Q1 2024 Pagaya Technologies Ltd Earnings Call

Operator: Good day, and welcome to the Pagaya 1Q 2024 Earnings Conference Call. All participants will be in the listen-only mode.

Good day and welcome to the poor Guy one Q2 thousand 20 earnings conference call at all.

All participants will be in the listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2. Please note that this event is being recorded. I would now like to turn the conference over to Jency John, Head of Investor Relations. Please go ahead.

Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

After todays presentation, there will be an opportunity to ask questions.

To ask a question you May Press Star then one on your Touchtone phone.

Withdraw your question. Please press Star then two.

Please note that this event is being recorded.

I would now like to turn the conference or to Genesee John head of Investor Relations. Please go ahead.

Jency John: Thank you, and welcome to Pagaya's first quarter 2024 earnings conference call. Joining me today to talk about our business and results are Gal Krubiner, Chief Executive Officer of Pagaya, Sanjiv Das, President, and Evangelos Perros, Chief Financial Officer.

John Hecht: Thank you and welcome to the Guy is first quarter of 'twenty 'twenty four earnings conference call. Joining me today to talk about our business and results our golf Colbert Chief Executive Officer forgot you Sanjeev Das President and Evangelists Perez Chief Financial Officer.

Jency John: 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, including our financial outlook for the second quarter and full year of 2024.

John Hecht: 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 investors out the Guy a dotcom.

Jency John: 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 filings, and in our Form 10-K, filed on April 25, 2024, with the U.S. Securities and Exchange Commission, as well as in 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.

John Hecht: 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, including our financial outlook for the second quarter and full year 'twenty 'twenty four.

John Hecht: Sure.

John Hecht: Our actual results may differ from those contemplated by these forward looking statements.

John Hecht: Factors that could cause these results to differ materially are described in today's press release and filings and in our Form 10-K filed on April 25, 2024, 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 <unk>.

John Hecht: New information or future events.

Jency John: Additionally, non-GAAP financial measures, including Adjusted EBITDA Margin, Adjusted Net Income, Fee Revenue Less Production Cost, or FRLPC, FRLPC Margin, 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 filed with the SEC on Form 8K today, for detailed commentary on our business and performance, in conjunction with the accompanying earnings supplement and press release. With that, I will turn the call over to Gal.

John Hecht: Additionally, non-GAAP financial measures, including adjusted EBITDA adjusted EBITDA margin adjusted net income fee revenue less production costs or F. R. L. P. C. After all PC margin 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 effort and our earnings release and other.

John Hecht: Cereals, which are posted on our Investor Relations website.

John Hecht: We encourage you to review the shareholder letter, which was furnished with the SEC on form 8-K 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 Carl.

Gal Krubiner: Thanks, Jency, and good morning, everyone. I'm actually very pleased with our first quarter results in Pagaya. We are always striving to build a future where more Americans have access to the financial products they deserve through our technology. Our operating performance was strong. We grew fees with our lending partners and raised a record of $2 billion in funding. I'm very proud to announce that this month we added Elevon to our network, a top 5 global payment company, and 18 new funding investors. Our network is now connected to 30 land deals and 116 funding funds.

Carl: Thanks, Jessie and good morning, everyone.

Carl: I'm actually very pleased with our first quarter results.

Carl: At <unk>, we are.

Carl: Always striving to build the future will more Americans have access to the financial product they need there through our technology.

Carl: Our operating performance was strong.

Carl: We grew fees with our lending policy.

Carl: <unk> raised a record of $2 billion in funding.

Speaker Change: I'm very proud to announce.

Speaker Change: This month, we added element to our network.

Speaker Change: The top five global payments company and 18, new funding investors.

Speaker Change: Our network is now connected to 30, Lando and 116 funding Paul.

Speaker Change: These accomplishments speaks to the power of our business.

Gal Krubiner: This accomplishment speaks to the power of our business, but I'm especially proud of the progress we're making on our bank enterprise sales strategy. Let's go back to 2022 for one second, when we reported earnings for the very first time as a public company. I spoke about one of the key reasons why we decided to go public, which was to execute our enterprise bank sales strategy, partnering with the largest banks in the country. Now fast forward two years.

Speaker Change: But I'm, especially proud of the progress, we're making on our bank enterprise sales strategy.

Speaker Change: Let's go back to 2022, one second.

Speaker Change: When we reported earnings for the very first started as a public company.

Speaker Change: I spoke about one of the key reason why we decided to go public.

Speaker Change: Which was to execute our enterprise bank space strategy partnering with the largest banks in the country.

Gal Krubiner: We now have three of the country's top banks using the Pagaya product, and many more are in the pipeline. And, as I shared, we also added Elephone. U.S. Bank Merchant Services and Payment Solutions to our POS VertiFactors, just one quarter after announcing the addition of U.S. Bank to our personal loan vertical. That speaks to the value of our product. On the financial side, we once again delivered record-breaking financial results, exceeding our outlook with network volume of $2.4 billion, total revenues of $245 million, and adjusted EBITDA of $40 million. P revenue, less production costs, was up 84% year-over-year to $92 million.

Speaker Change: Now fast forward to where you.

Speaker Change: We now have three of the country's top bank used.

Speaker Change: Using the <unk> product and many more in the pipeline.

Speaker Change: And as I shared we also added elephant.

Speaker Change: U S Bank merchant services and payment solution to our vertical.

Speaker Change: Just one quarter after announcing the addition of U S bank to our personal loan you got it.

Speaker Change: That speaks to the value of our product.

Gal Krubiner: And our FRLPC margin expanded 109 basis points year-over-year to 3.8%. That's the highest level we have seen since the beginning of the rate high cycle in early 2020. This is obviously clear proof that our strategy is working and that there is more room to increase our unit economies going forward. We delivered a fifth consecutive quarter of improvement in adjusted EBITDA and positive quarterly gap operating income for a third time of $8 million. We reported our third consecutive quarter of positive and growing operating cash flow in a row, delivering $20 million of operating cash flow this quarter.

Speaker Change: On the financial side, we once again delivered record breaking financial results.

Speaker Change: Exceeding our outlook with network volume of $2 4 billion.

Speaker Change: Total revenues of $245 million in.

Speaker Change: And adjusted EBITDA of $40 million.

Speaker Change: Fee revenue less production cost was up 84% year over year to $92 million and our effort LTC margin expanded hungrier than nine basis points equals to three 8%.

Speaker Change: That's the highest level, we've seen since the beginning of the rate hike cycle in early 2022.

Speaker Change: This is obviously a clear proof that our strategy is working and that there are more room to increase our unit economics going forward.

Speaker Change: We delivered our fifth back to back quarter of improvement in adjusted EBITDA.

Speaker Change: And positive quarterly GAAP operating income for a third time of $8 million.

Speaker Change: Really folded our third quarter with positive and growing operating cash flow in a row deliver.

Speaker Change: Delivering $20 million of operating cash flow this quarter.

Gal Krubiner: We continue to manage credit performance very closely to deliver a strong and consistent asset return to our funding partners. We are seeing continuous strong performance on our 2023 vintages with delinquencies trending at their lowest level since early 2021. Sanjiv will speak to this in more detail in just a moment.

Speaker Change: We continue to manage credit performance very closely to deliver strong and consistent asset breakdown to our funding partners.

Speaker Change: We are seeing continuous strong performance on our 2023 vintages with delinquencies trending at their lowest level since early 2021.

Speaker Change: Sanjiv will speak to this in more detail in just a moment.

Gal Krubiner: As I look ahead, Pagaya is on a path to be connecting infrastructure between all major U.S. loan origination systems and public and private capital markets. Since we started back in 2016, our teams have been working day in and day out, building the right infrastructure and capabilities to put us on this path. The connectivity we've built thus far, with 30 of the country's largest loan-origin nations and over 100 of the country's largest funding providers, is the foundation of the enterprise value of our business. We got here faster than I thought possible.

Speaker Change: As I look ahead, the guys on the path to be connecting infrastructure between all major U S loan origination system and public and private capital market.

Speaker Change: Since we started back in 2016, our teams have been working day in and day out do you think the right infrastructure and capabilities to put us on this path.

Speaker Change: The connectivity, we built thus far 30 of the country's largest loan origination and over 100 of the country's largest funding provisos.

Speaker Change: Is the foundation of the enterprise value of our business.

Speaker Change: We got here faster than I thought possible.

Gal Krubiner: Just three years ago, our business was connected to 10 lending partners and around 20 investors. As you can imagine, each new partner we onboard is adding to our institutional knowledge and capabilities to build better and smarter products for lenders across the country. As we build our product ecosystem, we are making our relationships with our lending partners stickier and increasing the overall pool of economics we can share in, and we are drawing new enterprise-grade lenders to the network, from the top five consumer banks to the world's largest payment provider. Now, let's talk strategy.

Speaker Change: Just three years ago, our business was connected to 10 lending partner and around 20 investor.

Speaker Change: As you can imagine each new partner, we on board he is adding to our institutional knowledge and capabilities to build better and smarter product for lender across the country.

Speaker Change: As we build our product ecosystem, we're making our relationships with our lending partners stickier and increasing the overall pool of economics, we can share it.

