Pagaya Technologies Ltd

Previous wording

We believe our historical growth has been significantly influenced by improvements to our AI technology, which are in turn driven both by the deepening of our proprietary data network and the strengthening of our AI technology. As our existing Partners grow their usage of our network, new Partners join our network, and as we expand our network into new asset classes, the value of our data asset increases. Our technology improvements thus benefit from a flywheel effect that is characteristic of AI technology, in that improvements are derived from a continually increasing base of training data for our technology. We have found, and we expect to continue to experience, that more data leads to more efficient pricing and greater Network Volume. Since inception, we have evaluated more than $2.0 trillion in application volume.

Current wording

We believe our historical growth has been significantly influenced by improvements to our AI technology, which are in turn driven both by the deepening of our proprietary data network and the strengthening of our AI technology. As our existing Partners grow their usage of our network, new Partners join our network, and as we expand our network into new asset classes, the value of our data asset increases. Our technology improvements thus benefit from a flywheel effect that is characteristic of AI technology, in that improvements are derived from a continually increasing base of training data for our technology. We have found, and we expect to continue to experience, that more data leads to more efficient pricing and greater Network Volume. Since inception, we have evaluated more than $2.2 trillion in application volume.

Previous wording

Regardless of market conditions, the availability and pricing of funding from investors is critical to our growth. We have diversified our investor network and will continue to seek to further diversify our investor base. In the three months ended March 31, 2024, our top 5 ABS investors contributed approximately 49% of our total ABS funding, compared to 50% in the year ended December 31, 2023.

Current wording

Regardless of market conditions, the availability and pricing of funding from investors is critical to our growth. We have diversified our investor network and will continue to seek to further diversify our investor base. In the six months ended June 30, 2024, our top 5 ABS investors contributed approximately 50% of our total ABS funding, which remained constant compared to 50% in the year ended December 31, 2023.

Previous wording

We collect and analyze operating and financial data of our business to assess our performance, formulate financial projections and make strategic decisions. In addition to total revenues, net operating income (loss), other measures under U.S. GAAP, and certain non-GAAP financial measures (see discussion and reconciliation herein titled “Reconciliation of Non-GAAP Financial Measures”), we consider Network Volume to be a key operating metric we use to evaluate our business. The following table sets forth our Network Volume for three months ended March 31, 2024 and 2023.

Current wording

We collect and analyze operating and financial data of our business to assess our performance, formulate financial projections and make strategic decisions. In addition to total revenues, net operating income (loss), other measures under U.S. GAAP, and certain non-GAAP financial measures (see discussion and reconciliation herein titled “Reconciliation of Non-GAAP Financial Measures”), we consider Network Volume to be a key operating metric we use to evaluate our business. The following table sets forth our Network Volume for the three and six months ended June 30, 2024 and 2023.

Previous wording

Total revenue and other income, increased by $58.6 million, or 31%, to $245.3 million for the three months ended March 31, 2024 from $186.6 million for the three months ended March 31, 2023. The increase was primarily driven by an increase in revenue from fees, partially offset by decreases in interest income and investment income.

Current wording

Total revenue and other income, increased by $54.7 million, or 28%, to $250.3 million for the three months ended June 30, 2024 from $195.6 million for the three months ended June 30, 2023. The increase was primarily driven by an increase in revenue from fees, partially offset by decreases in interest income and investment income.

Previous wording

Revenue from fees for the three months ended March 31, 2024 increased by $61.8 million, or 35%, to $237.0 million, compared to the same period in 2023. The increase was primarily due to a $65.1 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $150.2 million for the three months ended March 31, 2023 to $215.3 million for the three months ended March 31, 2024. The increase in Network AI fees was primarily driven by improved economics in AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 31% from $1.9 billion for the three months ended March 31, 2023 to $2.4 billion for the three months ended March 31, 2024. Also contributing to the increase was an increase in capital markets execution fees earned from our ABS transactions reflecting an increase in ABS transactions during the three months ended March 31, 2024.

Current wording

Revenue from fees for the three months ended June 30, 2024 increased by $56.9 million, or 31%, to $242.6 million, compared to the same period in 2023. The increase was primarily due to a $54.3 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $167.5 million for the three months ended June 30, 2023 to $221.8 million for the three months ended June 30, 2024. The increase in Network AI fees was primarily driven by improved economics in AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 19.1% from $2.0 billion for the three months ended June 30, 2023 to $2.3 billion for the three months ended June 30, 2024. These increases were partially offset by a decrease in capital markets execution fees earned from our ABS transactions affected by tighter economic environment during the three months ended June 30, 2024.

