Q2 2024 Pagaya Technologies Ltd Earnings Call

August 9, 2024

Jency John: Greetings and welcome to Pagaya's second quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker Change: Greetings and welcome to Pagaya Second Quarter 2024 Earnings Conference Call.

Operator: At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Jency John: A brief question-and-answer session will follow the formal presentation.

Speaker Change: At this time, all participants are in a listen-only mode.

Jency John: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Speaker Change: A brief question and answer session will follow the formal presentation.

Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Operator: As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Ms. Jency John, Head of Investor Relations. Thank you, Ms. John. You may begin.

Jency John: It is now my pleasure to introduce your host, Ms. Jenty John, head of In the Situations.

Speaker Change: It is now my pleasure to introduce your host, Ms. Jency John , Head of Investor Relations. Thank you, Ms. John . You may begin.

Jency John: Thank you, Ms. John. You may begin. Thank you and welcome to Pagaya's second 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. 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.

Jency John: Thank you, and welcome to Pagaya's second 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.

Speaker Change: [inaudible]

Speaker Change: Thank you and welcome to Pagaya's second 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. 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.

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 third quarter and full year of 2024.

Jency John: 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 third quarter and full year of 2024. 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 in our Form 10-K filed on April 25, 2024, with the US Securities and Exchange Commission, as well as our subsequent filings made with SEC.

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 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 new information or future events.

Speaker Change: Our remarks today will include forward-looking statements that are based on our current expectations and forecasts.

Speaker Change: and involve certain risks and uncertainties.

Speaker Change: 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 third quarter and full year of 2024. Our actual results may differ from those contemplated by these forward-looking statements.

Speaker Change: Factors that could cause these results to differ materially are described in today's press release and filings, and are 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.

Speaker Change: 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.

Jency John: Additionally, non-GAAP financial measures, including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, fee revenue less production costs, or FRLPC, FRLPC percentage, and core operating expenses will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available, to the extent available without unreasonable efforts, in our earnings release and other materials, which are posted on our investor relations website. We encourage you to review the shareholder letter, which was 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.

Jency John: Additionally, non-gap financial measures, including adjusted evita, adjusted evita margin, adjusted income, fee revenue less production costs, or FRLPC. FRLPC percentage and core operating expenses will be discussed on the call. Reconciliation to the most directly comparable gap 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.

Speaker Change: [inaudible]

Speaker Change: Additionally, non-GAAP financial measures including adjusted EBITDA, adjusted EBITDA margin, adjusted net income, fee revenue less production costs, or FRLPC, FRLPC percentage, and core operating expenses will be discussed on the call.

Speaker Change: 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.

Jency John: Greetings and welcome to Pagaya's second quarter, 2024 earnings conference call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

Jency John: 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 our company earnings supplement and press release.

Speaker Change: We encourage you to review the shareholder letter, which was furnished with SEC on Form 8K today, for detailed commentary on our business and performance in conjunction with accompanying earnings supplement and press release. With that, let me turn the call over to Gal.

Gal Krubiner: With that, let me turn the call over to Gal. Thank you, Gency, and good morning everyone. I hope you had the chance to read our shareholder letter. We delivered another very strong quarter. We beat our guidance on revenue and adjusted evita with another record quarter on both metrics. And we're in line with our guidance on network volume. We're now at an annual run rate of approximately $1 billion in revenues, $400 million of FRLPC, and $200 million of adjusted EBITDA margin. With the momentum we have delivered in the third half, we are raising our target range for FRLPC percentage and our 2024 full-year outlook for revenues and evidence. If we will speak more to that in a moment.

Gal Krubiner: Thank you, Jency, and good morning, everyone. I hope you have had the chance to read our shareholder letter. We delivered another very strong quarter. We beat our guidance on revenue and adjusted EBITDA with another record quarter on both metrics, and we're in line with our guidance on network volume. We're now at an annual run rate of approximately $1 billion in revenues, $400 million in FRLPC, and $200 million of adjusted EBIT. With the momentum we have delivered in the first half, we are raising our target range for FRLPC's percentage and our 2024 full-year outlook for revenues and EBIT. Ipi will speak more about that in a moment.

Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

Gal: Thank you, Jency, and good morning, everyone.

Gal: I hope you had the chance to read our shareholder letter.

Jency John: It is now my pleasure to introduce your host, Ms. Jenty John, head of in the situations. Thank you, Ms. John. You may begin.

Speaker Change: We delivered another very strong quarter.

Gal: We beat our guidance on revenue and adjusted EBITDA with another record quarter on both metrics.

Jency John: Thank you and welcome to Pagaya's second quarter, 2024 earnings conference call.

Gal: and we're in line with our guidance on network volume.

Gal: We're now at an annual run rate of approximately $1 billion in revenues, $400 million of FRLPC, and $200 million of adjusted EBITDA.

Jency John: 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. 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.

Gal: With the momentum we have delivered in the first half, we are raising our target range for FRLPC percentage and our 2024 full-year outlook for revenues and EBITDA.

Jency John: 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 third quarter and full year of 2024. 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 in our form 10K filed on April 25, 2024 with the US Securities and Exchange Commission, as well as our subsequent filings made with SEC.

Gal Krubiner: I want to spend a minute now on another critical financial milestone we have achieved in the third quarter. With the progress we are making on increasing profitability and getting efficient with our balance sheets, incremental volume growth is now making a positive contribution to the total cash flow. With this very important step achieved, I am now more confident than ever that very shortly we can sell, fund future growth.

Ipi: Ipi will speak more to that in a moment.

Gal Krubiner: I want to spend a minute now on another critical financial milestone we have achieved in the third quarter. With the progress we are making.., on increasing profitability and getting efficient with our balance sheet. Incremental volume growth is now making a positive contribution to the total cash flow.

Ipi: I want to spend a minute now on another critical financial milestone we have achieved in the third quarter.

Ipi: With the progress we are making,

Ipi: on Increasing Profitability and Getting Efficient with our Balance Sheets

Ipi: Incremental volume growth is now making a positive contribution to the total cash flow.

Gal Krubiner: With this very important step achieved, I am now more confident than ever that very shortly we can self-fund future growth. Let me turn now to our strategic priorities and how we execute on them. In short, everything we said we were going to deliver, we did.

Ipi: With this very important step achieved, I am now more confident than ever that very shortly we can self-fund future growth.

Jency John: Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. Additionally, non-gap financial measures, including adjusted evita, adjusted evita margin, adjusted income, fee revenue less production costs, or FRLPC. FRLPC percentage and core operating expenses will be discussed on the call. Reconciliation to the most directly comparable gap 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.

Gal Krubiner: Let me turn now to our strategic priorities and how we execute on that. In short, everything we sell we are going to deliver with it. We have managed the business to deliver on our long-term ambition to be the extended credit platform for the US consumer lending industry.

Ipi: Let me turn now to our strategic priorities and how we execute on them. In short, everything we said we were going to deliver, we did.

Gal Krubiner: We are managing the business to deliver on our long-term ambition to be the extended credit platform for the U.S. consumer lending industry while being laser focused on getting to cash flow and gap net income profitability in the near term. We have three key priorities. Number one, expanding the network to more top lenders. Number two, adding additional funding capacity that limits the use of our balance sheet. And number three, improving unit economics.

Ipi: We are managing the business to deliver on our long-term ambition to be the extended credit platform for the U.S. consumer lending industry.

Gal Krubiner: While being laser focused on getting to cash flow and gap net incomprofutable in the near future, we have three key priorities. Number one, extending the network to more top lenders. Number two, adding additional funding capacity that limits the use of our balance sheet, and number three, improving unit economies.

Ipi: while being laser focused on getting to cash flow and gap net inter-profitable in the near term.

Jency John: We encourage you to review the shareholder letter which was furnished with SEC on form 8K today for detailed commentary on our business and performance in conjunction with our company earning supplement and press release.

Ipi: We have three key priorities.

Ipi: Number one, expanding the network to more top lenders.

Ipi: Number two, adding additional funding capacity that limits the use of our balance sheets.

Gal Krubiner: With that, let me turn the call over to Gal. Thank you, Gency, and good morning everyone. I hope you had the chance to read our shareholder letter. We delivered another very strong quarter. We beat our guidance on revenue and adjusted evita with another record quarter on both metrics. And we're in line with our guidance on network volume. We're now at an annual run rate of approximately $1 billion in revenues, $400 million of FRLPC, and $200 million of adjusted evita margin, with the momentum we have delivered in the third half we are raising our target range for FRLPC percentage and our 2024 full-ear outlook for revenues and evidence if we will speak more to that in a moment.

Ipi: And number three, improving unit economies.

Gal Krubiner: Let me start with how we are growing our network with more of the largest lenders in the country. We met our target of adding 2 to 4 partners a year, five months ahead of schedule. We are building an enterprise relationship with one main financial, the second largest personal loan originator in the country. The top five banks in the onboarding process in point of sale. This will be the second top five bank partnering with Pagaya on point of sale. From my point of view, the main two joint Pagaya Network is accelerating compared to six months ago.

Gal Krubiner: Let me start by saying how we are growing our network with more of the largest lenders in the country. We met our target of adding 2 to 4 partners a year 5 months ahead of schedule. We are building an enterprise relationship with one main financial, the second largest personal loan originator in the country. The partnership is on track to go live in Q3. In addition, we have a top five bank in the onboarding process at point of sale.

Ipi: Let me start with how we are growing our network with more of the largest lenders in the country.

Ipi: We met our target of adding two to four partners a year, five months ahead of schedule.

Ipi: We are building an enterprise relationship with OneMainFinancial, the second largest personal loan originator in the country.

Ipi: The partnership is on track to go live in Q3.

Ipi: In addition, we have the top five banks in the onboarding process in point of sale.

Gal Krubiner: This will be the second top five bank partnering with Pagaya on point of sale. From my point of view, demand to join Pagaya Network is accelerating compared to six months ago. On point number two, improving capital efficiency, I'm very excited to share that we have signed our first forward flow agreement with Qatar for $1 billion in personal loans. We are pleased to partner with one of the country's leading credit investors and expect this partnership to be a long-term and mutual benefit. We also got our first ever AAA rating on our Personal Loan ABS program.

Ipi: This will be the second top five bank partnering with Pagaya on point of sale.

Speaker Change: From my point of view, demand to join Pagaya Network is accelerating compared to six months ago.

Gal Krubiner: On point number two, improving capital efficiency, I'm very excited to share that we have signed our first full flow agreement with Capital. For $1 billion in personal loans. We are pleased to partner with one of the country's leading credit investors and expect this partnership to be a long term and mutually beneficial. We also got our first ever triple A rating on our source of this initiative, our reducing cost of capital and lowering the use of our capital to fund for you.

Speaker Change: On point number two, improving capital efficiency, I'm very excited to share that we have signed our first forward flow agreement with Katelink.

Speaker Change: for $1 billion in personal loans.

Speaker Change: We are pleased to partner with one of the country's leading credit investors and expect this partnership to be a long-term and mutually beneficial one.

Speaker Change: We also got our first-ever AAA rating on our personal loan ABS program.

Gal Krubiner: Let me turn now to our strategic priorities and how we execute on that. In short everything we sell we are going to deliver with it. We have managed the business to deliver on our long-term ambition to be the extended credit platform for the US consumer lending industry.

Gal Krubiner: Both of these initiatives are reducing the cost of capital and lowering the use of our capital to fund volumes. In addition to that... Last week, we announced our upcoming acquisition of Theorem Capital, which will give Theorem investors access to new investment opportunities via the Pagaya Network and diversify our funding sources. Finally, on the third point, higher unit economies. Our fee revenue-led production costs reached another record level with the increasing value we have delivered to our partners.

Speaker Change: Both of these initiatives are reducing cost of capital and lowering the use of our capital to fund volume.

Gal Krubiner: In addition to that, last week we announced our upcoming acquisition of Ethereum Capital, which will give Ethereum investors access to new investment opportunities via the Pagaya network and diversify our funding source. Finally, on the third point, higher-unit economics, our few revenue-level production cost, rich another record level, with the increasing value we have delivered to our partners, and we took action to reduce operational expenses and streamline the business.

Speaker Change: In addition to that, last week we announced our upcoming acquisition of Theorem Capital, which will give Theorem investors access to new investment opportunities via the Pagaya Network and diversify our funding sources.

Speaker Change: Finally, on the third point, higher unit economics,

Speaker Change: Our fee revenue left production cost reached another record level with the increasing value we have delivered to our partners.

Gal Krubiner: And we took action to reduce operational expenses and streamline the business. In summary... All of these actions are putting us on track to fulfill our long-term growth plan and get us to cash flow positive and gap-net income profitability. Bye, next. I'm pleased with our performance and proud of our team execution. With that, let me pass it to Sanjiv, who will speak on the longer-term trajectory of our business, our operational priorities, and our product model.

Speaker Change: And we took action to reduce operational expenses and streamline the business.

Gal Krubiner: In summary, all of these actions are putting us on track to fulfill our long-term growth and get us to catch up positive and gap net income profitability by next year.

Gal Krubiner: Let me start with how we are growing our network with more of the largest lenders in the country. We met our target of adding 2 to 4 partners a year, five months ahead of schedule. We are building an enterprise relationship with one main financial, the second largest personal loan originator in the country. The top five bank in the onboarding process in point of sale. This will be the second top five bank partnering with Pagaya on point of sale. From my point of view, the main two joint Pagaya network is accelerating compared to six months ago.

