Pagaya Technologies Ltd.
For the period ended Sep 30, 2025. Filed Nov 10, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2025 · Filed Nov 10, 2025
PGY$17.50+0.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-06-30; filed 2025-08-07.
0001883085-25-000169
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-09-30; filed 2025-11-10.
0001883085-25-000195
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 173 previous paragraphs and 182 current paragraphs.
104 unchanged; 52 reworded; 22 added; 12 removed; 5 previous and 4 current paragraphs rearranged.
Tables are not compared: 26 previous and 30 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (22)
Current report
Gains and (losses) on investments in loans and securities
Current report
Gains and (losses) on investments in loans and securities primarily reflects changes in fair value that management identifies as credit losses or reversals of previously recognized credit losses, including remeasurements of instruments accounted for under the fair value option and any gain or loss realized upon sale or termination of such instruments. As of the end of each reporting period, management reviews each security where the fair value is less than the amortized cost to determine whether any portion of the decline in fair value is due to a credit loss and/or whether or not we intend to sell or will be required to sell such security before recovery of its amortized cost basis. The portion of any decline (or recovery) in fair value which management identifies as a credit loss (or a reversal of previously recognized credit loss) is recognized as loss (or gain) on investments in loans and securities.
Current report
Income Tax Expense
Current report
Technology, data and product development costs for the three months ended September 30, 2025 increased $1.6 million, or 9%, compared to the same period in 2024. The increase was driven by a $1.0 million increase in depreciation expenses, net of capitalization (as explained below), and a $0.5 million increase in cloud server and miscellaneous expenses.
Current report
Gains and (Losses) on Investments in Loans and Securities
Current report
Other expense, net for the three months ended September 30, 2025 decreased $3.0 million compared to the same period in 2024. The decrease was primarily due to a $4.8 million decrease in interest expenses resulting from the Company’s ongoing strategy to optimize its capital structure by reducing higher-cost debt, and a favorable foreign exchange impact of $4.2 million. These favorable impacts were offset by an unfavorable impact of $3.7 million from the change in fair value of warrant liability.
Current report
Loss from Extinguishment of Debt
Current report
Loss from extinguishment of debt is $25.0 million one-time loss related to the write-off of deferred issuance costs and the early payment penalty from the repayment of the outstanding principal balance under the Credit Agreement and secured borrowings using the proceeds from the issuance of Senior Notes.
Current report
Income Tax Benefit
Current report
Income tax benefit for the three months ended September 30, 2025 increased $3.7 million, compared to the same period in 2024. The increase was primarily driven by an increase in discrete tax benefit during the three months ended September 30, 2025.
Current report
Comparison of Nine Months Ended September 30, 2025 and 2024
Current report
Gains and (Losses) on Investments in Loans and Securities
Current report
Other expense, net for the nine months ended September 30, 2025 increased $4.8 million compared to the same period in 2024. The increase was primarily due to an unfavorable impact of $6.8 million from the change in fair value of warrant liability, and higher interest expenses of $2.3 million reflecting a higher borrowing balance in the current period. These increases were partially offset by a favorable impact of $5.8 million from a release of contingent liability associated with the acquisition of Theorem.
Current report
Loss From Extinguishment of Debt
Current report
Loss from extinguishment of debt is $25.3 million one-time loss related to the write-off of deferred issuance costs and the early payment penalty from the repayment of the outstanding principal balance under the Credit Agreement and secured borrowings using the proceeds from the issuance of Senior Notes.
Current report
Income Tax (Benefit) Expense
Current report
Senior Notes
Current report
The following table summarizes the Company’s new borrowings, repayments, and outstanding balances for the term loan, secured borrowing, and Senior Notes as of September 30, 2025 ($ in thousands):
Current report
(2) Excluding unamortized debt issuance costs associated with each borrowing.
Current report
(3) Excluding an early payment penalty of $6.6 million associated with the repayment of the term loan.
Current report
(4) 2025 Revolving Credit Facility, replacing the old revolving credit facility, was closed on October 1, 2025. See Note 15 to the unaudited condensed consolidated financial statements elsewhere included in this Quarterly Report.