Previous wording

Contract fees, comprised of administration and management fees and performance fees, decreased by $3.4 million from $25.1 million for the three months ended March 31, 2023 to $21.7 million for the three months ended March 31, 2024, reflecting a decline in net asset values of the assets held by certain Financing Vehicles primarily driven by an increase in redemptions in such vehicles.

Current wording

Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $2.7 million from $18.2 million for the three months ended June 30, 2023 to $20.8 million for the three months ended June 30, 2024, reflecting an increase in net asset values of the assets held by certain Financing Vehicles driven by continued business growth.

Previous wording

Production costs increased by $19.8 million, or 16%, to $144.9 million for the three months ended March 31, 2024 from $125.1 million for the three months ended March 31, 2023. This increase was predominantly due to increases in Network

Current wording

Production costs increased by $25.0 million, or 21%, to $145.6 million for the three months ended June 30, 2024 from $120.6 million for the three months ended June 30, 2023. This increase was predominantly due to increases in Network Volume and to a lesser extent the composition of the asset classes that make up our Network Volume, as well as new Partners onboarded to our network.

Previous wording

Income tax expense decreased by $1.7 million, or 25%, to $5.0 million for the three months ended March 31, 2024 from $6.7 million for the three months ended March 31, 2023. The decrease was primarily driven by geographical mix of taxable net income.

Current wording

Income tax expense for the three months ended June 30, 2024 increased $9.5 million, compared to the same period in 2023. The increase was primarily driven by geographical mix of taxable net income.

Previous wording

Interest income decreased by $2.7 million, or 26%, to $7.7 million for the three months ended March 31, 2024 from $10.4 million for the three months ended March 31, 2023. The decrease in interest income was directly related to our risk retention holdings and related securities held in our consolidated VIEs as well as certain risk retention holdings held directly by our consolidated subsidiaries. For further information, see “—Net Income (Loss) Attributable to Noncontrolling Interests.” The decrease in interest income was primarily the result of changes in structure and composition of the investments in loans and securities portfolio, partially offset by higher interest income on our cash balances.

Current wording

Interest income decreased by $4.7 million, or 23%, to $15.9 million for the six months ended June 30, 2024 from $20.6 million for the six months ended June 30, 2023. The decrease in interest income was directly related to our risk retention holdings and related securities held in our consolidated VIEs as well as certain risk retention holdings held directly by our consolidated subsidiaries. For further information, see “—Net Income (Loss) Attributable to Noncontrolling Interests.” The decrease in interest income was primarily the result of changes in structure and composition of the investments in loans and securities portfolio, partially offset by higher interest income on our cash balances.

Previous wording

Investment income decreased by $0.5 million to $0.5 million for the three months ended March 31, 2024 from $1.0 million for three months ended March 31, 2023, reflecting a less favorable impact from the change in valuation of certain proprietary investments.

Current wording

Investment income decreased by $0.6 million to $0.1 million for the six months ended June 30, 2024 from $0.7 million for six months ended June 30, 2023, reflecting a less favorable impact from the change in valuation of certain proprietary investments.

Previous wording

Volume and to a lesser extent the composition of the asset classes that make up our Network Volume, as well as new Partners onboarded to our network.

Current wording

Production costs increased by $44.8 million, or 18%, to $290.5 million for the six months ended June 30, 2024 from $245.7 million for the six months ended June 30, 2023. This increase was predominantly due to increases in Network Volume and to a lesser extent the composition of the asset classes that make up our Network Volume, as well as new Partners onboarded to our network.

Previous wording

Technology, data and product development costs in the three months ended March 31, 2024 decreased $1.8 million, or 8%, compared to the same period in 2023, primarily driven by a $3.1 million decrease in compensation expenses and a $1.1 million decrease in server costs, partially offset by a $2.6 million increase in overhead allocation and other miscellaneous costs.

Current wording

Technology, data and product development costs for the six months ended June 30, 2024 increased $2.5 million, or 6%, compared to the same period in 2023. The increase was primarily driven by a $6.0 million increase in depreciation of capitalized software, inclusive of impairment charges, and a $1.6 million increase in overhead allocation and other miscellaneous costs. These increases were partially offset by a $4.0 million decrease in compensation expenses and a $1.2 million decrease in server costs.

