Pagaya Technologies (PGY) 15 Feb 232022 Q4 Earnings call transcript

Good day, and welcome to the Pagaya Q4 and Full Year 2022 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded.

like of the Investor I'd Jency over time, Head John, Relations. this to call turn to At Thank you.

You may begin.

Thank you, year call. full quarter fourth and welcome XXXX to earnings Pagaya's and conference

are about and Pagaya; Kurlander, Chief business talk Officer Michael to Officer. today Chief Executive me and Joining results Gal Financial Krubiner, of our

accompanies the our the our Investor section prepared of earnings today's release, can find our of on You and site webcast investor.pagaya.com. at Web presentation that remarks, a replay Relations

based are on include and advantages will forward-looking to, and are products services conditions and uncertainties. statements today outlook, our macroeconomic current remarks forecasts performance. and our that and involve These Our expectations statements not competitive and business risks future strategy, financial future include, and but limited and

from as forward-looking Exchange Securities today's in Form most may by these X-K contemplated with cause could as results assumptions result well on future based statements to a made are our these statements. U.S. Any that information release to actual SEC. new different and and call this are we the these results on furnished recent Commission, statements update with that events. of undertake and as forward-looking no in Our differ make today as we obligation materially subsequent Factors press described those or of the as our filings

earnings available earnings on the site. call. the the most to are in posted Reconciliations and directly appendix measures the financial Relations Additionally, our on financial GAAP measures discussed Web which non-GAAP are be will in presentation, comparable Investor to release the

over call With turn to that, the me Gal. let

proposition year financial results. fourth joining and highlights us XXXX the discuss then and Mike an financials value to and our Today, year fourth infrastructure. quarter of network it you provide I all on business outlook. and to today hand our Thanks, CFO, discuss Kurlander, review I for discuss and XXXX, differentiated Jency. full to from quarter will update expansion and over operational model our will our our XXXX full Thank

your questions. take We will then

year billion and in network for our This revenue Xx company. and was of than achieved We million, was which total income an XX% $XXX growth XXXX. approximately We of incredible higher our the in was other of our volume, grew above and high volume XXXX grew year-over-year which XX% guidance. delivered $X.X end

cost markets higher of multiple funding, widening by rate Financial hikes interest highly volatile were driven spreads. in with

performance. near on to AI $X.X Our adjust EBITDA points year our consumer by cost quickly with capital, full we of Even delivered us relative XXXX. higher react of network powered enabled in model of and millions data significantly better million negative drive behavior adjusted to breakeven

grew in Our resiliency in of billion financials was to income Adjusted fourth Total the in EBITDA results revenue volume, year-over-year. XX% reflect and $X.X business. in other XX% million. Mike We more growing minutes. $XXX $X negative network our million. the discuss a our few quarter delivered will detail

This in still major how external We milestones conditions. agile learning expectations. to be achieved exceeded rapidly while has my shifting

progress significant a us company fuel we infrastructure. expanding XXXX, to the network future monetizing made and strategic ago. transitioned our different a successfully are were drive a our on In We we than giving company, to key expansion. public year objective, We

than services. industry We to across expertise raised leaders a evaluated management partners tech new of onboarded delivered line and both funding. a network applications and many results top added including We Visa, bench XXXX, creating in as decades record financial $X XXXX with compared and We auto more to to Klarna, top in team, billion XXXX, six lender. our our in three and twice

a Homes, transaction, completed business the Darwin solution. position offering elevating for to the We first ever our also I’m into taking proud future. of M&A to acquired end-to-end dislocation advantage current premier our our we SFR announce market

also received rental Moody's first AAA on single-family We from and DBRS securitization. our a rating

achievements, are XXXX momentum. strong we these a with entering With

seen past we is helping we The institutional a of million In our of million in testament assets partners grew a the infrastructure. billion our have three to providing for few from exceptional revenues over of access to years unique $XXX just to years, growth investors. $X in opportunities our the annually $XXX and the network business, originate strength investment

mission want over go more financial by opportunities is minutes our I BXBXC founded Pagaya fundamentals with to to model. few business accessible of take a the basic to platform, a a make innovating assistance originate and Pagaya who partner data technology. science. We or with with not servicer. legacy underwriting financial technology our AI the of with assets a institutions system is a lender

