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What changed in Pagaya Technologies Ltd.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Pagaya Technologies Ltd.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+614 added−468 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-12)

Top changes in Pagaya Technologies Ltd.'s 2025 10-K

614 paragraphs added · 468 removed · 295 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe have included our website address in this Annual Report solely for informational purposes. Our SEC filings are available on the SEC’s website at http://www.sec.gov. This site contains reports and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this annual report and is not incorporated by reference herein.
Biggest changeInformation contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by reference herein. We have included our website address in this Annual Report solely for informational purposes. Our SEC filings are available on the SEC’s website at http://www.sec.gov.
Capital Expenditures 2 Table of Contents For a description of our principal capital expenditures and divestitures for the three years ended December 31, 2024 and for those currently in progress, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” Business Overview Our Business Pagaya’s mission is to deliver more financial opportunity to more people, more often.
Capital Expenditures For a description of our principal capital expenditures and divestitures for the three years ended December 31, 2025 and for those currently in progress, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” Business Overview Our Business Pagaya’s mission is to deliver more financial opportunity to more people, more often.
Certain investors who invest in our Financing Vehicles are related parties and agreements with 3 Table of Contents such related parties are described in “ Certain Relationships and Related Person Transactions ” included elsewhere in this Annual Report. For information on how we earn revenue, see “
Certain investors who invest in our Financing Vehicles are related parties and agreements with such related parties are described in “ Certain Relationships and Related Person Transactions ” included elsewhere in this Annual Report. For information on how we earn revenue, see “
Item 1. Business History and Development of the Company Pagaya Technologies Ltd. was incorporated on March 20, 2016 and is organized under the laws of the State of Israel. We are registered with the Israeli Registrar of Companies, registration number 51-542127-9.
Item 1. Business History and Development of the Company Pagaya Technologies Ltd. was incorporated on March 20, 2016 and is organized under the laws of the State of Israel. We are registered with the Israeli Registrar of Companies, registration number 51-542127-9. In February 2024, Pagaya relocated its corporate headquarters to its current New York City office.
Accordingly, the investment community, including investors, prospective investors, and sell-side analysts, can monitor such sections of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by reference herein.
Material information is disclosed on our website in the “Investor Relations” section. Accordingly, the investment community, including investors, prospective investors, and sell-side analysts, can monitor such sections of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.
Investors in our Financing Vehicles range from large institutional investors, such as pension funds, sovereign wealth funds, and asset management firms, to high-net-worth individuals and family offices.
These funds and vehicles offer financial instruments based on underlying assets that have been originated by Partners through our network with the assistance of our AI technology. Investors in our Financing Vehicles range from large institutional investors, such as pension funds, sovereign wealth funds, and asset management firms, to high-net-worth individuals and family offices.
We believe that this combination of high application volume, speed of processing and variety of data enables us to enhance the accuracy and predictive power of our AI technology and rapidly adjust to evolving market conditions and consumer trends.
Since our inception, our network has processed more than $3.6 trillion in loan applications across our consumer credit asset classes. We believe the combination of high application volume and real-time data flow enables us to enhance the accuracy and predictive power of our Al technology and rapidly adjust to evolving market conditions and consumer trends.
For additional information, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” Acquisition of Theorem On October 22, 2024, the Company completed the acquisition of Theorem Technology, Inc.
For additional information, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” On October 1, 2025, the Company refinanced the Revolving Credit Facility by way of terminating the Credit Agreement and entering into a new three-year revolving credit facility (the “2025 Revolving Credit Facility”) with a syndicate of financial institutions.
Our business began in personal loans and has expanded to auto loans, point-of-sale and single-family rental (“SFR”). Our website address is www.pagaya.com. Material information is disclosed on our website in the “Investor Relations” section.
We have built and continue to enhance a network connecting financial institutions and their customers with investors, which is designed to facilitate greater access to financial products and services for consumers. Our business began in personal loans and has expanded to auto loans, point-of-sale and single-family rental (“SFR”). Our website address is www.pagaya.com.
The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers. The Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025. The Notes will mature on October 1, 2029, unless earlier repurchased, redeemed, or exchanged.
The 2030 Notes will accrue interest at a rate of 8.875% per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning on February 1, 2026. The 2030 Notes will mature on August 1, 2030, unless earlier repurchased or redeemed. The 2030 Notes will be redeemable at the option of Pagaya US.
The mailing address of our principal executive office is 335 Madison Ave, New York, NY 10017, telephone number +1 646-710-7714. Our office in Tel-Aviv, Israel is Azrieli Sarona Bldg, 54th Floor, 121 Derech Menachem Begin, Tel-Aviv, 6701203, Israel, telephone number +972 (3) 715 0920.
Our office in Tel-Aviv, Israel is Azrieli Sarona Bldg, 54th Floor, 121 Derech Menachem Begin, Tel-Aviv, 6701203, Israel, telephone number +972 (3) 715 0920. Pagaya was founded with the goal of improving upon legacy underwriting practices in the United States through the use of artificial intelligence (“AI”)-powered technology and data science.
On January 16, 2024, Pagaya announced its plans to relocate its corporate headquarters to its current New York City office, which became effective in February 2024. The U.S. is where we conduct our business, generate the majority of our revenue, and where all of our Partners and SFR Partners are domiciled.
The U.S. is where we conduct our business, generate the majority of our revenue, and where all of our Partners and SFR Partners are domiciled. The mailing address of our principal executive office is 335 Madison Ave, New York, NY 10017, telephone number +1 646-710-7714.
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Pagaya was founded with the goal of improving upon legacy underwriting practices in the United States through the use of artificial intelligence (“AI”)-powered technology and data science. We have built and continue to enhance a network connecting financial institutions and their customers with investors, which is designed to facilitate greater access to financial products and services for consumers.
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This site contains reports and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this annual report and is not incorporated by reference herein.
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Recent Developments Changes in Officers and Directors In November 2023, Evangelos Perros was promoted to serve as Interim Chief Financial Officer and, in February 2024, Mr. Perros was appointed Chief Financial Officer. Effective December 19, 2024, Company’s Board of Directors (the “Board”) (i) accepted the resignations of Mr. Mircea Ungureanu and Ms.
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Recent Developments Senior Notes and New Revolving Credit Facility On July 28, 2025, the Company, through Pagaya US Holding Company LLC (“Pagaya US”), a wholly-owned subsidiary of the Company, issued $500 million aggregate principal amount of 8.875% Senior Unsecured Notes due 2030 (the “2030 Notes”).
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Nicole Torraco from the Board and (ii) elected Ms. Alison Davis and Mr. Asheet Mehta to the Company’s Board, as independent directors, to fill the vacancies of Mr. Ungureanu and Ms. Torraco. Election to File as a U.S.
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At any time prior to August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at its option at a redemption price equal to 100% of the principal amount of the 2030 Notes plus a make-whole premium described in indenture governing the 2030 Notes (the “2030 Notes Indenture”), plus accrued and unpaid interest, if any, to, but not including, the redemption date.
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Domestic Issuer and Headquarters Change On January 16, 2024, the Company announced several initiatives to enhance the marketability of its stock and provide investors with increased disclosure and transparency of its business and performance. First, the Company relocated its corporate headquarters to New York City. Second, the Company elected to voluntarily file on U.S. domestic issuer forms with the SEC.
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On and after August 1, 2027, Pagaya US may redeem the 2030 Notes, in whole or in part, at the redemption prices set forth in the 2030 Notes Indenture. In July 2025, the Company fully paid off the outstanding principal balance under the Credit Agreement using the proceeds from the issuance of 2030 Notes.
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Third, the Company announced its plan to effect a reverse share split, which became effective on March 8, 2024, as described below and throughout this Form 10-K.
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The 2025 Revolving Credit Facility provides a committed borrowing capacity of $132 million.
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Term Loan Facility and New Revolving Credit Facility On February 2, 2024, the Company entered into a Credit Agreement (the “Credit Agreement”), which provides for a 5-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million, which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million.
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Borrowings under the 2025 Revolving Credit Facility bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to 1.00% floor) plus a margin of 2.50% or (ii) an adjusted term SOFR (subject to 1.00% floor) plus a margin of 3.50%, a reduction from the prior revolving credit facility’s rate of SOFR plus 7.50%.
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In November 2024, the Company amended the Credit Agreement to increase the Term Loan Facility by $100 million, bringing the total principal amount to $355 million. The Company also increased an aggregate principal amount of the Revolving Credit Facility of $15 million, bringing the total principal amount of the Revolving Credit Facility to $50 million.
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A commitment fee accrues on any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions.
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In February 2025, the Company further increased the aggregate principal amount of the Revolving Credit Facility by $8 million, resulting in a total principal amount of the Revolving Credit Facility of $58 million.
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In December 2025, the Company repurchased approximately $6.9 million in aggregate principal amount of the outstanding 2030 Notes in several open market transactions. In February 2026, the Company repurchased additional $7.4 million aggregate principal amount of the outstanding 2030 Notes. The Company funded the repurchases using cash from its balance sheet.
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For additional information, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” Reverse Share Split 1 Table of Contents On March 4, 2024, following approval by both the Pagaya Board and the Company’s shareholders, Pagaya announced that the Pagaya Board determined to implement a reverse share split of all of the Company’s ordinary and preferred shares, without par value, at a ratio of 1-for-12.
