which is recorded within secured borrowing on the consolidated balance sheet, with a weighted average interest rate of approximately fourteen percent and thirteen percent, respectively. The average remaining contractual maturities of the repurchase agreements were greater than 90 days as of both March 31, 2024 and December 31, 2023.

Receivables Facility

In October 2022, Pagaya Receivables LLC, a wholly-owned subsidiary, entered into a Loan and Security Agreement (the “LSA Agreement”) with certain lenders, which provides for a 3-year loan facility (the “Receivables Facility”) in a maximum principal amount of $22 million to finance certain eligible receivables purchased from sponsored securitization transactions. In June 2023, the Company amended the agreement and increased the maximum principal amount by $10 million to $32 million. Borrowings under the Receivables Facility bear interest at a rate per annum equal to the adjusted term Secured Overnight Financing Rate (subject to a 0.00% floor) plus a margin of 2.20%, and the balance is repaid using cash proceeds received from the receivables. As of March 31, 2024 and December 31, 2023, the outstanding principal balance under the Receivables Facility was $21.0 million and $20.3 million, respectively, which is recorded within secured borrowing on the consolidated balance sheet.

Credit Agreement

On February 2, 2024, the Company entered into a certain Credit Agreement (the “Credit Agreement”) which provides for a 5-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million, which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million.

The Facilities replace the SVB Revolving Credit Facility. In addition to replacing the SVB Revolving Credit Facility, proceeds of borrowings under the Facilities may be used for general corporate purposes of the Company and its subsidiaries. As of the date of this filing, no borrowings have been made under the Revolving Credit Facility.

No amortization payments are required to be made in respect of borrowings under the Revolving Credit Facility. Amortization payments are required to be made in respect of the term loans under the Term Loan Facility in amount of 1.25% per quarter of the original principal amount of the term loans under the Term Loan Facility.

Borrowings under the Facilities bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to a 2.00% floor) plus a margin of 6.50% or (ii) an adjusted term Secured Overnight Financing Rate (subject to a 1.00% floor) plus a margin of 7.50%. A commitment fee accrues on any unused portion of the commitments under the Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. Accrued interest of $2.3 million was recorded within accrued expenses and other liabilities on the consolidated balance sheet as of March 31, 2024.

As of March 31, 2024, the Company had an outstanding balance of $235.0 million, which is recorded within long-term debt on the consolidated balance sheet, and its aggregate future maturities consists of the following (in thousands):

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March 31, 2024
2024$9,563 
202512,750 
202612,750 
202712,750 
202812,750 
Thereafter191,250 
Total251,813 
Debt issuance costs
(16,765)
Total long-term debt, net of debt issuance costs
$235,048 

As of March 31, 2024, the Company had letters of credit issued in the amount of $10.0 million, and $25.0 million of remaining capacity available under the Revolving Credit Facility.

As of December 31, 2023, the Company had an outstanding balance of $90.0 million under the SVB Revolving Credit Facility.

NOTE 5 - INVESTMENTS IN LOANS AND SECURITIES

The amortized cost, gross unrealized gains and losses and fair value of investments in loans and securities as of March 31, 2024 and December 31, 2023 were as follows (in thousands). As provided in Note 6, a portion of these investments in loans and securities are consolidated as a result of the Company’s determination that it is the primary beneficiary of certain VIEs.
As of March 31, 2024
Investments in loans and securities, available for sale(1):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Allowance for Credit LossesFair
Value
Securitization notes
$174,845 $651 $(1,684)$ $173,812 
Securitization certificates
852,179 15,018 (29,638)(121,349)716,210 
Other loans and receivables9,140   (5,011)4,129 
Total$1,036,164 $15,669 $(31,322)$(126,360)$894,151 
(1) Excludes accrued interest receivable of $14.5 million included in Fees and other receivables.

As of December 31, 2023
Investments in loans and securities, available for sale(1):
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Allowance for Credit LossesFair
Value
Securitization notes
$91,654 $629 $(1,858)$ $90,425 
Securitization certificates
715,646 18,684 (11,578)(98,679)624,073 
Other loans and receivables 4,574   $(2,279)2,295 
Total$811,874 $19,313 $(13,436)$(100,958)$716,793 
(1) Excludes accrued interest receivable of $12.5 million included in Fees and other receivables.