Current report
For our forward flow agreements, loans purchased have a contractual performance requirement which is measured periodically over the life of the underlying loans. If the loan’s performance is below the contractual requirement, the counterparty may have first loss up until a contractual agreed limit. If the loans’ performance is below the counterparty’s first loss limit or if there is no first loss limit, then Pagaya would be required to make a payment to the counterparty such that the loans purchased would have achieved the contractual performance requirement. There is a contractual maximum loss for Pagaya’s loss protection with the counterparty taking full risk of loss beyond Pagaya’s loss protection. Our guarantee of contractual loss protection for the buyer meets the accounting definition of a derivative, and therefore we recognize, at inception and each reporting period, a liability for the fair value of the estimated loss protection payments, if any.
Removed paragraphs (12)
Previous report
Technology, data and product development costs for the three months ended June 30, 2025 decreased $3.5 million, or 16%, compared to the same period in 2024. The decrease was driven by a $2.0 million decrease in compensation expenses and a $1.9 million decrease in depreciation expense, including impairment charges for capitalized software development costs, partially offset by a $0.6 million increase in amortization of intangible assets.
Previous report
Comparison of Six Months Ended June 30, 2025 and 2024
Previous report
Senior Notes Issuance
Previous report
(1) Interest rates as of June 30, 2025 for long-term debt and secured borrowing.
Previous report
(3) Excluding debt issuance costs.
Previous report
The Company may voluntarily prepay borrowings under the Facilities at any time and from time to time subject to, in regards to voluntary prepayments and certain mandatory prepayments of the Term Loan Facility, a 3.00% fee if paid prior to the first anniversary of the Term Loan Facility, 2.00% if paid after the first anniversary but prior to the second anniversary, 1.00% if after the second anniversary but prior to the third anniversary, and 0.50% if after the third anniversary but prior to the fourth anniversary. In each case, prepayments of the Facilities may be subject to the payment of “breakage” costs.
Previous report
The Facilities contain certain customary mandatory prepayment events, including requirements to prepay the Term Loan Facility with excess cash flow and with the net cash proceeds from certain asset dispositions and casualty events, subject to customary reinvestment rights and other exceptions.
Previous report
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.
Previous report
The Company’s obligations under the Credit Agreement are guaranteed by certain of the Company’s material, wholly-owned subsidiaries (collectively, the “Guarantors”) and are secured by a first priority lien on substantially all assets of the Company and the Guarantors, subject to certain customary exceptions.
Previous report
The Credit Agreement contains customary negative covenants, which include, among other things, limitations on the ability of the Company and its consolidated subsidiaries to incur indebtedness, grant liens, engage in certain fundamental changes, make certain dispositions and investments, enter into sale and leaseback transactions, and make restricted payments and other distributions. The Credit Agreement contains certain financial covenants customary for a credit facility of this type, which include, among other things, a maximum first lien leverage ratio, a minimum fixed charge coverage ratio and a minimum tangible book value ratio. The Credit Agreement also contains affirmative covenants customary for a credit facility of its type, including customary reporting covenants.
Previous report
The Credit Agreement includes events of default related to, among other things, failure to pay amounts due under the Credit Agreement, breaches of representations, warranties or covenants, defaults under other material indebtedness, certain events of bankruptcy or insolvency, material judgment defaults and change of control, in each case, subject to customary cure periods where appropriate.
Previous report
As of June 30, 2025, the Company had an outstanding balance of $314.5 million, which is recorded within long-term debt and current portion of long-term debt on the unaudited condensed consolidated balance sheet, and the Company had letters of credit issued in the amount of $20.5 million, and $37.5 million of remaining capacity available under the Revolving Credit Facility. As of June 30, 2025, the Company was in compliance with all covenants.
Reworded paragraphs (52)
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 $2.9 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 $3.2 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 six months ended June 30, 2025, our top 5 ABS investors contributed approximately 52% of our total ABS funding compared to 54% in the year ended December 31, 2024.
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 nine months ended September 30, 2025, our top 5 ABS investors contributed approximately 53% of our total ABS funding compared to 54% in the year ended December 31, 2024.