Speaker Change: And we are growing new enterprise grade lenders to the network from top five consumer bank to the worlds largest payment provider.

Speaker Change: Now, let's talk strategy.

Gal Krubiner: From a strategy perspective, we're focused on two simple priorities. First, operating in a smart way to optimize for the current environment, and second, setting the stage for long-term growth. On near-term operational execution, our priorities are maximizing the profitability potential of the business and doing so with efficient use of our capital. We are seeing an increasing ability to earn more fields as we scale. Now, on the capital side, our focus is to become more capital efficient as we grow.

Speaker Change: From a strategy perspective, we're focused on two simple priorities.

Speaker Change: First.

Speaker Change: Operating in a smart way to optimize for the Covington violent and second setting the stage for long term growth.

Speaker Change: Our near term operational execution, our priority is on maximizing the profitability potential of the business and doing so with efficient use of our capital.

Speaker Change: We are seeing an increasing ability to earn morphine as we scale.

Speaker Change: Now on the capital side, our focus is to become more capital efficient as we grow.

Gal Krubiner: That means reducing how much upfront capital we use to fund new network volume in order to achieve. We are diversifying our funding and financing mechanisms to reduce net risk retention. We landed a $100 million secured borrowing facility in the crucial to finance our risk retention and a new whole-loan sales structure transaction that resulted in a low 1% net risk retention on that day. We are in advanced conversations now with several counterparties to execute forward flow and whole-on-sail arrangements that could exceed $1 billion in total size.

Speaker Change: That mean, reducing how much upfront capital we use to fund new network volume.

Speaker Change: In order to achieve this we are diversifying our funding and financing mechanisms too.

Speaker Change: To reduce net risk retention.

Speaker Change: We landed a $100 million secured borrowing facility in the fulfill to finance, our risk retention needs and new whole loan sales structure transaction that resulted in the low 1% net risk retention on that view.

Speaker Change: We are in advanced conversations now with several counterparties to execute forward flow and whole loan sale arrangement.

Speaker Change: Could exceed $1 billion in total site.

Gal Krubiner: Based on our ongoing conversation with new funding and financing counter parties, we can meaningfully reduce net risk retention over the next few quarters. These initiatives are key to our strategy to reach cash flow positive in early 2025. EP will speak more about this in a moment.

Speaker Change: Based on our ongoing conversation with new funding and financing Counterparties, we can meaningfully reduce net risk retention over the next few quarters.

Speaker Change: These initiatives are key to our strategy to reach cash flow positive in early 2025.

Speaker Change: EEP will speak more to this in a moment.

Gal Krubiner: Thinking about our long-term growth. We're not taking our foot off the gas in landing new enterprise-grade landing pads. That has been and will remain our North Star for our future growth and company potential. That will ensure that we have the raising place to achieve our ambition to become the lending tech partner of choice for the largest banks in the country. Adding Elavon, as I mentioned, this quarter in our point of sale vertical is a great example and speaks to the power of enterprise sales with large banks, the ability to expand our product across multiple consumer divisions within a single enterprise. Let me spend a minute on a point of safety.

EEP: Thinking about our low fill growth plan.

Speaker Change: We're not taking our foot off the gas in landing new enterprise grade lending partners.

Speaker Change: That has been and remain our north star for our future growth and company potential.

Speaker Change: That will ensure that we have the raise in place to achieve our ambition to become the lending test policy of choice for the largest banks in the country.

Speaker Change: I think elephant as I mentioned this quarter in our point of say vertical is a great example, and speaks to the power of enterprise sales with large banks.

Speaker Change: The ability to expand our product across multiple consumer division within a single enterprise.

Speaker Change: Let me spend a minute on point of sale.

Gal Krubiner: This is, what we believe, the next frontier of growth for Pagaya. Point of sale is the fastest growing consumer credit market, far outpacing the growth of total consumer credit. Pagaya is a leading white-label point-of-sale solution provider in the market today, allowing payments businesses and banks to offer point-of-sale financing under their own brand. Now this is a super important point; the value proposition is very strong.

Speaker Change: This is what we believe the next one pillar of growth for Guy.

Speaker Change: Point of sale is a fastest growing consumer credit market.

Speaker Change: Far outpacing the growth of total consumer credit.

Speaker Change: For Gaia.

Speaker Change: Is a leading white label point of sale solution provider in the market today.

Speaker Change: Allowing payments businesses and banks to offer point of sale financing under their own brand.

Speaker Change: No. This is super important point.

Speaker Change: <unk> is very strong.

Gal Krubiner: Why give your customers away when you can partner with Pagaya? The power of that value proposition is creating momentum for our future pipeline. And as such... We are in discussions with several large payment businesses that we aim to integrate over the next 12 to 18 months. Additionally, discussions with banks in our pipeline are increasingly turning to how Pagaya can help them break into point of sale, as we expand the offering to more industry leaders.

Speaker Change: Why give you a customer away when you can partner with <unk>.

Speaker Change: The power of that value prop is creating momentum for our future pipeline.

Speaker Change: And as such.

Speaker Change: We are in discussion with several large payment businesses that we aim to integrate over the next 12 to 18 months.

Speaker Change: Additionally, discussions with banks in our pipeline are increasingly turning to help a guy who can help them right into point of sale.

Speaker Change: As we expand the offering to more industry leader, we believe we can be a truly disruptive solution in the traditional buy now pay later universe.

Gal Krubiner: We believe we can be a truly disruptive solution in the traditional buy-now-pay-later model. The top line opportunity is also... We believe our point-of-sale vertical has the potential to generate billions of dollars in incremental network volume for our business at scale. Now looking at our broader pipeline of prospective lending partners. We are currently in late stage discussions with six large lenders across our main verticals of personal loan, auto, and point of sale. We are advancing our bank pipeline and expect to integrate three new point-of-sale providers or banks in our point-of-sale vertical over the next 12 to 18 months. With our existing lending partners, we continue to deepen our relationship with them, which is leading to better unit economies.

Speaker Change: The top line opportunities also huge.

Speaker Change: We believe our point of sale vertical has the potential to generate billions of dollars in incremental network volume to our business S. K.

Speaker Change: Now looking at our broader pipeline of prospective lending puzzle.

Speaker Change: We are currently in late stage discussion with fixed lodge lenders across our main verticals of personal loan boto and point of sale.

Speaker Change: We are advancing our bank pipeline and expect to integrate three new point of sale provider or banks in our point of sale vertical over the next 12 to 18 months.

Speaker Change: On our existing lending pulp mill, we continue to deepen our relationship with them, which is leading to better unit economics.

Gal Krubiner: Our 2023 cohort ramp-up is tracking according to plan while we continue to prioritize our most profitable personal loan partnership in a continued constrained funding environment. These actions are adding to our bottom line. Our average personal loan, FRLPC margin, more than doubled year over year to 6%. We are also in late-stage talks to expand our personal loan product with an existing bank policy. More to come on that later. With that, let me pass it over to Sanjiv to discuss our bank enterprise strategy and other operational updates.

Speaker Change: Our 2023 cohort ramp up is tracking according to plan, while we continue to prioritize our most profitable personal loan powerful ships.

Speaker Change: In a continuous constrained funding environment.

Speaker Change: These actions are adding to our bottom line.

Speaker Change: Our average personal loan F for LTC margin more than doubled year over year to 6%.

Speaker Change: We are also in late stage talks to expand our personal loan product with an existing bank partner.

Speaker Change: More to come on that later this year.

Speaker Change: With that.

Speaker Change: Let me pass it over to <unk> to discuss our bank enterprise strategy and other operational update.

Sanjiv Das: In Q1, we reorganized the operating business to increase capital efficiency and enhance our margin profile while still continuing to grow the business. We refocused the operations of Pagaya into two distinct areas.

Speaker Change: Thanks Carl.

Speaker Change: Q1, we reorganized the operating business to increase capital efficiency and enhance our margin profile, while still continuing to grow the business.

Speaker Change: We refocused our operations into two distinct areas.

Sanjiv Das: Growth and Monetization. Our growth team is focused on adding new partners across banks, fintechs, auto, captives, and POS lenders. And we put a new product organization in place that is designed to extend the Pagaya solution to our existing network of 30 partners. On the monetization side, the team is laser-focused on Pagaya's economic disciplines of maximizing partner revenue opportunities and efficiently allocating capital to volumes that deliver the highest IRR. The benefit of this transformation is a highly disciplined approach in our core operating business, both in the growth of our network volume, as well as enhanced economic returns through more efficient capital allocation. So the outcomes are clear.

Speaker Change: Growth and monetization.

Speaker Change: Our growth team is focused on adding new partners across banks Fintech.

Speaker Change: Auto captives and Pos lenders.

Speaker Change: And we put a new product organization in place that is designed to extend the <unk> solution to our existing network of 30 partners.

Speaker Change: On the monetization side. The team is laser focused on <unk> economic discipline of maximizing partner revenue opportunities and efficiently allocating capital to volumes that deliver the highest IRR.

Speaker Change: The benefit of this transformation is a highly disciplined approach in our core operating business.

Speaker Change: Both in the growth of our network volume as well as enhanced economic returns through more efficient capital allocation.

Speaker Change: Yes.

Speaker Change: So the outcomes are clear.

