Pagaya Technologies Ltd.

Good day and welcome to Pagaya's second quarter 2023 earnings call. Today's call is being recorded. At this time, I would like to turn the call over to Jensi John, head of investor relations.

Thank you and welcome to Pagaya's second quarter 2023 earnings conference call. Joining me today to talk about our business and results are Gal Kubiner, chief executive officer of Pagaya, and Michael Kurlander, our chief financial officer. You can find the materials that accompany our prepared remarks and a replay of today's webcast on the investor relations section of our website at investor.pagaya.com. Our remarks today will include forward-looking statements that are based on our current expectations and forecasts and involve certain risks and uncertainties. These statements include, but are not limited to, our competitive advantages and strategy, macroeconomic conditions and outlook, future products and services, and future business and financial performance. Our actual results may differ from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are described in today's press release and in our Form 20F filed on April 20, 2023, with the U.S. Securities and Exchange Commission, as well as our subsequent filings made with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Additionally, non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and fee revenue less production costs, or FRLPC, will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release and other materials, which are posted on our investor relations website. Before we begin our prepared remarks, we want to note that this quarter we published our inaugural shareholder letter in lieu of our usual earnings presentation. We encourage you to review the shareholder letter, which was furnished with the SEC on Form 6K today, for detailed commentary on our business and performance in conjunction with accompanying earnings supplement and press release. All documents are available on our investor relations website. With that, let me turn the call over to Gal.

Thanks, Jensi. At Pagaya, we strive for continuous improvement. As mentioned, we are committed to providing our existing and future shareholders communication that is transparent and comprehensive. Our shareholder letter is a reflection of this commitment, and you can expect to see more of that in the future. We had a strong second quarter, exceeding the high end of our guidance across all our KPIs, network volume, total revenue, and adjusted EBITDA. Our performance reflects our ability to consistently deliver for the lenders and investors on our network. We delivered record network volume in the second quarter of approximately $2 billion, despite an historical low conversion rate in light of the current macro environment. Our lending partners are sending more applications our way as they tighten their own credit boxes and investors continue to come to us to invest their capital. The demand is high for our products on both sides of the network. Total revenue grew by 8% year over year to $196 million. We are earning more fees on our lending platform product as demand grows. That resulting in growth in our fee revenue less production cost both year-over-year and compared to Q1 2023. Adjusted EBITDA grew to $17.5 million, more than triple the prior year period and our second highest EBITDA in our history. With the continued momentum in our business, we are raising our network volume and adjusted EBITDA outlooks for the full year, which Mike will speak to more in a minute. Now let me spend a few minutes discussing our business for those of you who are new to our story. I encourage all of you to read our shareholder letter index, which discuss our product offering and platform in more detail. Pagaya is designed to solve a critical problem in consumer credit. An estimated 42% of Americans are denied access to credit or don't get as much credit as they would like under traditional underwriting systems. Our mission is to unlock that opportunity with technology to help more people get access to more credit. To address this problem, we created a two-sided tech-enabled network that connects the lenders who originate loans to investors who want to purchase those assets. Lenders who integrate with Pagaya's network originate more loans, gain new customers, and earn more revenues. And all of this without taking any incremental risk. On the other side of our network, institutional investors get access to diversified and high-yielding asset pools at scale. We have pioneered a network comprised of two distinct products, a lending product, and an investor product. We believe this model gives Pagaya an edge over other structures. We are proud of the organization we built, housing best-in-class lending technology and asset distribution capabilities on one platform. We hired leading experts in the respective fields, lending and financial market industry veterans, and world-class engineers. As a result, Pagaya offers a value proposition to lenders and investors that we don't believe is replicated anywhere else today and will be difficult to build organically at this scale. On the lender side of the network, our product suite provides access to fully automated credit decisioning technology, secure data exchange and analytics, and real-time funding of any loan originated. The product is deeply embedded in each lender's loan origination system via customized seamless APIs. Once integrated, our product allows for smarter and faster credit evaluation with the ability to evaluate and price a loan in less than half a second. All of this results in a sticky product evident by the fact that we have grown to over 25 lending partners. And since inception, no lender has left our network. Institutional investors on the other side of the network connect to a distribution platform that delivers a continuous flow of billions of dollars of assets across multiple markets, including personal loans, auto, and point of sale. In the first half of the year, we raised $3.1 billion across seven different ABS deals and just closed on our most recent $800 million personal loan deal in July. We were once again the number one personal loan ABS issuer in the second quarter. Our reputation as a benchmark issuer and our performance track record continue to draw new investors to our network. we continue to see improving trends in asset performance. Early-stage delinquencies for recent personal loan and onto vintages, our two largest markets, continue to decline, while the weighted average coupon remains stable. This translates to improving returns for investors enabled by our continued low conversion rate. The flywheel effect is fueled by hundreds of millions of data points that flow through our network, which enables better outcomes for both existing and future network participants. The real impact is that over $7 billion of assets were created last year in the consumer finance ecosystem that would not have been created if it were not for Pagaya. of our product offering reinforced my confidence in our ability to grow existing partners, add new ones, and attract new investors. With the pipeline we have today, we believe we can grow our network significantly over the next few years. And to my fellow Pagayans, I'm incredibly grateful for your hard work and commitment to achieving our mission of increasing access to credit for more consumers across the country. With that, let me pass it over to Mike to discuss our financial results in more detail.