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The 1 Table of Contents Company evaluated the repurchases as part of its ongoing capital allocation strategy and determined that the repurchases at such market prices represented an attractive use of capital, given the significant discount to par value. The Company may, from time to time, seek to make additional open market repurchases.
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The reverse share split was made effective on March 8, 2024. All other outstanding securities, including warrants and options (and the number of shares underlying those securities) were also proportionately adjusted. The Company’s Articles of Association were amended and restated to reflect the reverse share split.
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Such repurchases or other liability management exercises, if any, will be limited in size and made upon such terms and at such prices and sizes as the Company may determine, and will depend on prevailing market conditions, the Company’s liquidity requirements and other factors.
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Ordinary Share Offering On March 13, 2024, the Company priced an offering of 7,500,000 of its Class A Ordinary Shares, no par value, pursuant to an underwriting agreement (the “Underwriting Agreement”) with Citigroup Global Markets Inc. and Jefferies LLC as representatives of the several underwriters, which is attached as Exhibit 10.24 of this Report.
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This scale creates a powerful flywheel effect: incremental training data points from new applications, Partners, and asset classes enable enhanced intelligence, which drives better results for our Partners and investors, leading to further network growth.
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The proceeds from the offer and sale of the securities were approximately $90.0 million, after deducting the underwriting discount and fees and offering expenses payable by the Company.
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While our business began with a focus on our flagship decline monetization lending product in the personal loan market, we have made significant investments in technology and infrastructure to expand our capabilities into new markets, such as auto loans and point-of-sale (POS) financing.
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For additional information, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources. ” Exchangeable Senior Notes On October 1, 2024, the Company, through a wholly owned subsidiary of the Company, issued $160 million aggregate principal amount of its 6.125% Exchangeable Senior Notes (“Notes”) due 2029.
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We integrate with our Partners via APIs, requiring limited upfront investment and resulting in minimal latency in the processing of applications. This seamless connectivity allows us to act as a comprehensive utility for lenders, helping them serve more customers through a diverse range of products.
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The Notes are exchangeable for cash, Class A Ordinary Shares (no par value) of the Company, or a combination of cash and Class A Ordinary Shares, at the election of the Company, subject to certain conditions. In addition, note holders have the option to exchange their Notes for Class A Ordinary Shares if certain market performance thresholds are met.
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Our Product Ecosystem We have expanded our platform beyond our foundational decline monetization capability into a comprehensive, multi-product ecosystem. These offerings allow our Partners to engage customers at different stages of the lending lifecycle—from initial marketing and application to real-time point-of-sale assessment.
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(“Theorem”), a Silicon Valley-based institutional asset manager focused exclusively on the consumer credit space, managing assets for global institutional investors since its founding in 2014.
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Our suite of products is categorized by asset class and function: 2 Table of Contents Product Product Description Personal Loan Auto Loan Point-of-Sale Decline Monetization Our flagship product allows Partners to automatically send rejected loan applications to our network for a "second look." This enables Partners to approve customers they would otherwise decline, increasing conversion rates without incremental risk. ✔ ✔ ✔ Dual Look Unlike the traditional second-look model where we review only declined applications, Dual Look allows us to assess applications concurrently with our Partners in real time.
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The Company acquired 100% of Theorem’s equity for approximately $17.5 million, consisting of $10.0 million cash and 504,440 of the Company’s Class A Ordinary Shares ($7.5 million worth as of the closing date), with an additional contingent consideration based on achievement of certain performance objectives defined in the purchase agreement.
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This parallel evaluation enables Partners to instantly present competitive offers to a wider universe of borrowers, increasing overall capture rates. ✔ ✔ First Look First Look routes designated segments of loan applications to our network for evaluation before the Partner reviews it.
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As the transaction has closed recently, the purchase accounting has not yet been completed. For additional information, see Note 3 to our consolidated financial statements included elsewhere in this Annual Report.
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This allows Partners to efficiently manage their application flow and optimize their underwriting resources while providing rapid decisioning for consumers. ✔ Affiliate Optimizer Engine This customer acquisition tool enables Partners to originate loans through third-party affiliate channels more efficiently.
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Ongoing War in Israel On October 7, 2023, a terrorist organization primarily based in the Gaza Strip launched a series of attacks on Israel, including in areas where our employees and independent contractors are located. As a result of such attack, on October 8, 2023, Israel officially declared war.
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By leveraging our AI network to price and underwrite traffic from these aggregators, Partners can maximize their return on acquisition spend and scale volumes outside of their organic channels. ✔ Direct Marketing Engine Designed for proactive growth, this product utilizes our data network to help Partners target and acquire new customers through direct channels (emails and direct mail), expanding their reach beyond inbound applicants. ✔ FastPass FastPass is designed to accelerate the transaction process.
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Israel’s military response has included, among other things, calling on a large number of army reservists, including Pagaya employees based in Israel as of October 2023. Since that time, all of our employees have returned to their regular work arrangements.
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By removing friction from the verification steps for qualified borrowers, this product improves the customer experience while maintaining credit discipline. ✔ ✔ Financing Vehicles Investors can invest in funds, securitization vehicles managed, sponsored and/or administered by Pagaya, special purpose vehicles established by third-party investors to facilitate the purchase of assets under forward flow agreements, and other similar vehicles (together, “Financing Vehicles”).
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Although the Company’s business operations have not been materially impacted due to this evolving conflict as of the date of this Report, our business, financial condition, results of operations and prospects may be adversely affected due to the ongoing nature of this conflict.
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Pagaya’s technology infrastructure, including its data, cloud and platform, are located in the United States, with backup systems in place. Pagaya has experienced no disruption as of the date of this Report, either from its lending partners or investors.
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See “Item 1A.—Risk Factors—Our business and the performance of Financing Vehicles may be adversely affected by economic conditions and other factors that we cannot control.
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These factors include interest rates, rising inflation, the instability of the banking system, acts of war (including the ongoing war in Israel and the ongoing Russia-Ukraine conflict), supply chain disruptions, labor shortages, the wind-down of stimulus programs, unemployment rates, conditions in the housing market, immigration policies, government shutdowns, trade wars or other impacts of tariffs and delays in tax refunds, as well as events such as natural disasters, terrorism, catastrophes, and pandemics (such as COVID-19)” in this Annual Report.
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Since our inception, we have been focused on developing and expanding our flagship lending product - our second-stage reevaluation program. This product, which enables lenders to improve customer acquisition and monetization, is seamlessly (and uniquely) integrated via API to Partners’ loan origination systems and is backed by our proprietary, AI-powered technology.
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We measure the assets originated by Partners with the assistance of Pagaya’s proprietary technology as Network Volume, a key performance indicator for our business. For more information regarding Network Volume, see “ Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Operating Metric ” included elsewhere in this Annual Report.
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As of December 31, 2024, more than 30 Partners were engaged with our network, utilizing our API and proprietary technology to offer financial products, such as personal, auto, or point-of-sale loans, to their customers. We have built and continue to scale our proprietary, AI-powered technology and data network.
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Since inception, our network has processed more than $2.6 trillion in loan applications across our consumer credit asset classes. Our data engine includes data from Partner loan applications as well as real-time information from other sources such as credit rating agencies. As of the date of this Annual Report, our network processes more than one application per second.
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In addition, we believe we are able to measure risk and predict behavior on a more accurate and equitable basis than legacy approaches, and our proprietary, AI-powered technology continuously improves as more data flows through our network.
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The scale we have achieved in the consumer credit market has created a large data pool that enables our proprietary, AI-powered technology to provide insights on evolving consumer behavioral, demographic and economic trends. We also leverage our data engine to select, acquire and operate single-family rental homes on behalf of institutional investors.
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While our SFR business is in early stages, we believe there is significant potential to capture market share in the SFR industry with a tech-first solution and generate attractive risk-adjusted returns for investors. We have achieved significant scale to date as measured by the number of loan applications that have been processed through our network since our inception.
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As of December 31, 2024, our network supports more than 30 Partners and SFR Partners to hundreds of investors across five asset classes, which has resulted in the generation of approximately $9.7 billion in Network Volume for the year ended December 31, 2024, which represents greater than six times as compared to our Network Volume for the year ended December 31, 2020 of $1.6 billion.
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We believe that the speed of such growth is a function of structural scale advantages embedded in our business model. We develop API connections with each Partner to integrate with their established systems, requiring limited upfront investment by our Partners and results in minimal latency in the processing of application volume by our AI technology.
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Investors can invest in funds and securitization vehicles managed, sponsored and/or administered by Pagaya (together, “Financing Vehicles”). These funds and vehicles offer financial instruments based on underlying assets that have been originated by Partners through our network with the assistance of our AI technology.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur ability to enable our Partners to increase the number and quality of loans or other assets that they originate with the assistance of our AI technology will depend in large part on our ability to effectively evaluate the creditworthiness and likelihood of default of our Partners’ customers and, based on that evaluation, help our Partners offer competitively-priced loans or other assets as well as obtain higher approval rates.
Biggest changeIf we are unable to continue to improve our AI technology or if our AI technology does not operate or perform as we expect, contains errors or is otherwise ineffective, our network may improperly evaluate products, not be able to process the volume we have historically, and our growth prospects, business, financial condition and results of operations could be adversely affected. 13 Table of Contents Our ability to enable our Partners to increase the number and quality of loans or other assets that they originate with the assistance of our AI technology will depend in large part on our ability to effectively evaluate the creditworthiness and likelihood of default of our Partners’ customers and, based on that evaluation, help our Partners offer competitively-priced loans or other assets as well as obtain higher approval rates.