Previous wording
Israel and Gaza, which escalated following the October 7, 2023, attacks by a terrorist organization primarily based in the Gaza Strip, remains a source of uncertainty. While the conflict has not materially disrupted our operations to date, its potential to intensify or expand, coupled with related instability in the Middle East, could adversely impact regional and global economic conditions, energy prices, and investor confidence. Such developments may increase volatility in financial markets, elevate operating costs, or constrain funding availability, potentially affecting our business, financial condition, results of operations, and prospects. We continue to monitor the situation closely, though no significant direct impact has been observed as of the date of this Report. The Russia-Ukraine conflict, ongoing since February 2022, persists with no clear resolution as of mid-2025. While we have not experienced material impacts on our business from this conflict, prolonged hostilities or further escalation, such as expanded sanctions, disruptions to energy markets, or broader economic fallout, could exacerbate global inflationary pressures and supply chain challenges. These factors may indirectly influence consumer credit demand, investor appetite for risk assets, and our Network Volume. We assess this risk as manageable but remain vigilant given its potential to contribute to wider economic disruptions.
Current wording
We expect economic cycles to affect our financial performance and related metrics. Macroeconomic conditions, including persistent inflation, elevated interest rates, supply chain constraints, geopolitical tensions, climate-related disruptions, and evolving global conflicts, may affect consumer demand for financial products, our Partners’ ability to generate and convert customer application volume, and the availability and cost of funding from investors through our Financing Vehicles. The war in Israel and Gaza, which escalated following the October 7, 2023 and intensified during the third quarter of 2025, remains a source of uncertainty. While the conflict has not materially disrupted our operations to date, its intensification and the expansion of related instability in the Middle East increase the risk of adverse impacts on regional and global economic conditions, energy prices, and investor confidence. Such developments may increase volatility in financial markets, elevate operating costs, or constrain funding availability, potentially affecting our business, financial condition, results of operations, and prospects. We continue to monitor the situation closely, though no significant direct impact has been observed as of the date of this Report. The Russia-Ukraine conflict, ongoing since February 2022, persists with no clear resolution as of mid-2025. While we have not experienced material impacts on our business from this conflict, prolonged hostilities or further escalation, such as expanded sanctions, disruptions to energy markets, or broader economic fallout, could exacerbate global inflationary pressures and supply chain challenges. These factors may indirectly influence consumer credit demand, investor appetite for risk assets, and our Network Volume. We assess this risk as manageable but remain vigilant given its potential to contribute to wider economic disruptions.
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 the three and six months ended June 30, 2025 and 2024.
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 nine months ended September 30, 2025 and 2024.
Previous wording
Other expenses, net primarily consists of changes in the fair value of warrant liabilities and other items, including credit-related impairment losses on investments in loans and securities.
Current wording
Other expenses, net primarily consists of interest expenses from borrowings, changes in the fair value of warrant liabilities and other non-recurring items.
Previous wording
Net income attributable to noncontrolling interests in our consolidated statements of operations is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net income of these consolidated entities that is not attributable to us.
Current wording
Net income (loss) attributable to noncontrolling interests in our condensed consolidated statements of operations is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net income of these consolidated entities that is not attributable to us.
Previous wording
Total revenue and other income, increased by $76.1 million, or 30%, to $326.4 million for the three months ended June 30, 2025 from $250.3 million for the three months ended June 30, 2024. The increase was primarily driven by an increase in revenue from fees and interest income, partially offset by an increase in investment loss, net.
Current wording
Total revenue and other income, increased by $92.9 million, or 36%, to $350.2 million for the three months ended September 30, 2025 from $257.2 million for the three months ended September 30, 2024. The increase was primarily driven by an increase in revenue from fees and interest income, partially offset by an increase in investment loss, net.
Previous wording
Revenue from fees for the three months ended June 30, 2025 increased by $75.1 million, or 31%, to $317.7 million, compared to the same period in 2024. The increase was primarily due to a $64.1 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $221.8 million for the three months ended June 30, 2024 to $285.9 million for the three months ended June 30, 2025. 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 13.6% from $2.3 billion for the three months ended June 30, 2024 to $2.6 billion for the three months ended June 30, 2025. These increases were partially offset by a decrease in capital markets execution fees earned from our ABS and forward flow transactions during the three months ended June 30, 2025.
Current wording
Revenue from fees for the three months ended September 30, 2025 increased by $90.6 million, or 36%, to $339.9 million, compared to the same period in 2024. The increase was primarily due to a $75.5 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $229.1 million for the three months ended September 30, 2024 to $304.6 million for the three months ended September 30, 2025. 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 19.2% from $2.4 billion for the three months ended September 30, 2024 to $2.8 billion for the three months ended September 30, 2025. These increases were partially offset by a decrease in capital markets execution fees earned from our ABS and forward flow transactions during the three months ended September 30, 2025.