Previous wording

Sales and marketing costs in the three months ended March 31, 2024 decreased by $4.0 million, or 28%, compared to the same period in 2023, primarily driven by a $3.4 million decrease in compensation expenses and a $0.7 million decrease in expenses related to marketing.

Current wording

Sales and marketing costs for the six months ended June 30, 2024 decreased $5.3 million, or 18%, compared to the same period in 2023, primarily driven by a $4.3 million decrease in compensation expenses due to decreased headcount and a $0.9 million decrease in expenses related to marketing and miscellaneous costs.

Previous wording

General and administrative costs in the three months ended March 31, 2024 increased by $11.9 million, or 23%, compared to the same period in 2023, primarily driven by a $7.2 million increase in transaction-related expenses supporting business initiatives and a $5.1 million increase in miscellaneous costs, including overhead allocations. Partially offsetting the increases was a $1.4 million decrease in compensation expenses.

Current wording

General and administrative costs for the six months ended June 30, 2024 increased $23.4 million, or 22%, compared to the same period in 2023. Excluding a $18.4 million loss from loan purchases during the six months ended June 30, 2024, general and administrative costs increased $4.9 million, primarily driven by a $6.6 million increase in professional and transaction-related expenses supporting business initiatives, partially offset by a $1.2 million decrease in compensation expenses and a $0.5 million decrease in miscellaneous costs, including overhead allocations.

Previous wording

Other expense, net for the three months ended March 31, 2024 decreased by $32.6 million, compared to the same period in 2023. The decrease was primarily due to a lower credit-related impairment loss of $42.8 million on certain investments, driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value, and a $1.7 million favorable impact from the changes in fair value remeasurement of warrants. We are not exposed economically to a significant portion of these fair value changes as certain investments are held within consolidated VIEs. For further information, please see “—Net Income (Loss) Attributable to Noncontrolling Interests.” The decrease was partially offset by a higher interest expenses of $12.4 million due to higher interest rates and increased borrowing to support business growth.

Current wording

Other expense, net for the six months ended June 30, 2024 increased $23.7 million, compared to the same period in 2023. The increase was primarily due to a higher interest expenses of $26.7 million due to higher interest rates and increased borrowing to support business growth, and a higher credit-related impairment loss of $2.1 million on certain investments, driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value. We are not exposed economically to a significant portion of these fair value changes as certain investments are held within consolidated VIEs. For further information, please see “—Net Income (Loss) Attributable to Noncontrolling Interests.” These increases were partially offset by a $4.0 million favorable impact from the changes in fair value remeasurement of warrants.

Previous wording

Net loss attributable to noncontrolling interests in the three months ended March 31, 2024 decreased by $27.2 million, or 72%, compared to the same period in 2023. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings. This amount represented the net income (loss) of the consolidated VIEs to which we had no economic right and was the result of interest income of $1.8 million generated from risk retention holdings offset by the credit-related impairment loss of $12.1 million on the same risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Other Income (Expense), net.”

Current wording

Net loss attributable to noncontrolling interests for the six months ended June 30, 2024 decreased by $20.2 million, or 52%, compared to the same period in 2023. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings. This amount represented the net income (loss) of the consolidated VIEs to which we had no economic right and was the result of interest income of $3.2 million generated from risk retention holdings offset by the credit-related impairment loss of $21.4 million on the same risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Other Expense, Net.”

Previous wording

FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA for the three months ended March 31, 2024 and 2023 are summarized below (in thousands):

Current wording

FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 are summarized below (in thousands):

Previous wording

As of March 31, 2024 and December 31, 2023, the principal sources of liquidity were cash, cash equivalents and restricted cash of $310.0 million and $222.5 million, respectively. We believe these sources will be sufficient to meet our current liquidity needs for the next twelve months, from the date of issuance of the Condensed Consolidated Financial Statements included elsewhere in this Form 10-Q, and be sufficient to support our future cash needs, however, we can provide no assurance that our liquidity and capital resources will meet future funding requirements.

Current wording

As of June 30, 2024 and December 31, 2023, the principal sources of liquidity were cash, cash equivalents and restricted cash of $267.9 million and $222.5 million, respectively. We believe these sources will be sufficient to meet our current liquidity needs for the next twelve months, from the date of issuance of the unaudited condensed consolidated financial statements included elsewhere in this Form 10-Q, and be sufficient to support our future cash needs, however, we can provide no assurance that our liquidity and capital resources will meet future funding requirements.

