Pagaya Technologies Ltd.
For the period ended Sep 30, 2026. Filed Nov 2, 2026.
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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, 2026 · Filed Nov 2, 2026
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 2026-06-30; filed 2026-07-30.
0001883085-26-000058
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-02.
0001883085-26-000066
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 166 previous paragraphs and 167 current paragraphs.
99 unchanged; 53 reworded; 11 added; 13 removed; 1 previous and 4 current paragraphs rearranged.
Tables are not compared: 30 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 (11)
Current report
Revenue and Other Income
Current report
Net (Loss) Income Attributable to Noncontrolling Interests
Current report
Sales and marketing costs for the three months ended September 30, 2026 decreased by $4.9 million, or 34%, to $9.5 million, compared to $14.5 million for the three months ended September 30, 2025. The decrease was primarily driven by a $4.1 million decrease in compensation expenses, including share-based compensation, due to lower sales and marketing headcount.
Current report
General and administrative costs for the three months ended September 30, 2026 decreased by $1.6 million, or 4%, to $35.4 million, compared to $36.9 million for the three months ended September 30, 2025. The decrease was primarily driven by a $1.8 million decrease in compensation expenses, including share-based compensation, from lower general and administrative headcount, partially offset by a $0.2 million increase in server cloud expenses.
Current report
Other expense, net for the three months ended September 30, 2026 decreased by $3.8 million, or 14%, to $23.6 million, compared to $27.4 million for the three months ended September 30, 2025. The decrease was primarily driven by a $5.5 million favorable change in fair value of warrant liability, partially offset by a $1.2 million increase in asset reserves compared to the prior-year period.
Current report
Gain (loss) on extinguishment of debt for the three months ended September 30, 2026 was $0 million, compared to a loss of $25.0 million for the three months ended September 30, 2025. The variance was primarily driven by the $25.0 million loss recognized in the prior-year period associated with the write-off of deferred issuance costs and early prepayment penalties from the full repayment of the outstanding principal balance under the Credit Agreement and secured borrowings, whereas no repurchases or early extinguishments of outstanding debt occurred during the three months ended September 30, 2026, resulting in no gain or loss recognized during the current period.
Current report
Net (Loss) Income Attributable to Noncontrolling Interests
Current report
Comparison of Nine Months Ended September 30, 2026 and 2025
Current report
Warehouse Facility
Current report
In September 2026 we entered into a $0.7 billion variable funding note warehouse facility. This Financing Vehicle will acquire eligible Partner-originated loans which are financed primarily through senior notes purchased by unaffiliated investors. This VFN trust is not consolidated on our balance sheet. Our related liquidity needs primarily relate to funding and carrying the residual certificates. Senior note borrowings are obligations of the applicable trust and are non-recourse to us, other than limited contractual support obligations. Our funding requirement depends on collateral eligibility, advance rates, concentration limits and other customary borrowing conditions. For additional information, see Note 5 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
Current report
The year-over-year increase in financing cash flows was primarily driven by an increase in net proceeds from secured borrowings and revolving credit facilities and lower borrowings repayments, partially offset by an absence of proceeds from long-term debt. Repayments of long-term debt decreased by $338.2 million to $9.5 million for 2026 from $347.6 million in 2025, and payments on secured borrowings decreased by $104.7 million to $206.1 million from $310.8 million. Additionally, proceeds from secured borrowings increased by $61.1 million, and the Company received net proceeds of $25.0 million under its revolving credit facility during 2026, with no comparable borrowings in 2025. These favorable impacts were partially offset by the absence of $500.0 million in proceeds from long-term debt received in 2025. These proceeds were a result of the Company’s ongoing strategy to optimize its capital structure by reducing higher-cost debt and extending debt maturities.
Removed paragraphs (13)
Previous report
Revenue
Previous report
Income Tax (Benefit) Expense
Previous report
(1) Prior period amounts have been reclassified to conform to the current period’s presentation.
Previous report
Sales and marketing costs for the three months ended June 30, 2026 decreased by $9.6 million, or 49%, to $10.1 million, compared to $19.7 million for the three months ended June 30, 2025. The decrease was primarily driven by a $10.1 million decrease in compensation expenses, including shared-based compensation, which was partially offset by a $0.3 million increase in amortization of intangible assets.
Previous report
General and administrative costs for the three months ended June 30, 2026 decreased by $5.3 million, or 13%, to $35.1 million, compared to $40.3 million for the three months ended June 30, 2025. Excluding the impact of one-time item of $2.4 million in the prior year period, general and administrative expenses decreased by $2.8 million due to a $2.2 million decrease in share-based compensation and a $0.4 million decrease in miscellaneous expenses.