Previous wording
Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $11.0 million from $20.8 million for the three months ended June 30, 2024 to $31.8 million for the three months ended June 30, 2025, reflecting an increase in net asset values of the assets held by certain Financing Vehicles driven by continued business growth.
Current wording
Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $15.2 million from $20.1 million for the three months ended September 30, 2024 to $35.3 million for the three months ended September 30, 2025, reflecting an increase in net asset values of the assets held by certain Financing Vehicles driven by continued business growth.
Previous wording
Interest income increased by $2.5 million, or 31%, to $10.7 million for the three months ended June 30, 2025 from $8.2 million for the three months ended June 30, 2024. The increase 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 increase in interest income was primarily the result of changes in structure and composition of asset portfolio.
Current wording
Interest income increased by $6.2 million, or 71%, to $14.9 million for the three months ended September 30, 2025 from $8.7 million for the three months ended September 30, 2024. The increase 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 increase in interest income was primarily the result of changes in structure and composition of asset portfolio.
Previous wording
Investment loss increased by $1.6 million to $2.1 million for the three months ended June 30, 2025, reflecting an unfavorable impact from the change in valuation of certain proprietary investments.
Current wording
Investment loss increased by $3.9 million to $4.6 million for the three months ended September 30, 2025, reflecting an unfavorable impact from the change in valuation of certain proprietary investments.
Previous wording
Production costs increased by $45.9 million, or 31%, to $191.5 million for the three months ended June 30, 2025 from $145.6 million for the three months ended June 30, 2024. This increase was due to an increase in the Network Volume attributable to business growth in addition to the composition of the asset classes that make up our Network Volume.
Current wording
Production costs increased by $51.6 million, or 35%, to $200.6 million for the three months ended September 30, 2025 from $149.0 million for the three months ended September 30, 2024. This increase was due to an increase in the Network Volume attributable to business growth in addition to the composition of the asset classes that make up our Network Volume.
Previous wording
During the three months ended June 30, 2025 and 2024, we capitalized $4.0 million and $5.9 million of software development costs, respectively. Depreciation expense, including impairment charges for capitalized software development costs was $5.9 million and $7.9 million during the three months ended June 30, 2025 and 2024, respectively.
Current wording
During the three months ended September 30, 2025 and 2024, we capitalized $3.9 million and $5.7 million of software development costs, respectively. Depreciation expense, including impairment charges for capitalized software development costs was $5.8 million and $6.6 million during the three months ended September 30, 2025 and 2024, respectively.
Previous wording
Sales and marketing costs for the three months ended June 30, 2025 increased by $6.3 million, compared to the same period in 2024. The increase was primarily driven by higher compensation expenses, including shared-based compensation.
Current wording
Sales and marketing costs for the three months ended September 30, 2025 increased by $3.0 million, compared to the same period in 2024. The increase was primarily driven by higher compensation expenses, including shared-based compensation.
Previous wording
General and administrative costs for the three months ended June 30, 2025 decreased by $24.1 million, or 37%, compared to the same period in 2024. The decrease was primarily driven by a $11.4 million lower loss from loan purchases and a $8.8 million decrease in compensation expenses during the three months ended June 30, 2025.
Current wording
General and administrative costs for the three months ended September 30, 2025 decreased by $20.8 million, or 36%, compared to the same period in 2024, primarily driven by a $14.3 million lower loss from loan purchases and a $8.0 million decrease in transaction costs charged to general and administrative costs.
Previous wording
Other expense, net for the six months ended June 30, 2025 decreased $24.9 million, compared to the same period in 2024. The decrease was primarily due to a $24.2 million decrease in credit-related impairment loss on certain investments from $76.4 million in the prior period to $52.2 million in the current period, 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. Of the credit-related impairment loss of $52.2 million in the current period, $8.7 million is attributable to the noncontrolling interest in certain VIEs, and accordingly, is not attributable to Pagaya Shareholders. For further information, see “—Net Income (Loss) Attributable to Noncontrolling Interests.” Also contributing to the decrease was $8.7 million of gain from sales of certain investments in the current period, and a favorable impact of $5.4 million from a release of contingent liability associated with the acquisition of Theorem. Theses decreases were partially offset by higher interest expenses of $7.6 million and an unfavorable impact from the change in fair value of warrant liability of $3.1 million.