Currently, the majority of our Partners’ asset originations facilitated with the assistance of our AI technology are unsecured personal loans, point-of-sale auto loans in the U.S. market. The market for unsecured personal loans has grown rapidly in recent years, and it is unclear to what extent such a market will continue to grow, if at all.
Currently, the majority of our Partners’ asset originations facilitated with the assistance of our AI technology are unsecured personal loans, auto loans and point-of-sale in the U.S. market. The market for unsecured personal loans has grown rapidly in recent years, and it is unclear to what extent such a market will continue to grow, if at all.
We actively evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future.
We actively evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future.
Adherence to such contractual requirements may impact our receipt, use, processing, storage, sharing, and disclosure of various types of information including financial information and other personal information, and may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve.
Adherence to such contractual requirements may impact our receipt, use, storage, sharing, disclosure and other processing of various types of information including financial information and other personal information, and may mean we become bound by, or voluntarily comply with, self-regulatory or other industry standards relating to these matters that may further change as laws, rules, and regulations evolve.
If future regulatory or legislative restrictions or prohibitions are imposed that affect our ability to offer certain of our products or that require us to make significant changes to our business practices, and if we are unable to develop compliant alternatives with acceptable returns, these restrictions or prohibitions could have a material adverse effect on our business.
If future regulatory or legislative restrictions or prohibitions are imposed that affect our ability to offer certain of our products or that require us to make significant changes to our business practices, and if we are unable to develop compliant alternatives with acceptable returns, these restrictions or prohibitions could have a material adverse effect on our business.
In particular, certain statutes, laws, regulations and rules to which we, our Partners, the Financing Vehicles or their respective service providers are or may be subject, and with which we facilitate or may facilitate compliance, include: • foreign, U.S. federal and state lending statutes and regulations that require certain parties, including our Partners, to hold licenses or other government approvals or filings in connection with specified activities, and impose requirements related to marketing and advertising, transaction disclosures and terms, fees and interest rates, usury, credit discrimination, credit reporting, servicemember relief, debt collection, repossession, unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, cybersecurity, conduct in connection with data breaches and money transmission; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act, and similar state and municipal fair lending laws; • foreign, U.S. federal and state securities laws, including, among others, the Securities Act, the Exchange Act, the Investment Advisers Act, and the Investment Company Act rules and regulations adopted under those laws, and similar foreign, state laws and regulations which govern securities law, advisory services, Financing Vehicles or how we generate or purchase consumer credit assets, other loan product regulations, the Israeli Joint Investments in Trust Law, 5754-1994, the Israeli Securities Law, 5728-1968, the Israeli Law for Regulation of Investment Advice, Investment Marketing and Portfolio Management, 5755-1995, the Israeli Law for Supervision of Financial Services (Regulated Financial Services), 5776-2016, and the Israeli Banking (Licensing) Law, 5741-1981; • foreign, U.S. federal and state laws and regulations addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection, and processing of certain types of data, including, among others, Fair Credit Reporting Act (the “FCRA”), Gramm-Leach-Bliley Act (the “GLBA”), Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, Controlling the Assault of Non-Solicited Pornography and Marketing (the “CAN-SPAM”), Telephone Consumer Protection Act (the “TCPA”), Federal Trade Commission Act (the “FTC Act”), California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”) (collectively, “CCPA”), General Data Protection Regulation (the “GDPR”) and the Protection of Privacy Law 5741-1981; • the FCRA and Regulation V promulgated thereunder, which imposes certain obligations on users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining or using consumer reports, taking adverse action on the basis of information from consumer reports, the accuracy and integrity of furnished information, addressing risks of identity theft and fraud and protecting the privacy and security of consumer reports and consumer report information and other related data use laws and regulations; • the GLBA and Regulation P promulgated thereunder, which includes limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial institutions to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other privacy laws and regulations; • the U.S. credit risk retention rules promulgated under the Dodd-Frank Act, which require a securitizer of securitization vehicles to retain an economic interest in the credit risk of the assets collateralizing the securitization vehicles; • the Truth in Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their consumer credit obligations, require creditors to comply with certain practice restrictions, limit the ability of a creditor to impose certain terms, impose disclosure requirements in connection with credit card applications and solicitations, and impose disclosure requirements in connection with credit advertising; • Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive, unconscionable, unlawful or abusive acts or practices; • the Credit Practices Rule, which (i) prohibits creditors from using certain contract provisions that the Federal Trade Commission has found to be unfair to consumers; (ii) requires creditors to advise consumers who co-sign obligations about their potential liability if the primary obligor fails to pay; and (iii) prohibits certain late charges; • the FRB, OCC (as defined below) and FDIC guidance related to model risk management and management of vendors and other bank specific requirements pursuant to the terms of service agreements with banks and the examination and enforcement authority of the FDIC under the Bank Service Company Act; 38 Table of Contents • U.S. federal and state regulation and licensing requirements related to the auto insurance and finance industries, including related to being a manager general agent; • the U.S.
In particular, certain statutes, laws, regulations and rules to which we, our Partners, the Financing Vehicles or their respective service providers are or may be subject, and with which we facilitate or may facilitate compliance, include: • foreign, U.S. federal and state lending statutes and regulations that require certain parties, including our Partners, to hold licenses or other government approvals or filings in connection with specified activities, and impose requirements related to marketing and advertising, transaction disclosures and terms, fees and interest rates, usury, credit discrimination, credit reporting, servicemember relief, debt collection, repossession, unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, cybersecurity, conduct in connection with data breaches and money transmission; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act, and similar state and municipal fair lending laws; • foreign, U.S. federal and state securities laws, including, among others, the Securities Act, the Exchange Act, the Investment Advisers Act, and the Investment Company Act rules and regulations adopted under those laws, and similar foreign, state laws and regulations which govern securities law, advisory services, Financing Vehicles or how we generate or purchase consumer credit assets, other loan product regulations, the Israeli Joint Investments in Trust Law, 5754-1994, the Israeli Securities Law, 5728-1968, the Israeli Law for Regulation of Investment Advice, Investment Marketing and Portfolio Management, 5755-1995, the Israeli Law for Supervision of Financial Services (Regulated Financial Services), 5776-2016, and the Israeli Banking (Licensing) Law, 5741-1981; • foreign, U.S. federal and state laws and regulations addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection, and processing of certain types of data, including, among others, Fair Credit Reporting Act (the “FCRA”), Gramm-Leach-Bliley Act (the “GLBA”), Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, Controlling the Assault of Non-Solicited Pornography and Marketing (the “CAN-SPAM”), Telephone Consumer Protection Act (the “TCPA”), Federal Trade Commission Act (the “FTC Act”), California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”) (collectively, “CCPA”), General Data Protection Regulation (the “GDPR”) and the Protection of Privacy Law 5741-1981; • the FCRA and Regulation V promulgated thereunder, which imposes certain obligations on users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining or using consumer reports, taking adverse action on the basis of information from consumer reports, the accuracy and integrity of furnished information, addressing risks of identity theft and fraud and protecting the privacy and security of consumer reports and consumer report information and other related data use laws and regulations; • the GLBA and Regulation P promulgated thereunder, which includes limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances requires financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and requires financial institutions to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other privacy laws and regulations; 37 Table of Contents • the U.S. credit risk retention rules promulgated under the Dodd-Frank Act, which require a securitizer of securitization vehicles to retain an economic interest in the credit risk of the assets collateralizing the securitization vehicles; • the Truth in Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their consumer credit obligations, require creditors to comply with certain practice restrictions, limit the ability of a creditor to impose certain terms, impose disclosure requirements in connection with credit card applications and solicitations, and impose disclosure requirements in connection with credit advertising; • Section 5 of the FTC Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive, unconscionable, unlawful or abusive acts or practices; • the Credit Practices Rule, which (i) prohibits creditors from using certain contract provisions that the Federal Trade Commission has found to be unfair to consumers; (ii) requires creditors to advise consumers who co-sign obligations about their potential liability if the primary obligor fails to pay; and (iii) prohibits certain late charges; • the FRB, OCC (as defined below) and FDIC guidance related to model risk management and management of vendors and other bank specific requirements pursuant to the terms of service agreements with banks and the examination and enforcement authority of the FDIC under the Bank Service Company Act; • U.S. federal and state regulation and licensing requirements related to the auto insurance and finance industries, including related to being a manager general agent; • the U.S.
Although the current conflict in Israel has not materially impacted our business or operations as of the date of this Annual Report, its persistence and potential escalation continue to create uncertainty, with possible long-term consequences including heightened regional instability, energy market disruptions, and adverse effects on macroeconomic conditions and financial markets.
Although the conflict in Israel has not materially impacted our business or operations as of the date of this Annual Report, its persistence and potential escalation continue to create uncertainty, with possible long-term consequences including heightened regional instability, energy market disruptions, and adverse effects on macroeconomic conditions and financial markets.
In the ordinary course of our business, we collect, process, transmit and store large amounts of sensitive information, including personal information, credit information and other sensitive data of our Partners’ customers and other consumers providing their data to a Partner, and, as a result, we and the third parties upon which we rely face a variety of evolving threats that could cause security incidents.
In the ordinary course of our business, we collect, process, transmit. store and otherwise process large amounts of sensitive information, including personal information, credit information and other sensitive data of our Partners’ customers and other consumers providing their data to a Partner, and, as a result, we and the third parties upon which we rely face a variety of evolving threats that could cause security incidents.