Sanjiv Das: Because of this operating discipline, the benefits of higher margins are already evidenced in the growth of our FRLPC to the highest level in each quarter. As a result of this more deliberate and disciplined capital allocation process towards partner flow, we not only deliver a higher FRLPC for Pagaya but also a higher IRR for our funding investors. Additionally, in our credit underwriting discipline, we are making methodical flow decisions that are demonstrating an improvement in our performance.

Speaker Change: Because of this operating discipline the benefits of higher margin are already evidenced in the growth of our fr LPC to the highest level in eight quarters.

Speaker Change: As a result of this more deliberate and disciplined capital allocation process towards partner flow.

Speaker Change: Not only deliver a higher fr LPC for <unk>, but also a higher IRR for our funding investors.

Speaker Change: Additionally, in our credit underwriting discipline, we are making methodical slow decisions that are demonstrating an improvement in our performance.

Sanjiv Das: Based on MOB30 DPD, it's fair to say that in both PL and Auto, Pagaya is already outperforming the market. 30-day delinquencies for 6-, 9-, and 12-month seasoned personal loans are at their lowest levels since April 2021, on average 30 to 40% lower than peak levels in 2021, and have been in continuous steady decline since then.

Speaker Change: Based on MLB 30 D. P D. It's fair to say that in both PL and auto <unk>.

Speaker Change: <unk> is already outperforming the market.

Speaker Change: 30 day delinquencies for six nine and 12 months seasoned personal loans are at their lowest levels since April 2021.

Speaker Change: On average, 30% to 40% lower than peak levels in 2021 and.

Speaker Change: And have been in continuous steady decline since then.

Sanjiv Das: Our most recent personal loan vintages from later 2023 are showing similar performance with early stage delinquencies at their lowest levels since January 2021. We continue to be encouraged by these trends, even as we are carefully monitoring consumer trends in the industry. Our vision is for Pagaya to be the lending technology partner of choice for banks and other large financial institutions. Despite being an eight-year-old company, we've already built up an extensive network of 30 lending partners of diverse size and scale.

Speaker Change: Our most recent personal loan vintages from later 2023 are showing similar performance with early stage delinquencies are at their lowest levels since January 2021.

Speaker Change: We continue to be encouraged by these trends even as we are carefully monitoring consumer trends in the industry.

Speaker Change: Our vision is for <unk> to be the lending technology partner of choice for banks and other large financial institutions.

Speaker Change: Despite being an eight year old company, we have already built up an extensive network of 30 lending partners of diverse size and scale.

Sanjiv Das: What we've learned from our enterprise bank partnerships is that there is a massive opportunity for Pagaya's product solution. Expanding from one bank consumer division to another consumer business in a bank is significantly easier as we demonstrate the value our product can create. As you would expect, this enterprise strategy significantly shortens our average sales and onboarding cycle. Landing Elavon at U.S. Bank is a great example of this. In just one quarter after announcing our U.S. Bank Personal Loans Partnership, we are now in the process of offering our solution to Elevon, which is another business within U.S. Bank.

Speaker Change: What we've learned from our enterprise bank partnerships is that there is a massive opportunity for <unk> product solution.

Speaker Change: Extending from one bank consumer division to another consumer business and our bank is significantly easier as we demonstrate the value of our product can create.

Speaker Change: As you would expect this enterprise strategy significantly shortens, our average sales and Onboarding cycle.

Speaker Change: Lending Elevon at U S Bank is a great example of this.

Speaker Change: And just one quarter after announcing our U S Bank personal loans partnership we are now in the process of offering a solution to Alabama, which is another business within U S snack.

Sanjiv Das: The deployment of our product across the banking ecosystem also demonstrates the industrial strength of Pagaya's offering in the face of the highest regulatory and compliance standards that banks have to comply with. I take great pride in what the teams and leaders have achieved in just one quarter of focus on discipline and operational efficiency. I do believe there is more to be done. As we stay focused on this, I believe that we will have the opportunity to further reduce expenses and improve our operating efficiency, which will set us up to invest in the key strategic needs of the business. With that, let me hand it over to EP to discuss our financials in more depth. Thank you, Sanjiv, and good

Speaker Change: Deployment of our product across the banking ecosystem also demonstrates the industrial strength of <unk> offering in the face of the highest regulatory and compliance standards that banks have to comply with.

Speaker Change: I take great pride in what the teams and leaders have achieved in just one quarter of focus on discipline and operational efficiency.

Speaker Change: I do believe there is more to be done.

Speaker Change: As we stay focused on this I believe that we will have the opportunity to further reduce expenses and improve our operating efficiency, which will set us up to invest in the key strategic needs of the business.

Speaker Change: With that let me hand, it over to Pete to discuss our financials in more depth.

Evangelos Perros: Thank you, Sanjiv, and good morning, everyone. We delivered another record quarter across our key metrics. While we continue to operate in a higher-for-longer rate environment, we remain focused on profitability and capital efficiency. Network volumes reached a record $2.4 billion in the quarter, up 31% year-over-year and up for the fifth consecutive quarter. Although application flow grew year-over-year, our conversion rate remains low as we optimize for our most profitable lending channels and returns for our funding partners.

Pete: And good morning, everyone. We delivered another record quarter across our key metrics, while we continue to operate in a higher for longer rate environment, we remain focused on profitability and capital efficiency.

Pete: Network volumes reached a record $2 4 billion in the quarter up 31% year over year and up for the fifth consecutive quarter.

Speaker Change: Application flow grew year over year.

Speaker Change: Our conversion rate remains low as we optimized for our most profitable lending channels and returns for our funding partners.

Evangelos Perros: As a result, personal loans, our most scaled and highest-margin product, continue to be the largest driver of network volume at 55%. Total revenue and other income grew 31% to a record $245 million compared to the same quarter in 2023, driven by a 35% increase in fee revenue. We continue to improve our unit economics, so that fee revenues less production costs once again outpace network volume growth by a significant margin. FRLPC grew by 84% to a record 92 million customers compared to network volume growth of 31%.

Speaker Change: As a result personal loans are more scale in our highest margin product continued to be the largest driver network volume at 55%.

Speaker Change: Total revenue and other income grew 31% to a record $245 million compared to the same quarter in 2023.

Speaker Change: Driven by a 35% increase in fee revenue.

Speaker Change: We continue to improve our unit economics fee revenues less production costs. Once again outpaced network volume growth by a significant margin if our LPC grew by 84% to a record $92 million compared to network volume growth of 31% sequentially. This equated to fr LPC growth of 16.

Evangelos Perros: Sequentially, this equated to FRLPC growth of $16 million, the largest quarterly increase in our history. Fees from our lending partnerships amounted to 63% of total FRLPC in the quarter, compared to 43% in the prior year. This is a testament to the growing fee-generating power of our business, making us increasingly less reliant on network volume expansion to drive bottom-line growth. FRPC margin increased 109 basis points year-over-year to 3.8%, the highest level since early 2022.

Speaker Change: The largest quarterly increase in our history.

Speaker Change: <unk> from our lending partnerships amounted to 63% of total if our LPC in the quarter compared to 43% in the prior year. This is a testament to the growing fee generating power of our business, making us increasingly less reliant on network volume expansion to drive bottom line growth.

Speaker Change: If our MPC margin increased 109 basis points year over year to three 8% the highest level since early 2022 or.

Evangelos Perros: Our personal loan business generated an average FRLPC margin of 6%, over 200 basis points above the blended average, and up 300 basis points compared to the same quarter last year. Additionally, in the first few weeks of the second quarter, we further improved unit economics with some of our lending partners as we scaled this channel. Hi, RFRLPC is translating directly to our bottom line.

Speaker Change: Our personal loan business generated an average I've already pursue margin up 6% over 200 basis points above the blended average and up 300 basis points compared to the same quarter last year.

Speaker Change: We grew fee rates across almost all of our personal loan lending partners in the quarter. Additionally in the first few weeks of the second quarter with further improved unit economics with some of our lending partners as we scale these channels.

Speaker Change: Hi, referring to proceed translating directly to our bottom line, we delivered record adjusted EBITDA of $40 million with an adjusted EBITDA margin of 16, 2%.

Evangelos Perros: We delivered record adjusted EBITDA of $40 million with an adjusted EBITDA margin of 16.2%. We also delivered our third consecutive quarter of positive GAAP operating income, which was $8 million in the quarter. Core operating expenses, which excludes stock-based compensation, depreciation, and one-time expenses, increased 4 million year over year and 10 million sequentially. Record funding of $1.9 billion led to elevated ABS set-up costs sequentially, which we expect to normalize in the second quarter, given the excess dry powder we raised to fund network volume. Additionally, we're lapping a one-time compensation benefit from the fourth quarter. The net loss attributable to Pagaya was $21 million, an improvement of $40 million from the prior year. Share-based compensation expense amounted to $15 million.

Evangelos Perros: Higher interest expense of $15 million reflects the addition of our new term loan facility in the first quarter. Credit impairments of $19 million after accounting for non-controlling interest on our investments in loans and securities represented less than 3% of our portfolio. We reported our fourth consecutive quarter of positive adjusted net income of $13 million, an improvement of $24 million compared to the prior year. Shifting now to discuss our approach to capital efficiency.