Current wording
Losses on investments in loans and securities for the three months ended September 30, 2025 decreased $58.0 million compared to the same period in 2024. The decrease was primarily due to a $74.0 million reduction in credit-related impairment loss on certain investments from $77.6 million in the prior period to $3.5 million in the current period, primarily 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, as well as fair value option gains from ABS resecuritizations at lower interest rates during the current period. Of the credit-related impairment loss of $3.5 million in the current period, $1.0 million is attributable to the noncontrolling interest in certain VIEs and accordingly, is not attributable to Pagaya Shareholders. These improvements were partially offset by a $16.3 million increase in loss from sales of certain investments in the current period.
Previous wording
Net loss attributable to noncontrolling interests for the three months ended June 30, 2025 decreased $7.8 million compared to the same period in 2024. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings. This amount represented the net loss of the consolidated VIEs to which we had no economic right and was the result of a lower credit-related impairment loss of $7.3 million on the risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Other Expense, Net.”
Current wording
Net income (loss) attributable to noncontrolling interests for the three months ended September 30, 2025 increased $7.5 million compared to the same period in 2024. The increase was driven by the net income 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 on investments, partially offset by a lower credit-related impairment loss of $6.9 million on the risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Gains and (losses) on Investments in Loans and Securities.”
Previous wording
Total revenue and other income, increased by $120.8 million, or 24%, to $616.4 million for the six months ended June 30, 2025 from $495.6 million for the six months ended June 30, 2024. The increase was primarily driven by an increase in revenue from fees, partially offset by a decrease in investment (loss) income.
Current wording
Total revenue and other income, increased by $213.7 million, or 28%, to $966.6 million for the nine months ended September 30, 2025 from $752.9 million for the nine months ended September 30, 2024. The increase was primarily driven by an increase in revenue from fees and interest income, partially offset by an increase in investment loss, net.
Previous wording
Revenue from fees for the six months ended June 30, 2025 increased by $120.8 million, or 25%, to $600.4 million, compared to the same period in 2024. The increase was primarily due to a $102.3 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $437.1 million for the six months ended June 30, 2024 to $539.3 million for the six months ended June 30, 2025. The increase in Network AI fees was primarily driven by improved economics of AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 6% from $4.8 billion for the six months ended June 30, 2024 to $5.0 billion for the six months ended June 30, 2025. These increases were partially offset by a decrease in capital markets execution fees earned from our ABS and forward flow transactions during the six months ended June 30, 2025.
Current wording
Revenue from fees for the nine months ended September 30, 2025 increased by $211.4 million, or 29%, to $940.3 million, compared to the same period in 2024. The increase was primarily due to a $177.7 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $666.2 million for the nine months ended September 30, 2024 to $843.9 million for the nine months ended September 30, 2025. The increase in Network AI fees was primarily driven by improved economics of AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 11% from $7.1 billion for the nine months ended September 30, 2024 to $7.9 billion for the nine months ended September 30, 2025. These increases were partially offset by a decrease in capital markets execution fees earned from our ABS and forward flow transactions during the nine months ended September 30, 2025.
Previous wording
Contract fees, comprised of administration and management fees and performance fees, increased by $18.6 million from $42.5 million for the six months ended June 30, 2024 to $61.1 million for the six months ended June 30, 2025. This increase was due to higher net asset values of assets held by certain Financing Vehicles driven by continued business growth, and an increase in performance fees, as the prior period included a reversal of performance fees.
Current wording
Contract fees, comprised of administration and management fees and performance fees, increased by $33.7 million from $62.7 million for the nine months ended September 30, 2024 to $96.4 million for the nine months ended September 30, 2025. This increase was due to higher net asset values of assets held by certain Financing Vehicles driven by continued business growth, and an increase in performance fees, as the prior period included a reversal of performance fees.
Previous wording
Interest income increased by $2.5 million, or 16%, to $18.4 million for the six months ended June 30, 2025 from $15.9 million for the six months ended June 30, 2024. The increase 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 increase in interest income was primarily the result of changes in structure and composition of asset portfolio.
Current wording
Interest income increased by $8.7 million, or 35%, to $33.3 million for the nine months ended September 30, 2025 from $24.7 million for the nine months ended September 30, 2024. The increase 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 increase in interest income was primarily the result of changes in structure and composition of asset portfolio.
Previous wording
Investment (loss) income decreased by $2.5 million to a loss of $2.4 million for the six months ended June 30, 2025 from an income of $0.1 million for six months ended June 30, 2024, reflecting an unfavorable impact from the change in valuation of certain proprietary investments.