Previous wording

We expect to fund our operations with existing cash and cash equivalents, cash generated from operations, including cash flows from investments in loans and securities, and additional secured borrowings, including repurchase agreements. We may also raise additional capital, including through borrowings under the new credit facility that we entered into in February 2024 (see further description of the new credit facility below in the section titled “Credit Agreement”) or through the sale or issuance of equity or debt securities, as described below in the sections titled “The Committed Equity Financing,” “Shelf Registration Statement” and “Ordinary Share Offering,” as well as the issuance of up to an additional 1,666,666 Series A Preferred Shares. The ownership interest of our shareholders will be, or could be, diluted as a result of sales or issuances of equity or debt securities, and the terms of any such securities may include liquidation or other preferences that adversely affect the rights of our shareholders of Class A Ordinary Shares. We intend to support our liquidity and capital position by pursuing diversified sources of financing, including debt financing, secured borrowings, or equity financing. The rates, terms, covenants and availability of such additional financing is not guaranteed and will be dependent on not only macro-economic factors, but also on Pagaya-specific factors such as the results of our operations and the returns generated by loans originated with the assistance of our AI Technology.

Current wording

“Ordinary Share Offering,” as well as the issuance of up to an additional 1,666,666 Series A Preferred Shares. The ownership interest of our shareholders will be, or could be, diluted as a result of sales or issuances of equity or debt securities, and the terms of any such securities may include liquidation or other preferences that adversely affect the rights of our shareholders of Class A Ordinary Shares. We intend to support our liquidity and capital position by pursuing diversified sources of financing, including debt financing, secured borrowings, or equity financing. The rates, terms, covenants and availability of such additional financing is not guaranteed and will be dependent on not only macro-economic factors, but also on Pagaya-specific factors such as the results of our operations and the returns generated by loans originated with the assistance of our AI Technology.

Previous wording

As of May 8, 2024, the price of our Class A Ordinary Shares was $10.50 per share. We believe the likelihood that warrant holders will exercise their public warrants and private placement warrants that were issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of Class A Ordinary Shares. If the market price for our Class A Ordinary Shares is less than $138 per share, we believe warrant holders will be unlikely to exercise on a cash basis their public warrants and private placement warrants that were issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger. To the extent the public warrants and private placement warrants are exercised by warrant holders, ownership interest of our shareholders will be diluted as a result of such issuances. Moreover, the resale of Class A Ordinary Shares issuable upon the exercise of such warrants, or the perception of such sales, may cause the market price of our Class A Ordinary Shares to decline and impact our ability to raise additional financing on favorable terms. See“Risk Factors—We have and may need to continue to raise additional funds in the future, including but not limited to, through equity, debt, secured borrowings, or convertible debt financings, to support business growth, and those funds may be unavailable on acceptable terms, or at all. As a result, we may be unable to meet our future capital requirements, which could limit our ability to grow and jeopardize our ability to continue our business” and “Risk Factors—Risks Related to Ownership of our Class A Ordinary Shares and Warrants” in our Annual Report on Form 10-K, which was filed with the SEC on April 25, 2024.

Current wording

As of August 8, 2024, the price of our Class A Ordinary Shares was $15.10 per share. We believe the likelihood that warrant holders will exercise their public warrants and private placement warrants that were issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of Class A Ordinary Shares. If the market price for our Class A Ordinary Shares is less than $138 per share, we believe warrant holders will be unlikely to exercise on a cash basis their public warrants and private placement warrants that were issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger. To the extent the public warrants and private placement warrants are exercised by warrant holders, ownership interest of our shareholders will be diluted as a result of such issuances. Moreover, the resale of Class A Ordinary Shares issuable upon the exercise of such warrants, or the perception of such sales, may cause the market price of our Class A Ordinary Shares to decline and impact our ability to raise additional financing on favorable terms. See“Risk Factors—We have and may need to continue to raise additional funds in the future, including but not limited to, through equity, debt, secured borrowings, or convertible debt financings, to support business growth, and those funds may be unavailable on acceptable terms, or at all. As a result, we may be unable to meet our future capital requirements, which could limit our ability to grow and jeopardize our ability to continue our business” and “Risk Factors—Risks Related to Ownership of our Class A Ordinary Shares and Warrants” in our Annual Report on Form 10-K, which was filed with the SEC on April 25, 2024.