Any losses or damages incurred by us as a result of the current conflict in Israel, or any similar conflicts in the future, could have a material adverse effect on our business, financial condition and results of operations. Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts.
Any losses or damages incurred by us as a result of the conflict in Israel, or any similar conflicts in the future, could have a material adverse effect on our business, financial condition and results of operations. Further, in the past, the State of Israel and Israeli companies have been subjected to economic boycotts.
Upon exchange of the Notes, we have the option to pay or deliver, as the case may be, cash, our Class A Ordinary Shares or a combination thereof. If we raise additional funds by issuing equity securities or securities convertible into equity securities, our shareholders may experience dilution.
Upon exchange of the 2029 Notes, we have the option to pay or deliver, as the case may be, cash, our Class A Ordinary Shares or a combination thereof. If we raise additional funds by issuing equity securities or securities convertible into equity securities, our shareholders may experience dilution.
A number of factors serve to increase our competitive risks: • a number of our competitors in some of our businesses have greater financial, technical, marketing and other resources and more personnel than we do; • some Financing Vehicles may not perform as well as competitors’ Financing Vehicles or other available investment products; • several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain investments, including in certain industries or businesses, than we can and/or bear less compliance expense than we do; • some of our competitors may have more flexibility than us in raising certain types of Financing Vehicles under the contracts or terms they have negotiated with their investors; and • some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make.
A number of factors serve to increase our competitive risks: • a number of our competitors in some of our businesses have greater financial, technical, marketing and other resources and more personnel than we do; 21 Table of Contents • some Financing Vehicles may not perform as well as competitors’ Financing Vehicles or other available investment products; • several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that many alternative investment strategies seek to exploit; • some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain investments, including in certain industries or businesses, than we can and/or bear less compliance expense than we do; • some of our competitors may have more flexibility than us in raising certain types of Financing Vehicles under the contracts or terms they have negotiated with their investors; and • some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make.
Except as set forth in the preceding sentence, the Pagaya Articles also provide that, unless we consent in writing to the selection of an alternative forum, the competent courts in Tel-Aviv, Israel shall 51 Table of Contents be the exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders or (iii) any action asserting a claim arising pursuant to any provision of the Pagaya Articles, the Companies Law or the Israeli Securities Law.
Except as set forth in the preceding sentence, the Pagaya Articles also provide that, unless we consent in writing to the selection of an alternative forum, the competent courts in Tel-Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of us, (ii) any action asserting a breach of a 50 Table of Contents fiduciary duty owed by any of our directors, officers or other employees to us or our shareholders or (iii) any action asserting a claim arising pursuant to any provision of the Pagaya Articles, the Companies Law or the Israeli Securities Law.
In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters, such as an amendment to the 50 Table of Contents articles of association, an increase of the company’s authorized share capital, a merger of the company and approval of related party transactions that require shareholder approval.
In particular, a shareholder of an Israeli company has a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on certain matters, such as an amendment to the articles of association, an increase of the company’s authorized share capital, a merger of the company and approval of related 49 Table of Contents party transactions that require shareholder approval.
Nevertheless, in view of the complexity and novelty of our business model and the fact that investment funds activity is not specifically regulated in Israel, uncertainty exists with respect to various regulatory matters, and we are exposed to the risk that an Israeli regulatory authority or agency (including the Israel Securities Authority, the Israel Capital Markets, Insurance and Savings Authority or the Bank of Israel) determines that our conduct is not in compliance with local laws or regulations or requires local licensing, including pursuant to the Israeli Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995, the Joint Investments in Trust Law, 5754-1994, the Law for the Regulation of the Activity of Credit Rating Companies, 5774-2014, the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016, or the Banking (Licensing) Law, 5741-1981.
Nevertheless, in view of the complexity and novelty of our business model and the fact that investment funds activity is not specifically regulated in Israel, uncertainty exists with respect to various regulatory matters, and we are exposed to the risk that an Israeli regulatory authority or agency (including the Israel Securities Authority, the Israel Capital Markets, Insurance and Savings Authority or the Bank of Israel) determines that our conduct is not in compliance with local laws or regulations or 47 Table of Contents requires local licensing, including pursuant to the Israeli Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 5755-1995, the Joint Investments in Trust Law, 5754-1994, the Law for the Regulation of the Activity of Credit Rating Companies, 5774-2014, the Supervision of Financial Services (Regulated Financial Services) Law, 5776-2016, or the Banking (Licensing) Law, 5741-1981.
In particular, with laws and regulations such as the FCRA, GLBA, CCPA, CDPA, CPA and potentially other laws and regulations that may be proposed or amended, imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices and may incur significant costs and expenses in an effort to do so.
In particular, with laws and regulations such as the FCRA, GLBA, CCPA and potentially other laws and regulations that may be proposed or amended, imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, we may face challenges in addressing their requirements and making necessary changes to our policies and practices and may incur significant costs and expenses in an effort to do so.
However, if we are nevertheless associated because of the heightened attention with such payday or short-term, small-dollar consumer loans, or if we are associated with increased criticism of non-payday loan programs involving relationships between bank originators and non-bank lending networks and program managers, or if regulatory scrutiny increases on the use of AI in our Partner’s origination practices, demand for loans or other assets could significantly decrease, which could cause our Partners to reduce their origination volumes or terminate their 21 Table of Contents arrangements with us, impede our ability to attract new Partners or delay the onboarding of Partners, impede our ability to attract asset investors to participate in the funding component of our network or reduce the number of potential Partners that use our network.
However, if we are nevertheless associated because of the heightened attention with such payday or short-term, small-dollar consumer loans, or if we are associated with increased criticism of non-payday loan programs involving relationships between bank originators and non-bank lending networks and program managers, or if regulatory scrutiny increases on the use of AI in our Partner’s origination practices, demand for loans or other assets could significantly decrease, which could cause our Partners to reduce their origination volumes or terminate their arrangements with us, impede our ability to attract new Partners or delay the onboarding of Partners, impede our ability to attract asset investors to participate in the funding component of our network or reduce the number of potential Partners that use our network.
In addition, we believe this growth has been driven in part by the transformative shift by consumers to e-commerce and the acceptance of online networks and digital 11 Table of Contents solutions for the use of and access to financial products that we expect may slow down over time, and as a result, our financial performance may be adversely affected.
In addition, we believe this growth has been driven in part by the transformative shift by consumers to e-commerce and the acceptance of online networks and digital 10 Table of Contents solutions for the use of and access to financial products that we expect may slow down over time, and as a result, our financial performance may be adversely affected.
In addition to the extraction of sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), supply chain attacks and other means to affect service reliability and threaten the confidentiality, integrity and availability of information and systems.
In addition to the extraction of sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, credential stuffings, social engineering (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), supply chain attacks and other means to affect service reliability and threaten the confidentiality, integrity and availability of information and systems.
All outstanding Class B Ordinary Shares held by a Founder and any Permitted Class B Owners will automatically be converted into an equal number of Class A Ordinary Shares (and therefore will have one rather than 10 votes per share) on the earliest to occur of (i) (A) (1) such Founder’s employment as our officer being terminated not for cause, (2) such Founder resigning as our officer, (3) death or Permanent Disability (as defined in the Pagaya Articles) of such Founder or such Founder’s bankruptcy; provided, however, that if such Founder or such Permitted Class B Owner validly provides for the transfer of some or all of his, her or its Class B Ordinary Shares to one or more of the other Founders or Permitted Class B Owners affiliated with one or more of the other Founders in the 35 Table of Contents event of death or Permanent Disability, then such Class B Ordinary Shares that are transferred to another Founder or Permitted Class B Owner affiliated with one or more of the other Founders shall remain Class B Ordinary Shares and shall not convert into an equal number of Class A Ordinary Shares or (4) the appointment of a receiver, trustee or similar official in bankruptcy or similar proceeding with respect to a Founder or his Class B Ordinary Shares and (B) such Founder no longer serving on the Pagaya Board; (ii) 90 days after such Founder is terminated for cause, subject to certain exceptions, or (iii) the earliest to occur of (A) such time as the Founders and their permitted transferees first collectively hold less than a specified percentage of our total issued and outstanding ordinary share capital – 9% as of the date of this Annual Report, which percentage will be reduced to 8% following the 2025 annual meeting of shareholders and further reduced to 7.5% following the 2026 annual meeting of shareholders, and (B) the 15th anniversary of the EJFA Closing.
All outstanding Class B Ordinary Shares held by a Founder and any Permitted Class B Owners will automatically be converted into an equal number of Class A Ordinary Shares (and therefore will have one rather than 10 votes per share) on the earliest to occur of (i) (A) (1) such Founder’s employment as our officer being terminated not for cause, (2) such Founder resigning as our officer, (3) death or Permanent Disability (as defined in the Pagaya Articles) of such Founder or such Founder’s bankruptcy; provided, however, that if such Founder or such Permitted Class B Owner validly provides for the transfer of some or all of his, her or its Class B Ordinary Shares to one or more of the other Founders or Permitted Class B Owners affiliated with one or more of the other Founders in the event of death or Permanent Disability, then such Class B Ordinary Shares that are transferred to another Founder or Permitted Class B Owner affiliated with one or more of the other Founders shall remain Class B Ordinary Shares and shall not convert into an equal number of Class A Ordinary Shares or (4) the appointment of a receiver, trustee or similar official in bankruptcy or similar proceeding with respect to a Founder or his Class B Ordinary Shares and (B) such Founder no longer serving on the Pagaya Board; (ii) 90 days after such Founder is terminated for cause, subject to certain exceptions, or (iii) the earliest to occur of (A) such time as the Founders and their permitted transferees first collectively hold less than a specified percentage of our total issued and outstanding ordinary share capital – 8% as of the date of this Annual Report, which percentage will be reduced to 7.5% following the 2026 annual meeting of shareholders, and (B) the 15th anniversary of the EJFA Closing.