Current wording
Investment loss increased by $6.4 million to $7.1 million for the nine months ended September 30, 2025, reflecting an unfavorable impact from the change in valuation of certain proprietary investments.
Previous wording
Production costs increased by $68.1 million, or 23%, to $358.5 million for the six months ended June 30, 2025 from $290.5 million for the six months ended June 30, 2024. This increase was due to an increase in the Network Volume attributable to business growth in addition to the composition of the asset classes that make up our Network Volume.
Current wording
Production costs increased by $119.7 million, or 27%, to $559.1 million for the nine months ended September 30, 2025 from $439.4 million for the nine months ended September 30, 2024. This increase was due to an increase in the Network Volume attributable to business growth in addition to the composition of the asset classes that make up our Network Volume.
Previous wording
Technology, data and product development costs for the six months ended June 30, 2025 decreased $3.4 million, or 8%, compared to the same period in 2024. This decrease was primarily driven by a $4.3 million decrease in compensation expense and a $1.3 million decrease in depreciation expense, including impairment charges for capitalized software development costs, partially offset by a $1.2 million increase in amortization of intangible assets and a $0.7 million increased in cloud server expenses.
Current wording
Technology, data and product development costs for the nine months ended September 30, 2025 decreased $1.8 million, or 3%, compared to the same period in 2024. This decrease was primarily driven by a $5.2 million decrease in compensation expense, partially offset by a $1.8 million increase in amortization of intangible assets and a $1.0 million increased in cloud server expenses.
Previous wording
During the six months ended June 30, 2025 and 2024, we capitalized $8.4 million and $12.2 million of software development costs, respectively. Depreciation expense, including impairment charges for capitalized software development costs was $12.2 million and $13.5 million during the six months ended June 30, 2025 and 2024, respectively.
Current wording
During the nine months ended September 30, 2025 and 2024, we capitalized $12.4 million and $17.8 million of software development costs, respectively. Depreciation expense, including impairment charges for capitalized software development costs was $18.0 million and $20.1 million during the nine months ended September 30, 2025 and 2024, respectively.
Previous wording
Sales and marketing costs for the six months ended June 30, 2025 increased by $5.7 million compared to the same period in 2024. The increase was primarily driven by higher compensation expenses, including shared-based compensation.
Current wording
Sales and marketing costs for the nine months ended September 30, 2025 increased by $8.7 million compared to the same period in 2024. The increase was primarily driven by higher compensation expenses, including shared-based compensation.
Previous wording
General and administrative costs for the six months ended June 30, 2025 decreased by $41.0 million, compared to the same period in 2024. The decrease was primarily driven by a $14.6 million decrease in loss from loan purchases, a $13.9 million decrease in transaction costs charged to general and administrative costs, and a $10.7 million decrease in compensation expense.
Current wording
General and administrative costs for the nine months ended September 30, 2025 decreased by $61.8 million, compared to the same period in 2024. The decrease was primarily driven by a $24.0 million lower loss from loan purchases, a $21.9 million decrease in transaction costs charged to general and administrative costs, and a $11.0 million decrease in compensation expenses.
Previous wording
Other expense, net for the three months ended June 30, 2025 decreased $38.3 million compared to the same period in 2024. The decrease was primarily due to a $38.0 million decrease in credit-related impairment loss on certain investments from $53.6 million in the prior period to $15.6 million in the current period, 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. Of the credit-related impairment loss of $15.6 million in the current period, $1.9 million is attributable to the noncontrolling interest in certain VIEs and accordingly, is not attributable to Pagaya Shareholders. Also contributing to the decrease was $2.8 million of gain from sales of certain investments in the current period, and a favorable impact of $2.2 million from a release of contingent liability associated with the acquisition of Theorem. These decreases were partially offset by higher interest expenses of $1.5 million.
Current wording
Losses on investments in loans and securities for the nine months ended September 30, 2025 decreased $91.2 million compared to the same period in 2024. The decrease was primarily due to a $98.3 million reduction in credit-related impairment loss on certain investments from $154.0 million in the prior period to $55.7 million in the current period, primarily 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, as well as fair value option gains from ABS resecuritizations at lower interest rates during the current period. Of the credit-related impairment loss of $55.7 million in the current period, $9.7 million is attributable to the noncontrolling interest in certain VIEs and accordingly, is not attributable to Pagaya Shareholders. These improvements were partially offset by a $7.6 million increase in loss (net of gain) from sales of certain investments in the current period.