connect the time, want locking grow required And to employ investors or to cost before first unique in risk upfront model now we funding with better sourcing incremental by funding returns limited we return assets to At the thresholds. meet assets. promise enables optimization We institutional that exposure the who same of capital. partners these that investor of a

products our scalable, new infrastructure new The across as with opportunity Finally, trillions. onboard real consumer five products building with are positioned credit market the for business in getting diverse make estate our attributes and the partners, and we level we stronger addressable these is network channels. and an open new of believe time, in scale resilient We is growth. long-term

as billions model incredible in annually. five more powering products trillion real investors our across the has to through XX that the $X.X an network, behavior of financial inception, dollars of grow. country, application in data Since collecting facilitating by volume economy across assets come approximately We hundreds of make amount insights are we than consumer institutions smarter of our creation continuously

over is flow partners We that volume application see we see creation on you flow, two XX, by for flow can have Network driven investors. grows and consistently consistent from over network time. and factors; Slide assets. as value our been at rate to our the is partners which to converted Application time the able deliver application

as we by driven partners from auto. the as In year, XXXX, nearly new such grow flow growth prior and we saw products newer application versus XXX% scale

can can rate conversion rate. investor our or conversion to for credit evolve, conditions improve through retail asset macro facing our we optimize As market reduce returns. tighter When environments, liquidity more challenging conditions we

Our declined in QX we prior to a year resilient conversion the by XX% rate more shifted borrower to XXXX portfolio the archetype. as nearly compared

are Partners have network. $XXX of On value average, our creation in months join volume they of approximately Xx seeing generated new our network by that the channels between partners when partners XXXX, by platform. on network growth seen and million our immediately enabled XX and origination onboarding. was In are third

of consumer our broader partners of QX network Institutional three AI the XXXX real to at performance Slide great market. and relative XX, originated versus estate investors our and on we analytics from XXXX assets. insight enabled assets get On by one-stop-shop personal the months loan connected portfolio to to yielding high QX outperformance book. show credit duration our access show data-driven

our a quarter payment. ability several annual to Our Slide loan evolve. widening This deterioration wide. market cohorts adjust in to optimize to dynamically income, spot of a this across the fourth including credit show portfolio XX presentation. has of quickly We conditions our In personal XXXX, of we market comparable adapt returns an consistently and is result long benchmark. of on our outperformed borrower the several borrower the direct as reacted market in of term portfolio We example attributes, population the

only $XX,XXX loan following months. widened reflect As of duration in the in expiration of We to looking shorter-term of December compared of than were loans to that portion XX loans XX-month to January of the proportion income portfolio XXXX, with adjusted book seeking a greater of refinance to personal larger a annual XX% versus was approximately government borrowers our We XX% the significant the stimulus. saw XXXX. borrowers

exposure stability payments. Lastly, we improving to do borrowers Autopay not origination, opt reduced at consistency the who and of into

and now in launched of products, our give rental. the saw single-family is volume we personal two approximately on an loan. Let after $XXX grow of update in newer second to auto evaluated auto our have annually, seen We to product me XXXX. billion and the Xx level application largest product Auto XXXX shift

XX including plus top second have a auto quarter we who onboarded partners, in three auto of the U.S. We XXXX. lender

independent approximately helping to are We dealerships XX consumers partners, through and serve in franchised our XX,XXX connected all states. now them

many we with There disruption the SFR The million estimated XXXX, we opportunities believe power are approximately States, market. to We of significant truly technology. to AI the trillion. apply roughly the with and investment AI-driven an solution. lies value science in data XX recognizing in decision network cross for potential a $X the In of United landscape estate tech-first application apply made in SFR households real single-family our to a reshape the rental can

million property DoorDash. an leveraging our take SFR proposition by to generates data engine acquired consumer acquire their next and evolving to platform We insights offer by technology homes on unique and we AI by Homes, trends. Our to credit, nearly insights To leading select, powered these level, demographic Darwin a recently unique value XXX on founding economic investors two behalf. operate members of offering the led industry points

and with Pagaya’s operational combination AI of The network Darwin’s three proprietary things. software does data main core and technology

fully a party providers. participants, integrated investors all for solution tech-first service first, residents, creates third The including and

for a processing application later services the from full to of elevates process Second, the the spectrum app residents living to bills. payment with homely experience mobile offers that

the to incremental path network Third, excited new on investors. cross SFR. AI value. It's asset forward our enable to the in performance create our optimize of data-driven in research of decision of about example am I making spaces and behalf applicability another