Speaker Change: We reported our fourth consecutive quarter of positive adjusted net income of 13 million, an improvement of $24 million compared to the prior year.

Evangelos Perros: First, let me discuss our funding in the quarter. Overall, funding markets are on a stronger footing than in 2023. We're seeing spreads in our 2024 deals reduced by 150 to 200 basis points compared to the peak in 2023. We took advantage of more favorable market conditions at the start of the year to raise $1.9 billion in funding, giving us excess dry powder of approximately $1 billion at the start of Q2. We added another 18 funding partners in the quarter.

Evangelos Perros: The tailwind of private credit deployment in consumer credit markets continues to work in our favor, with alternative asset managers being the majority of new funding partners we added in the quarter. Capital efficiency is a key enabler as we march toward our next financial milestone of reaching cash flow positive. Our strategy is focused on minimizing the amount of upfront capital we utilize to fund new network volume. We plan to do this in two ways.

Speaker Change: Our strategy is focused on minimizing the amount of upfront capital were utilized to fund New network volume we plan to do this in two ways first by diversifying our funding model with structures like whole loan sales or forward flow and second by executing more efficient ABS structures and financing arrangements.

Evangelos Perros: First, by diversifying our funding model with structures like whole loan sales or forward flow. And second, by executing more efficient ABS structures and financing arrangements. On diversifying our funding strategy, we executed a $50 million securitization in March that was uniquely structured to mimic a whole loan sale to investors. With this deal, we retain the net 1% vertical slice of the transaction. We have strong confidence we can scale programs like this one to reduce our up-front capital needs. We are in the midst of advanced discussions with several large asset managers to execute new forward flow and whole-loan sale arrangements, which we believe could exceed $1 billion in total size.

Speaker Change: On diversifying our funding strategy, we executed a $50 million securitization in March that was uniquely structured to mimic a whole loan sale to investors with this deal we retained a net 1% vertical slice of the transaction.

Speaker Change: We have strong confidence we can scale programs like this want to reduce our upfront capital needs. We are in the midst of advanced discussions with several large asset managers to execute new for workflow and whole loan sale arrangements, which we believe could exceed 1 billion in total size.

Evangelos Perros: In our core ABS funding model, we're solving for two things. Lowering net risk retention and improving the quality of the assets retained. We accomplish this by taking a larger gross portion of our deals with a higher quality mix of both debt and equity security. This enables more efficient financing, which results in single-digit net risk retention.

Speaker Change: In our core ABS funding model, we're solving for two things.

Speaker Change: Lowering net risk retention and improving the quality of the assets every day.

Speaker Change: We are accomplishing this by taking a larger gross portion of our deals with a higher quality mix of both debt and equity securities.

Speaker Change: <unk> enables more efficient financing, which results in single digit net risk retention.

Evangelos Perros: While we will dynamically adapt our funding strategy based on market conditions, our aim is to target an average net risk retention rate of 2-3% of network volume, with a diverse mix of funding sources. This is a key driver of our strategy to get to positive net cash flow by early 2025. Moving on to our balance sheet and cash flow, as of March 31st, our investments in loans and securities, net of non-controlling interest, were $804 million.

Speaker Change: While we will dynamically adapt our funding strategy based on market conditions. Our aim is to target an average net risk retention rate of 2% to 3% of network volume with a diverse mix of funding sources.

Speaker Change: This is a key driver of our strategy to get to positive net cash flow by early 2025.

Speaker Change: Moving onto our balance sheet and cash flow as of March 31st our investments in loan and securities net of Noncontrolling interest was $804 million.

Evangelos Perros: As a result of excess funding issuance, we added gross new investments in loans and securities of $262 million, offset by proceeds from securities of $36 million. We recorded net fair value adjustments which reduced the carrying value of the portfolio by $40 million in the quarter.

Speaker Change: As a result of excess funding issuance, we added gross new investments in loan and securities of $262 million offset by proceeds from securities of $36 million.

Speaker Change: We recorded net fair value adjustments, which reduced the carrying value of the portfolio of $40 million in the quarter.

Evangelos Perros: Cash and cash equivalents amounted to $310 million. We delivered our third consecutive quarter of positive cash flow from operating activities of $20 million, driven by FRAPC growth and continued operating leverage. Combined cash flow from investing and financing activities was $68 million, driven by our debt and equity capital raises in the quarter, offset by excess funding issued.

Speaker Change: Cash and cash equivalents amounted to $310 million.

Speaker Change: We delivered our third consecutive quarter of positive cash flow from operating activities of $20 million driven by FRE APC growth and continued operating leverage.

Speaker Change: Combined cash flow from investing in financing activities was $68 million driven by our debt and equity capital raises in the quarter offset by excess funding issuance.

Evangelos Perros: We expect additional financing on these issues to be executed in the second quarter. To close, our feed-generating business continues to deliver. We see a significant opportunity for further FRLPC expansion as we bring our newer lending partners to similar economics as our mature partners. We've demonstrated the operating leverage inherent in our B2B business, and we see opportunities to be more cost efficient and plan to execute on some of those initiatives over the next few months.

Speaker Change: We expect additional financing on this issuance to be executed in the second quarter.

Speaker Change: To close our fee generating business continues to deliver we see a significant opportunity for further fr LPC expansion as we bring our newer lending partners to the similar economics as our mature partners.

Speaker Change: With demonstrated the operating leverage inherent in our <unk> business, and we see opportunities to be more cost efficient and plan to execute on some of those initiatives over the next few months.

Evangelos Perros: On the capital side, we're entering 2024 in a stronger position to execute on our funding strategy, already proving our ability to do so in the first quarter, even in a continued challenging market environment. As we expand our fee generation and drive capital efficiency, we remain confident we can reach cash flow positive next year. Now, let me switch gears to our second quarter and 2024 financial outlook. Our key priorities this year are enhancing profitability and capital efficiency.

Speaker Change: On the capital side, we are entering 2024 in a stronger position to execute on our funding strategy already proving our ability to do so in the first quarter, even in a continued challenging market environment as.

Speaker Change: As we expand our fee generation and drive capital efficiency, we remain confident we can reach cash flow positive next year.

Speaker Change: Now, let me switch gears to our second quarter and 2024 financial outlook.

Speaker Change: Our key priorities this year are enhancing profitability and capital efficiency.

Evangelos Perros: Our guidance for the second quarter and the full year reflects a few key assumptions. First, we expect to continue to drive improved unit economics with our lending partners. We are focused on dynamically managing our portfolio as market conditions evolve to direct capital to our more profitable lending channels. Second, we expect to significantly scale our whole loan sale funding program and execute other structures like forward flow, along with raising additional secured borrowing to drive our net risk retention lower over the remainder of the year.

Speaker Change: Our guidance for the second quarter and the full year reflects a few key assumptions.

Speaker Change: We expect to continue to drive improved unit economics with our lending partnerships. We are focused on dynamically managing our portfolio as market conditions evolve to direct capital to our more profitable lending channels.

Speaker Change: Second we expect to significantly scale, our whole loan sale funding program and execute other structures like for flow along with raising additional secured borrowing to drive our net risk retention lower over the remainder of the year.

Evangelos Perros: In the second quarter of 2024, we expect network volume to range between 2.2 and 2.4 billion dollars, total revenue and other income to range between $235 and $245 million, and adjusted EBITDA to range between $40 and $45 million. We are reiterating our full year 2024 outlook. We expect network volume to range between nine and ten and a half billion dollars. Total revenue and other income is expected to range between $925 million and $1.05 billion, and adjusted EBITDA is expected to range between $150 and $190 million. With that, let me turn it back to the operator for Q&A.

Speaker Change: In the second quarter of 2024, we expect network volume to range between two two and $2 $4 billion.

Speaker Change: Total revenue and other income to range between 235, and $245 million and adjusted EBITDA to range between 40 and $45 million.

Speaker Change: We are reiterating our full year 2024 outlook, we expect network volume to range between nine and $10 $5 billion.

Speaker Change: Total revenue and other income to range between 925 million and $1 5 billion and adjusted EBITDA to range between 150 and $190 million.

Speaker Change: With that let me turn it back to the operator for Q&A.

Speaker Change: Thank you.

Operator: We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star, then 2. At this time, we will pause momentarily to assemble our roster.

Speaker Change: We'll now begin the question and answer session.

Speaker Change: To ask a question you May press Star then one on attached on phone.

Speaker Change: Using a speakerphone please pick up your handset before pressing the keys.

Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Operator: The first question comes from John Hecht with Jeffreys. Please go ahead.

Speaker Change: The first question comes from John Hecht.

John Hecht: With Jefferies. Please go ahead.

John Hecht: Thank you very much for taking my questions, and thanks for all the great detail on the call. You spent a lot of time on capital efficiency going forward, and you talked about forward flows, agreements, and whole loan sales. And, Gal, I think you cited maybe a billion dollars in the pipeline and a 2% goal for the committed capital. I'm just wondering, are those billion-dollar flow arrangements, are they going to come into effect this quarter, or is this just developments over the course of the year? I'm just wondering about the cadence of how to think about this.

John Hecht: Very much for taking my questions and thanks for all the great detail on the call.