The following tables set forth the fair value and gross unrealized losses on investments in loans and securities without an allowance for credit losses aggregated by investment category and length of time that individual securities had been in a continuous unrealized loss position, as of the dates indicated (in thousands):

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As of March 31, 2024
Less than or equal to 1 yearGreater than 1 yearTotal
Investments in loans and securities, available for sale:Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Securitization notes
$49,964 $(1,684)$ $ $49,964 $(1,684)
Securitization certificates
7,039 (1,482)  7,039 (1,482)
Other loans and receivables      
Total$57,003 $(3,166)$ $ $57,003 $(3,166)

As of December 31, 2023
Less than or equal to 1 yearGreater than 1 yearTotal
Investments in loans and securities, available for sale:Fair ValueUnrealized LossesFair ValueUnrealized LossesFair ValueUnrealized Losses
Securitization notes
$59,925 $(1,858)$ $ $59,925 $(1,858)
Securitization certificates
15,799 (1,988)  15,799 (1,988)
Other loans and receivables      
Total$75,724 $(3,846)$ $ $75,724 $(3,846)


The following table sets forth the amortized cost and fair value of investments in loans and securities by contractual maturities, as of the date indicated (in thousands):

As of March 31, 2024
Within 1 yearGreater than 1 year, less than or equal to 5 yearsTotal
Investments in loans and securities, available for sale:Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
Securitization notes
$1,256 $1,245 $173,589 $172,567 $174,845 $173,812 
Securitization certificates
53 53 852,126 716,157 852,179 716,210 
Other loans and receivables  9,140 4,129 9,140 4,129 
Total (1)$1,309 $1,298 $1,034,855 $892,853 $1,036,164 $894,151 

As of December 31, 2023
Within 1 yearGreater than 1 year, less than or equal to 5 yearsTotal
Investments in loans and securities, available for sale:Amortized CostFair ValueAmortized CostFair ValueAmortized CostFair Value
Securitization notes
$2,405 $2,387 $89,249 $88,038 $91,654 $90,425 
Securitization certificates
103 103 715,543623,970715,646624,073
Other loans and receivables  4,5742,2954,5742,295
Total (1)$2,508 $2,490 $809,366 $714,303 $811,874 $716,793 

(1) Based on contractual maturities of corresponding repurchase agreements. See Note 6 for additional information.

The following table sets forth gross proceeds and related investment gains (losses), as well as losses on write-downs and the allowance for credit losses of securities, for the periods indicated (in thousands):
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Three Months Ended March 31,
20242023
Investments in loans and securities, available for sale:
Proceeds from sales/maturities/prepayments$35,897 $25,985 
Write-offs charged against the allowance$1,449 $ 
Additions to allowance for credit losses not previously recorded$(26,851)$(68,347)

The following tables set forth the activity in the allowance for credit losses for investments in loans and securities, as of the dates indicated (in thousands):

Three Months Ended March 31, 2024
Securitization notesSecuritization certificatesOther Loans and ReceivablesTotal
Balance, beginning of period$ $(98,679)$(2,279)$(100,958)
Additions to allowance for credit losses not previously recorded (2,965) (2,965)
Additions to allowance for credit losses arising from purchases
  (3,246)(3,246)
Additions (reductions) on securities with previous allowance (19,705)(935)(20,640)
Write-offs charged against the allowance  1,449 1,449 
Balance, end of period$ $(121,349)$(5,011)$(126,360)

Three Months Ended March 31, 2023
Securitization notesSecuritization certificatesOther Loans and ReceivablesTotal
Balance, beginning of period$ $ $ $ 
Additions to allowance for credit losses not previously recorded (65,572)(2,775)(68,347)
Balance, end of period$ $(65,572)$(2,775)$(68,347)

Equity Method and Other Investments
The following investments, including those accounted for under the equity method, are included within Equity method and other investments in the consolidated balance sheets as of March 31, 2024 and December 31, 2023 (in thousands):

Carrying Value
March 31, 2024December 31, 2023
Investments in Pagaya SmartResi F1 Fund, LP (1)$17,884 $17,357 
Other (2)9,027 9,026 
Total$26,911 $26,383 

(1) The Company owns approximately 5.4% and is the general partner of Pagaya Smartresi F1 Fund LP.
(2) Represents the Company’s proprietary investments. Income from these investments is included in Investment income in the consolidated statements of operations.