SFR platform. of our the product capabilities stage, is the and is combined opportunity powered still I'm by While Pagaya early very confident a in in significant Darwin

business can the environments. deliver team dedication To reflect achievements our summarize, this through our of our of that hard and model year all and strength the work

Now it discuss outlook. financials our XXXX our over CFO, Kurlander, let to to me and hand Mike

our everyone. outlook. the results minutes the into strategy performance. metrics to focus next on Thank that had the key XXXX. grew to drive going discussing how you, revenue other spend Good end of Gal. XXXX XX% Total our a morning, $XXX exceeding few translates $X.X to We million, income grew with by XX% strong billion. a I'm Network year high our in and volume

production from grew of discuss grew up I'll for more markets business in our revenue gross of total more model in XX% offset business, which volatility. a XX% profit minutes. more a than this Revenue of as significant measure capital make our by Fee the XX% year-over-year. impact revenue, few fees, resiliency of less the depth costs, than

in investments growth. $X future Adjusted meaningful worsen our half of negative saw reflecting platform EBITDA million, was breakeven We our support second in to the financial near markets and XXXX.

on reflect could this. our results and focused fourth control remain we quarter we However, what

and by origination related more expenses volume, of at and partners. partners products newer are as a mature network our XX% than total was partners from year-over-year of products costs, which volume fees to and a by incurred our rate take from grew Production grew XX% reaching other pace record the XX% grew quarter. income increased in Network the revenue up and Revenue XX%, XX%. faster

We we a that would $X compensation, EBITDA was more exercise the to base compared of our operating the on cost rate excluding stock-based with also quarter normalized compared expenses, expense company. to being returned in run traded a year. Adjusted fourth fourth in compensation fixed quarter, of first note discipline stock-based publicly in quarter. flat roughly to I quarters two $XX of million our negative the prior million

profitability to to on an As us meaningful. achieve ability of EBITDA basis. BXBXC well our set ecosystem. sustainable this. delivering up is in we enter is The the Pagaya network and XXXX, our The a fundamentals we're connector business monetize focused model adjusted scale financial on

to application into to platform partners build a then as we connect we ultimately management, cost opportunity by partners rather having can demonstrated is the have flow, increasing ground a from grow Combined to these investors, clearly connecting forward and up existing profitability. scale monetization clear past consumer-facing those And not By that rapidly with have the we've but years. path discipline few significant.

components you revenue find XX diving presentation. of Slide into Now which the our of can deeper on earnings model, our

our is volume of revenue. network First, driver fee the critical

partners both fee have execution, comprised of up are take We network, of rate. capital revenue earned make AI which markets and investors. and our streams, sides AI integration, from our fees, combined fees contract three integration

from integration to of XX% middle assets. AI Pagaya to XX% fees utilize the their growing assets. obtain technology Pagaya’s unique as delivery in base. partners the exposure contribution their we total earning certain sourcing incremental fees network of related expand from on total creation, of sits and to Pagaya’s fees revenue, began grew diversified XXXX, for the Investors customer volume. earn Partners to In to these

Moving markets fees. capital to execution contract and on

earned network for pricing management of to securitization. We channels as partners fees are the other the have execution our Capital funding multiple to related such markets purchase administering transactions, performance and enable fees of earned ABS while are assets from these from our fees contract asset-backed market vehicles.

total market higher execution In stable we a fees capital cost decline XX% result of saw and at capital, XX% Contract materially of as liquidity to of from XX%. fees markets XXXX, tighter relatively a investor remain revenues.

which our and Finally, record retention driven rate corporate of not primarily with interest in sides risk by a take cash combined part assets our greater network the is both summarize, is XX% investment of ability year-on-year taking growth To from our XX% by balances. income, and to take network, earned a monetize revenue rate, the XX%. to volume of grew

