Pagaya Technologies Ltd.

Ladies and gentlemen, greetings and welcome to the Pagaya 3Q 2024 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and zero on the telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Josh Fagan. Thank you. Please go ahead.

Thank you, and welcome to Pagaya's third quarter 2024 Earnings Conference Call. Joining me today to talk about our business and results are Gal Pruvener, Chief Executive Officer of Pagaya, Sanjeev Das, President, and Evangelos Peros, 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 at of our website at investor.pagaya.com. Our remarks today will include forward-looking statements that are based on our current expectations and forecasts with respect to, among other things, our operations and financial performance, including our financial outlook for the third quarter and full year of 2024. Our actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially from our expectations include, but are not limited to, those risks described in today's press release and our filings with the U.S. Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements as a result of new information or future events. Please refer to the documents we follow from time to time with the SEC, including our 10-K, 10-Q, and other reports for a more detailed discussion of these factors. Additionally, non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, fee revenue less production costs, or FRLPC, FRLPC percentage, and core operating expenses will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available to the extent available without unreasonable efforts in our earnings release and other materials, which are posted on our investor relations website. We encourage you to review the shareholder letter which was furnished with the SEC on form 8K today for detailed commentary on our business and performance in conjunction with the accompanying earning supplement and press release. With that, let me turn the call over to Gal.

Thank you and good morning, everyone. I hope you had the chance to read our shareholder letter. With our strong third quarter results, Pagaya is at an approximate annual rate of $1 billion of revenues, $400 million of free revenue-less production costs, and $220 million in adjusted EBITDA. Pagaya is now reaching the next level of scale and profitability. This is the result of both increasing demand for our products and laser-focused execution of our financial goals to improve free generation, funding efficiency, and drive economic escape, all of which set Pagaya to deliver positive total cash flow and gap profitability during 2025. The momentum of the business is driven by the value that our unique product brings to our lenders, as they are always looking to improve the value they can offer to their customers. The use of our product since we started, has generated over $24 billion of loans with approximately 2 million new customers added or retained by our partners. As our network grows and our data mode is becoming bigger, we are enabling our partners to acquire and serve more customers with each application they are sending our way. The engine is perpetual. and only getting more powerful with time. Existing lending partners are looking to Pagaya to play a critical role in their 2025 growth plan. As part of this plan, partners are asking for more of our products, creating additional revenue opportunities for both Pagaya and our partners. and in return, enhancing the lifetime value of their customers' relationships. We expect next year to have over eight relationships generating over $500 million per year of network volume, channeling the power of our existing customer franchises. Growth of our pipeline is a key driver of our long-term growth. In line with our strategy, we continue to make inroads with the largest banks in the country. The onboarding of a top five bank in our point of sale vertical continues to progress well. Additionally, following multiple quarters of onboarding and integration, I'm also happy to report that Elevolve U.S. Bank's point-of-sale arm is now live on our network. In terms of future prospective lending partners, we are currently in term-sheet-level discussions with several other top 20 lenders across personal loan, point-of-sale, and alternate. And we are expecting to be able to announce some of these names next year. Sanjeev. We'll speak more about our pipeline and product expansion momentarily. I could not be more optimistic about the opportunity in front of us. Between the ongoing expansion of our network, combined with improving macroeconomic backdrop, the conditions are right to extend access to credit for more consumers. As important as the growth opportunity is our laser focus on profitability and cash flow generation. we transitioned for Gaia this past year to a business that can sustainably convert revenues into profits and cash flows. I want to be clear, this is without raising external equity capital. All of that brings me to our core 2024 financial strategy to improve fee generation, funding efficiency, and drive greater economy of sales. I will split it into three areas of focus. First, we are earning more fees on every dollar of network volume in January, reaching a record level this quarter. Cost saving has amplified the benefit of higher fees on our bottom line results. Next, in terms of our funding, we have demonstrated consistent improvement in our ADS execution as well as adding more diversified funding sources to our network. We have achieved this through structural changes in our ABS program. For example, achieving a triple A rating on our personal loan program and a double A rating on our auto loan program. We have also broadened our funding channel to forward flow, manage funds, and pass rules. All of these resulted in a material improvement in our both funding costs and the lowest risk retention level in over two years. In addition to that, this has created a significant cushion against future impairments on our risk retention efforts. Lastly, our balance sheet that has become much stronger as a result of a series of transactions we announced in September to refinance high-cost debt, reduce interest expenses, and unlock additional balance sheet liquidity. ETI will discuss the significance of this in a moment. In parallel to these initiatives, we continue to iterate on our underlying model, leveraging our unparalleled and growing data advantage. The improvement in performance from adjusting our model over the last 18 months has helped us to demonstrate significant stronger and stable credit performance. All in all, we have created a sustainably profitable business with growing fees, increasing operating leverage, and capital efficiency. 2025 will showcase the true earning potential of the business. as our growth continues and the negative impact of all the retention positions are behind us, which we expect by the end of 2024. As with any business, the successful build-out of our franchise came with a significant investment. The cost of that investment, some of which was credit-related and is impacting our financial results today, has delivered massive returns. We grew our network of top lenders and institutional investors and hence our underwriting capabilities with a richer data set and are strongly positioned to take advantage of the improving environment. I am proud of our team for sticking to the vision on our journey to offer one of the most in-demand lending technology solutions in the U.S. and become a multi-product lending technology enterprise. I have never been more excited as we turn the corner to a year when we start to demonstrate the true earning power of our company in 2025. To close, I could not be more confident about the future of our company and our ability to consistently deliver value to US consumers, our partners, our investors, and our shareholders. With that, I will hand it over to Sanjeev to say a few remarks.