NOTE 6 - CONSOLIDATION AND VARIABLE INTEREST ENTITIES
The Company has variable interests in securitization vehicles that it sponsors. The Company consolidates VIEs when it is deemed to be the primary beneficiary. In order to be primary beneficiary, the Company must have a controlling financial interest in the
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VIE. This is determined by evaluating if the Company has both (1) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (2) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant.
Consolidated VIEs
As of March 31, 2024 and December 31, 2023, the Company has determined that it is the primary beneficiary of Pagaya Structured Holdings LLC, Pagaya Structured Holdings II LLC, and Pagaya Structured Holding III LLC (“Risk Retention Entities”). As sponsor of securitization transactions, the Company is subject to risk retention requirements and established the Risk Retention Entities to meet these requirements.

Below is a summary of assets and liabilities from the Company’s involvement with consolidated VIEs (i.e., Risk Retention Entities) (in thousands):
 
AssetsLiabilitiesNet Assets
As of March 31, 2024
$122,929 $ $122,929 
As of December 31, 2023
$132,660 $ $132,660 
Unconsolidated VIEs
The Company determined that it is not the primary beneficiary of the trusts which hold the loans and issue securities associated with the securitization transactions the Company sponsors. The Company does not have the power to direct or control the activities which most significantly affect the performance of the trusts, which was determined to be servicing loans.
The Company’s maximum exposure to loss from its involvement with unconsolidated VIEs represents the estimated loss that would be incurred under severe, hypothetical circumstances, for which the Company believes the possibility is remote, such as where the value of securitization notes and senior and residual certificates the Company holds as part of the risk retention requirement declines to zero.
Below is a summary of the Company’s direct interest in (i.e., not held through Risk Retention Entities) variable interests in nonconsolidated VIEs (in thousands):
Carrying AmountMaximum Exposure to LossVIE Assets
As of March 31, 2024
$777,480 $777,480 $9,463,355 
As of December 31, 2023
$591,030 $591,030 $8,363,402 

From time to time, the Company may, but is not obligated to, purchase assets from the Financing Vehicles. Such repurchases can occur at the Company’s discretion. During the three months ended March 31, 2024, the Company purchased approximately $5.0 million of loan principal from the Financing Vehicles and included a loss of approximately $5.0 million in general and administrative expenses with respect to these loans. During the three months ended March 31, 2023, the Company did not purchase any loans from the Financing Vehicles.

NOTE 7 - LEASES

The Company leases facilities under operating leases with various expiration dates through 2032. The Company leases office space in New York, Israel and several other locations.
The security deposits for the leases are $4.6 million and $4.8 million as of March 31, 2024 and December 31, 2023, respectively, which have been recognized as restricted cash, non-current in the consolidated balance sheets.
The Company’s operating lease expense consists of rent and variable lease payments. Variable lease payments such as common area maintenance were included in operating expenses. Rent expense for the Company’s short-term leases was immaterial for the periods presented. Operating lease expense was as follows (in thousands):

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Three Months Ended March 31,
20242023
Rent expense$2,909$3,440
Variable lease payments$94$143
Sublease income$1,005$1,054

Maturities of the Company’s operating lease liabilities as of March 31, 2024 were as follows (in thousands):

2024$7,206 
20258,635 
20268,635 
20277,471 
20286,590 
Thereafter21,167 
Total59,704 
Less: imputed interest(11,203)
Total operating lease liabilities$48,501 


NOTE 8 - COMMITMENTS AND CONTINGENCIES

Legal Proceedings — From time to time the Company is subject to legal proceedings and claims in the ordinary course of business. The results of such matters often cannot be predicted with certainty. In accordance with applicable accounting guidance, the Company establishes an accrued liability for legal proceeding and claims when those matters present loss contingencies which are both probable and reasonably estimable. All such liabilities arising from current legal and regulatory matters, to the extent such matters existed, have been recorded in accrued expenses and other liabilities on the consolidated statements of financial position and these matters are immaterial.