Previous report
Gain from extinguishment of debt for the three months ended June 30, 2026 was $0.7 million, compared to a loss of $0.5 million for the three months ended June 30, 2025. The $0.7 million gain resulted from the repurchase of $3.8 million of the outstanding 2030 Notes at a price equal to 78.5% of the principal amount during the current period.
Previous report
Income Tax (Benefit) Expense
Previous report
Comparison of Six Months Ended June 30, 2026 and 2025
Previous report
Other expense, net for the six months ended June 30, 2026 remained relatively flat compared to the six months ended June 30, 2025. Favorable items included lower interest expenses of $4.9 million and a benefit of $1.2 million from foreign currency exchange adjustment. These items were offset by the absence of a $5.4 million favorable adjustment on the contingent liability associated with the Theorem acquisition recorded in the prior year period.
Previous report
Income Tax Expense
Previous report
Shelf Registration Statement
Previous report
On October 4, 2023, we filed a shelf registration statement on Form F-3 (the “Shelf Registration”) with the SEC that was declared effective on October 16, 2023. Under this Shelf Registration, we may, from time to time, offer and sell in one or more offerings Class A Ordinary Shares, various series of debt securities and/or warrants to purchase any of such securities, either individually or in combination with any of these securities, up to an aggregate amount of $500 million.
Previous report
The year-over-year decrease in financing cash flows was primarily driven by lower secured borrowing proceeds of $185.2 million in the current period compared to $244.9 million in the prior year period, as well as $9.5 million of 2030 Notes repurchases and $9.8 million of higher distributions to noncontrolling interests in the current period. These items were partially offset by a $29.4 million decrease in secured borrowing repayments, which declined from $156.9 million in the prior year period to $127.5 million in the current period.
Reworded paragraphs (53)
Previous wording
Capital markets execution and contract fees are primarily earned from investors. Multiple funding channels are utilized to enable the purchase of network assets from our Partners, such as asset backed securitizations and forward flow arrangements. Capital markets execution fees are primarily earned from the market pricing of ABS transactions, as well as upon the execution of forward flow transactions, while contract fees are management, performance and similar fees.
Current wording
Capital markets execution and contract fees are primarily earned from investors. Multiple funding channels are utilized to enable the purchase of personal loans, auto loans, and point-of-sale loans from our Partners, such as asset backed securitizations and forward flow arrangements. Capital markets execution fees are primarily earned from the market pricing of ABS transactions, as well as upon the execution of forward flow transactions, while contract fees are management, performance and similar fees.
Previous wording
We incur costs when Network Volume is acquired by the Financing Vehicles. These costs, which we refer to as ‘‘Production Costs,’’ compensate our Partners for acquiring and originating assets. Accordingly, the amount and growth of our Production Costs are highly correlated to Network Volume. An important operating metric to evaluate the success of our economic model, therefore, is FRLPC, or Fee Revenue Less Production Costs. FRLPC is a not calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). See the section below entitled “Reconciliation of Non-GAAP Financial Measures” for a description and reconciliation of this measure to the most directly comparable GAAP measure.
Current wording
We incur costs when Network Volume is acquired by the Financing Vehicles. These costs, which we refer to as ‘‘Production Costs,’’ compensate our Partners for acquiring and originating assets. Accordingly, the amount and growth of our Production Costs are highly correlated to Network Volume. An important operating metric to evaluate the success of our economic model, therefore, is FRLPC, or Fee Revenue Less Production Costs. FRLPC is not calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”). See the section below entitled “Reconciliation of Non-GAAP Financial Measures” for a description and reconciliation of this measure to the most directly comparable GAAP measure.
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 and products, 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 $4.2 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 and products, 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 $4.6 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. For the six months ended June 30, 2026 and 2025, our top 5 investors collectively accounted for approximately 44% and 52%, respectively, of our total funding.
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. For the nine months ended
Previous wording
Macroeconomic pressures, including sustained high interest rates and inflation, continue to shape our operating environment. Central banks, including the Federal Reserve, have maintained elevated rates into early 2026 to combat inflationary trends, increasing borrowing costs and potentially straining borrowers’ ability to service debt. This could lead to higher delinquencies, defaults, and charge-offs, reducing investor returns and dampening demand for assets generated on our platform. Inflation, though moderating from its 2022-2023 peak, remains above historical norms, driving up operating costs such as employee compensation, financing expenses, and technology investments. Meanwhile, the elevated risk-free rate environment has shifted investor preferences, with some favoring safer assets over consumer credit. While our ability to raise funding remains intact, the cost of capital has risen, necessitating adjustments in conversion ratios to meet investor return expectations. Adverse developments in the financial sector, such as regional bank stresses, liquidity concerns, or prolonged U.S. federal debt ceiling debates, could further complicate our operating landscape. Should these events escalate into systemic liquidity issues, they could impair our Partners’ and counterparties’ ability to meet obligations, disrupt funding flows, or destabilize financial markets, adversely affecting our performance. Similarly, ongoing trade tensions, particularly between the U.S. and China, and potential tariff escalations could introduce additional uncertainty. Economic downturns or prolonged uncertainty may pressure the performance of assets acquired by Financing Vehicles from our network.