Our success will depend, in part, on the continued growth of the unsecured personal loan market and auto loan market in the U.S., and if these markets do not further grow, or grows more slowly than we expect, our business, financial condition and results of operations could be adversely affected.
Our success will depend, in part, on the continued growth of the unsecured personal loan market and auto loan market and point-of-sale market in the U.S., and if these markets do not further grow, or grows more slowly than we expect, our business, financial condition and results of operations could be adversely affected.
In addition, a number of participants in the consumer financial services industry have been the subject of putative class action lawsuits, state attorney general actions, other state or local regulatory or enforcement actions, and federal regulatory enforcement 36 Table of Contents actions, including actions relating to alleged unfair, deceptive or abusive acts or practices, violations of state licensing and lending laws, including state usury and disclosure laws, actions alleging discrimination on the basis of race, ethnicity, gender or other prohibited bases, and allegations of noncompliance with various state and federal laws and regulations relating to originating and collecting consumer finance loans and other consumer financial services and products.
In addition, a number of participants in the consumer financial services industry have been the subject of putative class action lawsuits, state attorney general actions, other state or local regulatory or enforcement actions, and federal regulatory enforcement actions, including actions relating to alleged unfair, deceptive or abusive acts or practices, violations of state licensing and lending laws, including state usury and disclosure laws, actions alleging discrimination on the basis of race, ethnicity, gender or other prohibited bases, and allegations of noncompliance with various state and federal laws and regulations relating to originating and collecting consumer finance loans and other consumer financial services and products.
Terrorism and violence within Israel or the outbreak of conflicts between Israel and its neighbors, including the Palestinians, Iran, and terrorist organizations operating in the region, may adversely affect our business, operations, or personnel. Most recently, on October 7, 2023, Hamas, a terrorist organization primarily based in the Gaza Strip launched a series of attacks on Israel.
Terrorism and violence within Israel or the outbreak of conflicts between Israel and its neighbors, including the Palestinians, Iran, and terrorist organizations operating in the region, may adversely affect our business, operations, or personnel. On October 7, 2023, Hamas, a terrorist organization primarily based in the Gaza Strip, launched a series of attacks on Israel.
Because the obligations facilitated with the assistance of our AI technology are originated by our Partners or their bank partners, many state consumer financial regulatory requirements, including usury restrictions (other than the restrictions of the state in which a Partner originating a particular obligation is located) and many licensing requirements and substantive requirements under state consumer credit laws, are treated as inapplicable based on principles of federal preemption or express exemptions provided in relevant state laws for certain types of financial institutions or obligations they originate.
Because the obligations facilitated with the assistance of our AI technology are originated by our Partners or their bank partners, many state consumer financial regulatory requirements, including usury restrictions (other than 44 Table of Contents the restrictions of the state in which a Partner originating a particular obligation is located) and many licensing requirements and substantive requirements under state consumer credit laws, are treated as inapplicable based on principles of federal preemption or express exemptions provided in relevant state laws for certain types of financial institutions or obligations they originate.
If we or our Partners were found to be in violation of applicable state licensing requirements by a court or a state, federal, or local enforcement agency, our business could be harmed or limited, we could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties and other penalties or consequences, 37 Table of Contents and the obligations from our Partners could be rendered void or unenforceable, in whole or in part, any of which could have a material adverse effect on our business.
If we or our Partners were found to be in violation of applicable state licensing requirements by a court or a state, federal, or local enforcement agency, our business could be harmed or limited, we could be subject to fines, damages, injunctive relief (including required modification or discontinuation of our business in certain areas), criminal penalties and other penalties or consequences, and the obligations from our Partners could be rendered void or unenforceable, in whole or in part, any of which could have a material adverse effect on our business.
The Adjusted EBITDA increase for the year ended December 31, 2024 as compared to the prior year period reflects the impact of (i) FRLPC improvement initiatives we implemented in 2024, and (ii) disciplined cost management to improve operating efficiency and reduce vendor-related expenses in 2024.
The Adjusted EBITDA increase for the year ended December 31, 2025 as compared to the prior year period reflects the impact of (i) FRLPC improvement initiatives we implemented in 2025, and (ii) disciplined cost management to improve operating efficiency and reduce vendor-related expenses in 2025.
Moreover, we have incurred and could experience additional losses related to our risk retention holdings as a result of poor investment performance by the Financing Vehicles. As a result of ABS issuances during 2024, our risk retention holdings have increased during 2024. Accordingly, the magnitude of potential losses has also increased.
Moreover, we have incurred and could experience additional losses related to our risk retention holdings as a result of poor investment performance by the Financing Vehicles. As a result of ABS issuances during 2025, our risk retention holdings have increased during 2025. Accordingly, the magnitude of potential losses has also increased.
If we were ever deemed to be in noncompliance with the Investment Company Act, we could also be subject to various penalties, 42 Table of Contents including administrative or judicial proceedings that might result in censure, fine, civil penalties, cease-and-desist orders or other adverse consequences, as well as private rights of action, any of which could materially adversely affect our business.
If we were ever deemed to be in noncompliance with the Investment Company Act, we could also be subject to various penalties, including administrative or judicial proceedings that might result in censure, fine, civil penalties, cease-and-desist orders or other adverse consequences, as well as private rights of action, any of which could materially adversely affect our business.
Our reputation and brand are important to our success. If we are unable to continue developing our reputation and brand, or if our brand or reputation is compromised, our ability to retain existing and attract new Partners and asset investors and our ability to maintain and improve our relationship with regulators of our industry could be adversely affected.
If we are unable to continue developing our reputation and brand, or if our brand or reputation is compromised, our ability to retain existing and attract new Partners and asset investors and our ability to maintain and improve our relationship with regulators of our industry could be adversely affected.
We, our Partners, vendors, and other service providers, receive, collect, use, disclose, transmit, and store a large volume of personally identifiable information and other sensitive data relating to individuals, such as our Partners’ customers, asset investors and our employees.
We, our Partners, vendors, and other service providers, receive, collect, use, disclose, transmit, store and otherwise process a large volume of personally identifiable information and other sensitive data relating to individuals, such as our Partners’ customers, asset investors and our employees.
These factors include interest rates, rising inflation, supply chain disruptions, labor shortages, weakening exchange rates, unemployment levels, conditions in the housing market, immigration policies, government shutdowns, trade wars and delays in tax refunds, as well as events such as natural disasters, acts of war (including the ongoing war in Israel and the ongoing Russia-Ukraine conflict), terrorism, catastrophes and pandemics.
These factors include interest rates, rising inflation, supply chain disruptions, labor shortages, weakening exchange rates, unemployment levels, conditions in the housing market, immigration policies, government shutdowns, trade wars and delays in tax refunds, as well as events such as natural disasters, acts of war (including the ongoing conflict in the Middle East and the ongoing Russia Ukraine conflict), terrorism, catastrophes and pandemics.
Risks Related to Our Legal and Regulatory Environment Litigation, regulatory actions, consumer complaints and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses. In the ordinary course of business, we may be named as a defendant in various legal actions, including litigation, involving our Partners’ financial products.
Risks Related to Our Legal and Regulatory Environment 35 Table of Contents Litigation, regulatory actions, consumer complaints and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses. In the ordinary course of business, we may be named as a defendant in various legal actions, including litigation, involving our Partners’ financial products.
In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, Partners, asset investors and agents, even if we do not authorize such activities.
In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. 43 Table of Contents We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, Partners, asset investors and agents, even if we do not authorize such activities.
The personal lending market has also benefited from historically low interest rates, as our Partners’ customers are attracted to relatively low borrowing costs. The market for auto loans is sensitive to employment rates, prevailing interest rates and other domestic economic conditions, and it is unclear how rising interest rates or a recession may impact the growth of this market.
The personal lending market has also benefited from historically low interest rates, as our Partners’ customers are attracted to relatively low borrowing costs. 18 Table of Contents The market for auto loans is sensitive to employment rates, prevailing interest rates and other domestic economic conditions, and it is unclear how rising interest rates or a recession may impact the growth of this market.
We must comply with regulatory regimes or facilitate compliance with regulatory regimes on behalf of our Partners that are independently subject to supervision by federal and state financial services and consumer protection regulators, including those applicable to consumer credit transactions, account servicing and debt collection, and the purchase and sale of whole loans and other related transactions.
We must comply with regulatory regimes or facilitate compliance with regulatory regimes on behalf of our Partners that are independently subject to supervision by federal and state financial services and consumer protection regulators, including those 36 Table of Contents applicable to consumer credit transactions, account servicing and debt collection, and the purchase and sale of whole loans and other related transactions.
If we are deemed to be an investment company under the Investment Company Act, including as a result of changes in our business in the future (although no such changes are currently anticipated), we may be required to institute burdensome compliance requirements, restricting our activities in a way that could adversely affect our business, financial condition and results of operations.
If we are deemed to be an investment company under the Investment Company Act, including as a result of changes in our business in the future (although no such changes are currently anticipated), we may be required to institute burdensome 41 Table of Contents compliance requirements, restricting our activities in a way that could adversely affect our business, financial condition and results of operations.