Previous wording
Income tax expense for the three months ended June 30, 2025 decreased $9.5 million, compared to the same period in 2024. The decrease was primarily driven by a decrease in discrete tax expenses during the three months ended June 30, 2025.
Current wording
Income tax expense for the nine months ended September 30, 2025 decreased $20.8 million, compared to the same period in 2024. The decrease was primarily driven by a decrease in discrete tax expenses during the nine months ended September 30, 2025.
Previous wording
Net loss attributable to noncontrolling interests for the six months ended June 30, 2025 decreased by $12.8 million, or 70%, compared to the same period in 2024. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings. This amount represented the net loss of the consolidated VIEs to which we had no economic right and was the result of a lower credit-related impairment loss of $12.7 million on the risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Other Expense, Net.”
Current wording
Net loss attributable to noncontrolling interests for the nine months ended September 30, 2025 decreased by $20.3 million, or 81%, compared to the same period in 2024. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings. This amount represented the net loss of the consolidated VIEs to which we had no economic right and was the result of a lower credit-related impairment loss of $19.6 million on the risk retention holdings. For further information, see “—Total Revenue and Other Income” and “—Gains and (losses) on Investments in Loans and Securities.”
Previous wording
FRLPC, FRLPC %, Adjusted Net Income, and Adjusted EBITDA for the three and six months ended June 30, 2025 and 2024 are summarized below ($ in thousands):
Current wording
FRLPC, FRLPC %, Adjusted Net Income, and Adjusted EBITDA for the three and nine months ended September 30, 2025 and 2024 are summarized below ($ in thousands):
Previous wording
Adjusted Net Income is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions. Adjusted EBITDA is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions, interest expense, depreciation expense, and provision (and benefit from) for income taxes. These items are excluded from our Adjusted Net Income and Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items is unpredictable, is not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful.
Current wording
Adjusted Net Income is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions and other one-time expenses. Adjusted EBITDA is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions and other one-time expenses, interest expense, depreciation expense, and provision (and benefit from) for income taxes. These items are excluded from our Adjusted Net Income and Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items is unpredictable, is not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful.
Previous wording
As of June 30, 2025 and December 31, 2024, the principal sources of liquidity were cash, cash equivalents, current and non-current restricted cash of $242.0 million and $226.5 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.
Current wording
As of September 30, 2025 and December 31, 2024, the principal sources of liquidity were cash and cash equivalents, and restricted cash and cash equivalents of $264.8 million and $226.5 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 credit facility (see further description of the 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 “Shelf Registration Statement” and “Senior Note Issuance,” 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
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 borrowing, including repurchase agreements. We may also raise additional capital, including through borrowings (see further description of the credit facility below in the section titled “2025 Revolving Credit Facility”) or through the sale or issuance of equity or debt securities, as described below in the sections titled “Shelf Registration Statement” and “Senior Notes,” 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 borrowing, 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 August 6, 2025, the price of our Class A Ordinary Shares was $31.36 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” in our Annual Report on Form 10-K, which was filed with the SEC on March 12, 2025.
Current wording
As of November 7, 2025, the price of our Class A Ordinary Shares was $24.45 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” in our Annual Report on Form 10-K, which was filed with the SEC on March 12, 2025.
Previous wording
In connection with asset-backed securitizations, we sponsor and establish securitization vehicles to purchase loans originated by our Partners. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. To comply with risk retention regulatory requirements, we retain at least 5% of the securities issued by securitization vehicles and may choose to hold more than 5% depending on many factors. This 5% risk retention is determined based on the fair value of the securities under US GAAP at the time of closing. In ordinary course of business, we enter into certain financing arrangements to finance our risk retention balance in certain notes and securities retained from securitization transactions. From time to time, the Company makes cash deposits that serve to collateralize guarantees for related transactions, included in restricted cash on the consolidated balance sheets. For further information, see Note 4 and Note 5, respectively, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
Current wording
In connection with asset-backed securitizations, we sponsor and establish securitization vehicles to purchase loans originated by our Partners. Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria. To comply with risk retention regulatory requirements, we retain at least 5% of the securities issued by securitization vehicles and may choose to hold more than 5% depending on many factors. This 5% risk retention is determined based on the fair value of the securities under US GAAP at the time of closing. In ordinary course of business, we enter into certain financing arrangements to finance our risk retention balance in certain notes and securities retained from securitization transactions. From time to time, the Company makes cash deposits that serve to collateralize guarantees for related transactions, included in restricted cash and cash equivalents on the consolidated balance sheets. For further information, see Note 4 and Note 5, respectively, to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report.