Current wording
Macroeconomic pressures, including sustained high interest rates and inflation, continue to shape our operating environment. Central banks, including the Federal Reserve, have slightly raised interest rates during the third quarter of 2026 to combat inflationary trends, increasing borrowing costs and potentially straining borrowers’ ability to service debt. This could lead to higher delinquencies, defaults, and charge-offs, reducing investor returns and dampening demand for assets generated on our platform. Inflation in the U.S., though moderating from its 2022-2023 peak, remains above historical norms, driving up operating costs such as employee compensation, financing expenses, and technology investments. Meanwhile, the elevated risk-free rate environment has shifted investor preferences, with some favoring safer assets over consumer credit. While our ability to raise funding remains intact, the cost of capital has risen, necessitating adjustments in conversion ratios to meet investor return expectations. Adverse developments in the financial sector, such as regional bank stresses, liquidity concerns, or prolonged U.S. federal debt ceiling debates, could further complicate our operating landscape. Should these events escalate into systemic liquidity issues, they could impair our Partners’ and counterparties’ ability to meet obligations, disrupt funding flows, or destabilize financial markets, adversely affecting our performance. Similarly, ongoing trade tensions, particularly between the U.S. and China, and potential tariff escalations could introduce additional uncertainty. Economic downturns or prolonged uncertainty may pressure the performance of assets acquired by Financing Vehicles from our network.
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, other measures under U.S. GAAP, and certain non-GAAP financial measures (see the section below entitled “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, 2026 and 2025:
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, other measures under U.S. GAAP, and certain non-GAAP financial measures (see the section below entitled “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, 2026 and 2025:
Previous wording
We generate revenue from network AI fees, contract fees, interest income and investment income. Network AI fees and contract fees are presented together as Revenue from fees in the consolidated financial statements. Revenue from fees is recognized after applying the five-step model consistent with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Consumers” (“ASC 606”). Revenue from fees is inclusive of network AI fees and contract fees.
Current wording
We generate revenue from network AI fees, contract fees, interest income and investment income. Network AI fees and contract fees are presented together as Revenue from fees in the unaudited condensed consolidated financial statements. Revenue from fees is recognized after applying the five-step model consistent with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers” (“ASC 606”). Revenue from fees is inclusive of network AI fees and contract fees.
Previous wording
Network AI fees. Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. We earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume. Multiple funding channels are used to enable the purchase of network assets from our Partners, such as ABS and forward flow arrangements. Capital markets execution fees are earned from the market pricing of ABS transactions, as well as upon the execution of forward flow transactions.
Current wording
Network AI fees. Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. We earn AI integration fees for the creation and delivery of the loans that comprise our Network Volume. Multiple funding channels are used to enable the purchase of personal loans, auto loans, and point-of-sale loans from our Partners, such as ABS and forward flow arrangements. Capital markets execution fees are earned from the market pricing of ABS transactions, as well as upon the execution of forward flow transactions.
Previous wording
We also earn interest income from our investments in loans and securities, including risk retention holdings and additional investments we may make in our sponsored asset backed securitizations, and our corporate cash balances. We earn investment income associated with our ownership interests in certain investment funds where we are the RIA and other proprietary investments.
Current wording
We also earn interest income from our investments in loans and securities, including risk retention holdings and additional investments we may make in our sponsored asset backed securitizations, and our corporate cash balances. We earn investment income or loss associated with our ownership interests in certain investment funds where we are the RIA and other proprietary investments.
Previous wording
Other expenses, net primarily consists of interest expenses from borrowings, allowance for doubtful accounts, changes in the fair value of warrant liabilities, and other non-recurring items.
Current wording
Other expenses, net primarily consist of interest expenses from borrowings, allowance for doubtful accounts, changes in the fair value of warrant liabilities, and other non-recurring items.
Previous wording
Net loss attributable to noncontrolling interests in the unaudited condensed consolidated statements of income is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net loss of these consolidated entities that is not attributable to us.
Current wording
Net (loss) income attributable to noncontrolling interests in the unaudited condensed consolidated statements of income is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net loss of these consolidated entities that is not attributable to us.
Previous wording
Total revenue and other income, increased by $60.6 million, or 19%, to $387.0 million for the three months ended June 30, 2026, compared to $326.4 million for the three months ended June 30, 2025. The increase was primarily driven by an increase in revenue from fees and interest income.