Any of the foregoing factors could negatively affect our business, ability to obtain cost-effective funding, financial condition, and results of operations. 12 Table of Contents From time to time, we have undertaken, and may undertake again, internal corporate reorganizations in an effort to simplify our organizational structure, streamline our operations or for other operational reasons.
Any of the foregoing factors could negatively affect our business, ability to obtain cost-effective funding, financial condition, and results of operations. From time to time, we have undertaken, and may undertake again, internal corporate reorganizations in an effort to simplify our organizational structure, streamline our operations or for other operational reasons.
Further, we, as securitization sponsor or through a majority-owned affiliate, will hold either an eligible horizontal interest in the most subordinate class of securities or an eligible vertical interest of a portion of each class of securities offered to satisfy U.S. risk retention requirements, and we may purchase securities in excess of the amount required pursuant to U.S. risk retention rules.
Further, we, as securitization sponsor or through a majority-owned affiliate, will hold either an eligible horizontal interest in the most subordinate class of securities or an eligible vertical interest of a portion of each class of securities offered to satisfy U.S. risk retention requirements, and we may purchase securities in excess of the amount required pursuant to 42 Table of Contents U.S. risk retention rules.
These transactions could be disruptive to our business, result in significant expense, require regulatory approvals, and fail to result in the intended or expected benefits, any of which could adversely impact our business and results of operations. Our business and the performance of Financing Vehicles may be adversely affected by economic conditions and other factors that we cannot control.
These transactions could be disruptive to our business, result in significant expense, require regulatory approvals, and fail to result in the intended or expected benefits, any of which could adversely impact our business and results of operations. 11 Table of Contents Our business and the performance of Financing Vehicles may be adversely affected by economic conditions and other factors that we cannot control.
For example, there is a risk that the single-family rental properties that we have invested in have some undiscovered flaw, or would otherwise require additional expenditures to make them rentable in excess of the expected amount, which could result in greater total renovation costs and a loss of revenue.
For example, there is a risk that the single-family rental properties that we have invested in have some undiscovered 15 Table of Contents flaw, or would otherwise require additional expenditures to make them rentable in excess of the expected amount, which could result in greater total renovation costs and a loss of revenue.
Accordingly, we may need to engage in equity, debt, secured borrowings, including repurchase agreements, or convertible debt financings to secure additional funds. As of the date of this Annual Report on Form 10-K, we had outstanding $160 million of 6.125% exchangeable senior notes due in October 2029 (the “Notes”).
Accordingly, we may need to engage in equity, debt, secured borrowings, including repurchase agreements, or convertible debt financings to secure additional funds. As of the date of this Annual Report on Form 10-K, we had outstanding $160 million of 6.125% exchangeable senior notes due in October 2029 (the “2029 Notes”).
Regulators could also impose conditions that reduce the ultimate value of our acquisitions. In addition, to the extent that our perceived ability to consummate acquisitions has been harmed, future acquisitions may be more difficult, complex or expensive. 26 Table of Contents We may not successfully integrate acquired companies and we may fail to realize the anticipated benefits of such acquisitions.
Regulators could also impose conditions that reduce the ultimate value of our acquisitions. In addition, to the extent that our perceived ability to consummate acquisitions has been harmed, future acquisitions may be more difficult, complex or expensive. We may not successfully integrate acquired companies and we may fail to realize the anticipated benefits of such acquisitions.
Although we have taken precautions to prevent our solutions from being provided, deployed or used in violation of sanctions laws, due to the remote nature of our solutions and the potential for manipulation using virtual private networks, we cannot assure you that our 44 Table of Contents policies and procedures relating to sanctions compliance will prevent any violations.
Although we have taken precautions to prevent our solutions from being provided, deployed or used in violation of sanctions laws, due to the remote nature of our solutions and the potential for manipulation using virtual private networks, we cannot assure you that our policies and procedures relating to sanctions compliance will prevent any violations.
If we are unable to effectively manage the foregoing risks, our growth prospects, business, financial condition and results of operations could be adversely affected. For example, in real estate investments, the yields available from properties depend on the amount of revenue generated and expenses incurred.
If we are unable to effectively manage the foregoing risks, our growth prospects, business, financial condition and results of operations could be adversely affected. For example, in real estate investments, the 17 Table of Contents yields available from properties depend on the amount of revenue generated and expenses incurred.
As a result, if vacancies continue for a longer period of time than we expect or indefinitely, our customers may incur additional operating expenses and capital expenditures, and their homes could be substantially impaired, all of which may have a material effect on our SFR operations.
As a result, if vacancies continue for a longer period of time than we expect or indefinitely, our customers may incur additional 31 Table of Contents operating expenses and capital expenditures, and their homes could be substantially impaired, all of which may have a material effect on our SFR operations.
Risks Related to Dual Class Structure The dual class structure of Pagaya Ordinary Shares has the effect of concentrating voting power with certain shareholders—in particular, our Founders—which will effectively eliminate your ability to influence the outcome of many important determinations and transactions, including a change in control.
Risks Related to Dual Class Structure 34 Table of Contents The dual class structure of Pagaya Ordinary Shares has the effect of concentrating voting power with certain shareholders—in particular, our Founders—which will effectively eliminate your ability to influence the outcome of many important determinations and transactions, including a change in control.
Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions, and potential legal risk, require additional investment of resources in 40 Table of Contents compliance programs, impact strategies and the availability of previously useful data, and could result in increased compliance costs and/or changes in business practices and policies.
Such proposed legislation, if enacted, may add additional complexity, variation in requirements, restrictions, and potential legal risk, require additional investment of resources in compliance programs, impact strategies and the availability of previously useful data, and could result in increased compliance costs and/or changes in business practices and policies.
Despite our efforts to comply with applicable laws, regulations, and other obligations relating to privacy, cybersecurity, data protection, and information security, it is possible that our interpretations of the law, practices, or our network could be inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or obligations.
Despite our efforts to comply with applicable laws, regulations, and other obligations relating to privacy, cybersecurity, data protection, and information security, it is possible that our interpretations of the law, practices, or our network could be 40 Table of Contents inconsistent with, or fail or be alleged to fail to meet all requirements of, such laws, regulations, or obligations.
Generally, if effective legislation to manage the level of federal debt is not enacted and the debt ceiling is reached in any given year, the federal government may suspend its investments for certain government accounts, among other available options, in order to prioritize payments on its obligations.
Generally, if effective legislation to manage the level of federal debt is not enacted and the debt ceiling is reached in any given year, the federal government may suspend its investments for certain government accounts, among 12 Table of Contents other available options, in order to prioritize payments on its obligations.
In the event of failure by our general contractors to pay their subcontractors, our properties may be subject to filings of mechanics or materialmen liens, 33 Table of Contents which we may need to resolve to remain in compliance with certain debt covenants, and for which indemnification from the general contractors may not be available.
In the event of failure by our general contractors to pay their subcontractors, our properties may be subject to filings of mechanics or materialmen liens, which we may need to resolve to remain in compliance with certain debt covenants, and for which indemnification from the general contractors may not be available.
These laws can be costly to 39 Table of Contents comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations. Where applicable, we seek to comply with applicable law.
These laws can be costly to comply with, require significant management attention, and could subject us to claims, government enforcement actions, civil and criminal liability, or other remedies, including revocation of licenses and suspension of business operations. Where applicable, we seek to comply with applicable law.
For example, a third party may attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent. The pursuit of a claim against a third party for infringement of our intellectual property could be costly, and 27 Table of Contents any such efforts may not be successful.
For example, a third party may attempt to reverse engineer or otherwise obtain and use our proprietary technology without our consent. The pursuit of a claim against a third party for infringement of our intellectual property could be costly, and any such efforts may not be successful.
The CCPA, CPRA, CDPA, CPA and other changes in laws or regulations relating to privacy, cybersecurity, data protection, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations like the GLBA, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could greatly increase the cost of providing our network, require significant changes to our operations, or even prevent us from providing our network in jurisdictions in which we currently operate and in which we may operate in the future.
Changes in laws or regulations relating to privacy, cybersecurity, data protection, and information security, particularly any new or modified laws or regulations, or changes to the interpretation or enforcement of laws or regulations like the GLBA, that require enhanced protection of certain types of data or new obligations with regard to data retention, transfer, or disclosure, could greatly increase the cost of providing our network, require significant changes to our operations, or even prevent us from providing our network in jurisdictions in which we currently operate and in which we may operate in the future.
In Colorado, this settlement should provide a helpful model for what constitutes an acceptable Partnership model. 46 Table of Contents However, the settlement may also invite other states to initiate their own actions, and set their own regulatory standards through enforcement. As noted above, federal prudential regulators have also taken actions to address the Madden decision.
In Colorado, this settlement should provide a helpful model for what constitutes an acceptable Partnership model. However, the settlement may also invite other states to initiate their own actions, and set their own regulatory standards through enforcement. As noted above, federal prudential regulators have also taken actions to address the Madden decision.
In particular, certain of our historical 43 Table of Contents Financing Vehicles have had substantially higher delinquencies when compared to similar securitizations of our 2020 vintage, which may result in a decline in our revenue, income and cash flow.
In particular, certain of our historical Financing Vehicles have had substantially higher delinquencies when compared to similar securitizations of our 2020 vintage, which may result in a decline in our revenue, income and cash flow.