Now let me how and our unit they've time. over economics discuss evolved

in to the products of the as Our and into increasing scaled new we rate year. costs X% network of during take led At fourth the time, grew XXXX onboarded production to same which volume XXXX. of X% from six newer to partners volume quarter XX% auto, network in such

quarter. in profit inflation such network cost of increase backdrop. the was volatile we by during gross interest into gross relatively a When a X% driven fourth of to a put ability of rapid rate deliver result, a of proud and in hikes of XXX stable even volume basis the profit year, macro points the context our in As capital high are

operating Now costs. turning to

side being our earnings with on our see As as left scale can of you created leverage operating Slide grows, is presentation. XX the business of

the stabilizing company reaching investments past level significant over partnership a years are public operating in We and after expense bank readiness. two

grew stock-based to as that 'XX, reduce total XX% from enter percent the in compensation, fell revenue same our We're excluding half the revenue expenses, over in taking a to base Operating time as of half measures of XXXX. of while second also period. first XXXX cost fixed XX% proactive XX% we

implemented annualized savings. to in expected headcount be year, initiatives to I rate recently are announced in the run reduction, million other conjunction expense with in approximately throughout result new $XX

income XXXX quarter, range million million Now range $XXX EBITDA minutes billion our $X to to and expect and adjusted outlook. negative discussing network $X.X breakeven. revenue other between to first we I'll $X.X billion, between spend total $XXX and the a In volume few and between range and million

expect adjusted $XX between be second financial and $X.X income and of million and EBITDA assumptions the include; full our million challenging total and revenue In and to the year between core the due half than more to network an first $XXX first, XXXX, we outlook between year to $X other expectation million to The $XX volume $XXX million. billion, billion the range that range underlying XXXX the primarily will state of markets. range

we're Also, we in to funding first of which cost with rate compared manage continuing uncertainty driving ratio, volume expected lower higher the second. to year to half conversion of will lead in the expect network first half, our the the

to Finally, from the partners up of half year. we in second ramp to volume our network expect new the

With make After brief that, to let the hand Q&A. closing Operator? me operator will it for remarks. Gal a which, back few

Thank you.

be now conducting will [Operator We a Instructions]. session. question-and-answer

the from our from will line Kumar ahead. question of go first Please UBS. take We Rayna

for Thanks question. morning. Good my taking

delinquency rates unsecured personal your on data good a for really talk delinquency loan are rates. asset your about portfolio little you trending? bit classes some how provided Can You other on the

thank you so the call today. and joining Definitely, for much

slide. looking foremost, we we consistent is So performance. and we the point as a we've last looking years, make the show And performance, want first when on I within outperforming in only very as to been -- the few for the benchmark in in are relative are

are the products main two auto. Our PL and

our say of put context the QX [ph] month at QX And is than expected put lending on perspective, versus average X.X% which book was much PL, XXXX. X.XX. to the things was I of than that higher vintages X.XX% which in XXXX, coming DPD On in in at lower to would October, three, at

very be. strong where seeing XXXX. used need in a to this the improve be XX% are deqs much in expected momentum highs working [ph] the to are to be we reaching constantly than DPD of we we lower XXXX And getting to better now they XXXX. to So than be

of phenomena the same experience didn't PL. we we with side, saw other the type On that

and So coming with actually basis around deqs stable. are economy perspective, coupon that, actually and us. return investor average they a be but not we From to aligned XXX have increased little as that by to to of expectations. we the XXXX in our weighted saw XXXX, management XXX vintages normality, are skyrocketing With are bit performing points

of as management mentioned Thank That's January. in you. you products, a investments categories? in with in reduction terms do extremely through you now workforce helpful. new think longer-term and balancing expense XX% loan And you you cost are earlier, then, went including your of How expanding into thinking your how structure near-term position

for joining. Rayna. Thanks Hi,

two Let parts. me in take that

positioned. workforce part a the first EBITDA that most in your sustained is and profitability reduction to we're question I around is reiterate thing we're how to of the basis. And think important committed First, the on

the that rate million And from a And comprised savings. we during set is mentioned workforce that just and towards other actually an call, year. will million we've annualized have gross initiatives we of in $XX going in the that the which as of in a the $XX million of that. run step then compensated so reduction broader related was further, create bring to key reduction throughout we initiatives of $XX And identified that's down breaking force, expense additional