Current wording
Total revenue and other income, increased by $40.3 million, or 12%, to $390.5 million for the three months ended September 30, 2026, compared to $350.2 million for the three months ended September 30, 2025. The increase was primarily driven by an increase in revenue from fees and interest income.
Previous wording
Revenue from fees for the three months ended June 30, 2026 increased by $47.9 million, or 15%, to $365.6 million, compared to $317.7 million for the three months ended June 30, 2025. The increase was primarily due to a $32.5 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, to $318.4 million for the three months ended June 30, 2026 from $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 growth in Network Volume, which increased by 33% to $3.5 billion for the three months ended June 30, 2026 from $2.6 billion for the three months ended June 30, 2025. Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $15.5 million to $47.2 million for the three months ended June 30, 2026 from $31.8 million for the three months ended June 30, 2025, reflecting an increase in the assets held by securitization vehicles driven by continued business growth.
Current wording
Revenue from fees for the three months ended September 30, 2026 increased by $22.3 million, or 7%, to $362.2 million, compared to $339.9 million for the three months ended September 30, 2025. The increase was primarily due to a $14.9 million increase in contract fees, comprised of administration and management fees, to $50.1 million for the three months ended September 30, 2026 from $35.3 million for the three months ended September 30, 2025. The increase in contract fees was primarily driven by an increase in the assets held by securitization vehicles driven by continued business growth. Network AI fees, comprised of AI integration fees and capital markets execution fees, increased by $7.4 million to $312.0 million for the three months ended September 30, 2026 from $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 growth in Network Volume, which increased by 29% to $3.6 billion for the three months ended September 30, 2026 from $2.8 billion for the three months ended September 30, 2025.
Previous wording
Interest income for the three months ended June 30, 2026 increased by $11.5 million, or 107%, to $22.2 million compared to $10.7 million for the three months ended June 30, 2025. The increase in interest income was directly related to our investments in loans and securities, including 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 Loss Attributable to Noncontrolling Interests.” The increase was primarily the result of a higher average balance in investments in loans and securities, as well as changes in the structure and composition of our asset portfolio toward a greater proportion of cash-yielding senior note tranches of our sponsored securitization transactions.
Current wording
Interest income for the three months ended September 30, 2026 increased by $14.0 million, or 94%, to $29.0 million compared to $14.9 million for the three months ended September 30, 2025. The increase in interest income was directly related to our investments in loans and securities, including 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 Loss Attributable to Noncontrolling Interests.” The increase was primarily the result of a higher average balance in investments in loans and securities, as well as changes in the structure and composition of our asset portfolio toward a greater proportion of cash-yielding senior note tranches of our sponsored securitization transactions.
Previous wording
Investment loss for the three months ended June 30, 2026 decreased by $1.3 million to $0.8 million, compared to $2.1 million for the three months ended June 30, 2025, reflecting a less unfavorable impact from the change in valuation of certain proprietary investments.
Current wording
Investment loss, net for the three months ended September 30, 2026 decreased by $4.0 million to $0.6 million, compared to $4.6 million for the three months ended September 30, 2025, reflecting a less unfavorable impact from the change in valuation of certain proprietary investments.
Previous wording
Production costs for the three months ended June 30, 2026 increased by $27.3 million, or 14%, to $218.7 million, compared to $191.5 million for the three months ended June 30, 2025. The increase was due to growth in Network Volume, which increased by 33% to $3.5 billion for the three months ended June 30, 2026 from $2.6 billion for the three months ended June 30, 2025, attributable to continued business growth as well as shifts in the composition of the asset classes and products comprising our Network Volume.
Current wording
Production costs for the three months ended September 30, 2026 increased by $15.1 million, or 8%, to $215.7 million, compared to $200.6 million for the three months ended September 30, 2025. The increase was due to growth in Network Volume, which increased by 29% to $3.6 billion for the three months ended September 30, 2026 from $2.8 billion for the three months ended September 30, 2025, attributable to continued business growth as well as shifts in the composition of the asset classes and products comprising our Network Volume.
Previous wording
Technology, data and product development costs for the three months ended June 30, 2026 decreased by $1.1 million, or 6%, to $17.3 million, compared to $18.5 million for the three months ended June 30, 2025. The decrease was driven by a $3.3 million decrease in depreciation expenses, net of capitalization (as explained below). The reduction in depreciation expense was primarily due to an increase in the estimated useful life of internal-use software effective January 1, 2026. This decrease was partially offset by a $1.4 million increase in compensation expenses primarily driven by the appreciation of the Israeli Shekel against the U.S. Dollar.
Current wording
Technology, data and product development costs for the three months ended September 30, 2026 decreased by $0.9 million, or 5%, to $17.4 million, compared to $18.2 million for the three months ended September 30, 2025. The decrease was driven by a $3.2 million decrease in depreciation expenses, net of capitalization. The reduction in depreciation expense was primarily due to an increase in the estimated useful life of internal-use software effective January 1, 2026. This decrease was partially offset by a $1.0 million increase in compensation expenses primarily driven by the appreciation of the Israeli Shekel against the U.S. Dollar and a $0.7 million increase in consultant expenses.