Speaker Change: In summary, all of these actions are putting us on track to fulfill our long-term growth plan and get us to cash flow positives and gap-net income profitability by next year.

Sanjiv Das: I'm pleased with our performance and proud of our team execution. With that, let me thank Sanjiv, who will speak on the long-term trajectory of our business, our operational priorities, and our products. Thanks, Gal, and good morning, everyone. I want to spend a few minutes on how we are executing on the strategic priorities Gal just spoke about.

Speaker Change: I'm pleased with our performance and proud of our team execution. With that, let me pass it to Sanjiv, who will speak on the longer-term trajectory of our business, our operational priorities, and our product roadmap.

Sanjiv Das: Thanks, Gal, and good morning, everyone. I want to spend a few minutes on how we are executing on the strategic priorities Gal just spoke about. I'll start by providing some context on our growth strategy, how we are reorganizing our business for success, and provide some color on the funding and the consumer environment we are operating in. I will close with our product roadmap as we keep our eye on our future long-term vision.

Sanjiv: Thanks, Gal, and good morning, everyone.

Sanjiv: I want to spend a few minutes on how we are executing on the strategic priorities Gal just spoke about.

Sanjiv: I'll start with providing some context on our growth strategy.

Sanjiv: how we are reorganizing our business for success and provide some color on the funding and the consumer environment we are operating in.

Gal Krubiner: On point number two, improving capital efficiency, I'm very excited to share that we have signed our first full flow agreement with capital. For $1 billion in personal loans.

Sanjiv Das: I will close with our product roadmap as we keep our eye on our future long-term vision. We are accelerating our growth strategy by targeting enterprise lenders where we can expand the Pagaya solution across consumer credit businesses in a single organization. We have clearly started demonstrating this with some of the largest enterprise lenders in personal loans, auto, and point of sale. For example, just this year we expanded our enterprise relationship with US Bank beyond their personal loans business to Elevon, which is their point of sale business, in literally one quarter. With Lending Club, we are now expanding our business from a secondary purchase program to our flagship personal loans program starting this quarter.

Sanjiv: I will close with our product roadmap as we keep our eye on our future long-term vision.

Sanjiv Das: We are accelerating our growth strategy by targeting enterprise lenders where we can expand the Pagaya solution across consumer credit businesses in a single organization. We have clearly started demonstrating this with some of the largest enterprise lenders in personal loans, auto, and point of sale. For example, just this year we expanded our enterprise relationship with U.S. Bank beyond their personal loans business to Elevon, which is their point-of-sale business, in literally one quarter. With LendingClub, we are now expanding our business from a secondary purchase program to our flagship personal loans program starting this quarter.

Sanjiv: We are accelerating our growth strategy by targeting enterprise lenders where we can expand the Pagaya solution across consumer credit businesses in a single organization.

Gal Krubiner: We are pleased to partner with one of the countries leading credit investors and expect this partnership to be a long term and mutual beneficial.

Sanjiv: We have clearly started demonstrating this with some of the largest enterprise lenders in personal loans, auto, and point-of-sale.

Gal Krubiner: We also got our first ever triple A rating on our source of this initiative, our reducing cost of capital and lowering the use of our capital to fund for you.

Sanjiv: For example, just this year we expanded our enterprise relationship with U.S. Bank beyond their personal loans business to Elevon, which is their point-of-sale business, in literally one quarter.

Gal Krubiner: In addition to that, last week we announced our upcoming acquisition of Ethereum Capital, which will give Ethereum investors access to new investments opportunities via the Pagaya network and the diversify our funding source. Finally, on the third point, higher-unit economics, our few revenue-level production cost, rich another record level, with the increasing value we have delivered to our partners, and we took action to reduce operational expenses and streamline the business. In summary, all of these actions are putting us on track to fulfill our long-term growth and get us to catch up positive and gap net income profitability by next year.

Sanjiv: With LendingClub, we are now expanding our business from a secondary purchase program to our flagship personal loans program starting this quarter.

Sanjiv Das: And we just signed a new enterprise relationship with OneMain, which will begin with auto and move to personal loans in relatively short order. Once the hard work of onboarding an enterprise relationship is done, extending it to other businesses within that enterprise becomes significantly easier and faster. We expect to replicate this strategy with the top five banks currently being onboarded in POS, and with all other enterprise partners we bring onboard.

Sanjiv Das: And we just signed a new enterprise relationship with OneMain, which will begin with auto loans and move to personal loans in relatively short order. Once the hard work of onboarding an enterprise relationship is done, extending it to other businesses within that enterprise becomes significantly easier and faster. We expect to replicate this strategy with the top five banks currently being onboarded in POS and with all other enterprise partners we bring on board. As we think about the key markets for future growth, Point of sale is at the top of that list.

Sanjiv: And we just signed a new enterprise relationship with OneMain, which will begin with auto and move to personal loans in relatively short order.

Sanjiv: Once the hard work of onboarding an enterprise relationship is done, extending it to other businesses within that enterprise becomes significantly easier and faster.

Sanjiv: We expect to replicate this strategy with the top five banks currently being onboarded in POS and with all other enterprise partners we bring on board.

Sanjiv Das: As we think about the key markets for future growth, point of sale is at the top of that list. Almost every conversation we've had with a big bank in the last 12 months has turned to POS and how Pagaya can help as a go-to-market enabler. We've already built the foundation of our point of sale product. As you know, we have a rapidly growing partnership with Clarner that we are in talks to expand. We already mentioned Elevon, expected to go alive by the fourth quarter. We are onboarding yet another major bank in POS, and Pagaya has been selected to join Mastercard's Engage Program as the only POS and credit partner.

Speaker Change: and many more. Thank you for watching. I hope you enjoyed this video. If you did, please give it a thumbs up and subscribe to my channel. I'll see you in the next video.

Speaker Change: as we think about the key markets for future growth.

Speaker Change: Point of sale is at the top of that list.

Sanjiv Das: Almost every conversation we've had with a big bank in the last 12 months has turned to POS and how Pagaya can help as a go-to-market enabler. We've already built the foundation of our point of sale product. As you know, we have a rapidly growing partnership with Klarna that we are in talks to expand. We already mentioned Elavon, expected to go live by the fourth quarter.

Sanjiv Das: I'm pleased with our performance and proud of our team execution, with that, let me thank Sanjiv, who will speak on the long-term trajectory of our business, our operational priorities, and our products. Thanks, Gal, and good morning, everyone. I want to spend a few minutes on how we are executing on the strategic priorities Gal just spoke about.

Speaker Change: Almost every conversation we've had with a big bank in the last 12 months has turned to POS and how Pagaya can help as a go-to-market enabler.

Speaker Change: We've already built the foundation of our point-of-sale product. As you know, we have a rapidly growing partnership with Klarna that we are in talks to expand.

Speaker Change: We already mentioned Elevon, expected to go live by the fourth quarter.

Sanjiv Das: We're onboarding yet another major bank in POS, and Pagaya has been selected to join MasterCard's Engage program as the only POS and credit partner. And we're already in initial conversations with bank and fintech lenders on the MasterCard network to partner on POS. The growth potential in auto is also getting more apparent. The demand is strong, and our pipeline is growing. Auto market conditions are improving, and we are driving continued efficiency in our auto funding structures.

Sanjiv Das: I'll start with providing some context on our growth strategy, how we are reorganizing our business for success, and provide some color on the funding and the consumer environment we are operating in. I will close with our product roadmap as we keep our eye on our future long-term vision. We are accelerating our growth strategy by targeting enterprise lenders where we can expand the Pagaya solution across consumer credit businesses in a single organization.

Speaker Change: We are onboarding yet another major bank in POS.

Speaker Change: And Pagaya has been selected to join MasterCard's Engage program as the only POS and credit partner.

Sanjiv Das: and we are already in initial conversations with bank and FinTech lenders on the MasterCard network to partner on POS.

Speaker Change: And we are already in initial conversations with bank and fintech lenders on the MasterCard network to partner on POS.

Sanjiv Das: The growth potential in auto is also getting more apparent. The demand is strong, and our pipeline is growing. Auto market conditions are improving, and we are driving continued efficiency in our auto funding structures. The building we have signed several multi-year mutually beneficial exclusivity agreements with our partners, which extend and protect our fee arrangements.

Sanjiv Das: We have clearly started demonstrating this with some of the largest enterprise lenders in personal loans, auto, and point of sale. For example, just this year we expanded our enterprise relationship with US Bank beyond their personal loans business to Elevon, which is their point of sale business, in literally one quarter. With Lending Club, we are now expanding our business from a secondary purchase program to our flagship personal loans program starting this quarter.

Speaker Change: The growth potential in auto is also getting more apparent.

Speaker Change: The demand is strong and our pipeline is growing.

Speaker Change: Auto market conditions are improving and we are driving continued efficiency in our auto funding structures.

Sanjiv Das: The building blocks are in place to scale Auto up more meaningfully over the next few quarters. We have signed several multi-year, mutually beneficial, exclusivity agreements with our partners, which extends and protects our fee arrangements. At the same time, on the operational side, as you saw in June, we announced actions to streamline our organization.

Speaker Change: The building blocks are in place to scale Otto up more meaningfully over the next few quarters.

Speaker Change: We have signed several multi-year mutually beneficial exclusivity agreements with our partners which extends and protects our fee arrangements.

Sanjiv Das: At the same time, on the operational side, as you saw in June, we announced actions to streamline our organization. These actions are already delivering significant cost savings, and we are executing faster and creating more value for our partners.

Speaker Change: At the same time, on the operational side, as you saw in June , we announced actions to streamline our organization.

Sanjiv Das: These actions are already delivering significant cost savings and we are executing faster and creating more value for our partners. Now turning to the funding environment. As Gal mentioned, we delivered some major wins in our funding strategy, including signing our first forward flow agreement and getting a AAA rating on our personal loan ABS program. We added 22 new funding partners this year with strengthening demand. Private credit, insurance, and pension funds are increasing deployment in consumer assets.

Speaker Change: These actions are already delivering significant cost savings and we are executing faster and creating more value for our partners.

Sanjiv Das: And we just signed a new enterprise relationship with one main, which will begin with auto and move to personal loans in relatively short order. Once the hard work of onboarding an enterprise relationship is done, extending it to other businesses within that enterprise becomes significantly easier and faster. We expect to replicate this strategy with the top five bank currently being onboarded in POS, and with all other enterprise partners we bring onboard.

Sanjiv Das: Now turning to the funding environment. As Gal mentioned, we delivered some major wins in our funding strategy, including signing our first forward flow agreement and getting a cripple rating on our personal loan ABS program. We added 22 new funding partners this year with strengthening demand. Private credit, insurance, and pension funds are increasing deployment in consumer assets. Consumer loan performance continues to show stable to improving trends. Personal loans 30 days plus delinquencies in our second half of 2023, pintages are down 40 to 50% versus peak levels in 2021. Depositive trend is accelerating, with delinquencies for early 2024 ventages down nearly 60% from 2021 peak levels.

Speaker Change: Now turning to the funding environment.

Speaker Change: As Gal mentioned, we delivered some major wins in our funding strategy, including signing our first forward flow agreement and getting a AAA rating on our personal loan ABS program.

Gal: We added 22 new funding partners this year with strengthening demand.

Gal: Private credit, insurance, and pension funds are increasing deployment in consumer assets.

Sanjiv Das: Consumer loan performance continues to show a stable to improving trend; personal loans, 30 day plus delinquencies in our second half of 2023, vintages are down 40 to 50% versus peak levels in 2021. The positive trend is accelerating with delinquencies for early 2024 vintages down nearly 60% from 2021 peak levels. On the auto side, 60 day plus delinquencies for the first half of 2023 are down 40% from peak 20

Gal: Consumer loan performance continues to show stable to improving trends.

Gal: Personal loans, 30 day plus delinquencies in our second half of 2023, vintages are down 40% to 50% versus peak levels in 2021.

Gal: The positive trend is accelerating with delinquencies for early 2024 vintages down nearly 60% from 2021 peak levels.

Sanjiv Das: On the auto side, 60-day plus delinquencies for the first half of 2023 ventages are down 40% from peak 2021 levels. We see further improvement in the second half of 2023 auto ventages with delinquencies down nearly 50% from peak 2022 levels.

Sanjiv Das: We already mentioned Elevon, expected to go alive by the fourth quarter. We are onboarding yet another major bank in POS, and Pagaya has been selected to join MasterCards Engage Program as the only POS and Credit Partner, and we are already in initial conversations with bank and FinTech lenders on the master card network to partner on POS.

Gal: On the auto side, 60 day plus delinquencies for the first half of 2023 vintages are down 40% from peak 2021 levels.

Sanjiv Das: We see further improvement in the second half of 2023 auto vintages with delinquencies down nearly 50% from peak 2022 levels. Despite this improving performance, we continue to keep a close eye on consumer health. Finally, as we set the stage for future growth, we are building a product roadmap that will serve millions of our lending partners' customers. One example is our new pre-screen product. We are now in the process of testing pre-screened products with our partners that will provide firm offers of credit and deepen relationships on behalf of our partners with their existing consumers.

Gal: We see further improvement in the second half of 2023 auto vintages with delinquencies down nearly 50% from peak 2022 levels.

Sanjiv Das: Despite this improving performance, we continue to keep a close eye on consumer health.

Gal: Despite this improving performance, we continue to keep a close eye on consumer health.

Sanjiv Das: The growth potential in auto is also getting more apparent. The demand is strong and our pipeline is growing. Auto market conditions are improving and we are driving continued efficiency in our auto funding structures. The building we have signed several multi-year mutually beneficial exclusivity agreements with our partners which extend and protect our fee arrangements.