John Hecht: You spent a lot of time on the capital efficiency going forward and you talked about forward flows agreements and whole loan sales.

John Hecht: <unk> I think you cited maybe $1 billion in the pipeline and a 2%.

John Hecht: <unk> for the committed capital.

Speaker Change: I'm just wondering what it was.

Speaker Change: Those billion dollar flow arrangements or are they going to come into effect in this quarter or is this just developments over the course of the year I'm just wondering about the cadence of how to think about this.

Gal Krubiner: I think the way to think about it is that we are very focused on these points, as you mentioned, and I did mention that in my previous script. The main thing to consider is the following, because we have such a vast majority of connections to the biggest asset managers in the world. We actually already have all the connectivity to the folks we are discussing, so what we're just now focusing on moving these relationships, which have been, as you can imagine, very strong and robust on the ABS, to lead to a transaction that is both on the path through structures which are making us retain a much smaller piece, and both on the forward flow agreements.

Speaker Change: Hi, John.

Speaker Change: It got here. Thank you very much for your question.

Speaker Change: I think the way to think about it is we are very focused on these points as you mentioned and we mentioned that in my.

Speaker Change: You may previous script. The main thing to consider is the following because we have such a vast majority of connections to.

Speaker Change: So the biggest asset managers in the world, we actually already have or liquid activity to the folks will discussing with so what we're just now focusing is to move these relationships that has been as you can imagine very strong and robust when the avs.

Speaker Change: To bleed to transactions that are both on the pass through structures, which are making us retain much smaller base and both on the forward flow agreements.

Gal Krubiner: We're actually having talks with a few counterparties to be able to come through in the very near future. So we are now in the midst of negotiation, and we hope very, very soon we are going to land and announce this as such.

Speaker Change: They were actually having with few counterparties.

Speaker Change: To be able to come fruit in the very near future. So we are now in the men's of negotiation and we hope very very soon we are going to to London to announce these as such.

John Hecht: Okay, great. Thanks very much. And then you had a lot of very big ads for partners on the lending front in the latter part of last year, and I know there's an onboarding process, and you know there's a period of ramp-up that occurs. I'm wondering how those new partnerships are ramping relative to expectations.

Speaker Change: Okay, great. Thanks, very much and then.

Speaker Change: You had a lot of very big ad.

Speaker Change: Partners on the lending front.

Speaker Change: In the latter part of last year and I know there is an onboarding process.

Speaker Change: Yes.

Speaker Change: A period of ramp that occurs I'm wondering how those new partnerships or are ramping relative to expectations.

Sanjiv Das: Hi John, I'll take this. This is Sanjiv.

Speaker Change: Hi, John I'll take this this is sanjiv.

Sanjiv Das: A couple of things. One is, you know, we talked about the new partners that we onboarded last quarter, but we also talked about the disciplined approach with which we sort of monitor the volumes. There are a couple of things, John, that I've looked at.

Sanjiv: A couple of things one is.

Sanjiv: We talked about.

Sanjiv: The new partners that we've on boarded last quarter.

Sanjiv: You also talked about the disciplined approach with which we sort of monitor the volumes. There are couple of things John that I've looked at one is I want to make sure.

Sanjiv Das: One is I want to make sure that the quality of the flow is very carefully monitored before we sort of turn on the taps completely. And that's what we are doing in the first quarter; we are, you know, watching for DTI and TV, those kinds of things as we are taking on new partners. And getting ready for the flow. What I'm seeing so far is that the quality is actually pretty good.

Sanjiv: That the quality of the flow is.

Sanjiv: Before we sort of turn on the taps completely to the quality of the flow is very carefully monitored and that's what we're doing in the first quarter.

Sanjiv: Watching for DTI LTV those kinds of things that we're taking on new partners.

Sanjiv: And getting ready for the fleet, what I'm seeing so far is that the quality is actually pretty good.

Sanjiv Das: And the other thing is, with some of these auto partners, obviously, as you know, we go dealer by dealer by dealer. And so it takes a little bit of time to ramp it up. By the time we get to full potential, it's normally six to nine months in terms of steady state, and we want to do this the right and disciplined way.

Sanjiv: <unk>.

Sanjiv: The other thing is.

Sanjiv: With some of these order partners, obviously as you know we go dealer by dealer by dealer and so it takes a little bit of time to ramp it up by the time, we get to full potential it's normally six months to nine months in terms of steady state.

Sanjiv: And we want to do this right and disciplined way.

Sanjiv Das: Take the case of different sectors, US Bank, for example. We are seeing enriched customer data coming in. So we sort of look at that to see how we can continue to improve the quality of. So facing ourselves, and before we wrap.

Sanjiv: Take the case of different sector U S. Bank. For example, we are seeing enriched customer data coming in so we sort of look at that to see how we can continue to improve the quality of the flow so basing ourselves.

Sanjiv: And before.

Sanjiv: Before we wrap this up.

Gal Krubiner: That's very helpful, and I appreciate the focus on the flow. My final question is, you know, the point-of-sale verticals, which are becoming increasingly important, you know, and a good driver of growth. I'm wondering, can you maybe just give us the characteristics of the typical loan, the structure of the typical loan in that channel relative to, say, the installment loan business?

Speaker Change: That's very helpful and.

Speaker Change: I appreciate the focus on the float.

Speaker Change: Final question is the point of sale verticals.

Speaker Change: It's becoming increasingly important.

Speaker Change: And in a good driver of growth I'm wondering can you can you maybe just give us the characteristics of the typical loan his structure of the typical loan in that channel relative to say the installment loan business.

Gal Krubiner: Yeah, John, so let me start giving the high level of how we think about it, and then Sanjiv will get into specifics in detail. So POS is definitely one of the frontiers for growth for us, mainly because today. literally, all of the banks are looking to have that as a product. And this is one of the areas where we have the strongest pipeline of partners, and banks are calling us and asking the question of how we can help them accelerate their penetration into this market.

Speaker Change: Yes, So let me, let me start giving the high level of how we think about it and then send you wouldn't get into specifics in it.

Speaker Change: <unk> is definitely one of the frontier for growth for us mainly because today.

Speaker Change: Literally all of the banks are looking to have that as a as a product.

Speaker Change: And this is one of the areas, where we have the strongest pipeline of parallel than banks are calling us and asking the question of how can we help them accelerate.

Speaker Change: Their penetration into this market to market at the banks were a little bit left behind and now now looking to keep up with the Fintech and <unk> quite frankly is maybe.

Gal Krubiner: So it's a market that the banks have a little bit left behind, and they are now looking to keep up with the fintechs. And Pagaya, quite frankly, is maybe the only, the best solution that allows them to keep the customers and not give them to anyone else but, at the same time, offer that outcome. And for us and for the bank, it's very clear why to partner with someone that you need to give up on the customer when you can partner with Pagaya to be able to completely keep the customer. So that's the thesis that we have.

Speaker Change: The only the best solution that allows them actually to keep their customers and give it to anyone else, but in the same time to offer that outcome and for us and for the banks, it's very clear why to partner with someone that you need to give up on the customer when you can partner with <unk> to be able to completely keep the customer so that's that.

Speaker Change: The thesis.

Speaker Change: That we have and Thats, where the excitement that we see from the banks.

Sanjiv Das: And that's the excitement that we see from the banks. The first piece that you can appreciate on the non-bank side is the typical payment method that exists out there. And then there is some kind of progression or maturation into loans of like six to 12 months. Again, a very interesting play for Pagaya because we have so much knowledge and capabilities on the full personal loan spectrum. We are coming as a very natural add-on for this and helping the BNPL providers to have an enhancement in their ability to collect fees by extending loans to that. Sanjeev, do you want to add anything?

Speaker Change: The first piece that you can appreciate on the nonbank side is a typical paying forward that exist out there and then there is some kind of a progression or mature.

Speaker Change: Two loans of like six to 12 months again, a very interesting play for it but because we have so much knowledge and capabilities on the full builds on our loan spectrum. So we are coming as a very natural add on for days and helping the BNP provide us to have an enhancement in their ability to collect.

Speaker Change: Fees by by extending loans to that center, if they want to add anything.

Sanjiv Das: Sure. I mean, look, as both of you said, the POS is, in fact, the fastest-growing sector in the consumer world. As a former banker, I know that when we were moving from personal installment loans to purpose-driven loans, the quality of the credit was substantially higher. There are three major categories, John, that we are seeing this growth in within POS. One is in health, one is in education, and then, of course, in medical – sorry, in home improvement. So those are the three major sectors that we are seeing growth in. And the term structure is very similar to personal loans, which is why it fits Pagaya's model perfectly. I appreciate it.

Speaker Change: I mean look as both of you said.

Speaker Change: The Pos is in fact, the fastest growing sector in the consumer world as a former banker I know that when we were moving from personal installment loans to two purpose driven loans that the quality of the critical substantially higher there are three major categories. Jon that we are seeing this growth within the U S. One is in health one is in <unk>.

Speaker Change: Education, and then of course.

Speaker Change: Medical Oh, sorry in home improvement. So those are the three major sectors, where we are seeing growth in the term structure is very similar to personal loans, which is a fixed per <unk> model perfect.

Operator: Great, I appreciate all that color. Thanks, guys.

