In This Article:
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Total Revenue: $257 million for Q3 2024, up 21% year over year.
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Fee Revenue Less Production Cost (FRLPC): $100 million, representing 4.3% of network volume.
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Adjusted EBITDA: $56 million, with a margin of 21.8%.
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Net Loss (GAAP): $67 million for Q3 2024.
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Adjusted Net Income: $33 million, excluding share-based compensation and other non-cash items.
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Network Volume: $2.4 billion, an 11% increase year over year.
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Personal Loan FRLPC Percentage: 6.6% in Q3 2024.
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Operating Expenses: Core operating expenses down 5% sequentially.
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Interest Expense Reduction: Expected reduction of approximately $13 million from debt paydown.
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ABS Issuance: $4.4 billion year-to-date as of September 30, 2024.
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Full Year 2024 Revenue Guidance: Between $1.01 billion and $1.025 billion.
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Full Year 2024 Adjusted EBITDA Guidance: Between $195 million and $205 million.
Release Date: November 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Pagaya Technologies Ltd (NASDAQ:PGY) reported strong third-quarter results with an approximate annual revenue rate of $1 billion and $220 million in adjusted EBITDA.
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The company is experiencing increasing demand for its products, leading to improved fee generation and funding efficiency.
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Pagaya's network has grown significantly, generating over $24 billion in loans and adding approximately 2 million new customers.
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The company has successfully onboarded a top 5 bank in its point-of-sale vertical and is in advanced discussions with several other top 20 lenders.
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Pagaya has made significant progress in optimizing its ABS structures and diversifying funding sources, resulting in lower funding costs and improved capital efficiency.
Negative Points
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Pagaya Technologies Ltd (NASDAQ:PGY) reported a net loss of $67 million in the third quarter, compared to a net loss of $22 million in the same quarter of 2023.
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The company recognized credit-related fair value adjustments amounting to negative $70 million, impacting its financial results.
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There are concerns about the sensitivity of ABS structures to small changes in credit performance, which led to impairments in 2023.
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Despite improvements, the conversion rate remains low, with less than 1% of application flow being converted into loans.
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The company faces challenges in scaling newer products like auto and point-of-sale loans to achieve the same profitability as its mature personal loan product.
Q & A Highlights
Q: Can you provide more details on how loan volume is allocated across different funding sources and the economics involved? A: Evangelos Perros, CFO: We have optimized our ABS structures, expecting a 4% to 5% range, combined with diversified funding sources like forward flow and pass-through structures. Currently, ABS accounts for 60% to 70% of our volume, with alternative sources covering the remaining 30% to 40%.