Sanjiv Das: Finally, as we set the stage for future growth, we are building a product roadmap that will serve millions of our lending partners' customers. One example is our new pre-screen product. We are now in the process of testing pre-screen products with our partners that will provide firm offers of credit and deepen relationships on behalf of our partners with their existing consumers. Early results of these tests are extremely encouraging in terms of the high response rates. We expect new products we are developing to be a significant portion of our business in future quarters.

Gal: Finally, as we set the stage for future growth, we are building a product roadmap that will serve millions of our lending partners' customers.

Gal: One example is our new pre-screen product.

Gal: We are now in the process of testing pre-screened products with our partners that will provide firm offers of credit and deepen relationships on behalf of our partners with their existing consumers.

Sanjiv Das: Early results of these tests are extremely encouraging in terms of the high response rate. We expect new products we are developing to be a significant portion of our business in future quarters. To close, given the strength of our pipeline and the momentum in our business, Pagaya is in a very strong position to deliver great results. I'm excited for what the future holds. Let me now hand it over to EP to discuss our financial results.

Gal: Early results of these tests are extremely encouraging in terms of the high response rates.

Sanjiv Das: At the same time on the operational side as you saw in June we announced actions to streamline our organization. These actions are already delivering significant cost savings and we are executing faster and creating more value for our partners.

Gal: We expect new products we are developing to be a significant portion of our business in future quarters.

Sanjiv Das: To close, given the strength of our pipeline and the momentum in our business, Pagaya is in a very strong position to deliver great results. I'm excited for what the future holds.

Gal: To close, given the strength of our pipeline and the momentum in our business, Pagaya is in a very strong position to deliver great results.

Sanjiv Das: Now turning to the funding environment. As Gal mentioned we delivered some major wins in our funding strategy including signing our first forward flow agreement and getting a cripple rating on our personal loan ABS program. We added 22 new funding partners this year with strengthening demand. Private credit, insurance and pension funds are increasing deployment in consumer assets. Consumer loan performance continues to show stable to improving trends. Personal loans 30 days plus delinquencies in our second half of 2023, Pintages are down 40 to 50% versus peak levels in 2021.

Evangelos Perros: Let me now hand it over to EP to discuss our financial results. Thank you, Sanjeev, and good morning, everyone. We spoke about our key financial priorities at the start of the year. Increasing units economics, enhancing operating levers, and improving capital efficiency. I'm pleased to share with the liver from every single one of them. We grew FRLPC and adjusted EBITDA to record levels, reduced co-operating expenses, signed a full flow agreement, and got our first AAA rating on our personal loan ABS program. All of these actions get us closer to reaching Caselo positive in 2025. As Gal mentioned, we achieved a new milestone on this path.

EP: I'm excited for what the future holds. Let me now hand it over to EP to discuss our financial results.

Evangelos Perros: Thank you, Sanjiv, and good morning, everyone. We spoke about our key financial priorities at the start of the year. Increasing unit economics, enhancing operating leverage, and improving capital efficiency. I'm pleased to say we delivered on every single one of them.

EP: Thank you Sanjiv and good morning everyone. We spoke about our key financial priorities at the start of the year.

EP: Increasing unit economics, enhancing operating leverage, and improving capital efficiency.

Evangelos Perros: We grew FRLPC and adjusted EBITDA to record levels, reduced core operating expenses, signed a forward flow agreement, and got our first AAA rating on our personal loan ABS program. All of these actions get us closer to reaching cash flow positive in 2025. As Gal mentioned, we achieved a new milestone on this path. The most important step for Pagaya to become a cash-generating business is to earn more fees on network volume than the capital we use to fund it. We reached that point in the third quarter.

EP: I'm pleased to say we delivered on every single one of them.

EP: We grew FRLPC and adjusted EBITDA to record levels, reduced core operating expenses, signed a forward flow agreement, and got our first AAA rating on our personal loan ABS program.

EP: All of these actions get us closer to reaching cash flow positive in 2025.

Sanjiv Das: Depositive trend is accelerating with delinquencies for early 2024 ventages down nearly 60% from 2021 peak levels. On the auto side 60 day plus delinquencies for the first half of 2023 ventages are down 40% from peak 2021 levels. We see further improvement in the second half of 2023 auto ventages with delinquencies down nearly 50% from peak 2022 levels. Despite this improving performance we continue to keep a close eye on consumer health.

EP: As Gal mentioned, we achieved a new milestone on this path. The most important step for Pagaya to become a cash-generating business is to earn more fees on network volume than the capital we use to fund it.

Evangelos Perros: The most important step for Pagaya to become a cash-generating business is to earn more fees on network volume than the capital we use to fund it. We reached that point in the third quarter. As we scale our volume, the incremental cas we generate will offset operating costs to get us to total caselo positive. And it's important to remember the capital we use for this retention will come back as future caseloas as the security is mature.

Evangelos Perros: As we scale our volume, the incremental cash we generate will offset operating costs to get us to total cash flow positive. And it's important to remember that the capital we use for risk retention will come back as future cash flows as the securities mature. Turning now to 2Q Results.

Gal: We reach that point in the third quarter.

Speaker Change: As we scale our volume, the incremental cash we generate will offset operating costs to get us to total cash flow positive.

Speaker Change: And it's important to remember, the capital we use for risk retention will come back as future cash flows as the securities mature.

Evangelos Perros: Turning now to two key results. Total revenue, FRLPC, and adjusted EBITDA hit record levels. FRLPC grew 49%, far outpacing network volume growth of 19%. FRLPC as a percent of volume was above 4% for the first time in our history as a public company. We now expect FRLPC to be 3.5% to 4.5% of network volume for the remainder of 2024. While this number may fluctuate quarter to quarter with product, partner, and funding mix, this range is sustainable over time. FRLPC growth is translating directly to bottom-line expansion as we stay focused on cost discipline to drive operating leverage.

Sanjiv Das: Finally as we set the stage for future growth we are building a product roadmap that will serve millions of our lending partners customers. One example is our new pre-screen product. We are now in the process of testing pre-screen products with our partners that will provide firm offers of credit and deepen relationships on behalf of our partners with their existing consumers. Early results of these tests are extremely encouraging in terms of the high response rates. We expect new products we are developing to be a significant portion of our business in future quarters.

Evangelos Perros: Total Revenue, FRLPC, and Adjusted EBITDA hit record levels. FRLPC grew 49%, far outpacing network volume growth of 19%. FRLPC as a percent of volume was above 4% for the first time in our history as a public company. We now expect FRLPC to be 3.5% to 4.5% of network volume for the remainder of 2024. While this number may fluctuate quarter to quarter with product, partner, and funding mix, this range is sustainable over time.

Speaker Change: Turning now to 2Q Results.

Speaker Change: Total Revenue, FRLPC, and Adjusted EBITDA hit record levels.

Speaker Change: FRLPC grew 49%, far outpacing network volume growth of 19%.

Speaker Change: FRLPC as a percent of volume was above 4% for the first time in our history as a public company. We now expect FRLPC to be 3.5% to 4.5% of network volume for the remainder of 2024.

Speaker Change: While this number may fluctuate quarter to quarter with product, partner, and funding mix, this range is sustainable over time.

Sanjiv Das: To close given the strength of our pipeline and the momentum in our business, Pagaya is in a very strong position to deliver great results. I'm excited for what the future holds.

Evangelos Perros: FRLPC growth is translating directly to bottom line expansion as we stay focused on cost discipline to drive operating leverage. Core operating expenses were 22% of total revenue in the second quarter compared to 28% in the prior year. We also executed 25 million of cost savings initiatives with a full year impact to be recognized in 2025. We see room to drive even further efficiencies, especially in third-party vendor and consultant spend.

Speaker Change: FRLPC growth is translating directly to bottom-line expansion as we stay focused on cost discipline to drive operating leverage.

Evangelos Perros: Coroperating expenses were 22% of total revenue in the second quarter compared to 28% in the prior year. We also executed 25 million of cost savings initiatives, with a full year impact to be recognized in 2025. We see room to drive even further efficiencies, especially in third part of vendor and consultant spend. Adjusted EBITDA is now run rating at 200 million on an annual basis, with adjusted EBITDA margin above 20% for the first time since we went public. We reported operating income of $5 million. Net loss attributable to Pagaya was 75 million, impacted primarily by share-based comp and fair value adjustments.

Evangelos Perros: Let me now hand it over to EP to discuss our financial results. Thank you Sanjeev and good morning everyone. We spoke about our key financial priorities at the start of the year.

Speaker Change: Core operating expenses were 22% of total revenue in the second quarter compared to 28% in the prior year.

Speaker Change: We also executed $25 million of cost savings initiatives, with a full-year impact to be recognized in 2025.

Evangelos Perros: Increasing Units Economics, Enhancing Operating Levers, and Improving Capital Efficiency I'm pleased to share with the liver from every single one of them. We grew FRLPC and adjusted EBITDA to record levels, reduced co-operating expenses, signed a full flow agreement and got our first AAA rating on our personal loan ABS program. All of these actions get us closer to reaching caselo positive in 2025. As Gal mentioned, we achieved a new milestone on this path.

Speaker Change: We see room to drive even further efficiencies, especially in third-party vendor and consultant spend.

Evangelos Perros: Adjusted EBITDA is now a run rating at $200 million on an annual basis, with an adjusted EBITDA margin above 20% for the first time since we went public. We reported operating income of $5 million. The net loss attributable to Pagaya was $75 million, impacted primarily by share-based comp and fair value adjustment. Adjusted net income, which excludes the impact of these items, was $7 million in the quarter. The share-based compensation expense amounted to $18 million.

Speaker Change: Adjusted EBITDA is now run rating at $200 million on an annual basis, with adjusted EBITDA margin above 20% for the first time since we went public. We reported operating income of $5 million.

Speaker Change: Net loss attributable to Pagaya was $75 million, impacted primarily by share-based comp and fair value adjustments.

Evangelos Perros: Adjusted net income, which excludes the impact of these items, was 7 million in the quarter. Share-based compensation expense amounted to 18 million. Interest expense of 22 million reflects both higher secured borrowings and the addition of our term loan facility in the first quarter. We see opportunities to lower interest expense in the coming quarters. Net credit impairments of 58 million reflect two drivers: fair value adjustment on our risk retention assets and losses on whole loans from past deals. Both were related to older businesses in our portfolio. Operating caselo was 15 million in the quarter, our fourth consecutive quarter of positive operating caselo.

Evangelos Perros: The most important step for Pagaya to become a cas-generating business is to earn more fees on network volume than the capital we use to fund it. We reached that point in the third quarter. As we scale our volume, the incremental cas we generate will offset operating costs to get us to total caselo positive. And it's important to remember the capital we use for this retention will come back as future caseloas as the security is mature.

Speaker Change: Adjusted net income, which excludes the impact of these items, was $7 million in the quarter.

Evangelos Perros: Interest expense of $22 million reflects both higher secured borrowings and the addition of our term loan facility in the first quarter. We see opportunities to lower interest expense in the coming quarters. Net credit impairments of 58 million reflect two drivers.

Speaker Change: Share-based compensation expense amounted to $18 million. Interest expense of $22 million reflects both higher secured borrowings and the addition of our term loan facility in the first quarter. We see opportunities to lower interest expense in the coming quarters.

Speaker Change: Net credit impairments of 58 million reflect two drivers.

Evangelos Perros: Fair value adjustment on our risk retention assets and losses on whole loans from past deals. Both were related to older vintages in our portfolio. Operating cash flow was $15 million in the quarter, our fourth consecutive quarter of positive operating cash flow. Excluding the impact of whole loans losses recognized in our GNA, operating cash flow would have been approximately $29 million. I'm especially proud of our accomplishments to improve capital efficiency. Our new $1 billion forward flow agreement is expected to fund over 15% of our annual personal loan volumes.

Speaker Change: Fair value adjustment on our risk retention assets and losses on whole loans from past deals. Both were related to older vintages in our portfolio.

Evangelos Perros: Turning now to two key results. Total revenue, FRLPC and adjusted EBITDA hit record levels. FRLPC grew 49% far outpacing network volume growth of 19%. FRLPC as a percent of volume was above 4% for the first time in our history as a public company. We now expect FRLPC to be 3.5% to 4.5% of network volume for the remainder of 2024. While this number may fluctuate quarter to quarter with product, partner and funding mix, these range is sustainable over time.

Speaker Change: Operating cash flow was $15 million in the quarter, our fourth consecutive quarter of positive operating cash flow.

Evangelos Perros: Excluding the impact of whole loans losses, recognized in our GNA, operating caselo would have been approximately 29 million.

Speaker Change: Excluding the impact of whole loans losses recognized in our GNA, operating cash flow would have been approximately $29 million.

Evangelos Perros: I'm especially proud of our accomplishments to improve capital efficiency. Our new $1 billion forward flow agreement is expected to fund over 15% of our annual personal loan volumes. We expect to scale programs like forward flow and structural pass-throughs to account for a more meaningful portion of our total funding over time. In our flagship ABS program, we've been delivering strong, consistent performance, optimizing build structures, and increasing scale. That led to our first triple aerating on our personal loan ABS program, which lowers both the cost of capital for investors, as well as our risk retention requirements.

Speaker Change: I'm especially proud of our accomplishments to improve capital efficiency. Our new $1 billion forward flow agreement is expected to fund over 15% of our annual personal loan volumes.