So of position and to us really allows us the guiding really of -- key like one puts XXXX. to a we in positive feel parts that a be EBITDA strong that the in

is with the we long on continuously What of say management we're the execution of longer-term part investments? on run. balancing second do manage terms focused question of that your how In I'll near-term for

be business focused and the auto, or of not and investment our our the to on of we're scaling about just SFR PL. specific big And the strategy growing to all at be changed expansion on in We banks, strategy. have continue reduced focused that,

dislocation long-term long that short expense expense advantage we've to we're term, invest the last from like are compromising got is the taking in we're And building. the actions the balance. our example feel in with existing in the year significant to those market products an the of revenue we're give alongside of you with term. base streamlining of our few part we've We acquisition how that weeks taken to this operating objectives which even reduction, maybe now none So just We've And just the of Darwin. of runway been expansion. the

term, in to long compromising invest that, on to just continue without to near term the but summarize expenses those we so goals. And save the opportunity see all we in do of

you. thank Great,

Thank you.

We from MoffettNathanson. Please will of take Eugene ahead. the next line Simuni question with the go

Hi. you Good Thank my for taking morning, questions. guys.

up So to kind pretty maintaining about box And ask clear from of that, your that of result of a It what after with I wanted of you're kind the on you year that. data are network quarter stable, trajectory and is stance the next conservative that's this as potential guys flattish staying for pick approvals. And volumes. seems credit projecting a quarter. network first the of volume

bit So I'm I that What should credit little the that? guys maybe are seemingly help you potentially is about forward us when with macro of credit stance. relaxing to understand looking are Pagaya considerations do this how your a in their a and stance, bit what thinks be up and Pagaya up contrast opening thinking comfortable in might this how maybe bit, compare little stabilization box think a conservative environment think conservative philosophy credit your about lenders we and and it around now right potential signals about some little coming

it. Thanks, really so really, appreciate important Eugene, and that's question, a

Let about our model. little and me business unpack that talk bit a

part of flow increased of our and the the grow. in to we And continued showed we're If those metrics application think saw as the you about in some how partners, presentation. has you generating charts through we're that ecosystem, positioned

applications and macro and are that's manage ratio network grow As seen. we the changes new that now XXX% scaling volume then increase, the see. the investors different returns. optimize amount into as And we really our applications point the over as use is over year-over-year, capital we year. that's ratio the continue the we conversion we From around conversion to trillion has that flow as within flow, grown conversion versus And That to we've versus five products. that our And of point to to XX% generating control of tightened tool ratio. described, application QX application we've cost of the the significant last partners, for flow starting with QX of we tune application investor of the $X

last bank year at the new U.S. we a partners, Klarna. that same partners Now we've announced, auto onboarded six time, and two in top large

forward, see a spot which conversion that so allow it's for ratio indicators, macro more and will returns seeing generate we we We to volume. our generate very to about And that require us that us us like headwind to investors sure don't of to we from really the going ratio. extent subside, if the as about think improve start conservative conversion you'd the to out I off the in year of pivot is it the network allow But add that investor Gal, making us. context all know, anything. market level of

all the is that partners, think all as to the and the where you and next completely of more to franchise environment network. maybe unique we power growth. continue day, quarters in network to part we are the to here ups more company, years give continue volume the about to And of part independently Think is what bring to as do the application situation, you the building I about every flow, which nice continue of be Eugene, the of that the so getting to day of think standing in a connect will frame. macro as many and and expect the should reference close

every risks the opportunities, managing and side, the mainly driven being the business, that outcome. that will different other by the and short-term rate produce is as On you're conversion

like put between of frame network management to it the into the is caveat of is two. coming from frame the of application nice the growth of like the extension. kind over And I where the think conversion a So course Pagaya then

macro follow very about the on very Thank That's say, you're you. management a the that I helpful on to up and volume when let's any there can which any becoming kind there to frame. -- I’m you and quick it. the for of just help out, talking environment positive conversion sure, Are your got decision, all looking factors as when are guess you waiting goes so that. might kind that XXXX turn that clear we’re what for are guys? Yes, of that more point Are of investors at? track the be key you can

So think about it as two sides looking of things on. as we are

on or So less kind we are looking it any heuristics. the of from expectations

performance are is We the of economy is as very the the that strong monitoring of are and have in closely indicators that and the do. production driver definitely we a production of we stage full early they there. the place, And

to see like, we of kind change is and things and of the availability rates. actually in seeing of that that in didn't we like we XXXX. saw interest react we started the is could And definitely certainty the the that direction And spectrum different we that be liquidity we the becoming started the the about places. economy drive perspective. driver. influenced one it other but of that like things liquidity the from the is a market So QX in XXXX to is how across where of general is much main and But something that part is macro much It’s to important consumer to need that to factor, economy, more quantify prudent credit consumer lot that. is by And are most how could it to by you're therefore

minus guess be lot negative. we So it, falling the if think are economy a see macro XX% that in And we managing or normal of around higher, us. -- you the I like so conversion is about there will XX% as less environment, fair a trends and

it. Got

Okay. Thank you.