Competition for highly skilled technical experts, including engineering and data analytics personnel, is extremely intense, 22 Table of Contents particularly in Israel where we have large operations. From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees and independent contractors with appropriate qualifications.
Competition for highly skilled technical experts, including engineering and data analytics personnel, is extremely intense, particularly in Israel where we have large operations. From time to time, we have experienced, and we expect to continue to experience, difficulty in hiring and retaining employees and independent contractors with appropriate qualifications.
Our AI technology relies on a wide variety of data sources, including data collected from our Partners’ customers and applicants, credit bureau data 28 Table of Contents and our credit experience gained through monitoring the payment performance of our Partners’ customers over time.
Our AI technology relies on a wide variety of data sources, including data collected from our Partners’ customers and applicants, credit bureau data and our credit experience gained through monitoring the payment performance of our Partners’ customers over time.
An overall labor shortage experienced by our vendors, lack of skilled labor, increased turnover, or labor inflation, or as a result of general macroeconomic factors, could have a material adverse impact on our SFR operations.
An overall labor 32 Table of Contents shortage experienced by our vendors, lack of skilled labor, increased turnover, or labor inflation, or as a result of general macroeconomic factors, could have a material adverse impact on our SFR operations.
The usury claim is 45 Table of Contents based on an allegation that Elevate, which was not licensed in Washington, DC, and not its partner bank, originated these loans, and was therefore in violation of the state’s usury laws.
The usury claim is based on an allegation that Elevate, which was not licensed in Washington, DC, and not its partner bank, originated these loans, and was therefore in violation of the state’s usury laws.
Alternatively, we, our non-bank Partners or asset investors may face litigation, government enforcement or other challenge, for example, based on claims that rates and fees were lawful at origination, but that subsequent purchasers were unable to enforce the loan pursuant to its contracted-for terms, or that certain disclosures were not provided at origination because while such disclosures are not required of banks, they may be required of non-bank lenders.
Alternatively, we, our non-bank Partners or asset investors may face litigation, government enforcement or other challenge, for example, based on claims that rates and fees were lawful at origination, but that subsequent purchasers were unable to enforce the loan pursuant to its contracted-for terms, or that certain disclosures were not provided at origination because while such disclosures are not required of banks, they may be required of non-bank lenders. 45 Table of Contents In Madden v.
Extortion 29 Table of Contents payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
Were the availability of this funding to decrease, our ability to generate Network Volume and revenue will be adversely affected. Furthermore, five of the largest asset investors together contributed 54% of all ABS funding raised in 2024, compared to 50% of all ABS funding raised in 2023.
Were the availability of this funding to decrease, our ability to generate Network Volume and revenue will be adversely affected. Furthermore, five of the largest asset investors together contributed 46% of all ABS funding raised in 2025, compared to 54% of all ABS funding raised in 2024.
A failure to accurately detect and prevent fraud may also lead to increased costs if we have to invest in developing new technology to defend against fraud, which, in turn may lead to decreased returns in Financing Vehicles and therefore decreased returns for asset investors.
A failure to accurately detect and prevent fraud may also lead to increased costs if we have to invest in developing new technology to defend against fraud, which, in turn may lead to decreased returns in Financing Vehicles and therefore decreased 20 Table of Contents returns for asset investors.
However, our existing and potential competitors include real estate technology companies and real estate brokerage firms and management companies that operate, or could develop, national and/or local businesses offering similar services, including real estate brokerage and management services, to home buyers or sellers or institutional owners.
However, our existing and potential competitors include real estate technology companies and real estate brokerage firms and management 30 Table of Contents companies that operate, or could develop, national and/or local businesses offering similar services, including real estate brokerage and management services, to home buyers or sellers or institutional owners.
In Madden v. Midland Funding , LLC, 786 F.3d 246 (2d Cir. 2015), cert. denied, 136 S. Ct. 2505 (June 27, 2016), for example, the U.S.
Midland Funding , LLC, 786 F.3d 246 (2d Cir. 2015), cert. denied, 136 S. Ct. 2505 (June 27, 2016), for example, the U.S.
We have made, and will continue to make, changes to our financial management control systems and other areas to manage our obligations as a public company, including corporate governance, corporate controls, disclosure controls and procedures and financial reporting and accounting systems.
We have made, and will continue to make, changes to our financial management control systems and other areas to manage our obligations as a 51 Table of Contents public company, including corporate governance, corporate controls, disclosure controls and procedures and financial reporting and accounting systems.
The regulatory environment in which financial institutions operate has become increasingly complex, and following the financial crisis that began in 2008, supervisory efforts to enforce relevant laws, regulations and policies have become more intense.
The regulatory environment in which financial institutions operate has become increasingly complex, and following the financial 38 Table of Contents crisis that began in 2008, supervisory efforts to enforce relevant laws, regulations and policies have become more intense.
In addition, from time to time, our SFR Partners may perform ongoing maintenance or make ongoing capital improvements and replacements and perform significant renovations and repairs that resident deposits and insurance may not cover.
In addition, from time to time, our SFR Partners may perform ongoing maintenance or make ongoing capital improvements and replacements and perform significant renovations and repairs that 33 Table of Contents resident deposits and insurance may not cover.
We have relied upon the securitization market and committed asset-backed facilities to provide a significant portion of the capital needed to purchase Partner assets evaluated and selected using our AI. The ability of the Financing Vehicles to provide funding at 16 Table of Contents competitive rates, or at all, is essential to our business.
We have relied upon the securitization market, committed asset-backed facilities, and forward flow agreements to provide a significant portion of the capital needed to purchase Partner assets evaluated and selected using our AI. The ability of the Financing Vehicles to provide funding at competitive rates, or at all, is essential to our business.
These factors include interest rates, rising inflation, the instability of the banking system, acts of war (including the ongoing war in Israel and the ongoing Russia-Ukraine conflict), supply chain disruptions, labor shortages, the wind-down of stimulus programs, unemployment rates, conditions in the housing market, immigration policies, government shutdowns, trade wars or other impacts of tariffs and delays in tax refunds, as well as events such as natural disasters, terrorism, catastrophes, and pandemics (such as COVID-19).
These factors include interest rates, rising inflation, the instability of the banking system, acts of war, supply chain disruptions, labor shortages, the wind-down of stimulus programs, unemployment rates, conditions in the housing market, immigration policies, government shutdowns, trade wars or other impacts of tariffs and delays in tax refunds, as well as events such as natural disasters, terrorism, catastrophes, and pandemics.
Our customers face competition for residents from other lessors 31 Table of Contents of single-family rental properties, apartment buildings, and condominium units.
Our customers face competition for residents from other lessors of single-family rental properties, apartment buildings, and condominium units.
Further, events such as these may make equity or debt financing more difficult to obtain, and additional equity 14 Table of Contents or debt financing might not be available on reasonable terms, if at all; difficulties obtaining equity or debt financing could have a material adverse effect on our financial condition, as well as our ability to continue to grow our operations.
Further, such uncertainty may make equity or debt financing more difficult to obtain, and additional equity or debt financing might not be available on reasonable terms, if at all; difficulties obtaining equity or debt financing could have a material adverse effect on our financial condition, as well as our ability to continue to grow our operations.
Although we currently maintain insurance coverage, such coverage may not be sufficient to cover the types or extent of claims or loss that may be incurred or received. 25 Table of Contents We currently maintain insurance in connection with our business, including, among other coverages, directors and officers liability insurance, errors and omissions/professional liability insurance, employment practices liability insurance, fiduciary liability insurance, and cyber insurance.
We currently maintain insurance in connection with our business, including, among other coverages, directors and officers liability insurance, errors and omissions/professional liability insurance, employment practices liability insurance, fiduciary liability insurance, and cyber insurance. The scope and limits of such insurance may not be sufficient to cover the types or extent of claims or loss that may be incurred or received.
If we do, we will incur expenses associated with the separation with those employees. We may also incur additional expenses due to events associated with the reduction in workforce, for example, the reduction in workforce may have a future impact on other areas of our liabilities and obligations, which could result in losses in future periods.
We may also incur additional expenses due to events associated with the reduction in workforce, for example, the reduction in workforce may have a future impact on other areas of our liabilities and obligations, which could result in losses in future periods.
The preparation of financial statements in conformity with U.S. GAAP requires our management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
GAAP requires our management to make estimates, judgments and assumptions that affect the amounts reported and disclosed in our consolidated financial statements and accompanying notes. We base our estimates and assumptions on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
We have grown rapidly over the last several years, and our recent revenue and FRLPC growth rate and financial performance may not be indicative of our future performance. Our revenue and other income was $1,032.2 million and $812.1 million for the years ended December 31, 2024 and December 31, 2023, respectively, representing a 27% growth rate.
We have grown rapidly over the last several years, and our recent revenue and FRLPC growth rate and financial performance may not be indicative of our future performance. Our revenue and other income was $1,301.4 million and $1,032.2 million for the years ended December 31, 2025 and December 31, 2024, respectively, representing a 26% growth rate.
Such changes or challenges to existing standards or in their interpretation may have an adverse effect on our reputation, business, financial condition, and profit and loss, or cause an adverse deviation from our revenue and operating profit and loss target, which may negatively impact our results of operations.
Such changes or challenges to existing standards or in their interpretation may have an adverse effect on our reputation, business, financial condition, and profit and loss, or cause an adverse deviation from our revenue and operating profit and loss target, which may negatively impact our results of operations. 19 Table of Contents Our reputation and brand are important to our success.