Speaker Change: Great I appreciate all that color thanks, guys.

Speaker Change: Okay.

Speaker Change: Thank you.

Operator: The next question comes from Joseph Vafi with Canaccord Genuity. Please go ahead.

Speaker Change: The next question comes from Joseph <unk> with Canaccord Genuity. Please go ahead.

Joseph Anthony Vafi: Hey, everyone. Good morning, and great to see all the progress both on partners, P&L, balance sheet, and all facets of the business. That's great. I just thought we'd start it, you know, looking at the shareholder letter. It looked like total application flow was up about 5%, but obviously, network volume was up more than application flow. I was wondering if we could kind of drill down into underwriting in the quarter a little bit and what might have been driving the higher network volume versus application flow, and then I'll have a follow-up.

Joseph: Hey, everyone. Good morning, and great to see all the progress both on partners.

Joseph: P&L balance sheet, all facets of the business that's great just I thought we'd start looking at the shareholder letter it looked like.

Speaker Change: Total application flow.

Joseph: Was up about 5%, but obviously network volume was up more than an application flows wondering.

Speaker Change: Drill down in to underwriting in the quarter a little bit in.

Speaker Change: What might've been.

Speaker Change: Driving the higher network volume versus application flow and then I'll have a follow up.

Evangelos Perros: Thanks for the question. I'll take that.

Speaker Change: Yes, thanks for the question I'll take that.

Evangelos Perros: So look, application flow continues to grow. And, as Gal and Sanjiv mentioned, the value proposition of our product is quite unique. So as we add more partners, application flow will continue to grow and has been doing that for the last few quarters. What we are doing, we're very disciplined in our approach and focusing significantly more on the channels that will drive growth that have higher unit economics and drive higher FRPC. And as a result, those channels will have more mature relationships.

Speaker Change: So look application flow continues to grow and Scotland since you've mentioned the value proposition of our product is quite unique so as we add more partners application flow will continue to grow and has been doing that for the last two quarters.

Speaker Change: What we are doing we're very disciplined in our approach and focusing significantly more on the channels that will drive that have higher unit economics and drive higher occupancy and as a result, those other channels will have more mature relationships. So that's why you would see effectively network volume growing by a faster rate than the application flow that horse.

Evangelos Perros: So that's why you would see effectively network volume growing by a faster rate than the application flow that we're seeing. So let's think about it as a higher conversion ratio for those types of channels where we get higher economics.

Speaker Change: So, let's think about it as a higher conversion ratio for those types of.

Speaker Change: Channels that we get higher economics, and Joe maybe one add on on this do you think about it that as we move into.

Gal Krubiner: And Joe, maybe one add-on to this. What do you think about it as we move into... stronger institutions that have higher quality of flow? You will expect to see lower growth on the application, but every application means much more because it's much more, call it, a likely borrower that we would like to lend to. So there is an inverse of, like, as the company gets bigger, and therefore we are lending more unique marquee partners, the ratio between the two is rather.

Joe: Stronger institution.

Joe: That have higher quality of flow you will expect to see lower growth on the application, but every application means much more because it's much more call it likely boiler that we would like to lend to.

Joe: So there is an inverse of like as the company get bigger and therefore, we are lending more unique murky.

Joe: <unk> the ratio between the two is rather different.

Evangelos Perros: Sure, that's great and makes a lot of sense. And then secondly, I appreciate the movement to new funding sources to reduce net retention. I think that's a big positive here. Just wondering if you move to forward flows or other vehicles, is there a potential impact down the line on FRLPC upside from the investment side of the business? Thanks a lot, guys. Great, great results.

Speaker Change: Sure that's great and makes a lot of sense.

Speaker Change: And then secondly, I appreciate that.

Speaker Change: The movement to new funding sources.

Joe: Reduce net retention that I think.

Joe: A big positive here just wondering if if you move to a forward flows or other vehicles is there a potential impact down the line in fr LPC upside.

Joe: From the investment side of the business.

Speaker Change: Thanks, a lot guys great great results.

Evangelos Perros: Thank you for the question. No, I think we'll continue to, as you have seen, right; we're accelerating the fee generation power of the business and improving the unit economics. Obviously, the diversification of the funding sources will allow us to lower the net retention of what we're keeping from the deals, but I think over time we will continue to see that growth in FRLPC while we continue to diversify this type of, diversify the funding sources. So overall, as we look forward, we do expect FRLPC to range between 3 to 4 percent in line with what we have provided in terms of guidance before.

Speaker Change: Thank you for the question.

Speaker Change: No I think we'll continue to as we have seen that we are accelerating the fee generation power of the business and improving the unit economics, obviously, the diversification of funding sources will allow us to lower that net retention of what we're keeping from the deals but I think over time, we will continue to see that growth and therefore.

Speaker Change: MPC, while we continue to diversify this type of.

Speaker Change: Diversify the funding sources. So overall as we look forward, we do expect <unk> to range between the 3% to 4% in line with what we have provided in terms of guidance before.

Operator: Great. Thanks a lot.

Speaker Change: Great. Thanks, a lot.

Speaker Change: Thank you.

Operator: The next question comes from Michael Legg with a benchmark. Please go ahead. Thanks, good morning.

Speaker Change: The next question comes from.

Michael Frederick Legg: Michael Legg with.

Michael Frederick Legg: Benchmark. Please go ahead.

Michael Frederick Legg: Thanks, good morning, and great results guys. Question on the 1.9 billion raised: what was the cost of capital after you'd been expenses for that?

Michael Frederick Legg: Thanks, Good morning, and great results guys.

Michael Frederick Legg: Question on the $1 9 billion raised what was the cost of capital and expenses for that.

Gal Krubiner: Hi, Mike. It's Gal. So, cost of capital for this transaction, think about it from an IG perspective: it's trending below the seven. So really robust and much stronger, like a lower cost of capital compared to what we had in the past. And even a little bit the IG, something around the eight.

Scott: Hi, Mike its Scott.

Scott: So cost of capital for this transaction and think about it from an idea perspective, it's trending below the seven.

Michael Frederick Legg: So really robust and much stronger like lower cost of capital of what we had in the past and even a little bit the IAG something around the <unk>.

Michael Frederick Legg: Okay. Great. Thanks. And then on the investment loans and securities of the $800 million, do you have the tranches on that? Like how many are from 23 issuances versus 21, 22? Do we have a breakout on that?

Speaker Change: Okay, great. Thanks, and then on the.

Michael Frederick Legg: And gasoline in loans and securities of the $800 million do you have the.

Speaker Change: Tranches on that like how many are from 23, three issuances was 'twenty one 'twenty two we have a breakout on that.

Evangelos Perros: So yeah, I'll take that. The majority of what we currently have in the portfolio is driven by the 2023 and then 2024 vintages, as the previous vintages have mostly paid down or amortized. As we look forward, one of the things I want to highlight is that in the recent transactions that we did, it's important to remember that the mix of the portfolio is shifting. In the last deal that we did, we did get much more of the debt versus the equity securities.

Speaker Change: So yes, I'll take that so majority of what we currently have in the portfolio is driven by the 2023 and 2024 vintages as the previews vintages has mostly paydown or amortize.

Michael Frederick Legg: As we look forward one of the things I want to highlight is that in the recent transactions that we did.

Michael Frederick Legg: It's important to remember is that the mix of the portfolio is shifting and the last deal that we did we did get a much more of the debt versus the equity securities. So the quality of the portfolio is improving.

Evangelos Perros: So the quality of the portfolio is improving. And actually, that has two very positive implications. First, we are able to secure better financing because the debt can now support the pay down of the secured borrowings. And more importantly, given the mix and the quality of what we're retaining, it is actually expected to be accretive both to the P&L and the balance sheet overall.

Michael Frederick Legg: And actually that has two very positive applications first we arent able to secure better financing because that can now support the pay down of the secured borrowings and more importantly, given the mix and the quality of what we're retaining it is actually accretive to both the expected to be accretive both to the P&L.

Michael Frederick Legg: And the balance sheet overall.

Gal Krubiner: Great, thanks. And then just last question, just on the consumer, are you seeing anything regionally or anything that gives any indication of what you're seeing with the consumer? Thanks.

Speaker Change: Great. Thanks, and then just last question just on the consumer or are you seeing anything regionally or anything that gives us any indication of what you're seeing with the consumer.

Gal Krubiner: Yeah, so I just want to set the stage, as you know, but just repeating for all the folks on the call, Pagaya is in a unique place that can see, quite frankly, most of the consumer credit trends. The fact that we are connecting to 30-plus originators gives us a very wide understanding of how these trends are actually happening. So we have a very unique vantage point on that, what we are seeing, and I think you heard us talking about the 2023 vintage, is, especially on the personal loan, but generally on consumer credit, that there is a very steady environment already since the start of 2023.

Speaker Change: Yes, so I just wanted to say at this stage.

Michael Frederick Legg: No, but just repeating for all the folks on the call <unk> is in a unique place.

Michael Frederick Legg: That can see.

Michael Frederick Legg: Quite frankly, most of the consumer credit trends. The fact that we are connecting to a 30 plus originators.

Michael Frederick Legg: Give us a very wide understanding of how these trends are actually happening. So we have a very unique vantage point on that.