Previous wording
During the three months ended June 30, 2026 and 2025, we capitalized $3.9 million and $4.0 million of software development costs, respectively. Depreciation expense was $2.6 million and $5.9 million during the three months ended June 30, 2026 and 2025, respectively.
Current wording
During the three months ended September 30, 2026 and 2025, we capitalized $3.8 million and $3.9 million of software development costs, respectively. Depreciation expense was $2.5 million and $5.8 million during the three months ended September 30, 2026 and 2025, respectively.
Previous wording
Losses on investments in loans and securities for the three months ended June 30, 2026 increased by $28.1 million, or 197% to $42.3 million, compared to $14.3 million for the three months ended June 30, 2025. The increase was primarily driven by an increase in credit-related impairment losses on ABS securities. Of the credit-related impairment loss in the current period, $4.3 million is attributable to the noncontrolling interests in certain VIEs and accordingly does not impact net income attributable to Pagaya shareholders.
Current wording
Losses on investments in loans and securities for the three months ended September 30, 2026 increased by $23.8 million, or 122% to $43.4 million, compared to $19.6 million for the three months ended September 30, 2025. The increase was primarily driven by an increase in credit-related impairment losses on ABS securities. Of the credit-related impairment loss in the current period, $6.5 million is attributable to the noncontrolling interests in certain VIEs and accordingly does not impact net income attributable to Pagaya shareholders.
Previous wording
Income tax benefit for the three months ended June 30, 2026 was $1.1 million, compared to income tax expense of $5.0 million for the three months ended June 30, 2025. The change was primarily attributable to a favorable change in uncertain tax positions and the utilization of net operating loss carryforwards.
Current wording
Income tax expense for the three months ended September 30, 2026 was $1.1 million, compared to income tax benefit of $15.2 million for the three months ended September 30, 2025. The change was primarily attributable to an increase in pre-tax income and change in uncertain tax positions, specifically a net decrease in 2025 compared to an increase in 2026.
Previous wording
Net loss attributable to noncontrolling interests for the three months ended June 30, 2026 increased by $2.8 million to $2.9 million, compared to $0.1 million for the three months ended June 30, 2025. The increase was driven by the net loss generated by our consolidated VIEs associated with investments in asset backed securitizations. This amount represented the net loss of the consolidated VIEs held by other investors in the VIEs for which we have no economic rights. This amount was primarily driven by $4.3 million of credit-related impairment losses in the current period. For further information regarding credit-related impairment losses, see “—Total Revenue and Other Income” and “—Gains and (Losses) on Investments in Loans and Securities.”
Current wording
Net loss attributable to noncontrolling interests for the three months ended September 30, 2026 increased by $6.0 million to $5.2 million, compared to $0.7 million net income attributable noncontrolling interests for the three months ended September 30, 2025. The increase was driven by the net loss generated by our consolidated VIEs associated with investments in asset backed securitizations. This amount represented the net loss of the consolidated VIEs held by other investors in the VIEs for which we have no economic exposure. This amount was primarily driven by $6.5 million of credit-related impairment losses in the current period. For further information regarding credit-related impairment losses, see “—Total Revenue and Other Income” and “—Gains and (Losses) on Investments in Loans and Securities.”
Previous wording
Total revenue and other income for the six months ended June 30, 2026 increased by $88.6 million, or 14%, to $705.0 million, compared to $616.4 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in revenue from fees and interest income.
Current wording
Total revenue and other income for the nine months ended September 30, 2026 increased by $128.9 million, or 13%, to $1,095.5 million, compared to $966.6 million for the nine months ended September 30, 2025. The increase was primarily driven by an increase in revenue from fees and interest income.
Previous wording
Revenue from fees for the six months ended June 30, 2026 increased by $64.2 million, or 11%, to $664.6 million, compared to $600.4 million for the six months ended June 30, 2025. The increase was primarily due to a $46.0 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, to $585.4 million for the six months ended June 30, 2026 from $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 22% to $6.2 billion for the six months ended June 30, 2026 from $5.0 billion for the six months ended June 30, 2025. Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $18.2 million to $79.3 million for the six months ended June 30, 2026 from $61.1 million for the six months ended June 30, 2025, reflecting an increase in the assets held by securitization vehicles driven by continued business growth.