Evangelos Perros: We expect to scale programs like forward flow and structured pass-throughs to account for a more meaningful portion of our total funding over time. In our FLEXIB ABS program, we've been delivering strong, consistent performance, optimizing build structures, and increasing scale. That led to our first AAA rating on our Personal Loan ABS program which lowers both the cost of capital for investors as well as our risk retention requirements.

Evangelos Perros: FRLPC growth is translating directly to bottom line expansion as we stay focused on cost discipline to drive operating leverage. Coroperating expenses were 22% of total revenue in the second quarter compared to 28% in the prior year. We also executed 25 million of cost savings initiatives with a full year impact to be recognized in 2025. We see room to drive even further efficiencies, especially in third part of vendor and consultant spend. Adjusted EBITDA is now run rating at 200 million on an annual basis with adjusted EBITDA margin above 20% for the first time since we went public.

Speaker Change: We expect to scale programs like Forward Flow and Structured Pass-throughs to account for a more meaningful portion of our total funding over time.

Speaker Change: In our Flagship ABS program, we've been delivering strong, consistent performance, optimizing build structures, and increasing scale.

Speaker Change: That led to our first AAA rating on our personal loan ABS program, which lowers both the cost of capital for investors as well as our risk retention requirements.

Evangelos Perros: Now let me close with our third quarter and full-year financial outlook. Our outlook reflects a few key assumptions. We expect to remain prudent with our conversion rate, while continuing to expand our SFR platform. We will continue to manage our portfolio to direct capital to our most profitable lending channels. FRLPC is expected to range between 3.5% and 4.5% of network volume in the second half of the year. Our recent cost savings actions will continue to drive operating leverage, with lower expected core operating expenses in the second half of the year. Finally, our outlook assumes no material change in the macroeconomic environment from where we stand today.

Evangelos Perros: Now, let me close with our third quarter and full year financial outlook. Our outlook reflects a few key assumptions. We expect to remain prudent with our conversion rate while continuing to expand our SFR platform. Additionally, we will continue to manage our portfolio to direct capital to our most profitable lending channels. FRLPC is expected to range between 3.5% and 4.5% of network volume in the second half of the year. Our recent cost savings actions will continue to drive operating leverage with lower expected core operating expenses in the second half of the year. Finally, our outlook assumes no material change in the macroeconomic environment from where we stand today.

Speaker Change: Now, let me close with our third quarter and full year financial outlook.

Speaker Change: Our outlook reflects a few key assumptions.

Speaker Change: We expect to remain prudent with our conversion rate while continuing to expand our SFR platform. We will continue to manage our portfolio to direct capital to our most profitable lending channels.

Evangelos Perros: We reported operating income of 5 million. Net loss attributable to pagaya was 75 million, impacted primarily by share-based comp and fair value adjustments. Adjusted net income, which excludes the impact of these items, was 7 million in the quarter. Share-based compensation expense amounted to 18 million. Interest expense of 22 million reflects both higher secured borrowings and the addition of our term loan facility in the first quarter. We see opportunities to lower interest expense in the coming quarters.

Speaker Change: FRAPC is expected to range between 3.5% and 4.5% of network volume in the second half of the year.

Speaker Change: Our recent cost savings actions will continue to drive operating leverage with lower expected core operating expenses in the second half of the year.

Speaker Change: Finally, our outlook assumes no material change in the macroeconomic environment from where we stand today.

Evangelos Perros: In the third quarter of 2024, we expect network volume to range between $2.3 and $2.5 billion. Total revenue and other income is expected to range between $250 and $260 million, and adjusted EBITDA to range between $50 and $60 million. For full-year 2024, we're narrowing our network volume outlook to range between $9.25 and $10.25 billion. We are raising the low end of our total revenue and other income range by $50 million to range between $975 million and $1.05 billion. After raising our adjusted EBIDA outlook range in June, we are raising the range by another $20 million on the low end to $180 million, and by $10 million on the high end to $210 million.

Evangelos Perros: In the third quarter of 2024, we expect network volume to range between $2.3 and $2.5 billion. Total revenue and other income is expected to range between $250 and $260 million and adjusted EBITDA to range between $50 and $60 million. For full year 2024, we're narrowing our network volume outlook to range between $9.25 and $10.25 billion. We are raising the low end of our total revenue and other income range by $50 million to range between $975 million and $1.05 billion.

Speaker Change: In the third quarter of 2024, we expect network volume to range between $2.3 and $2.5 billion.

Evangelos Perros: Net credit impairments of 58 million reflect two drivers, fair value adjustment on our risk retention assets and losses on whole loans from past deals. Both were related to older businesses in our portfolio. Operating caselo was 15 million in the quarter, our fourth consecutive quarter of positive operating caselo. Excluding the impact of whole loans losses, recognized in our GNA, operating caselo would have been approximately 29 million.

Speaker Change: Total revenue and other income is expected to range between $250 and $260 million, and adjusted EBITDA to range between $50 and $60 million.

Speaker Change: For full year 2024, we're narrowing our network volume outlook to range between 9.25 and 10.25 billion dollars.

Speaker Change: We are raising the low end of our total revenue and other income range by $50 million to range between $975 million and $1.05 billion.

Evangelos Perros: I'm especially proud of our accomplishments to improve capital efficiency. Our new $1 billion forward flow agreement is expected to fund over 15% of our annual personal loan volumes. We expect to scale programs like forward flow and structural pass-throughs to account for a more meaningful portion of our total funding over time. In our flagship ABS program, we've been delivering strong consistent performance, optimizing build structures and increasing scale. That led to our first triple aerating on our personal loan ABS program, which lowers both the cost of capital for investors, as well as our risk retention requirements.

Evangelos Perros: After raising our adjusted EBITDA outlook range in June, we are raising the range by another $20 million on the low end to $180 million and by $10 million on the high end to $210 million. To close, we are proud of our performance in the second quarter as we deliver on our financial strategy, putting us in a strong position to achieve positive net cash flow and gap net income in 2025. With that, let me turn it back to the operator for Q&A.

Speaker Change: After raising our adjusted EBITDA outlook range in June , we are raising the range by another $20 million on the low end to $180 million, and by $10 million on the high end to $210 million.

Evangelos Perros: To close, we are proud of our performance in the second quarter, as we deliver on our financial strategy, putting us in a strong position to achieve positive net cash flow and gap net income in 2025.

Speaker Change: To close, we are proud of our performance in the second quarter as we deliver on our financial strategy, putting us in a strong position to achieve positive net cash flow and gap net income in 2025. With that, let me turn it back to the operator for Q&A.

Jency John: With that, let me turn it back to the operator for Q&A. Thank you.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your questions from the Q&A. For participants using speaker equipment, it may be necessary to pick up their handsets before pressing the start button. One moment, please, while we poll for questions. The first question comes from the line of Sanjay Sakrani with KBW. Please go ahead.

Jency John: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The information tone will indicate your line is in the question. Thank you. You may press start too, if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the start keys.

Evangelos Perros: Now let me close with our third quarter and full-here financial outlook. Our outlook reflects a few key assumptions. We expect to remain prudent with our conversion rate, while continuing to expand our SFR platform. We will continue to manage our portfolio to direct capital to our most profitable lending channels. FRLPC is expected to range between 3.5% and 4.5% of network volume in the second half of the year. Our recent cost savings actions will continue to drive operating leverage, with lower expected core operating expenses in the second half of the year.

Speaker Change: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Speaker Change: You may press star 2 if you would like to remove your questions from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the star keys.

Operator: One moment please, while we pull for questions.

Sanjay Sakhrani: The first question comes on the line of Sanjay Sakhrani with the KBW Peaceful ahead. Thank you. Good morning.

Speaker Change: One moment please while we poll for questions.

Speaker Change: The first question comes from the line of Sanjay Sakkarani with KBW. Please go ahead.

Sanjay Sakrani: Thank you. Good morning.

Gal Krubiner: So congratulations on getting to this important milestone of being able to self on your growth. Can you just elaborate a little bit more in terms of how you expect to utilize that? Do you feel like it takes care of all the opportunities in front of you, or do you feel like you might still need to mark this from time to time? Thanks. Thanks, Sanjiv. Yes, we're very excited about the milestone which has hit where basically all our incremental volume is currently both contributing positively to cash flow. In very simple terms, what that means is that the fees that we earn right now are higher than the capital that we're putting to work.

Sanjay Sakkarani: Thank you. Good morning. So congratulations on getting to this important milestone of being able to self-fund your growth.

Evangelos Perros: Finally, our outlook assumes no material change in the macroeconomic environment from where we stand today. In the third quarter of 2024, we expect network volume to range between $2.3 and $2.5 billion. Total revenue and other income is expected to range between $250 and $260 million, and adjusted EBIDA to range between $50 and $60 million. For full-here 2024, we're narrowing our network volume outlook to range between $9.25 and $10.25 billion. We are raising the low end of our total revenue and other income range by $50 million to range between $975 million and $1.05 billion. After raising our adjusted EBIDA outlook range in June, we are raising the range by another $20 million on the low end to $180 million, and by $10 million on the high end to $210 million.

Sanjay Sakrani: So congratulations on getting to this important milestone of being able to sell from your growth. Can you just elaborate a little bit more in terms of how you expect to utilize that? Do you feel like it takes care of all the opportunities in front of you, or do you feel like you might still need to tap the markets from time to time?

Sanjay Sakkarani: Can you just elaborate a little bit more in terms of how you expect to utilize that? Do you feel like it it it takes care of all the opportunities in front of you? Or do you feel like you might still need to test the markets from time to time? Thank you.

Sanjay Sakrani: Thanks.

Yigit: Thanks, Sanjiv. This is Yigit.

Yigit: Yes, we're very excited about the milestone we just hit, where basically all our incremental volume is currently contributing positively to cash. In very simple terms, what that means is that the fees that we earn right now are higher than the capital that we're putting to work. So all what we need to do from now on is effectively cover operating expenses to get us to total cash flow positive. And we have demonstrated that basically cost discipline is a core competency of ours.

IP: Thanks Sanjiv, this is IP. Yes, we're very excited about the milestone we just hit where basically all our incremental volume is currently both contributing positively to cash flow. In very simple terms, what that means is that the fees that we earn right now are higher than the capital that we're putting to work.

Sanjiv Das: So all what we need to do from now on is effectively cover operating expenses to get us to total cash flow positive. And we have demonstrated that basically cost this plan is a core competency of ours. Because we will continue to maintain very regular focus on expense, this plan. And as volume grows from what you're on, that's the path to get us to total cash flow positive. Once we get to that point, everything, all the growth going forward is going to be self-funded. And Sanjiv, it's got here just one point to add. And yes, this is taking into the consideration of all the things that we think we need to invest in.

IP: So all what we need to do from now on is effectively cover operating expenses to get us to total cash flow positive.

IP: And we have demonstrated that basically cost discipline is a core competency of ours. We will continue to maintain very razor focused on expense discipline. And as volume grows from here on, that's the path to get us to total cash flow positive.

Yigit: So we will continue to be razor focused on expense discipline. And as volume grows from here on, that's the path to get us to total cash flow. Once we get to that point, all the work going forward is going to be self-funded.

IP: Once we get to that point, all the growth going forward is going to be self-funded.

Gal Krubiner: And Sanjiv, it's Gal here, just one point to add, and yes, this is taking into the consideration of all the things that we think we need to invest in, so new markets that we are building or other places that we will need to lay more heavily, so this is a total number that you see on the full company level, if that makes sense.

IP: And Sanjiv, it's Gal here, just one point to add, and yes, this is taking into the consideration of all the things that we think we need to invest in.

Sanjay Sakhrani: So new markets that we are building or other places that we are will need to lay more heavily. So this is a total number that you see on the full company level. Is that makes sense? Yeah, thank you.

Sanjiv: So new markets that we are building or other places that we need to lay more heavily. So this is a total number that you see on the full company level, if that makes sense.

Operator: With that, let me turn it back to the operator for Q&A. Thank you.

Sanjiv Das: And then I wanted to just get more color on the Catholic relationship. I think it's a good strategic partner. You know, maybe you could just talk about the pipeline and how the specific funding commitment sort of factors into your expectations. I mean, is this incremental to what you were thinking, or is it supplemental? Just trying to get a sense of that and sort of what the pipeline for additional partnerships are. Yeah, sure. So since this is obviously, we're very excited about this agreement. And as we have set out, if we step back, one of the key pillars of our financial strategies is to drive capital efficiency.

Sanjay Sakrani: Thank you. And then I wanted to just get more color on the Castle Lake relationship. I think it's a good.., partner. You know, maybe you could just talk about the pipeline and and how this specific funding commitment sort of factors into your expectations. I mean, is this incremental to what you were thinking or is it supplemental? Just trying to get a sense of that and sort of what the pipeline for additional partnerships is. Yes, sure.

Operator: We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. The information tone will indicate your line is in the question. Thank you. You may press start too, if you would like to remove your questions from the queue. For participants using speaker equipment, it may be necessary to pick up your handsets before pressing the start keys. One moment please, while we pull for questions.

Sanjiv: Yeah, thank you.

Speaker Change: And then I wanted to just get more color on the Castle Lake relationship. I think it's a good strategic partner.

Speaker Change: You know, maybe you could just talk about the pipeline and how this specific funding commitment sort of factors into your expectations. I mean, is this incremental to what you were thinking, or is it supplemental, just trying to get a sense of that and sort of what the pipeline for additional partnerships are?