Contractual Obligations and Commitments — During 2023, the Company entered into a purchase commitment with our third-party cloud computing web services provider, which included an annual purchase commitment of $4.6 million for the period from October 2023 through September 2025. As of March 31, 2024, the total remaining contractual obligations are approximately $7.3 million, of which $4.9 million is for the next 12 months. We may pay more than the minimum purchase commitment based on usage.

Guarantees and Indemnifications In the ordinary course of business, the Company may provide indemnifications or loss guarantees of varying scope and terms to customers and other third parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap. As of March 31, 2024, there have been no known events or circumstances that have resulted in a material indemnification liability and the Company did not incur material costs to defend lawsuits or settle claims related to these indemnifications. For certain contracts meeting the definition of a guarantee or a derivative, the guarantor must recognize, at inception, a liability for the fair value of the obligation undertaken in issuing the guarantee. In addition, the guarantor must disclose the maximum potential amount of future payments that the guarantor could be required to make under the guarantee, if there were a default by the guaranteed parties. The determination of the maximum potential future payments is based on the notional amount of the guarantees without consideration of possible recoveries under recourse provisions or from collateral held or pledged. As of March 31, 2024, the maximum potential amount of undiscounted future payments the Company could be required to make under these guarantees totaled $29.0 million. In accordance with the guarantee contracts, the maximum potential payment amount has been segregated and recognized within restricted cash in the consolidated balance sheet.

NOTE 9 - TRANSACTIONS WITH RELATED PARTIES

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In the ordinary course of business, the Company may enter into transactions with directors, principal officers, their immediate families, and affiliated companies in which they are principal shareholders (commonly referred to as related parties). In addition, the Company has transactions with the securitization vehicles and other Financing Vehicles, which are also related parties.

As of March 31, 2024, the total fee receivables from related parties are $88.7 million, which consist of $81.9 million from securitization vehicles and $6.8 million from other Financing Vehicles. As of December 31, 2023, the total fee receivables from related parties are $84.8 million, which consists of $78.4 million from securitization vehicles and $6.3 million from other Financing Vehicles.

As of March 31, 2024 and December 31, 2023, prepaid expenses and other assets include amounts due from related parties of $7.1 million and $7.9 million, respectively, all of which were attributable to Financing Vehicles.

For the three months ended March 31, 2024, the total revenue from related parties is $178.5 million, which consists of $162.6 million from securitization vehicles and $15.9 million from other Financing Vehicles. For the three months ended March 31, 2023, the total revenue from related parties is $153.8 million, which consists of $131.6 million from securitization vehicles and $22.2 million from other Financing Vehicles.

NOTE 10 - FAIR VALUE MEASUREMENT

FASB ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles, and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, when available. If such quoted market prices are not available, fair value is based upon models that use, as inputs, observable market-based parameters to the greatest extent possible.

Financial Assets and Liabilities Recorded at Fair Value

The following table presents information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value (in thousands):

March 31, 2024
Level 1Level 2Level 3Total
Assets:
Investments in loans and securities (Notes)
$ $69,030 $104,782 $173,812 
Investments in loans and securities (Certificates and Other loans and receivables)
  720,339 720,339 
Liabilities:
Warrant liability$872$470$ $1,342

December 31, 2023
Level 1Level 2Level 3Total
Assets:
Investments in loans and securities (Notes)
$ $90,425 $ $90,425 
Investments in loans and securities (Certificates and Other loans and receivables)
  626,368 626,368 
Liabilities:
Warrant liability$2,106$1,136$ $3,242

There were no transfers between levels during the periods ended March 31, 2024 and December 31, 2023.

Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 1 and 2)

Warrant liability (Level 1 and 2)
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The Company used the value of the Public Warrants (Level 1) as an approximation of the value of the Private Warrants as they are substantially similar to the Public Warrants, but not directly traded or quoted on an active market.

The following tables summarize the Warrant liability activity for the three months ended March 31, 2024 and 2023 (in thousands):

Balance as of December 31, 2022$1,400
Change in fair value(190)
Balance as of March 31, 2023$1,210
Balance as of December 31, 2023$3,242
Change in fair value(1,900)
Balance as of March 31, 2024$1,342

Assets and Liabilities Measured at Fair Value on a Recurring Basis (Level 3)

Investments in Loans and Securities Available for Sale (Level 3)

As of March 31, 2024, the Company held investments in loans and securities classified as available for sale. These assets are measured at fair value using a discounted cash flow model, and presented within investments in loans and securities on the consolidated balance sheets. Changes in the fair value, other than declines in fair value due to credit, are reflected in other comprehensive income (loss) on the consolidated statements of comprehensive income (loss). Declines in fair value due to credit are reflected in other income (expenses), net on the consolidated statements of operations.