Michael Frederick Legg: What we are seeing and I think you heard us talking on the 2023 vintages.

Michael Frederick Legg: Especially on the vessel alone, but generally in the consumer credit that there is a very steady.

Gal Krubiner: You did hear some different narratives, I would say, with different earnings calls from different companies. So, we heard and saw a little bit of softening on the higher FICO type of thing, but from our perspective, it's really driven because of higher demand for these segments. So, think about it. As people migrated from the more average FICO to the higher FICO, they created a little bit of over competition, and therefore, losses are a little bit higher there.

Michael Frederick Legg: <unk> already since the start of 2023, you did hear some different narratives I would say.

Michael Frederick Legg: With the financing cost of different companies, so we heard and so a little bit of softening on the <unk>.

Michael Frederick Legg: Higher FICO type of thing, but from our perspective is really driven.

Michael Frederick Legg: Because of higher demand for these segments. So as I think about it as people migrated from the more average FICO to the higher FICO, they created a little bit over competition and therefore losses are a little bit higher data. We are not playing in that segment, because we don't see the value there per se right now.

Gal Krubiner: We are not playing in that segment because we don't see the value there per se right now, and we are sticking to the 670, 680. That's the areas where we are operating there. And over there, the performance, as I've mentioned, is very stable since 2023, and we are hopeful and looking forward to continuing to watch it as a hawk as we go into 2024.

Michael Frederick Legg: Speaking today 70, 680, that's the areas, where we are operating hit down in <unk>.

Michael Frederick Legg: The performance as I've mentioned is very stable.

Michael Frederick Legg: 2023, and we are hopeful and looking forward to continue to what she does it help as we go into 2024.

Operator: Great. Thanks. Great quarter, guys.

Speaker Change: Great Thanks, great quarter guys.

Speaker Change: Thank you.

Operator: The next question comes from the line of David Scharf with Citizens JMP. Please go ahead.

Speaker Change: The next question comes from the line of.

Speaker Change: David Scharf with citizens JMP. Please go ahead.

David Michael Scharf: Great, good morning, and thanks for taking my questions as well. I had a general question about unit economics and how we ought to think about them evolving. There are obviously a lot of moving pieces associated with how... Rapidly, you're growing both asset classes beyond personal loans as well as exploring new funding structures. Maybe I have a question for you, Evangelos.

David Michael Scharf: Great Good morning, and thanks for taking my questions as well.

David Michael Scharf: Okay.

Speaker Change: Hello.

David Michael Scharf: General question about unit economics, and how we ought to think about them evolving there obviously a lot of moving pieces associated with <unk>.

Speaker Change: Rapidly youre growing.

Speaker Change: Both.

Speaker Change: Asset classes beyond personal loans as well as exploring new funding structures.

Speaker Change: A question for you of Angelus.

Evangelos Perros: You know, personal loans are the most profitable product. Does the FRLPC margin... Does it change over time as you do more auto and more point-of-sale lending versus personal loans? And then, on the funding side... Do the fees from your capital markets, you know, partners, and the economics of that change?

Speaker Change: Personal loans is the most profitable product.

Speaker Change: Fr LPC margin.

Speaker Change: Does it change over time as you do more auto and more point of sale lending versus personal loans.

Speaker Change: And on the funding side.

Speaker Change: The fees from your capital markets.

Speaker Change: Partners.

Speaker Change: To the economics of that change as you engage in more whole loan sales and forward flows just trying to understand as the business evolves. It sounds like it may be considerably different mix, even just 12 months from now whether that impacts.

Speaker Change: Consolidated unit economics.

Evangelos Perros: Thanks for the question. Look, we see very positive momentum in our FIBC growth, right, and it's actually faster than we expected, partly because of the value proposition that we're offering to our lending partners and also because of our disciplined approach this year to focus on the higher sort of fee-paying partnerships. And as you pointed out, PL is now at 6% this quarter, which is the highest it has been in our history, up 300 basis points year over year. And we believe we can achieve the same things for auto and even POS over time.

Speaker Change: Great. Thanks for the question.

Speaker Change: Look we see very positive momentum on auto policy growth right and it's actually faster than we expected.

Speaker Change: Approximately obviously because the value proposition that we're offering to our lending partners and also because of our disciplined approach this year to focus on the higher sort of fee paying partners.

Speaker Change: Partnerships and as you pointed out.

Speaker Change: Now at 6% this quarter, which is the highest it has been in our history.

Speaker Change: Up 300 basis points year over year and we.

Speaker Change: We believe we can achieve the same things, we're all doing even tos.

Speaker Change: Im obviously those continue to be investment areas for us. So there are a few years.

Evangelos Perros: Obviously, those continue to be investment areas for us, so they're a few years behind, let's say, the personal loan, but the playbook is the same, and we know we can achieve that in those verticals as well. Now, as to your question, generally, as we look ahead, we have given you guidance historically of FIBC being between 3% and 4%, and even though this quarter, again, is 3.8 on the higher end of the range, it's always going to be a mix of partners, between new partners coming in that are coming in at lower economics, and that being offset by the higher fee-paying channels.

Speaker Change: Behind let's say than the personal loan, but the playbook is the same and we know we can achieve that in growth verticals as well.

Speaker Change: Now to your question generally as we look ahead.

Speaker Change: We have given you guidance.

Speaker Change: Historically, our foreign APC being between three and 4% and even though this quarter again reporting made one on the higher end of the range, it's always going to be a mix of partners between new partners coming in that are coming in at the lower economics, and that's being offset by the higher fee paying channels. So we feel very comfortable about continuing.

Evangelos Perros: So, we feel very comfortable about continuing at 3% to 4%. When it comes to funding, capital market fees are pretty much the same. They don't really change between the different products across ABS and some of the other funding sources that we're using. And over time, given the unmatched access to capital that we have through the network of over 115 partners, we can achieve these new diversified sources of funding with the goal of getting to an average of 2 to 3 percent.

Speaker Change: 2% to 4% when it comes to funding.

Speaker Change: Capital markets fees are pretty much the same and they don't really change between the different products.

Speaker Change: Across ABS and some of the other funding sources that we're using.

Speaker Change: And over time give.

Speaker Change: Given the unmatched access to customer with half of the network of over 115 partners.

Speaker Change: We can achieve this new diversified sources of funding.

Speaker Change: A goal of getting to an average 2% to 3% net retention over time across all verticals.

David Michael Scharf: Got it. No, that's very helpful.

Speaker Change: Got it no that's very helpful and.

Speaker Change: On the risk retention front it sounds like Youre in a lot of advanced discussions on making terrific progress there.

Evangelos Perros: And on the risk retention front, it sounds like you're in a lot of advanced discussions and making terrific progress there, as we think about modeling, of the balance sheet exposure. With that 2-3% of network volume target, do you have a time frame in mind when you hope to be able to achieve that? I mean, is that as early as the end of the current year, or is that a... and the longer term goal?

Speaker Change: Yes.

Speaker Change: As we think about modeling.

Speaker Change: The balance sheet.

Speaker Change: Sure.

Speaker Change: With that 2% to 3% of network volume target.

Speaker Change: Do you have a timeframe in mind when you hope to be able to achieve that I mean is that is that as early as the end of the current year or is that a.

Speaker Change: Kind of longer term goal.

Evangelos Perros: Yeah, so always in the 2-3% is an average that we expect to achieve over time, and we have actually demonstrated that in our history, if you go back. What I would say is we're progressing in a very fast way, diversifying our funding sources. We're already in discussions with multiple parties to execute on forward flow agreements for whole load sales that could lead up to a billion dollars each. I can't speak specifically on the timing, but overall, we're progressing over the year, and we do expect to see some of those great benefits for the remainder.

Speaker Change: Yes.

Speaker Change: So obviously, the 2% to 3% as an average that we expect to achieve over time and we will.

Speaker Change: We've actually demonstrated that in our case of if you go back.

Speaker Change: What I would say is we're progressing.

Speaker Change: In a very fast way of diversifying our funding sources, we're already in discussions with multiple parties.

Speaker Change: To execute on.

Speaker Change: Forward flow agreements for whole loan sales that could lead up to a billion dollars of it and I can't speak specifically on the timing, but overall, we're progressing over the year, we do expect to see some of those benefits for the remainder of the year.

Evangelos Perros: Great, and if I can just add one quick maybe product question, specifically for Elevon, you know. It's the old Nova Merchant Solutions, one of the world's largest merchant processors. Are they actually providing point-of-sale loans currently? I wasn't exactly sure about what the product set is at Elev.

Speaker Change: Great and if I can just add one.

Speaker Change: Quick maybe product question.

Speaker Change: Specifically for Elevon.

Speaker Change: I know, it's the old Novo merchant solutions.

Speaker Change: One of the world's largest merchant processors.

Speaker Change: Are they actually providing.

Speaker Change: Point of sale loans currently.

Speaker Change: It wasn't exactly sure.

Speaker Change: Maybe what the product set is.

Speaker Change: Hello upon.

Sanjiv Das: Hi David, I'll take it. This is Sanjiv.

Speaker Change: Hi dividend take this essentially the short answer is.

Speaker Change: We are about to with the <unk> solution and so for example, we met with the NPL.