Sanjiv Das: So, Sanjiv, obviously, we're very excited about this agreement. And as we have set out, if we step back, one of the key pillars of our financial strategy is to drive capital efficiency. And by successfully executing transactions like this, we're on track to get to our capital needs of 2% or 3% over time, as we have committed to. And as we have said, deals like this forward flow or other structure pass-throughs, which basically require minimal or no capital up front, are the path to get us to cash flow positive, which is significant demand from other parties as well to get into agreements like that and effectively gives us the ability to scale this program.

Sanjay Sakhrani: The first question comes on the line of Sanjay Sakhrani with the KBW Peaceful ahead. Thank you. Good morning.

Speaker Change: So, Sanjiv, this is obviously, we're very excited about this agreement and as we have set out, if we step back, one of the key pillars of our financial strategy is to drive capital efficiency.

Sanjiv Das: And by successfully executing transactions like this, we don't track to get to our capital needs to 2 or 3% over time that we have committed to. And as we have said that, I think deals like this forward flow or other structure pastries, which basically require minimal or no capital upfront, is the path to get us to cash flow positive, which is significant demand from other parties as well to get into agreements like that. And effectively gives us the ability to scale this program, and we also have the opportunity to expand this relationship going forward.

Sanjiv: And by successfully executing transactions like this, we're on track to get to our capital needs to 2 or 3% over time that we have committed to.

Sanjiv: and

Sanjiv: As we have said, I think deals like this forward flow or other structural pass-throughs, which basically require minimal or no capital upfront, is the path to get us to cash flow positive.

Sanjiv: with a significant demand from other parties as well to get into agreements like that and effectively gives us the ability to scale this program and we also have the opportunity to expand this relationship going forward.

Sanjiv Das: And we also have the opportunity to expand this relationship going forward. Got it. We're hearing a lot about the choppiness in the macro backdrop and the state of the consumer. I'm just curious to get your views on what you're seeing.

Gal Krubiner: In very simple terms, what that means is that the fees that we earn right now are higher than the capital that we're putting to work. So all what we need to do from now on is effectively cover operating expenses to get us to total cash flow positive. And we have demonstrated that basically cost this plan is a core competency of ours. Because we will continue to maintain very regular focus on expense this plan.

Sanjay Sakhrani: Ask one more question. I'm so sorry.

Speaker Change: Got it. May I ask one more question? I'm so sorry. Just, you know, we're hearing a lot about the choppiness and the macro backdrop and the state of the consumer. I'm just curious to get your views on what you're seeing.

Operator: You know, we're hearing a lot about the choppiness in the macro backdrop and the state of the consumer. I'm just curious to get your views on what you're seeing.

Sanjiv Das: Hi Sanjay, this is Sanjiv Das. So I would say that our experience in terms of the consumer performance has been that it's been quite stable. I think it's quite consistent with what we are seeing across the centech, close-known environment. It all seems to be very consistent. We are obviously quite pleased with the performance of our own recent ventages. They've done quite well. In fact, improved in the case of auto quite significantly and stabilized in the case of personal loans. Our broad thesis, which has been validated, is that, you know, while there is some staffening in the consumer spend, their ability to repay seems to be relatively strong.

Sanjiv Das: Hi Sanjiv, this is Sanjiv Das. So I would say that our experience in terms of consumer performance has been that it's been quite stable. I think it's quite consistent with what we are seeing across the FinTech closed loan environment. It all seems to be very consistent. We are obviously quite pleased with the performance of our own recent vintages. They've done quite well, in fact, improved in the case of the auto loans quite significantly and stabilized in the case of the personal loans.

Speaker Change: [inaudible]

Gal Krubiner: And as volume grows from what you're on, that's the path to get us to total cash flow positive. Once we get to that point, everything all the growth going forward is going to be self funded. And Sanjiv, it's got here just one point to add. And yes, this is taking into the consideration of all the all the things that we think we need to invest in. So new markets that we are building or other places that we are will need to lay more heavily. So this is a total number that you see on the full company level. Is that makes sense? Yeah, thank you.

Speaker Change: [inaudible]

Speaker Change: Hi Sanjay, this is Sanjiv Das.

Sanjiv Das: So, I would say that our experience in terms of the consumer performance has been that it's been quite stable. I think it's quite consistent with what we are seeing across the FinTech closed loan environment. It all seems to be very consistent. We are obviously quite pleased with the performance of our own recent vintages. They've done quite well, in fact, improved in the case of auto quite significantly and stabilized in the case of personal loans.

Sanjiv Das: Our broad thesis, which has been validated, is that while there is some softening in consumer spending, their ability to repay seems to be relatively strong. And as we saw in the last quarter, as I said, our credit performance, both on PL and auto, is pretty much back on track. In fact, our delinquencies on auto in recent vintages have come down to their lowest level since 2022.

Sanjiv Das: Our broad thesis, which has been validated, is that while there is some softening in the consumer spend, their ability to repay seems to be relatively strong.

Sanjiv Das: And, you know, we saw in the last quarter, as I said, our credit performance both on PL and auto is pretty much that contract. In fact, our delinquency on auto in the recent ventages has come down to its lowest level since 2022. We believe that reducing rates will be a tailwind. Having said that, you know, just broadly watching the consumer firmament, we are watching it very carefully, and all the macro trends. And I know that people adapt very quickly based on the depth of data that we get across all our asset classes across our 30 partners, so we, you know, we have a pretty good read on the consumer and can act pretty quickly.

Sanjiv Das: And, you know, as we saw in the last quarter, our, as I said, our credit performance both on PL and auto is pretty much back on track.

Sanjiv Das: In fact, our delinquencies on auto in the recent vintages has come down to its lowest level since 2022.

Sanjiv Das: We believe that rates or reducing rates will be a tailwind. Having said that, just broadly watching the consumer firmament, we are watching it very carefully and all the macro trends. And I know that we will adapt very quickly based on the depth of data that we get across all our asset classes across our 30 partners. We have a pretty good read on the consumer and can act pretty quickly.

Sanjiv Das: We believe that rates, or reducing rates, will be a tailwind.

Sanjiv Das: Yeah, sure. So since this is obviously we're very excited about this agreement. And as we have set out if we step back, one of the key pillars of our financial strategies to drive capital efficiency. And by successfully executing transactions like this, we don't track to get to our capital needs to 2 or 3% over time that we have committed to. And as we have said that I think deals like this forward flow or other structure pastries which basically require minimal or no capital upfront is the path to get us to cash flow positive, which is significant demand from other parties as well to get into agreements like that.

Sanjiv Das: Having said that, you know, just broadly watching the consumer firmament, we are watching it very carefully.

Sanjiv Das: and all the macro trends, and I know that we will adapt very quickly based on the depth of data that we get across all our asset classes across our 30 partners, so we have a pretty good read on the consumer and can act pretty quickly.

Operator: Thank you.

Joseph Vafi: Thank you. The next question comes from the line of Joseph Vafi with Kanakor, January. Please go ahead.

Joseph Vafi: Next question comes on the line of Joseph O'Vaffee with Canada Code Generity. Please go ahead. Hey, everyone. Good morning. Great progress in the business here. This quarter, congratulations.

Speaker Change: Thank you. Next question comes from the line of Joseph Vafi with Canaccord Genuity. Please go ahead.

Joseph Vafi: Hey, everyone. Good morning. Great progress in the business here this quarter. Congratulations. Just wanted to, you know, maybe drill down a little on your forward flow agreement announcement. Just trying to get an idea first on You know, maybe, you know, differences, positives or negatives in FRL PC margin coming from, funding via ABS versus Forward Flow, and then just trying to figure out how you kind of orchestrate, you know, which funding vehicles are funding, you know, which loan volumes, how you kind of traffic cop all of that, now that you've got different agreements in place. And I'll have a quick follow-up. Great.

Sanjiv Das: And effectively gives us the ability to scale this program and we also have the opportunity to expand this relationship going forward. Ask one more question. I'm so sorry. You know, we're hearing a lot about the choppiness in the macro backdrop and the state of the consumer. I'm just curious to get your views on what you're seeing.

Evangelos Perros: Just wanted to, you know, maybe drill down a little on your forward flow agreement announcement. Just trying to get an idea first on, you know, maybe, you know, differences, positives or negatives in FRLPC margin coming from funding via ABS versus forward flow, and then just trying to figure out how you kind of orchestrate, you know, which funding vehicles are funding, you know, which loan volumes, how you kind of traffic cop all of that now that you've got different agreements in place, and I'll quick follow up. Great. So obviously we're very excited about this new agreement because it's aligned very much with our goal to drag capital efficiency.

Speaker Change: you know, maybe, you know, differences, positives or negatives in FRL PC margin coming from

Speaker Change: funding via ABS versus forward flow and then just

Speaker Change: trying to figure out how you kind of orchestrate, you know, which funding vehicles are funding, you know, which loan volumes, how you kind of traffic cop all of that now that you've got different agreements in place. And I'll have a quick follow-up.

Evangelos Perros: Great. So obviously, we're excited about this new agreement because it's aligned very much with our goal to drive capital efficiency. And as we have said before, there are two ways to achieve that; one, to diversify our funding, as well as to optimize our current ABS program. When you think about this Forward-Forward Agreement and other funding mechanisms that we have, we basically, that would cover probably 20 or so percent of our current volume. And this is in the form of funding that basically has minimum or no capital requirements.

Speaker Change: Great.

Speaker Change: So, obviously we're excited about this new agreement because it's aligned very much with our goal to drive capital efficiency. And as we have said before, there are two ways to achieve that. One, diversify our funding, as well as optimize our current ABS program.

Evangelos Perros: And, as we have said before, there are two ways to achieve that. One, they specify our funding as well as optimize our current ABS program. When you think about this forward flow agreement and other funding mechanisms that we have, we basically doesn't cover only 20 or so percent of our current volume. And this is in the form of funding that requires basically minimum or no capital requirements. And we expect to scale that program going forward to increasingly become more capital efficient. And that's basically the way we can also pay the past to get the cash flow positive.

Sanjiv Das: Our broad thesis which has been validated is that, you know, while there is some staffening in the consumer spend, their ability to repay seems to be relatively strong. And, you know, we saw in the last quarter, as I said, our credit performance both on PL and auto is pretty much that contract. In fact, our delinquency on auto in the recent ventages has come down to its lowest level since 2022. We believe that reducing rates will be a tailwind.

Speaker Change: When you think about this 414 agreement and other funding mechanisms that we have, basically that would cover only 20 or so percent of our current volume. And this is in the form of funding that requires basically minimum or no capital requirements.

Evangelos Perros: And we expect to scale that program going forward to become increasingly capital efficient. And that's basically the way we can also pay for the car to get to Kastler. Overall, you know, the four flow agreement that we put in place is basically sort of a market based on market standards. The pricing will be reflected in FRLPC, and our current direction of three and a half to four and a half percent of FRLPC going forward already reflects those arrangements going forward.

Speaker Change: And we expect to scale that program going forward to increasingly become more capital efficient. And that's basically the way we can also pave the path to get to cash flow positive.

Evangelos Perros: Overall, you know, the four flow agreement that we put in place is basically for those market standards. The pricing will be reflected in FRNPC. And our current, a direction of three and a half to four and a half percent of FRNPC going forward already reflects those arrangements.

Speaker Change: Overall, you know, the fourth law agreement that we put in place is basically sort of market based on market standards.

Sanjiv Das: Having said that, you know, just broadly watching the consumer firmament, we are watching it very carefully, and all the macro trends. And I know that people adapt very quickly based on the depth of data that we get across all our asset classes across our 30 partners, so we, you know, we have a pretty good read on the consumer and can act pretty quickly.

Speaker Change: Pricing will be reflected in FRNPC.

Speaker Change: And our current direction of 3.5% to 4.5% of FRPC going forward already reflects those arrangements going forward.

Sanjay Sakhrani: Thank you.

Evangelos Perros: I got it thanks for that EP and then just you know I mean I guess it's you know the the four-of-floor agreements to a relatively small compared to your ABS vehicles is there is it focused on funding specific loan categories or specific lending partners or is it just kind of broad-based across your your your your lending volume? Yeah, now this kind of agreement is across all our personal loan portfolio but we do expect to grow as I said this program within the personal loan and also a case of opportunities for some of the other asset classes as well maybe a vote from the market we do see a lot of demand for that type of assets so it can be in a forward flow format or it can be in a path through as as EP mentioned but the reality is that the major credit shops post 21 and 22 while seeing the performance very much stabilizing and going to the right direction and actually very stabilized for over a year he's bringing a lot of demand for that for that discussion we have conversations with many obviously you want to lend the right partners and the right programs that suit for that but we see the same amount of interest from personal loan on auto loans and on point of sale that it is a market that obviously we are growing a lot so think about it as another way to fund the business with much lower upfront capital needs that gives us flexibility in between the world of AVS the forward flow and in few others right thanks very much for that extra color doll thank you next question comes from the line of Peter Christianson with city please go ahead good morning thanks for having me going to be part of the roster here nice nice stuff on on on the partner expansion like one of the things that caught my attention was the pre screening tool just curious if we could dig into that a little bit and and and if you can give us a sense of how you see that use case potentially expanding to other to other partners Hi this is Sanjeev I'll take it the way the free screen product works is it's essentially a firm offer of credit that we offer to our partners existing customers on a programmatic basis so today if you really think about the guys flagship product we offer it to new consumers that come into our our partners pre screen is to the massive existing customer based that our partners have and basically what we do is effectively provide the provider model to for them to be able to expand that and offer that to their to their existing customers so that distinction between new and existing is extremely important as you know existing customers form the large part of our partners portfolio That has demonstrated a huge result in some of the early work that we've done in terms of very strong response rates and very low acquisition costs.