Current wording
Revenue from fees for the nine months ended September 30, 2026 increased by $86.5 million, or 9%, to $1,026.8 million, compared to $940.3 million for the nine months ended September 30, 2025. The increase was primarily due to a $53.4 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, to $897.4 million for the nine months ended September 30, 2026 from $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 24% to $9.8 billion for the nine months ended September 30, 2026 from $7.9 billion for the nine months ended September 30, 2025. Contract fees, comprised of administration and management fees, performance fees, and servicing fees, increased by $33.0 million to $129.4 million for the nine months ended September 30, 2026 from $96.4 million for the nine months ended September 30, 2025, reflecting an increase in the quantity and value of loans held by securitization vehicles driven by continued business growth.
Previous wording
Interest income for the six months ended June 30, 2026 increased by $21.5 million, or 117%, to $39.9 million compared to $18.4 million for the six months ended June 30, 2025. The increase in interest income was directly related to our investments in loans and securities, including 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 Loss Attributable to Noncontrolling Interests.” The increase was primarily the result of a higher average balance in investments in loans and securities, as well as changes in the structure and composition of our asset portfolio toward a greater proportion of cash-yielding senior note tranches of our sponsored securitization transactions.
Current wording
Interest income for the nine months ended September 30, 2026 increased by $35.5 million, or 107%, to $68.8 million compared to $33.3 million for the nine months ended September 30, 2025. The increase in interest income was directly related to our investments in loans and securities, including 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 Loss Attributable to Noncontrolling Interests.” The increase was primarily the result of a higher average balance in investments in loans and securities, as well as changes in the structure and composition of our asset portfolio toward a greater proportion of cash-yielding senior note tranches of our sponsored securitization transactions.
Previous wording
Investment income for the six months ended June 30, 2026 was $0.5 million, compared to a loss of $2.4 million for the six months ended June 30, 2025, reflecting a favorable impact from the change in valuation of certain proprietary investments.
Current wording
Investment loss, net for the nine months ended September 30, 2026 decreased by $6.9 million to $0.1 million, compared to $7.1 million for the nine months ended September 30, 2025, reflecting a less unfavorable impact from the change in valuation of certain proprietary investments.
Previous wording
Production costs for the six months ended June 30, 2026 increased by $37.7 million, or 11%, to $396.3 million, compared to $358.5 million for the six months ended June 30, 2025. The increase was due to growth in the Network Volume, which increased by 22% to $6.2 billion for the six months ended June 30, 2026 from $5.0 billion for the six months ended June 30, 2025, attributable to continued business growth as well as shifts in the composition of the asset classes comprising our Network Volume.
Current wording
Production costs for the nine months ended September 30, 2026 increased by $52.9 million, or 9%, to $612.0 million, compared to $559.1 million for the nine months ended September 30, 2025. The increase was due to growth in the Network Volume, which increased by 24% to $9.8 billion for the nine months ended September 30, 2026 from $7.9 billion for the nine months ended
Previous wording
Technology, data and product development costs for the six months ended June 30, 2026 decreased by $4.6 million, or 12%, to $33.3 million, compared to $37.9 million for the six months ended June 30, 2025. The decrease was driven by a $6.5 million decrease in depreciation expenses, net of capitalization (as explained below). The reduction in depreciation expense was primarily due to an increase in the estimated useful life of certain internal-use software effective January 1, 2026. This decrease was partially offset by a $2.0 million increase in compensation expenses primarily driven by the appreciation of the Israeli Shekel against the U.S. Dollar.
Current wording
Technology, data and product development costs for the nine months ended September 30, 2026 decreased by $5.5 million, or 10%, to $50.6 million, compared to $56.1 million for the nine months ended September 30, 2025. The decrease was driven by a $9.7 million decrease in depreciation expenses, net of capitalization. The reduction in depreciation expense was primarily due to an increase in the estimated useful life of certain internal-use software effective January 1, 2026. This decrease was partially offset by a $3.0 million increase in compensation expenses primarily driven by the appreciation of the Israeli Shekel against the U.S. Dollar and a $0.9 million increase in consultant expenses.
Previous wording
During the six months ended June 30, 2026 and 2025, we capitalized $7.5 million and $8.4 million of software development costs, respectively. Depreciation expense was $4.7 million and $12.2 million during the six months ended June 30, 2026 and 2025, respectively.
Current wording
During the nine months ended September 30, 2026 and 2025, we capitalized $11.3 million and $12.4 million of software development costs, respectively. Depreciation expense was $7.3 million and $18.0 million during the nine months ended September 30, 2026 and 2025, respectively.
Previous wording
Sales and marketing costs for the six months ended June 30, 2026 decreased by $8.0 million, or 27%, to $21.2 million, compared to $29.3 million for the six months ended June 30, 2025. The decrease was primarily driven by a $9.3 million decrease in compensation expenses, including shared-based compensation, which was partially offset by a $0.6 million increase in amortization of intangible assets.