Previous wording

During the three months ended March 31, 2024, 298,057 shares were issued under the Equity Financing Purchase Agreement for net proceeds of $5.2 million.

Current wording

During the three months ended June 30, 2024, the Company did not issue any shares under the Equity Financing Purchase Agreement. During the six months ended June 30, 2024, 298,057 shares were issued under the Equity Financing Purchase Agreement for net proceeds of $5.2 million.

Previous wording

Our primary uses of cash in operating activities are for ordinary course of business, with the primary use related to employee and personnel-related expenses. As of March 31, 2024, we had 714 employees, including 178 full-time Darwin employees, compared to 712 on December 31, 2023. During the first and second quarters of 2023, we reduced our headcount by over 20% across our Israel and U.S. offices. This reduction in workforce enabled us to streamline our operations resulting in cost savings.

Current wording

Our primary uses of cash in operating activities are for ordinary course of business, with the primary use related to employee and personnel-related expenses. As of June 30, 2024, we had 591 employees, including 149 full-time Darwin employees, compared to 712 on December 31, 2023. During the second quarter of 2024, we reduced our headcount by over 20% across our Israel and U.S. offices. This reduction in workforce enabled us to streamline our operations resulting in cost savings.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2024 was $20.5 million, an increase of $44.1 million from net cash used in operating activities of $23.7 million for the same period in 2023. This reflects our net loss including noncontrolling interests of $31.7 million, adjusted for non-cash charges of $47.4 million, and net cash inflows of $4.8 million from changes in our operating assets net of operating liabilities.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2024 was $36.0 million, an increase of $61.5 million from net cash used in operating activities of $25.5 million for the same period in 2023. This reflects our net loss including noncontrolling interests of $114.3 million, adjusted for non-cash charges of $129.1 million, and net cash inflows of $21.2 million from changes in our operating assets net of operating liabilities.

Previous wording

Non-cash charges primarily consisted of (1) impairment losses on investments in loans and securities, which decreased by $41.5 million driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value (we are not exposed economically to a portion of these fair value changes as certain investments are held within consolidated VIEs), (2) share-based compensation, which decreased by $0.9 million, (3) depreciation and amortization, which increased by $2.8 million primarily from capitalized software, and (4) fair value adjustment to warrant liability, which decreased by $1.7 million driven by changes in the market price of our Class A Ordinary Shares.

Current wording

Non-cash charges primarily consisted of (1) impairment losses on investments in loans and securities, which increased by $1.6 million driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value (we are not exposed economically to a portion of these fair value changes as certain investments are held within consolidated VIEs), (2) share-based compensation, which decreased by $3.1 million, (3) depreciation and amortization, which increased by $5.4 million primarily from capitalized software, and (4) fair value adjustment to warrant liability, which decreased by $4.0 million driven by changes in the market price of our Class A Ordinary Shares.

Previous wording

Our net cash flows resulting from changes in operating assets and liabilities increased by $18.4 million to net cash inflows of $4.8 million for the three months ended March 31, 2024 compared to net cash outflow of $13.7 million for the same period in 2023, reflecting cost savings.

Current wording

Our net cash flows resulting from changes in operating assets and liabilities increased by $42.1 million to net cash inflows of $21.2 million for the six months ended June 30, 2024 compared to net cash outflows of $20.9 million for the same period in 2023, reflecting cost saving initiatives.

Previous wording

For the three months ended March 31, 2024, net cash used in investing activities of $230.9 million was primarily attributable to purchases of risk retention assets of $261.6 million, which increased by $139.9 million driven by business growth, partially offset by proceeds received from existing risk retention assets of $35.9 million, which also increased by $9.9 million.

Current wording

For the six months ended June 30, 2024, net cash used in investing activities of $351.3 million was primarily attributable to purchases of risk retention assets of $408.5 million, which increased by $135.1 million driven by business growth, partially offset by proceeds received from existing risk retention assets of $66.8 million, which decreased by $24.5 million.