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 June 30, 2025, we had 524 employees compared to 591 on June 30, 2024. During the the first and second quarters 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.
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 September 30, 2025, we had 531 employees compared to 534 on September 30, 2024. During the first and second quarters 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 six months ended June 30, 2025 was $91.8 million, an increase of $64.8 million from net cash provided by operating activities of $27.0 million for the same period in 2024. This reflects our net income including noncontrolling interests of $19.1 million, adjusted for non-cash charges of $103.8 million, and net cash outflows of $31.1 million from changes in our operating assets net of operating liabilities.
Current wording
Net cash provided by operating activities for the nine months ended September 30, 2025 was $158.8 million, an increase of $138.9 million from net cash provided by operating activities of $19.9 million for the same period in 2024. This reflects our net income including noncontrolling interests of $42.3 million, adjusted for non-cash charges of $179.6 million, and net cash outflows of $63.2 million from changes in our operating assets and liabilities.
Previous wording
Non-cash charges during six months ended June 30, 2025 primarily consisted of (1) impairment losses on investments in loans and securities, which decreased by $25.4 million compared to the same period in 2024, 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, of which $8.7 million is not attributable to Pagaya, but rather attributable to the VIEs noncontrolling interests, (2) share-based compensation, which decreased by $2.1 million compared to the same period in 2024,, (3) depreciation and amortization, which increased by $2.0 million compared to the same period in 2024, primarily from capitalized software, and (4)
Current wording
Non-cash charges during nine months ended September 30, 2025 primarily consisted of (1) impairment losses on investments in loans and securities, which decreased by $92.0 million compared to the same period in 2024, primarily 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, as well as fair value option gains from ABS resecuritizations at lower interest rates during the current period, of which $9.7 million is not attributable to Pagaya, but rather attributable to the VIEs noncontrolling interests, (2) share-based compensation, which decreased by $0.9 million compared to the same period in 2024, (3) depreciation and amortization, which increased by $2.5 million compared to the same period in 2024, primarily from capitalized software, and (4) fair value adjustment to warrant liability, which increased by $6.8 million compared to the same period in 2024, 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 decreased by $43.2 million to net cash outflows of $31.1 million for the six months ended June 30, 2025 compared to net cash inflows of $12.1 million for the same period in 2024.
Current wording
Our net cash flows resulting from changes in operating assets and liabilities decreased by $37.7 million to net cash outflows of $63.2 million for the nine months ended September 30, 2025 compared to net cash outflows of $25.5 million for the same period in 2024.
Showing the first 40 of 52 pairs. Open the source sections for the rest.
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
Net Income (Loss) Attributable to Noncontrolling Interests
Current report — wording carried from elsewhere
Net Income (Loss) Attributable to Noncontrolling Interests
Current report — wording carried from elsewhere
The Company intends to use the net proceeds from the Notes to repay higher-cost debt and reduce interest expense, with the remainder allocated for general corporate purposes.
Current report — wording carried from elsewhere
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.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
We expect economic cycles to affect our financial performance and related metrics. Macroeconomic conditions, including persistent inflation, elevated interest rates, supply chain constraints, geopolitical tensions, climate-related disruptions, and evolving global conflicts, may affect consumer demand for financial products, our Partners’ ability to generate and convert customer application volume, and the availability and cost of funding from investors through our Financing Vehicles. The war in
Previous report — wording carried elsewhere
Net Income Attributable to Noncontrolling Interests
Previous report — wording carried elsewhere
Income tax expense for the six months ended June 30, 2025 decreased $17.1 million, compared to the same period in 2024. The decrease was primarily driven by a decrease in discrete tax expenses during the six months ended June 30, 2025.
Previous report — wording carried elsewhere
Net Loss Attributable to Noncontrolling Interests
Previous report — wording carried elsewhere
fair value adjustment to warrant liability, which increased by $3.1 million compared to the same period in 2024, driven by changes in the market price of our Class A Ordinary Shares.