Joseph Vafi: Got it. Thanks for that, E.P. And then just.

Speaker Change: www.globalonenessproject.org

Evangelos Perros: I mean, I guess it's, you know, the forward flow agreement is still relatively small compared to your ABS vehicles. Is it focused on funding specific loan categories or specific lending partners, or is it just kind of broad-based across your lending volume?

Speaker Change: got it thanks for that EP and then just

Speaker Change: You know, I mean, I guess it's, you know, the forward flow agreement is still relatively small compared to your ABS vehicles. Is there, is it, is it focused on funding specific loan categories or?

Speaker Change: specific lending partners or is it just kind of broad-based across your lending volume?

Evangelos Perros: This current agreement is across all of our personal loan portfolio, but we do expect to grow, as I said, this program within the personal loan category and also chase opportunities for some of the other asset classes.

Speaker Change: This current agreement is across all our personal loan portfolio but we do expect to grow, as I said, this program within the personal loan and also chase opportunities for some of the other asset classes as well.

Speaker Change: Maybe a word from the market, we do see a lot of demand for that type of assets.

Gal Krubiner: I think maybe a word from the market. We do see a lot of demand for that type of asset. So it can be in a forward-flow format, or it can be in a path-through, as Yipi mentioned.

Yipi: So it can be in a forward-flow format, or it can be in a path-through as Yipi mentioned.

Gal Krubiner: But the reality is that the major credit shops, both 21 and 22, while seeing the performance very much stabilizing and going to the right direction, and actually very stabilized for over a year, is bringing a lot of demand for that discussion. We have conversations with many. Obviously, you want to land the right partners and the right programs that suit for that. But we see the same amount of interest from personal loan, on auto loans, and on point of sale.

Yipi: But the reality is that the major credit shops, both 21 and 22, while seeing the performance very much stabilizing and going to the right direction, and actually very stabilized for over a year.

Evangelos Perros: Great. So obviously we're very excited about this new agreement because it's aligned very much with our goal to drag capital efficiency. And as we have said before, there are two ways to achieve that. One, they specify our funding as well as optimize our current ABS program. When you think about this forward flow agreement and other funding mechanisms that we have, we basically doesn't cover only 20 or so percent of our current volume.

Speaker Change: He's bringing a lot of

Speaker Change: Demands for that for that discussion. We have conversations with many obviously you want to land the right partners

Speaker Change: and the right programs that suit for that. But we see the same amount of interest.

Gal Krubiner: This is a market that obviously we are growing a lot. So think about it as another way to fund the business with much lower upfront capital need that gives us flexibility in between the world of AVS, forward flow, and few others.

Speaker Change: from personal loan, on auto loans, and on point of sale. This is a market that obviously we are growing a lot.

Evangelos Perros: And this is in the form of funding that requires basically minimum or no capital requirements. And we expect to scale that program going forward to increasingly become more capital efficient. And that's basically the way we can also pay the past to get the cash flow positive. Overall, you know, the four flow agreement that we put in place is basically for those market standards. The pricing will be reflected in FRNPC. And our current, a direction of three and a half to four and a half percent of FRNPC going forward already reflects those arrangements.

Speaker Change: So, think about it as another way to fund the business with much lower upfront capital need that gives us flexibility in between the world of AVS, forward flow, and few others.

Joseph Vafi: Great. Thanks very much for that extra color, Gal.

Speaker Change: Great. Thanks very much for that extra call, Adele.

Peter Christensen: Thank you. The next question comes from the line of Peter Christensen with Citi. Please go ahead.

Speaker Change: Thank you. Next question comes from the line of Peter Christensen with Citi. Please go ahead.

Peter Christensen: Good morning. Thanks for having me. Glad to be part of the roster here. Nice stuff on the partner expansion. One of the things that caught my attention was the pre-screening tool. Just curious if you could dig into that a little bit and if you can give us a sense of how you see that use case, potentially expanding to other partners.

Peter Christensen: Good morning. Thanks for having me. Glad to be part of the roster here.

Sanjiv Das: I got it thanks for that EP and then just you know I mean I guess it's you know the the four-of-floor agreements to a relatively small compared to your ABS vehicles is there is it is it focused on funding specific loan categories or specific lending partners or is it just kind of broad-based across your your your your lending volume yeah now this kind of agreement is across all our personal loan portfolio but we do expect to grow as I said this program within the personal loan and also a case of opportunities for some of the other asset classes as well maybe a vote from the market we do see a lot of demand for that type of assets so it can be in a forward flow format or it can be in a in a path through as as EP mentioned but the reality is that the major credit shops post 21 and 22 while seeing the performance very much stabilizing and going to the right direction and actually very stabilized for over a year he's bringing a lot of demand for that for that discussion we have conversations with many obviously you want to lend the right partners and the right programs that suit for that but we see the same amount of interest from personal loan on auto loans and on point of sale that it is a market that obviously we are growing a lot so think about it as another way to fund the business with much lower upfront capital needs that gives us flexibility in between the world of AVS the forward flow and in few others right thanks very much for that extra color doll thank you next question comes from the line of Peter Christianson with city please go ahead good morning thanks for having me going to be part of the roster here nice nice stuff on on on the partner expansion like one of the things that caught my attention was the pre screening tool just curious if we could dig into that a little bit and and and if you can give us a sense of how you see that use case potentially expanding to other to other partners Hi this is Sanjeev I'll take it the way the free screen product works is it's essentially a firm offer of credit that we offer to our partners existing customers on a programmatic basis so today if you really think about the guys flagship product we offer it to new consumers that come into our our partners pre screen is to the massive existing customer based that our partners have and basically what we do is effectively provide the provider model to for them to be able to expand that and offer that to their to their existing customers so that distinction between new and existing is extremely important as you know existing customers form the large part of our partners portfolio That has demonstrated a huge result in some of the early work that we've done in terms of very strong response rates and very low acquisition costs. That allows us to basically offer an extended product to all of our partners and so it's pretty much the next phase of how Pagaya grows.

Peter Christensen: Nice stuff on the partner expansion. One of the things that caught my attention was the pre-screening tool. Just curious if we could dig into that a little bit.

Speaker Change: and if you can give us a sense of how you see that use case potentially expanding to other partners.

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

Sanjiv Das: The way the Freescreen product works is it's essentially a firm offer of credit, that we offer to our partners, existing customers. Um.., on a programmatic basis. So today, if you really think about Pagaya's flagship product, we offer it to new consumers that come in to our partners. Prescreen is to the massive existing customer base that our partners have, and basically what we do is effectively provide the Pagaya model for them to be able to expand that and offer that to their existing customers. So that distinction between new and existing is extremely important.

Speaker Change: Hi Pete, this is Sanjiv, I'll take it. The way the Freescreen product works is, it's essentially a firm offer of credit that we offer to our partners, existing customers.

Speaker Change: on a programmatic basis. So today, if you really think about Pagaya's flagship product, we offer it to new consumers that come into our partners. Freescreen is to the massive existing customer base that our partners have.

Speaker Change: And basically what we do is effectively provide the Pagaya model.

Speaker Change: to for them to be able to expand that and offer that to their to their existing customers. So that distinction between new and existing is extremely important as you know. Existing customers form the large part of our partners portfolios.

Sanjiv Das: As you know, existing customers form the large part of our partners' portfolios. That has demonstrated huge results in some of the early work that we've done in terms of very strong response rates and very low acquisition costs, that allows us to basically offer an extended product to all of our partners. And so it's, you know, I would say pretty much the next phase of how Pagaya grows. With all our 30 partner relationships, we will deepen these relationships in a very significant and programmatic basis.

Speaker Change: That has demonstrated huge results in some of the early work that we have done in terms of very strong response rates and very low acquisition costs.

Sanjiv Das: That allows us to basically offer an extended product to all of our partners, and so it's pretty much the next phase of how Pagaya grows. With all our 30 partner relationships, we will deepen these relationships in a very significant and programmatic basis.

Speaker Change: that allows us to basically offer an extended product.

Speaker Change: to all of our partners. And so it's, I would say, pretty much the next phase of how Pagaya grows. With all our 30 partner relationships, we will deepen these relationships in a very significant and programmatic basis.

Sanjiv Das: And we have now been testing this with about three partners. And so our ability to take it across the board to all of our partners is relatively straightforward and is turning out to be one of the most promising things in our businesses as we look forward.

Sanjiv Das: We have now been testing this with about three partners, and so our ability to take it across the board to all of our partners is relatively straightforward and is turning out to be one of the most promising things in our businesses as we look forward to.

Speaker Change: And we have now been testing this with about three partners.

Speaker Change: And so our ability to take it across the board to all of our partners is relatively straightforward and is turning out to be one of the most promising things in our businesses as we look forward to it.

Peter Christensen: Thank you, that's interesting. And then on the UBS issuance that you had, where you achieved the AAA rating, how should we think about risk retention when you're trying to get issuance at this level of quality and the co-investment that's required? Thank you. Thank you.

Operator: Thank you. That's interesting.

Operator: And then on the EBS issuance that you had, were you choosing to play a rating?

Speaker Change: Thank you. That's interesting. And then on the UBS issuance that you had, where you achieved the AAA rating,

Evangelos Perros: How should we think about risk retention when you're trying to get issuance at this level of quality and the co-investment that's required? Thank you. Yeah, we're very pleased, obviously, with that outcome as we continue to optimize our ABS structure. Again, as a path for us to get to capital positive, I think what the tribulated thing does very simply, it lowers the cost of capital for investors and, as a result, lowers the risk retention requirements that we have to put into these deals. So now the way to think about it is, on one side you have an optimized ABS structure that calls for five or less percent risk retention, combined with other structures on the both or in other pastures.

Speaker Change: How should we think about risk retention when you're...

Speaker Change: trying to get issuance at this level of quality and the co-investment that's required. Thank you.

Evangelos Perros: Yeah, we're very pleased, obviously, with that outcome as we continue to optimize our ABS structure. Again, as a path for us to get to cash flow positive, I think what the stipulated thing does very simply, it lowers the cost of capital for our investors, and as a result, lowers the risk retention requirements that we have to put into this business. So now the way to think about it is, on one side, you have an optimized ABS structure that calls for 5% or less risk retention, combined with other structures on the fourth floor and other pass-throughs. That's the path to get to a very low capital requirement of 3% over time.

Speaker Change: Yeah, we're very pleased obviously with that outcome as we continue to optimize our ABS structure.

Peter Christensen: Thank you, that's helpful.

Speaker Change: Again, I said that for us to get to cash flow positive.

Speaker Change: I think what the AAA rating does, very simply, it lowers the cost of capital for our investors and as a result, lowers the risk retention requirements that we have to put into these deals.

Speaker Change: So now the way to think about it is, on one side, you have an optimized ABS structure that calls for five or less percent risk retention, combined with other structures on the fourth floor and other pass-throughs. That's the path to get to a very low capital requirement of 2-3% over time.

Evangelos Perros: That's the path we get to a very low capital requirement of two to three percent of our time.

John Hecht: Thank you. Next question comes on the line of John Hector with Jeff Lee. Please go ahead. Good morning, guys. Thanks for taking my questions, and congratulations on all the positive developments. I guess a quick follow-up on the AAA rating question.

Speaker Change: Thank you, that was helpful.

John Hecht: Thank you. Next question comes from the line of John Hecht with Jeffries. Please go ahead.

Speaker Change: Thank you. Next question comes from the line of John Hecht with Jeffries. Please go ahead.

John Hecht: Morning guys, thanks for taking my questions and congratulations on all the positive developments. I guess a quick follow-up on the AAA rating question. I guess how much of this stack does the AAA amount account for, and what's the cost of capital or spread difference in AAA versus the prior rating?

John Hecht: Morning guys, thanks for taking my questions and congratulations on all the positive developments. I guess a quick follow-up on the AAA rating question.

Evangelos Perros: I guess how much of the stack does the AAA amount account for and what's the cost of capital or spread difference in AAA versus the prior rating? Hi, Jeff. So it's glad you're able to take it. So, in reality, basically 40% of the cap stack is now has moved from what we used to have the AA to a AAA. You can think about it from a perspective of 50 to 70 basis points of additional saving because usually spreads around the AAA are hovering around 75. W would be 120 140 depending on the structure and the situation.

John Hecht: I guess how much of this stack does the AAA amount account for and what's the cost of capital or spread difference in AAA versus the prior rating?

Gal Krubiner: Hi Joe. So it's Gal here.

John Hecht: Hi Joe, so it's Gal here, I will take it.

Gal Krubiner: I will take it. So, in reality, basically, 40% of the cap stack now has moved from what we used to have as an AA to an AAA. You can think about it from the perspective of 50 to 70 basis points of additional savings, because usually spreads around the AAA are hovering around 75. W could be 120, 140, depending on the structure and the situation.

Sanjiv Das: With all our 30 partner relationships we will deepen these relationships in a very significant and programmatic basis. We have now been testing this with about three partners and so our ability to take it across the board to all of our partners is relatively straightforward and is turning out to be one of the most promising things in our businesses as we look forward to. Thank you.

Speaker Change: Basically 40% of the cap stack is now has moved from what we used to have as a double A to a triple A. You can think about it from a perspective of

Speaker Change: 50 to 70 basis points of additional saving because usually spreads around the AAAR hoovering around 75.