I maybe was it's just And strategic lending kind see Can more between business segment. of sorry, question interesting. what provide very a the a the to business. the that SFR more your different it's a Darwin enablement about and you because as the -- can bit you seems one since of a just your in on And you Gal, little throw core lending of related another acquisition it synergies bit bit elaborated class, excitement business if kind just type a of different obviously you're little that detail not

So can between if that the be businesses, you synergies the would talk about great?

Sure.

the let's to connectivity, Pagaya take and let's to see order in back, the a or foot, where step consumer. XX,XXX think go and see So about we

of underwriting. pillar that. into is a financial a making So that we connect able Pagaya perspective. doing decision, that liquidity and consumer provide when is be having obviously, his he's house cards a debt new be AI someone initiatives other is have he's and another consolidated is and from a When discussed with our he's it behind that purchase, Pagaya could the and [indiscernible] going some in effectively any it SFR online, AI loan interaction renting And when even about interaction personal moving to to auto person in auto partners, when actually is an buying an applicability loan. and a to to we let but or doing do takeout when through XX,XXX, he's taking these television with And that credit have, the

to to end-to-end And is of the you much vertical are is can pricing, There by getting advantage an with one so, collectively Pagaya of data serve And the of coming model management and and that to to the to more et perspective right et allow things by to the our and space to execution right to much from AI is cetera, Now institutions. that the able Darwin. and end-to-end when modeling a tenants, more where to months data we quarters that foot entering having kind understand XX adds work we unlocking XX way these has an of how last advantage few we modes be houses, obviously residents to the months. that We've with we deeper the outcomes, speak perspective, having coming yet. about doing connectivity how demographics have an a oriented go of from unique a with is the actually or such. world trends doing and thought and consumers then been on other estate the technology to SFT the end-to-end. cetera. about trying solution will the been we the of is ago tech, and get have and very be started And discussion the the that and the a And the happening into it, that actually as are this on XX have modeling you market order SFR the these network from Darwin have. capabilities the where to the in U.S. against lot could to conversation and And homes of of solution therefore quite underinvested interacting imagine, the on strong real tenants create these asset advantage opportunity we the the in needs That that see for their unpack the pieces of huge ultimately. XX,XXX the holding last the in housing a of created for can full is not all what started in an U.S. in frankly, is to different and

see about a we it's how the direction a but it know and think like and we connectivity I you gave So lot, the little it. of bit kind it how hope I

Gal. you helpful, very Thank No, that guys. much, super was

Thank the go next Hal with from you. the Capital. of Loop ahead. Goetsch question Please line We’ll take

country and to ask you're franchise Thanks XX,XXX there's the franchise for my question. at or independent, connected to of have a staggering taking a number one XX,XXX, scale. and but auto both active Good about lot you many how Of only more Thanks. the I about lot business. them And in morning. XX,XXX of that's mentioned a dealers loan That's dealerships, or independent first wanted are more? because the done question. least and my

the can second question? So I'm at repeat part. looking you the

I The heard. the first about one independent

not I’m sure part, I second The follow.

you are or you activity the with? you're penetrating -- it of platform alone done XX,XXX The question those in connected it is is -- getting of or how at XX,XXX it many from XX,XXX? the you of Is half kind on the mentioned all where XX,XXX is have to,

Sure.

about in And see numbers from we're all the them. put independent is of the to applications perspective, franchise. and when XX,XXX just So talking we

clear, be to not connected directly. we to them Just are

with We are scale partners through have connected that that them our to them.

of took pipes we one actual independent the going very dealerships, is of of the not type have business, of which after of approach and them. established our with mature very to all we already franchise the instead connected lenders that So kind, big are

XX,XXX independent franchise. the that are connecting at business, we as to the partners about So are we the and these to think end connecting actually

take getting but a flow the now already of think is my big all these them coming of head, number with to the it don't we as and dealerships you and access a deal of top loan. through up are So part of have I about applications, very

That's an even better setup.