Current wording
Sales and marketing costs for the nine months ended September 30, 2026 decreased by $13.0 million, or 30%, to $30.7 million, compared to $43.7 million for the nine months ended September 30, 2025. The decrease was primarily driven by a $13.4 million decrease in compensation expenses, including share-based compensation, due to lower sales and marketing headcount, partially offset by a $0.6 million increase in amortization of intangible assets.
Previous wording
General and administrative costs for the six months ended June 30, 2026 decreased by $18.1 million, or 21%, to $68.4 million, compared to $86.5 million for the six months ended June 30, 2025. Excluding the impact of one-time item of $8.8 million in the prior year period, general and administrative expenses decreased by $9.3 million due to a $5.9 million decrease in compensation expenses, including share-based compensation, and a $2.5 million decrease in miscellaneous expenses.
Current wording
General and administrative costs for the nine months ended September 30, 2026 decreased by $19.7 million, or 16%, to $103.8 million, compared to $123.5 million for the nine months ended September 30, 2025. Excluding the impact of a one-time item of $8.8 million in the prior year period, general and administrative expenses decreased by $10.9 million due to a $7.8 million decrease in compensation expenses, including share-based compensation, from lower general and administrative headcounts, and a $3.1 million decrease in miscellaneous expenses.
Previous wording
Losses on investments in loans and securities for the six months ended June 30, 2026 increased by $37.0 million, or 86%, to $80.3 million, compared to $43.3 million for the six months ended June 30, 2025. The increase was primarily driven by an increase in credit-related impairment losses on ABS securities. Of the credit-related impairment loss in the current period, $6.0 million is attributable to the noncontrolling interests in certain VIEs and accordingly does not impact net income attributable to Pagaya shareholders.
Current wording
Losses on investments in loans and securities for the nine months ended September 30, 2026 increased by $60.9 million, or 97%, to $123.7 million, compared to $62.8 million for the nine months ended September 30, 2025. The increase was primarily driven by an increase in credit-related impairment losses on ABS securities. Of the credit-related impairment loss in the current period,
Previous wording
Other expense, net for the three months ended June 30, 2026 increased by $2.8 million, or 14%, to $23.0 million, compared to $20.2 million for the three months ended June 30, 2025. The increase was primarily driven by a $3.5 million of a reserve against certain assets during the current period and the absence of a $2.2 million favorable adjustment on the contingent liability associated with the Theorem acquisition recorded in the prior year period. These increases were partially offset by lower interest expenses of $3.4 million.
Current wording
Other expense, net for the nine months ended September 30, 2026 decreased by $4.2 million, or 6%, to $62.0 million, compared to $66.3 million for the nine months ended September 30, 2025. The decrease was primarily driven by a $4.3 million reduction in interest expenses, a $0.9 million of favorable foreign currency exchange adjustments, a $0.6 million increase in sublease income, and a $0.4 million decrease in fee receivables write-offs. These favorable impacts were partially offset by the absence of a $5.8 million favorable adjustment on the contingent liability associated with the Theorem acquisition recorded in the prior year period.
Previous wording
Gain from extinguishment of debt for the six months ended June 30, 2026 was $1.5 million, compared to a loss of $0.5 million for the six months ended June 30, 2025. The $1.5 million gain resulted from the repurchase of $7.4 million and $3.8 million of the outstanding 2030 Notes at a price equal to 87.3% and 78.5% of the principal amount, respectively, during the current period.
Current wording
Gain from extinguishment of debt for the nine months ended September 30, 2026 was $1.5 million, compared to a loss of $25.5 million for the nine months ended September 30, 2025. The $1.5 million gain resulted from the repurchase of $7.4 million and $3.8 million of the outstanding 2030 Notes at a price equal to 87.3% and 78.5% of the principal amount in February 2026 and in May 2026, respectively. Whereas, a $25.5 million loss recognized in the prior-year period associated with the write-off of deferred issuance costs and early prepayment penalties from the full repayment of the outstanding principal balance under the Credit Agreement and secured borrowings.
Previous wording
Income tax expense for the six months ended June 30, 2026 decreased by $0.4 million, or 15%, to $2.1 million, compared to $2.4 million for the six months ended June 30, 2025. The decrease was primarily attributable to changes in uncertain tax positions and the utilization of net operating loss carryforwards.
Current wording
Income tax expense for the nine months ended September 30, 2026 was $3.1 million, compared to income tax benefit of $12.8 million for the nine months ended September 30, 2025. The change was primarily attributable to an increase in pre-tax income and change in uncertain tax positions, specifically a net decrease in 2025 compared to an increase in 2026.