Speaker Change: Double E could be 120, 140, depending on the structure and the situation.

Evangelos Perros: So, from that perspective, at least 75 to 100 basis points of about 40% is very meaningful from a cost of capital, etc.

Gal Krubiner: So from that perspective, you know, at least 75 to 100 basis points, about 40% is very meaningful from a cost of capital, et cetera. The more interesting piece, I think, is the fact that we're now in the category of people that could do that. There are not that many originators in the U.S. that will originate assets of our kind with the 680 FICO, et cetera, that will have a AAA. So we should think about cost of capital in the context of the asset, and that making us a very strong, large, leading producer of the personal loan that will have now on the funding side additional benefit, competitive benefit of reduced capital cost to be able to price borrower better, and therefore, obviously, to expand what we can originate.

Sanjiv Das: That's interesting.

Speaker Change: So, from that perspective, you know, at least 75 to 100 basis points, about 40% is very,

Evangelos Perros: And then on the EBS issuance that you had, were you choosing to play a rating?

Evangelos Perros: How should we think about risk retention when you're trying to get issuance at this level of quality and the co-investment that's required? Thank you. Yeah, we're very pleased, obviously, with that outcome as we continue to optimize our ABS structure. Again, as a path for us to get to capital positive, I think what the tribulated thing does very simply it lowers the cost of capital for investors and as a result lowers the risk retention requirements that we have to put into these deals.

Evangelos Perros: The more interesting piece I think is the fact that we now in the category of people that could do that. There are not that many originators in the US that will originate assets of our kind with the 680 FICO, etc. that will have a AAA. So we should think about cost of capital in the context of the asset and that making us a very strong, large leading producer of the person alone that will have now on the funding side additional benefits. So it's a competitive benefit of reduced capital cost to be able to price boar better and therefore obviously to expand what we can originate.

Speaker Change: The more interesting piece I think is the fact that we are now in the category of people that could do that. There are not that many.

Speaker Change: originators in the U.S. that will originate.

Evangelos Perros: So now the way to think about it is on one side you have an optimized ABS structure that calls for five or less percent risk retention combined with other structures on the both or in other pastures. That's the path we get to a very low capital requirement of two to three percent of our time. Thank you.

Speaker Change: assets of our kind with the 680 FICO, et cetera, that will have a triple A. So we should think about cost of capital in the context of the asset.

Speaker Change: competitive benefit of reduced capital cost to be able to price borrowers better and therefore obviously to expand what we can originate. The last point I will make into that is that that percentage could grow over time.

Evangelos Perros: The last point I will make into that is that that percentage could grow over time as you know, it's based on the multipliers of that. So we started with very 40% but we do expect over time around 50, 55% of the capital tech to become AAA and therefore these are the next milestone from us on the page shelf as that. Okay, that's very, very helpful color.

Gal Krubiner: The last point I would make into that is that that percentage could grow over time. As you know, it's based on the multipliers of that, so we started with 30, 40%, but we do expect over time around 50, 55% of the capital stack to become AAA, and therefore, these are the next milestone for us on the page shelf as such.

John Hecht: Next question comes on the line of John Hector with Jeff Lee. Please go ahead. Good morning, guys. Thanks for taking my questions and congratulations on all the positive developments. I guess a quick follow up on the AAA rating question. I guess how much of the stack does the AAA amount account for and what's the cost of capital or spread difference in AAA versus the prior rating? Hi, Jeff. So it's glad you're able to take it.

Speaker Change: As you know, it's based on the multipliers of that, so we started with 30-40%, but we do expect over time around 50-55% of the capital stack to become AAA, and therefore these are the next milestone for us on the page shelf as such.

John Hecht: Okay, that's very, very helpful, Collar. Second question is, you know, you've hit your target partner ad much earlier in the year than we expected, so maybe talk about partner pipeline and, you know, any kind of changes to the characteristics of what you're looking for at this point in time.

Speaker Change: Okay, that's very, very helpful, Collar. Second question is, you know, you've hit your target partner ad much earlier in the year than we expected. So maybe talk about partner pipeline.

Speaker Change: and any kind of changes to the characteristics of what you're looking for at this point in time.

John Hecht: So in reality, basically 40% of the cap stack is now has moved from what we used to have the AA to a AAA. You can think about it from a perspective of 50 to 70 basis points of additional saving because usually spreads around the AAA are hovering around 75. W could be 120 140 depending on the structure and the situation. So from that perspective, at least 75 to 100 basis points of about 40% is very meaningful from a cost of capital etc.

Sanjiv Das: Hi John, Sanjiv Das, so you're right. We have announced our partner pipeline to be pretty strong, pretty early on. I would say that across the board in PL auto and POS that pipeline has been, has been extremely strong. But I will emphasize that POS has, in fact, been completely off the charts in terms of the demand that we are seeing there. As I mentioned in my script earlier, almost every discussion we started a bank team, he starts with point of sale. People are saying that the BNPL business, which now has essentially evolved into a form of retail lending, so high ticket size, large ticket size, younger duration.

Sanjiv Das: Hi John, Sanjiv, bye. So, you're right, we have announced our partner pipeline to be pretty strong pretty early on. I would say that across the board, in PL, Auto, and POS, that pipeline has been extremely. But I will emphasize that POS has, in fact, been... Completely off the charts in terms of the demand that we are seeing there.

Speaker Change: [inaudible]

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

Sanjiv Das: So, you're right, we have announced our partner pipeline to be pretty strong pretty early on. I would say that across the board, in PL, Auto, and POS, that pipeline has been extremely strong.

Sanjiv Das: but I will emphasize that POS has in fact been

Sanjiv Das: As I mentioned in my script earlier, almost every discussion we start with the banking, we start with point of sale. People are seeing that the BNPL business, which now has essentially evolved into a form of retail lending, so high ticket size, large ticket size, longer duration, purpose-driven, generally around home improvement or medical or education, which is very consistent with our personal loans business. It's the one that's really, really, really taking on traction and in fact is a large part of our entry strategy now.

Sanjiv Das: Completely off the charts in terms of the demand that we are seeing there, as I mentioned in my script earlier. Almost every discussion we start with the bank is his thoughts, but point of sale.

John Hecht: The more interesting piece I think is the fact that we now in the category of people that could do that. There are not that many originators in the US that will originate assets of our kind with the 680 FICO etc, that will have a AAA. So we should think about cost of capital in the context of the asset and that making us a very strong, large leading producer of the person alone that will have now on the funding side additional benefits.

Sanjiv Das: People are seeing that the BNPL business, which now has essentially evolved into a form of retail lending, so high ticket size, large ticket size, longer duration.

Sanjiv Das: Purpose prison generally around home improvement or medical education, which is very consistent with our personal loans business. It's the one that's really, really, really taking on traction. And in fact, it's a large part of our entry strategy now with banks. The second thing I'll mention is that our business has become very enterprise-driven. And it's intentional. So what we do is we enter either into the PL side and then expand into POS and then into auto. All we enter into POS and then expand into PL or into auto. So that enterprise piece is very important. As you know, onboarding some of these enterprises can take some time.

Sanjiv Das: purpose-driven, generally around home improvement or medical or education, which is very consistent with our personal loans business. It's the one that's really, really, really taking on traction and, in fact, is a large part of our entry strategy in other banks.

Sanjiv Das: The second thing I'll mention is that our business has become very enterprise-driven, and that's intentional. What we do is we enter either on the PL side and then expand into POS and then into auto, or we enter through POS and then expand into PL or into auto.

Sanjiv Das: The second thing I'll mention is that our business has become very enterprise driven.

John Hecht: So it's a competitive benefit of reduced capital cost to be able to price boar better and therefore obviously to expand what we can originate. The last point I will make into that is that that percentage could grow over time as you know, it's based on the multipliers of that.

Sanjiv Das: and it's intentional.

Sanjiv Das: So what we do is we enter either into the PL side.

Sanjiv Das: and then expand into POS and then into auto, or we enter in through POS and then expand into PL or into auto. So that enterprise piece is very important. As you know, onboarding some of these enterprises can take some time. It can take about, you know, in the case of you.

Sanjiv Das: So that enterprise piece is very important. As you know, onboarding some of these enterprises can take some time. It can take about, you know, in the case of... Editing ORIGINAL, so forth and OneMain is absolutely heading in that direction as well. So we started with Auto now, we expect to onboard PL by the end of the year, launch it by the middle of next year, so it's all moving in a very systematic way across asset classes through these enterprises.

Evangelos Perros: So we started with very 40% but we do expect over time around 50, 55% of the capital tech to become AAA and therefore these are the next milestone from us on the page shelf as that. Okay, that's very, very helpful color.

Sanjiv Das: It can take about, you know, in the case of US Bank, for example, 18 months, but once you are in, we need to allow one to literally happen in one quarter. Once you get in, it's almost like a moat, right? So you've gotten in; the technology integration takes a long time, but once you're integrated, you have part of the system of the enterprise. And that's very important. You saw that in US bank, we are not seeing that with the Lending Club, we'll see this with the top five banks, you just announced and so on. So for one main, it's absolutely heading in that direction as well.

Sanjiv Das: 18 months, but once we were in, moving into Elevon literally happened in one quarter.

Sanjiv Das: Once you get in, it's almost like a moat, right? So you've gotten in, the technology integration takes a long time. But once you're integrated, you're part of the system of the enterprise. And that's very important. We saw that in U.S. banks. We are now seeing that with LendingClub. We'll see this with the top five banks we just announced.

John Hecht: And the second question is, you know, you've hit your target partner ad much earlier in the year than we've expected. So maybe talk about partner pipeline. And, you know, any, any kind of change the characteristics of what you're looking for at this point time. Hi John, Sanjiv Das, so you're right. We have announced our partner pipeline to be pretty strong, pretty early on. I would say that across the board in PL auto and POS that pipeline has been, has been extremely strong.

Sanjiv Das: So we started with auto now. We expect on board PL by the end of the year, launched by the middle of next year. So it's all moving in a very systematic way across asset classes to these enterprises.

Sanjiv Das: and so on and so forth. And OneMain is absolutely heading in that direction as well. So we started with Auto now. We expect to onboard PL by the end of the year, launch it by the middle of next year. So it's all moving in a very systematic way across asset classes through these enterprises.

John Hecht: Okay, and then just a quick follow-up on that. Assume the F, well, is there anything to note on the FRLPC margin on POS versus the consumer loans?

Operator: Okay, and then just click follow up on that.

Operator: Assume the F, is there anything to note on the FRL PC margin on POS versus the consumer loans? Yeah, so on that one, obviously POS continues to be an investment area for us and asset classes we expect to grow. Ultimately, obviously, as you know, you know, personal loan is a more mature asset class of the highest FRL PC.

Speaker Change: Okay, and then just a quick follow-up on that, is there anything to note on the FRLPC margin on POS versus the consumer loans?

Sanjiv Das: Yeah, so on that one, obviously POS continues to be an investment area for us and an asset class that we expect to grow. Ultimately, obviously, as you know, you know, personal loan is a more mature asset class for the highest FRLPC. Our goal is to continue to grow the other asset classes like auto and POS and drive higher margin consistent with what we have done with personal loans. And we have the roadmap to get One more time. Great, thanks very much. Thank you.

John Hecht: But I will emphasize that POS has, in fact, been completely off the charts in terms of the demand that we are seeing there, as I mentioned in my script earlier, almost every discussion we started a bank team, he starts with point of sale, people are saying that the BNPL business which now has essentially evolved into a form of retail lending, so high ticket size, large ticket size, younger duration. Purpose prison generally around home improvement or medical education, which is very consistent with our personal loans business.

Speaker Change: So on that one, obviously POS continues to be an investment area for us and an asset class that we expect to grow. Ultimately, obviously, as you know, you know, personal loan is a more mature asset class for the highest FRLPC. Our goal is to continue to grow the other asset classes like auto and POS and drive higher margin consistent with what we have done with personal loans. And we have the roadmap to get there.

Operator: Our goal is to continue to grow the asset classes like auto and POS and drive higher margin, consistent with what we have done with personal loans, and we have the roadmap to get.

Operator: Great, thanks very much, guys. Thank you.

Speaker Change: One more time.

Speaker Change: Great. Thanks very much, guys.

Timothy D'Agostino: The final question comes from the line of Timothy D'Agostino with Be Riley, please go ahead.

Timothy Dagestino: The final question comes from the line of Timothy Dagestino with B. Riley, please go ahead. Hi, thank you so much for taking my question. At a high level, what assets and resources does Theerion bring to Pagaya? Also, could you share your perspective on the problems you saw for one main? Thank you. Sure, it's good. I will take it. So we're very, very excited about the combination and the purchase of Theerion. Theerion for us is a little bit of an asset management that is focusing on consumer credit. We've been in touch with them for the last few years, on and off.

Speaker Change: Thank you. The final question comes from the line of Timothy D'Agostino with Be Riley. Please go ahead.

John Hecht: It's the one that's really, really, really taking on traction. And in fact, it's a large part of our entry strategy now with banks. The second thing I'll mention is that our business has become very enterprise driven. And it's intentional. So what we do is we enter either into the PL side and then expand into POS and then into auto, all we enter into POS and then expand into PL or into auto.

Speaker Change: Thanks a lot. Bye. Bye.

Speaker Change: Hi, thank you so much for taking my question. At a high level, what assets and resources does Therion bring to Pagaya? Also, could you share your perspective with the problems you solve for OneMain? Thank you.