XX,XXX? So get is it system you're three that number to helps auto that that's those you management lender dealer partner, a to that the your company is or connected that

The are different one dealerships the through many partners. and connected goes singularly they franchises to and one flow that connecting too. that biggest over connected to are partners, three to of are you we we is XX top goes like and said through the So us

Excellent. you That's you. very much. great. Thank Thank

you for your questions. Thank

question from the go take with line next Vafi We’ll you. Canaccord Joseph of Please Genuity. ahead. the Thank

of here side see you Good these asset tough appetite in update guys. the nice morning. a Hi, we XXXX. a provide in us for into Where little then follow And to And this investor any have year? bit, I available guess on up. expectation new Maybe your raising now funding funding how X loans. existing much you've vehicles? you an could I Thanks Nice perspective and potentially right of ones a how XXXX continued maybe from got look at results Maybe environment. funding billion classes in you runway with on are start

Sure.

would QX appetite, I an like from the So hardest. was that say

Xx year the senior path much of Xx pieces. more And year, the million the the billion the about had ABS. better. week of we the the junior kind and of least ABS thinking over amount $XXX that in you of subscribed started this an You were oversubscribed just the in And quarter, start which market. like closed priced was off start on $X.X we liquidity When on

we as see down, reality. comeback higher. we we to expect a deqs that go So into number are healthy coming to historical see the And that go materially

best type say went for investor for maybe that of and perspective. ABS, a in QX to group days market that perspective institutional long are funding had time. discussions most QX that to And are cost be that have a recent spreads but So the from our note these top very of the we as is in partners, of tap will interesting definitely we we worldwide not And to the diversified down. established part well another like to have one from a leader we that in able

adding new such. are we investors continuously So as

partners you and take That's And moving revenue guess would little that versus kind offsetting It like of great rate’s lot. take how Gal. some go that a but balance maybe I mentioned moving some a sounds works? color, COGS side great. up rate, into know you up of could then fees are newer some, detail? higher, fees more maybe were That's Thanks And I also balance the that, be program just for is great? why on program

one. question, the I'll for Joe. take Thanks that

our And me in the Let we've And markets described demonstrate or take of the was our being to AI and two of the into the I it many parts. integration that remarks in cases what about I’ll platforms. was monetization, sided rate what the able around in some that partners’ is benefit because were the started our been partners’ really increased on through of revenues volume prepared fees these higher, some is XX% they the of we're two networks, ecosystem. from honestly on seeing Pagaya side. value network first were quarter what on role to talk to fourth and particularly we've built, XX% some we've of split higher

economics translated markets. that softness that's offset us for all with an were the we've And experienced generate partners. that some up ability and of so higher to those fees And capital integration into in the

fourth the to and on take XX% that's So the roughly then rate us side in take quarter. level that

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cost you're production point on costs higher. Now right production side, are out the that to

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are either margin, And costs. higher or higher with the fees, lower other product words costs those higher have itself. in associated We

we make then So example, given there's time in we're in period with auto, of and economic value about again, do a addition in that for we're participants, there's the proving more cetera. happy sure structural to et for market Pagaya, proposition this then there fees partners, higher talk want to lenders, optimization. there's dealers, before of And to we

so And costs that's expect seeing up X% production and to you're the those be in why the ranging X%. to we

helps expect Joe. has over profit, putting we X% last things year to X% a gross on range. two been to stable your to those side, the the that in the X% X% rate leads relatively Hopefully the So to together, stable which question, it, costs, on so call XX% that answer or take production stable, and be

That Michael. was explanation. Thanks, a good

the the sir. floor have reached Thank to CEO, closing to like you. Gal I'd of we gentlemen, the over for end Ladies Krubiner, session. to Over you, turn and back question-and-answer And comments.

of we reiterate how accomplished team XXXX. in proud am would like I closing, our have to In and what I

want We strong we and I have momentum you great day. to today look and into of all continue future. forward in for a to have And us the joining partner thank lot with to you a a Thanks XXXX.

Thank Ladies today's this concludes and teleconference. gentlemen, you.

this participation. You you may disconnect your for lines your at Thank time.