The following tables summarize the activity related to the fair value of the investments in loans and securities available for sale for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,
20242023
Balance, beginning of period
$716,793$
Transfer from held-to-maturity to available for sale at fair value480,437
Additions261,638121,731
Cash received(35,897)(25,985)
Change in fair value(21,531)(670)
Credit-related impairment loss(26,851)(68,347)
Balance, end of period
$894,151$507,166

Significant unobservable inputs used for our Level 3 fair value measurement of the loans and securities are the discount rate, loss rate, and prepayment rate. Significant increases or decreases in any of the inputs in isolation could result in a significantly lower or higher fair value measurement.

The following tables present quantitative information about the significant unobservable inputs used for our Level 3 fair value measurement of the loans and securities as of March 31, 2024 and December 31, 2023:

March 31, 2024
Unobservable InputMinimumMaximumWeighted Average
Discount rate8.0 %20.0%16.7%
Loss rate6.2 %31.0%17.2%
Prepayment rate0.0 %40.0%9.1%

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December 31, 2023
Unobservable InputMinimumMaximumWeighted Average
Discount rate8.0 %15.0%15.0%
Loss rate4.9 %31.0%15.7%
Prepayment rate4.0 %40.0%9.9%

Financial Assets and Liabilities Not Recorded at Fair Value
The Company believes that the carrying amount of cash, cash equivalents and restricted cash, fees and other receivables, accounts payables and other current liabilities approximate their fair value due to the short-term maturities of these instruments.

The below tables contain information about assets that are not measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 (in thousands):

March 31, 2024
Fair Value
Carrying
Value
Level 1Level 2Level 3Total
Assets
Cash, cash equivalents and restricted cash$310,049 $310,049 $ $ $310,049 
Fees and other receivables122,600  122,600  122,600 
Total assets
$432,649 $310,049 $122,600 $ $432,649 
December 31, 2023
Fair Value
Carrying
Value
Level 1Level 2Level 3Total
Assets
Cash, cash equivalents and restricted cash$222,541 $222,541 $ $ $222,541 
Fees and other receivables113,707  113,707  113,707 
Total assets
$336,248 $222,541 $113,707 $ $336,248 
 

NOTE 11 - ORDINARY SHARES AND ORDINARY SHARE WARRANTS

As of March 31, 2024, 839,999,998 shares with no par value are authorized, of which, 6,666,666 shares are designated as Preferred Shares, 666,666,666 shares are designated as Class A Ordinary Shares, and 166,666,666 shares are designated as Class B Ordinary Shares. As of March 31, 2024, the Company had 5,000,000 Preferred Shares outstanding, 57,950,053 Class A Ordinary Shares outstanding and 12,652,310 Class B Ordinary Shares outstanding.

The rights of the holders of each class of Ordinary Shares are identical, except with respect to voting. Each Class A Ordinary Share is entitled to one vote per share. Each Class B Ordinary Share is entitled to 10 votes per share. Class B Ordinary Shares may be converted at any time at the option of the stockholder and automatically convert upon sale or transfer to a Class A Ordinary Share.

Reverse Share Split

Upon the approvals granted at the special general meeting of shareholders held on February 15, 2024, the Board has determined to implement a reverse share split of all of the Company’s ordinary and preferred shares, without par value, at a ratio of 1-for-12
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with effective date of March 8, 2024. All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect the effects of the reverse share split.

As of March 31, 2024 and December 31, 2023, the Company had reserved ordinary shares for future issuance as follows:

March 31, 2024
December 31, 2023
Share options4,110,3744,250,988
Options to restricted shares20,034,51420,046,080
RSUs2,353,5893,034,203
Ordinary share warrants2,076,0142,076,014
Redeemable convertible preferred shares5,000,0005,000,000
Shares available for future grant of equity awards5,251,3535,231,186
Shares reserved for issuance under the ESPP
891,858