Previous wording

For the three months ended March 31, 2024, net cash provided by financing activities of $298.7 million was primarily attributable to $233.6 million of net proceeds from issuance of long-term debt, net of repayments, $89.9 million of net proceeds from the ordinary share offering, $59.4 million from secured borrowings executed to finance certain risk retention assets, net of repayments, and $5.3 million of proceeds from the issuance of our Class A Ordinary Shares under the Equity Financing Purchase Agreement. These net cash inflows were partially offset by $90.0 million of repayments of the SVB revolving credit facility.

Current wording

For the six months ended June 30, 2024, net cash provided by financing activities of $362.4 million was primarily attributable to $230.4 million of net proceeds from issuance of long-term debt, net of repayments, $90.0 million of net proceeds from the ordinary share offering, $128.5 million from secured borrowings executed to finance certain risk retention assets, net of repayments, and $5.3 million of proceeds from the issuance of our Class A Ordinary Shares under the Equity Financing Purchase Agreement. These net cash inflows were partially offset by $90.0 million of repayments of the SVB revolving credit facility.

Previous wording

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.

Current wording

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

Previous wording

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 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. The Company is in compliance with all covenants.

Current wording

As of June 30, 2024, the Company had an outstanding balance of $232.6 million, which is recorded within long-term debt on the unaudited condensed consolidated balance sheet, and the Company had letters of credit issued in the amount of $19.8 million, and $15.2 million of remaining capacity available under the Revolving Credit Facility. The Company is in compliance with all covenants.

Previous wording

During the normal course of business, we enter into certain lease contracts with lease terms through 2032. As of March 31, 2024, the total remaining contractual obligations are approximately $59.7 million, of which $7.2 million is for the next 12 months. During the year ended March 31, 2024, we 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.

Current wording

During the normal course of business, we enter into certain lease contracts with lease terms through 2032. As of June 30, 2024, the total remaining contractual obligations are approximately $56.2 million, of which $4.7 million is for the next 12 months. In 2023, we 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 June 30, 2024, the total remaining contractual obligations are approximately $6.1 million, of which $4.9 million is for the next 12 months. We may pay more than the minimum purchase commitment based on usage.

Previous wording

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 $26.0 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.

Current wording

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 June 30, 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 June 30, 2024, the maximum potential amount of undiscounted future payments the Company could be required to make under these guarantees totaled $29.2 million. In accordance with the guarantee contracts, the maximum potential payment amount has been segregated and recognized within restricted cash in the unaudited condensed consolidated balance sheet.

Previous wording

For a discussion of our long-term debt obligations and operating lease obligations as of March 31, 2024, see Note 4 and Note 7, respectively, to our consolidated financial statements included elsewhere inthis Quarterly Report.

Current wording

For a discussion of our long-term debt obligations and operating lease obligations as of June 30, 2024, see Note 4 and Note 7, respectively, to our unaudited condensed consolidated financial statements included elsewhere inthis Quarterly Report.

Previous wording

In the ordinary course of business, we engage in activities with unconsolidated VIEs, including our sponsored securitization vehicles, which we contractually administer. To comply with risk retention regulatory requirements, we retain at least 5% of the credit risk of the securities issued by sponsored securitization vehicles. From time to time, we may, but are not obligated to, purchase assets from the Financing Vehicles. Such purchases could expose us to loss. For additional information, refer to Note 8 to the consolidated financial statements elsewhere included in this Annual Report.

Current wording

In the ordinary course of business, we engage in activities with unconsolidated VIEs, including our sponsored securitization vehicles, which we contractually administer. To comply with risk retention regulatory requirements, we retain at least 5% of the credit risk of the securities issued by sponsored securitization vehicles. From time to time, we may, but are not obligated to, purchase assets from the Financing Vehicles. Such purchases could expose us to loss. For additional information, refer to Note 8 to the unaudited condensed consolidated financial statements elsewhere included in this Quarterly Report.

Previous wording

Our significant accounting policies and their effect on our financial condition and results of operations are more fully described in our audited consolidated financial statements included in our Annual Report on Form 10-K. Management has reassessed the critical accounting policies and estimates as disclosed in Note 2 to the audited Consolidated Financial Statements included in our

Current wording

Our significant accounting policies and their effect on our financial condition and results of operations are more fully described in our audited consolidated financial statements included in our Annual Report on Form 10-K. Management has reassessed the critical accounting policies and estimates as disclosed in Note 2 to the audited consolidated financial statements included in our Annual Report on Form 10-K and determined that there were no significant changes in our critical accounting policies and estimates during the three and six months ended June 30, 2024.