Gal Krubiner: Sure, Itgal; I will take it. So we're very, very excited about the combination and the purchase of Theorem. Theorem, for us, is a little bit of an asset management company that is focusing on consumer credit. We've been in touch with them for the last few years on and off. And just recently, we managed to come to a conclusion that forcing hands and the Theorem team to join the Pagaya team is actually the right way to do it and to bring value for everyone. In a very short way, describing it...

Speaker Change: Sure, it's Gal. I will take it. So, we're very, very excited about the combination and the purchase of T-Room.

Speaker Change: See room for us, please.

John Hecht: So that enterprise piece is very important. As you know, onboarding some of these enterprises can take some time. It can take about, you know, in the case of US bank, for example, 18 months, but once you are in, we need to allow one to literally happen in one quarter. Once you get in, it's almost like a moat, right? So you've gotten in, the technology integration takes a long time, but once you're integrated, you have part of the system of the enterprise.

Speaker Change: Mendee.

Speaker Change: a little bit of an asset management that is focusing on consumer credit. We've been in touch with them for the last few years on and off. And just recently we managed to come to a conclusion that forcing hands and the theorem team joining the Pagaya team is actually the right way to do it and to bring value for everyone.

Gal Krubiner: And just recently, we managed to come to a conclusion that forcing hands and the theorem team joining the Pagaya team is actually the right way to do it and to bring value for everyone. In a very short way of describing it, the main rationale for the transaction is that now that Theorem is part of Pagaya, while they are going to work in a completely independent, both on their investment committee and their research piece, they will have a very big access to the Pagaya network, if you will. So you should expect going forward that their LPs will have now the ability to actually select assets from a much bigger and wider possibilities and opportunities, hence utilizing the network that we are building with the major partners that we just spoke about across the US.

Gal Krubiner: The main rationale for the transaction is that now the theorem is part of Pagaya, while they are going to work and.., independent, both on their investment committee and their research piece, they will have a very big access to the Pagaya network, if you will. So you should expect going forward that their LPs will have now the ability to actually select assets from a much bigger and wider possibilities and opportunities, hence utilizing the network that we are building with the major partners that Sanjiv just spoke about across the U.S. And on the other side, from a Pagaya perspective, it's obviously very interesting to us to have additional funding diversification that could see some interest in the assets that we are producing on a go-forward basis.

Speaker Change: In a very short way of describing it, the main rationale for the transaction is that now the theorem is part of Pagaya, while they are going to work and complete the transaction

John Hecht: And that's very important. You saw that in US bank, we are not seeing that with the lending club, we'll see this with the top five bank, you just announced and so on. So for one main, it's absolutely heading in that direction as well. So we started with auto now. We expect on board PL by the end of the year, launched by the middle of next year.

Speaker Change: independent both on their investment committee and and their their research piece they will have a very big access to the Pagaya network if you will.

Sanjiv Das: So it's all moving in a very systematic way across asset classes to these enterprises. Okay, and then just click follow up on that. Assume the F, is there anything to note on the FRL PC margin on POS versus the consumer loans? Yeah, so on that one, obviously POS continues to be an investment area for us and asset classes we expect to grow. Ultimately, obviously, as you know, you know, personal loan is a more mature asset class of the highest FRL PC. Our goal is to continue to grow the asset classes like auto and POS and drive higher margin, consistent with what we have done with personal loans and we have the roadmap to get.

Speaker Change: So, you should expect going forward that their LPs will have now the ability to actually select assets from a much bigger and wider possibilities and opportunities.

Speaker Change: Hence, utilizing the network that we are building with the major partners that Sanjiv just spoke about across the U.S.

Speaker Change: And on the other side, from a Pagaya perspective, it's obviously very interesting to us to have additional funding diversification that could see some interest in the assets that we are producing on a go-forward basis.

Gal Krubiner: I will just make the last point that the team is going to stay here and going to take the lead on building Serum and the asset management business in Pagaya. And we have very high expectations and hopes that could get to the billions of dollars of LP capital too. From the OneMain perspective, so OneMain is a new partner on our network. As Sanjiv said, we have the enterprise concept and approach to this.

Gal Krubiner: I will just make the last point that the team is going to stay here and going to take the lead on building theorem and the asset management business in Pagaya, and we have very high expectations and hopes that could get to the billions of dollars of LP capital, too.

Speaker Change: I would just make the last point that the team...

Speaker Change: is going to stay here and going to take the lead on building Serum and the asset management business in Pagaya, and we have very high expectations and hopes.

John Hecht: Great, thanks very much, guys. Thank you.

Timothy Dagestino: The final question comes from the line of Timothy Dagestino with B.

Gal Krubiner: Riley, please go ahead. Hi, thank you so much for taking my question. At a high level, what assets and resources does theerion bring to Pagaya? Also, could you share your perspective with the problems you saw for one main? Thank you. Sure, it's good. I will take it.

Speaker Change: that could get to the billions of dollars of LP capital too.

Gal Krubiner: From the one main perspective, so one main is a new partner on our network as Sanjuv said, we have the enterprise concept and approach to this. We started with them on the autolone, which they are trying to build and ramp up even bigger part of their autolone platform, and we are part of that already right now. And as we are thinking about what the future holds with them, we are starting to work on getting on the PL side, too, and the integration that is needed from that in order to be able to help them approve more customers on that side, too.

Speaker Change: From the OneMain perspective, so OneMain is a new partner on our network, as Sanjiv said, we have the enterprise concept.

Gal Krubiner: We started with them on the AutoLoan, which they are trying to build and ramp up even bigger part of their AutoLoan platform, and we are part of that already right now. And as we're thinking about what the future holds with them, we are starting to work on getting on the PL side too, and the integration that is needed from that in order to be able to help them approve more customers on that side too. I'd just like to, uh, supplement what Carl said.

Gal Krubiner: So we're very, very excited about the combination and the purchase of theerion. Theerion for us is a little bit of an asset management that is focusing on consumer credit. We've been in touch with them for the last few years on and off. And just recently, we managed to come to a conclusion that forcing hands and the theorem team joining the Pagaya team is actually the right way to do it and to bring value for everyone.

Speaker Change: and approach to this. We started with them on the auto loan, which they are trying to build and ramp up.

Speaker Change: even bigger part of their auto loan platform, and we are part of that.

Speaker Change: already right now. And as we're thinking about what the future holds with them, we are starting to work on getting on the PL side too and the integration that is needed from that in order to be able to help them approve more customers on that side too.

Gal Krubiner: In a very short way of describing it, the main rational for the transaction is that now that theorem is part of Pagaya, while they are going to work in a completely independent, both on their investment committee and their research piece, they will have a very big access to the Pagaya network, if you will. So you should expect going forward that their LPs will have now the ability to actually select assets from a much bigger and wider possibilities and opportunities, hence utilizing the network that we are building with the major partners that we just spoke about across the US.

Sanjiv Das: I'd just like to supplement what Carl rightly pointed out in terms of the customers that OneMain has. I think it's well known that their customer segment is very consistent with Pagaya's.

Sanjiv Das: I would just like to supplement what Carl rightly pointed out in terms of the customers that OneMain has. I think it's well known that their customer segment is very consistent with Pagayas. And so the one big thing that we will solve for one main, obviously, given their acquisition of four sides, which pretty much doubles their volume with a segment that's consistent with ours that will allow enabled them to scale even more. So one main is this a very serious acquisition for one main and they see us as a very integral partner in helping them scale.

Speaker Change: I'd just like to supplement what Carl rightly pointed out in terms of the customers that OneMain has. I think it's well known that their customer segment is very consistent with Pagaya's.

Sanjiv Das: And so the one big thing that we'll solve for OneMain, obviously, given their acquisition of Foresight, which pretty much doubles their volume with a segment that's consistent with ours, is that we'll allow, enable them to scale even more. So this is a very serious acquisition for OneMain, and they see us as a very integral partner in helping them scale. The second thing I would add is that when you scale at that level, more than scaling your business, the ability to get more approvals at the dealer with Pagaya's extended credit box is extremely powerful.

Speaker Change: And so the one big thing that we'll solve for one main, obviously, given their acquisition of Forsyth, which pretty much doubles their volume.

Speaker Change: with a segment that's consistent with ours so that we allow, enable them to scale even more so. OneMain is, this is a very serious acquisition for OneMain and they see us as a very integral partner in helping them scale.

Sanjiv Das: The second thing I would add is that when you scale at that level, more than scaling your business, the ability to get more approvals at the dealer with Pagaya's extended credit box is extremely powerful. And so we very, very significantly enhanced the value proposition for one main, just as we do with Ally and with some of our auto partners. The approval at the dealer point of sale is extremely important. And I would say those are the principle things that we solve for them on order today and eventually in the same thing on BF.

Speaker Change: The second thing I would add is that when you scale at that level, more than scaling your business,

Speaker Change: The ability to get more approvals at the dealer with Pagaya's extended credit box is extremely powerful.

Gal Krubiner: And on the other side, from a Pagaya perspective, it's obviously very interesting to us to have additional funding diversification that could see some interest in the assets that we are producing on a go-forward basis. I will just make the last point that the team is going to stay here and going to take the lead on building theorem and the asset management business in Pagaya, and we have a very high expectations and hopes that could get to the billions of dollars of LP capital, too.

Sanjiv Das: And so we have very, very significantly enhanced the value proposition for OneMain, just as we do with Ally and with some of our, with many of our auto partners. The approval at the dealer point of sale is extremely important. And I would say those are the principal things that we solve for them on auto today, and eventually, the same thing on BS.

Speaker Change: And so we very, very significantly enhanced the value proposition for OneMain, just as we do with Ally and with many of our other partners. The approval at the dealer point of sale is extremely important.

Speaker Change: And I would say those are the principal things that we solve for them on auto today and eventually in the same thing on BL.

Operator: Okay, thank you so much.

Speaker Change: Okay, thank you so much.

Operator: Thank you.

Gal Krubiner: Thank you. Ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to Gal Krubiner for closing comments.

Gal Krubiner: Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Gal Krubiner for closing comments. To close, I want to say that I'm very proud of the team execution this quarter. Everything we set out we got to do at the start of the year, we have accomplished. Our network and value proposition to the US lending ecosystem is stronger than ever. Thank you all for joining us today, and I look forward to our continuous partnership. Thank you.

Speaker Change: Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to turn the floor over to Gal Krubiner for closing comments.

Gal Krubiner: From the one main perspective, so one main is a new partner on our network as Sanjuv said, we have the enterprise concept and approach to this. We started with them on the autolone, which they are trying to build and ramp up even bigger part of their autolone platform and we are part of that already right now. And as we are thinking about what the future holds with them, we are starting to work on getting on the PL side, too, and the integration that is needed from that in order to be able to help them approve more customers on that side, too.

Gal Krubiner: To close, I want to say that I'm very proud of the team's execution this quarter. Everything we set out we gotta do, at the start of the year, we have accomplished. Our network and value proposition to the U.S. lending ecosystem is stronger than ever. Thank you all for joining us today, and I look forward to our continued partnership. Thank you.

Gal Krubiner: To close, I want to say that I'm very proud of the team execution this quarter. Everything we set out we're going to do, at the start of the year, we have accomplished.

Gal Krubiner: Our network and value proposition to the U.S. lending ecosystem is stronger than ever. Thank you all for joining us today, and I look forward to our continued partnership.

Operator: Thank you. This concludes our today's study conference. You may disconnect your lines at this time. Thank you for your participation.

Operator: This concludes our today's study conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thank you. This concludes our today's study conference. You may disconnect your lines at this time. Thank you for your participation.

unknown: transcript Emily Beynon

unknown: Momentum, not just for today, but for the next few weeks.

Gal Krubiner: I would just like to supplement what Carl rightly pointed out in terms of the customers that one main has. I think it's well known that their customer segment is very consistent with Pagayas. And so the one big thing that we will solve for one main, obviously, given their acquisition of four sides, which pretty much doubles their volume with a segment that's consistent with ours that will allow enabled them to scale even more.

Speaker Change: Momentum, not just for today, but for the next few weeks.

unknown: We expect you to say now that you're done.

unknown: So, we expect you to say now you know. [music]

unknown: Director By M.A. D.? Edited By D.?

unknown: R.I.P. Luke, produced by J.L. Luke edited by J.L. R.I.P. Luke, edited by J.L. R.I.P. Luke

Gal Krubiner: So one main is this is a very serious acquisition for one main and they see us as a very integral partner in helping them scale. The second thing I would add is that when you scale at that level, more than scaling your business, the ability to get more approvals at the dealer with Pagayas extended credit box is extremely powerful. And so we very, very significantly enhanced the value proposition for one main, just as we do with Ally and with some of our with many of our auto partners. The approval at the dealer point of sale is extremely important. And I would say those are the principle things that we solve for them on order today and eventually in the same thing on BF.

Timothy Dagestino: Okay, thank you so much. Thank you.

Operator: Ladies and gentlemen, we have reached the end of question and answer session.

Gal Krubiner: I would now like to turn the floor over to Gal Krubiner for closing comments. To close, I want to say that I'm very proud of the team execution this quarter. Everything we set out we got to do at the start of the year we have accomplished.

Speaker Change: www.globalonenessproject.org www.globalonenessproject.org

Gal Krubiner: Our network and value proposition to the US lending ecosystem is stronger than ever. Thank you all for joining us today and I look forward to our continuous partnership.

Operator: Thank you.

Operator: This concludes our today's study conference. You may disconnect your lines at this time. Thank you for your participation.

Q2 2024 Pagaya Technologies Ltd Earnings Call

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