Previous wording
Net loss attributable to noncontrolling interests for the six months ended June 30, 2026 decreased by $2.0 million, or 37%, to $3.5 million, compared to $5.5 million for the six months ended June 30, 2025. The decrease was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings, which represents the net loss of the consolidated VIEs held by other investors in the VIEs for which we have no economic rights. This amount was primarily driven by a $6.0 million of credit-related impairment loss on the risk retention holdings during the current period. For further information regarding credit-related impairment losses, see “—Total Revenue and Other Income” and “—Gains and (Losses) on Investments in Loans and Securities.”
Current wording
Net loss attributable to noncontrolling interests for the nine months ended September 30, 2026 increased by $4.0 million, or 83%, to $8.7 million, compared to $4.8 million for the nine months ended September 30, 2025. The increase was driven by the net loss generated by our consolidated VIEs associated with our risk retention holdings, which represents the net loss of the consolidated VIEs held by other investors in the VIEs for which we have no economic exposure. This amount was primarily driven by $15.2 million of credit-related impairment losses on the risk retention holdings during the current period. For further information regarding credit-related impairment losses, see “—Total Revenue and Other Income” and “—Gains and (Losses) on Investments in Loans and Securities.”
Previous wording
FRLPC, FRLPC %, Adjusted Net Income, and Adjusted EBITDA for the three and six months ended June 30, 2026 and 2025 are summarized below ($ in thousands):
Current wording
FRLPC, FRLPC %, Adjusted Net Income, and Adjusted EBITDA for the three and nine months ended September 30, 2026 and 2025 are summarized below ($ in thousands):
Previous wording
As of June 30, 2026 and December 31, 2025, the principal sources of liquidity were cash and cash equivalents, and restricted cash and cash equivalents of $304.4 million and $288.3 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 in this Quarterly Report on 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, 2026 and December 31, 2025, the principal sources of liquidity were cash and cash equivalents, and restricted cash and cash equivalents of $305.6 million and $288.3 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 in this Quarterly Report on 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 borrowing, including repurchase agreements. We may also raise additional capital, including through borrowings, as described in the section below 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.” 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 are not guaranteed and will be dependent on not only macro-economic factors, but also on factors such as our 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, as described in the section below titled “2025 Revolving Credit Facility” and “Senior Notes” or through the sale or issuance of equity or debt securities. 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 are not guaranteed and will be dependent on not only macro-economic factors, but also on factors such as our results of our operations and the returns generated by loans originated with the assistance of our AI technology.
Previous wording
As of July 29, 2026, the price of our Class A Ordinary Shares was $16.19 per share. We believe the likelihood that warrant holders will exercise their public warrants that were issued 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 that were issued in the EJFA Merger. To the extent the public warrants are exercised by warrant holders, ownership interests 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.
Current wording
As of October 30, 2026, the price of our Class A Ordinary Shares was $19.23 per share. We believe the likelihood that warrant holders will exercise their public warrants that were issued 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 that were issued in the EJFA Merger. To the extent the public warrants are exercised by warrant holders, ownership interests 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.
Previous wording
As of June 30, 2026 and December 31, 2025, our total Risk Retention Holdings were $542.1 million and $504.3 million, and represented approximately 52% and 53% of total investments in loans and securities, respectively. As of June 30, 2026, our total Additional Investments were $498.0 million and $441.0 million, and represented approximately 48% and 47% of total investments in loans and securities, respectively. Total Additional Investments increased by $57.0 million as of June 30, 2026 compared to December 31, 2025.
Current wording
As of September 30, 2026 and December 31, 2025, our total Risk Retention Holdings were $510.9 million and $504.3 million, and represented approximately 46% and 53% of total investments in loans and securities, respectively. As of September 30, 2026 and December 31, 2025, our total Additional Investments were $590.0 million and $441.0 million, and represented approximately 54% and 47% of total investments in loans and securities, respectively. Total Additional Investments increased by $149.0 million as of September 30, 2026 compared to December 31, 2025.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
September 30, 2026 and 2025, our top 5 investors collectively accounted for approximately 41% and 53%, respectively, of our total funding.
Current report — wording carried from elsewhere
September 30, 2025, attributable to continued business growth as well as shifts in the composition of the asset classes comprising our Network Volume.
Current report — wording carried from elsewhere
$15.2 million is attributable to the noncontrolling interests in certain VIEs and accordingly does not impact net income attributable to Pagaya shareholders.
Current report — wording carried from elsewhere
Net Loss Attributable to Noncontrolling Interests
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
In July 2026, Pagaya Structured Products LLC, a wholly-owned subsidiary of the Company, entered into an Amendment to its the ALPF Facility with the lender, which increased the aggregate borrowing commitment from $65 million to $100 million. Pursuant to the amendment, the revolving period end date was extended from June 11, 2027, to July 16, 2028, and the scheduled maturity date was extended from December 11, 2027, to January 16, 2029. All other terms, including the interest rate, remained the same at the adjusted term SOFR (subject to a 1.00% floor) plus a margin of 1.9%.