Sanjiv Das: The short answer is that they are about to with the Pagaya solution. And so, for example, we met with the BNPL POS lending head, and we know that that's the direction they want to go in. And as you rightly pointed out, they are a top five payment processor. And listen, my background, from Fiserv data, demonstrates that the ability for a payment processor to add more value to the merchant at the point of sale is really what is critical to them. And we've been talking about very, very late stage. I mean, obviously, onboarding right now in terms of making sure that we fulfill their second value proposition.

Speaker Change: NPL Pos lending head.

Speaker Change: And we know that thats the direction they want to go in and as you rightly pointed out they are a top five payment process and listen my background return from Fiserv first data demonstrates that the ability to for a payment processor to add more value to the merchant at the point of sale is really what is what is critical to them and we've been talking about.

Speaker Change: Very very late stage Permian, obviously on boarding right now on in terms of making sure that we will do.

Speaker Change: Their second look value proposition.

Gal Krubiner: And David, as you can think about that, it's exactly what I was mentioning when I spoke about POS. This is a great use case of someone who is looking to, a bank that is looking to enhance their capabilities, and obviously, we love them and they are a very good partner and have a lot of capabilities, and together with Pagaya, the ability to open that and become a major business for them, obviously not just on us, we are the complementary piece, is a very appealing value proposition for them and, quite frankly, for us. Great, great.

Speaker Change: And David as you can think about that that's exactly what it was mentioning when I spoke about pass this is a great use case.

Speaker Change: Of someone who is looking to.

Speaker Change: Banks that is looking to enhance their capabilities and obviously, we love them in a really good partner and there's a lot of capabilities and together with <unk> the ability to open that and become a major business for them, obviously not just on US we are as a complementary piece.

Speaker Change: He is a very appealing value proposition for them and quite frankly for us there.

David Michael Scharf: Great, great. Now, that's an exciting development. I mean, it kind of potentially opens up the broader merchant processing vertical to the extent that they want to get into point-of-sale.

Speaker Change: Great Great. That's an exciting development I mean, it kind of potentially opens up the broader merchant processing.

Speaker Change: Vertical to the extent they want to get into point of sale lending. Thank you very much.

Operator: Thank you very much. Thank you. Thank you. The next question comes from Hal Coach with B Riley. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: The next question comes from Al <unk> with B Riley. Please go ahead.

Operator: Thank you. Hey, great quarter, guys. My question is on the automotive channel.

al: Hey, Great quarter guys. My question is on the automotive channel could you just give us an update on automotive partners like ally and others, where theyre at in their rollout by state or by a number of dealerships and how the overall auto business is going for you.

Harold Lee Goetsch: Hi, Harold, it's Gal. I will take a question here. So, yeah, definitely, as we said, the auto loan, the auto space is something that we have been working on a lot less. And we are definitely focusing on completing the rollout in LA. There are a few states left.

Speaker Change: I have got I will take your question here.

Speaker Change: So yes definitely.

Speaker Change: As we said out alone.

Speaker Change: Delta space is something that we had been working a lot less deal.

Speaker Change: And we are definitely focusing on completing the rollout on highlight a few states left.

Gal Krubiner: And on Westlake and others, we are continuously improving the product and finding the right place where we can add the most amount of value. Auto loan, in general, I would say, was a little bit softer throughout the year from the world of funding, et cetera, and what it has been through in this type of environment for that specifically versus auto loan. And therefore, when we are disciplined, focused on higher unit economics and higher return, et cetera, we might shift more towards the PLO, the other things, or deprioritize.

Speaker Change: On Westlake and other we are continuously improving the product and finding the right place, where we can add the most amount of value.

Speaker Change: Auto loan in general I would say was a little bit softer throughout the year from <unk>.

Speaker Change: World of funding etcetera.

Speaker Change: What has been through.

Speaker Change: In this type of in this type of environment that specifically versus auto loan and therefore, when we our disciplined focus on higher unit economy on higher return et cetera, we might shift more towards the PLO. The other thing, though de prioritize and.

Gal Krubiner: And as we see things are becoming stronger in different places, we are over-allocating there. I think it's a very good use case for how Pagaya has solved both the long-term growth and the ability to lend more partners and increase the network capabilities, but at the same time, managing the short-term goals of shifting capital between different parts to make sure we are lending on the right financial.

Speaker Change: And as we see things will be coming in stronger and if one day says we are allocating their I think it's a very good year.

Speaker Change: Use case to help with <unk>.

Speaker Change: Having.

Speaker Change: Both the long term growth and the ability to lend more pulp mills and to increase the network capabilities, but.

Speaker Change: But in the same time, managing the short term goals of.

Speaker Change: Shifting capital in between different parts to make sure we are lending on the iPhone inkjet site.

Speaker Change: Okay.

Operator: Does that answer your question, Mr. Goetz? We move to the next question. The next question comes from Sanjay Sakrani with KBW. Please go ahead.

Speaker Change: Does that answer your question.

Speaker Change: Best of luck.

Speaker Change: Yeah.

Speaker Change: We move to the next question. The next question comes from Sanjay <unk> with <unk>. Please go ahead.

Speaker Change: Hi, This is actually Steven Kwok filling in for Sanjay. Thanks for taking my question within the prepared remarks, you talked about them further improving the unit economics and that you've made some additional changes in the first few weeks of the second quarter could you just provide an update around where we are within the process and then how does the benefit.

Speaker Change: Flow through do we see it on the take rate side or is it on the production cost side or is it both.

Operator: Hi, thanks for the question and I'm looking forward to working together. So, to your point, what we are doing, as we said, right now, our strategy is now to continue to be very disciplined and improve unit economics across the portfolio. And what I wanted to highlight in the prepared remarks is that we actually continue to take more action, as we did in the early part of Q2, to continue to improve fees as our value proposition to our lenders continues to resonate.

Speaker Change: Hi, Thanks for the question and looking forward to.

Speaker Change: Working together.

Speaker Change: So to your point, what we are doing as we said right. Our strategy is now to continue to be very disciplined and improving unit economics across the portfolio.

Speaker Change: And what I wanted to highlight there in the prepared remarks is that we actually continue to take more action as we did in the early part of Q2 to continue to improve the fees as our value proposition to our lenders continues to resonate. So obviously that will take over time and we expect that to.

Operator: So obviously, that, you know, will take time, and we expect that to basically translate to higher FRLPC and get the full benefit of that into sort of the second half of Q2, most importantly into a full quarter impact in Q3. And that will come both, to your point, reflected both on the take rate as well as obviously the FRLPC rate. And if I may, I just wanted to add something to

Speaker Change: Basically the translate to higher.

Speaker Change: Apples to apples basis higher for MPC and get the full benefit of that into sort of second half grow to almost like most importantly into.

Speaker Change: A full quarter impact in Q3.

Speaker Change: And that will come both to your point.

Speaker Change: That reflected both on the take rate as well as obviously the VFR NBC right.

Evangelos Perros: And if I may, I just wanted to add to what Yipi just said, which is again part of our remarks, and Sanjay, good to talk to you again. I will say that in terms of our pricing power today in the market, I feel very, very confident that we will be able to deliver the FRLPC number that we are projecting to sort of talking about in Q3. I will say to you, just cut to the chase here: in many of our top five accounts, we have a dominant share of their business, and we are realizing that our ability to work closely with them to increase our pricing power is actually very, very high.

Speaker Change: And if I may I, just wanted to add to what <unk> said, which is again part of our remarks and Sanjay good to talk to you again.

Speaker Change: I will say that in terms of our pricing power today in the market.

Speaker Change: We are very confident to be able to deliver FRP C. 100, <unk> number that we're projecting sort of talking about in Q3, I would say to you Scott to the chairs here in our many of our top five accounts, we have a dominant share of their business and we are realizing that our ability to work closely with them to increase our presence is actually a very very high.

Speaker Change: Yes.

Speaker Change: Great. Thanks for taking my question.

Speaker Change: Thank you.

Gal Krubiner: This concludes our question and answer session. I would now like to turn the conference back over to Gal Krubiner for a closing remarks.

Speaker Change: This concludes our question and answer session I would now like to turn the conference back wall to wall Cubana for closing remarks.

Wall Cubana: Thank you.

Gal Krubiner: So to close, I want to speak for a minute on our growing value proposition in the U.S. lending ecosystem. We have truly unique solutions for lenders in the U.S. that can add real value immediately. You're seeing this reflected in the additions of top banks and lenders to our network, the increasing fees we're earning, and the rapid pace of funding that we are bringing to our network. Thank you all for joining today, and I look forward to our continued partnership in the future. Thank you. The conference has now concluded. Thank you for attending today's presentation.

Cubana: So to close I want to speak for a minute on our growing value proposition in the U S lending ecosystem.

Operator: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Wall Cubana: We have a truly unique solution for lenders in the U S that can add real value immediately.

Cubana: Youre seeing this reflected in the additions of top banks and lenders to our network.

Cubana: The increasing fees, we're earning and the rapid pace of funding that we're bringing to our network.

Speaker Change: Thank you all for joining today and I look forward to our continued partnership into the future.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Speaker Change: Okay.

Speaker Change: [music].

Operator: BF-WATCH TV 2021

Speaker Change: Yeah.