GAAP net losses, and we may not be able to achieve profitability in the future. For the years ended December 31, 2024 and 2023, we incurred U.S. generally accepted accounting principles (“U.S. GAAP”) net losses of $401.4 million and $128.4 million, respectively.
GAAP net losses, and we may not be able to remain profitability in the future. For the years ended December 31, 2025 and 2024, we incurred U.S. generally accepted accounting principles (“U.S. GAAP”) net income (losses) of $81.4 million and $(401.4) million, respectively.
See “— Our management team has limited experience managing a public company. ” The costs relate to public company reporting obligations under the Securities Act or the Exchange Act, regulations regarding corporate governance practices, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules of the SEC, the listing requirements of the Nasdaq, and other applicable securities rules and regulations that impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
The costs relate to public company reporting obligations under the Securities Act or the Exchange Act, regulations regarding corporate governance practices, the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules of the SEC, the listing requirements of the Nasdaq, and other applicable securities rules and regulations that impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices.
Additional cybersecurity threats include, but are not limited to, credential harvesting, server malfunctions, software or hardware failures, adware, attacks enhanced or facilitated by AI, natural disasters, terrorism, war and telecommunication and electrical failures and other similar threats.
Additional cybersecurity threats include, but are not limited to, credential 28 Table of Contents harvesting, account takeovers, server malfunctions, software or hardware failures, software errors, adware, attacks enhanced or facilitated by AI, natural disasters, terrorism, war and telecommunication and electrical failures and other similar threats.
Rising inflation may adversely impact the ability of borrowers to service their debt, which could lead to deterioration of the credit performance of loans and impact investor returns, and therefore may result in lower 13 Table of Contents demand from investors for assets generated on our platform and lead to constraints on our ability to fund new volume origination.
While inflationary pressure has eased recently, rising inflation may adversely impact the ability of borrowers to service their debt, which could lead to deterioration of the credit performance of loans and impact investor returns, and therefore may result in lower demand from investors for assets generated on our platform and lead to constraints on our ability to fund new volume origination.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+2 added−0 removed9 unchanged
Biggest changeWe use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example threat intelligence providers, cybersecurity consultants and software providers, managed cybersecurity service providers, penetration testing service providers, dark web monitoring service providers, and forensic investigators. 64 Table of Contents In addition, our third party risk management program manages cybersecurity risks associated with our use of third-party service providers that perform a variety of functions throughout our business, such as software-as-a-service providers, hosting companies, distributors, and supply chain resources.
Biggest changeWe use third-party service providers to assist us from time to time to identify, assess, and manage material risks from cybersecurity threats, including for example threat intelligence providers, cybersecurity consultants and software providers, managed cybersecurity service providers, penetration testing service providers, dark web monitoring service providers, and forensic investigators.
Our cybersecurity incident processes are designed to escalate material cybersecurity incidents to members of our management team depending on the circumstances, who will then work with our incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified, in addition to notifying the Risk Committee, as appropriate.
Our cybersecurity incident processes are designed to escalate material cybersecurity incidents to members of our management team depending on the circumstances, who will then work with our incident response team to help the Company mitigate and remediate cybersecurity incidents of which they are notified, in addition to notifying the Risk Committee, as appropriate. 62 Table of Contents
Cybersecurity Risk management and strategy Our information security program is designed to identify, assess, and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and our customer data (“Information Systems and Data”).
Cybersecurity 61 Table of Contents Risk management and strategy Our information security program is designed to identify, assess, and manage material risks from cybersecurity threats to our critical computer networks, third-party hosted services, communications systems, hardware and software, and our critical data, including intellectual property, confidential information that is proprietary, strategic or competitive in nature, and our customer data (“Information Systems and Data”).
In addition, we are aligned with the SOC 2 Type 2 standard and, since 2019, we have been certified under ISO 27001:2013, ISO 27017:2015 & ISO 27018. Our identification, assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.
In addition, we are aligned with the SOC 2 Type 2 standard and, since 2019, we have been certified under ISO 27001:2013, ISO 27017:2015 & ISO 27018 (also ISO 42001 certification was achieved this year). Our identification, assessment and management of material risks from cybersecurity threats are integrated into the Company’s overall risk management processes.
Our information security program consists of processes and controls around access control, authorization, auditing, and monitoring, and is supported by our cybersecurity tech ecosystem, all of which is designed to protect our business flows and Information Systems and Data.The information security program is overseen by our Chief Information Security Officer (“CISO”), who manages a team responsible for leading enterprise-wide cybersecurity policy, standards, architecture, and processes.
Our information security program consists of processes and controls around access control, authorization, auditing, and monitoring, and is supported by our cybersecurity tech ecosystem, all of which is designed to protect our business flows and Information Systems and Data.
Added
The information security program is overseen by our Chief Information Security Officer (“CISO”), who manages a team responsible for leading enterprise-wide cybersecurity policy, standards, architecture, and processes.
Added
In addition, our third party risk management program manages cybersecurity risks associated with our use of third-party service providers that perform a variety of functions throughout our business, such as software-as-a-service providers, hosting companies, distributors, and supply chain resources.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−1 removed0 unchanged
Biggest changeWe believe that our current facilities are adequate to meet our current needs, and we believe we can acquire suitable additional or alternative space as needed.
Biggest changeItem 2. Properties Our main offices are in New York, NY (Headquarters) and Tel Aviv, Israel. None of our facilities are owned by Pagaya. We believe that our current facilities are adequate to meet our current needs, and we believe we can acquire suitable additional or alternative space as needed.
Removed
Item 2. Properties Our main offices are in New York, NY (Headquarters) and Tel Aviv, Israel. We also lease offices in Austin, Texas, and San Mateo, CA. None of our facilities are owned by Pagaya.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

2 edited+0 added−0 removed3 unchanged
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors.
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosure Not applicable. PART II
Item 3. Legal Proceedings Please refer to Note 12. Commitments and Contingencies of the accompanying notes to our consolidated financial statements. From time to time, we may become involved in legal proceedings or be subject to claims arising in the normal course of business.
Item 3. Legal Proceedings Please refer to Note 15. Commitments and Contingencies of the accompanying notes to our consolidated financial statements. From time to time, we may become involved in legal proceedings or be subject to claims arising in the normal course of business.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

118 edited+72 added−56 removed73 unchanged
Biggest changeResults of Operations The following table sets forth operating results for the periods indicated (in thousands, except share and per share data): 72 Table of Contents Year Ended December 31, 2024 2023 2022 Revenue Revenue from fees $ 1,004,550 $ 772,814 $ 685,414 Other Income Interest income 32,291 38,748 57,758 Investment (loss) income (4,593) 489 5,756 Total Revenue and Other Income 1,032,248 812,051 748,928 Production costs 597,652 508,944 451,084 Technology, data and product development (1) 76,571 74,383 150,933 Sales and marketing (1) 50,404 49,773 104,203 General and administrative (1) 240,781 203,351 294,213 Total Costs and Operating Expenses 965,408 836,451 1,000,433 Operating Income (Loss) 66,840 (24,400) (251,505) Other expense, net (487,962) (156,768) (24,869) Loss Before Income Taxes (421,122) (181,168) (276,374) Income tax expense 24,576 15,571 16,400 Net Loss (445,698) (196,739) (292,774) Less: Net (loss) income attributable to noncontrolling interests (44,292) (68,301) 9,547 Net Loss Attributable to Pagaya Technologies Ltd. $ (401,406) $ (128,438) $ (302,321) Per share data: Net loss attributable to Pagaya Technologies Ltd. $ (401,406) $ (128,438) $ (302,321) Less: Undistributed earnings allocated to participated securities — — (12,205) Net loss attributable to Pagaya Technologies Ltd. ordinary shareholders $ (401,406) $ (128,438) $ (314,526) Net loss per share: Basic and Diluted (2) $ (5.66) $ (2.14) $ (8.22) Non-GAAP adjusted net income (loss) (3) $ 66,866 $ 16,556 $ (32,664) Non-GAAP adjusted net income (loss) per share (3): Basic (2) $ 0.94 $ 0.28 $ (0.85) Diluted (2)(4) $ 0.92 $ 0.27 $ (0.85) Weighted average shares outstanding: Basic and Diluted (2) 70,879,807 60,038,893 38,253,737 Weighted average shares outstanding (Non-GAAP): Basic (2) 70,879,807 60,038,893 38,253,737 Diluted (2)(4) 72,495,097 61,693,526 58,302,653 (1) The following table sets forth share-based compensation for the periods indicated below (in thousands): Year Ended December 31, 2024 2023 2022 Technology, data and product development $ 8,695 $ 12,375 $ 81,337 Sales and marketing 14,666 13,216 58,377 General and administrative 38,136 45,464 101,975 Total share-based compensation in operating expenses $ 61,497 $ 71,055 $ 241,689 Share-based compensation for the year ended December 31, 2022 included compensation of $172.2 million related to the vesting of certain performance-based options, which was included in technology, data and product development, sales and marking, and general and administrative expenses.
Biggest changeResults of Operations The following table sets forth operating results for the periods indicated (in thousands, except share and per share data): 70 Table of Contents Year Ended December 31, 2025 2024 2023 Revenue Revenue from fees $ 1,261,341 $ 1,004,550 $ 772,814 Other Income Interest income 48,434 32,291 38,748 Investment (loss) income (8,415) (4,593) 489 Total Revenue and Other Income 1,301,360 1,032,248 812,051 Production costs 749,169 597,652 508,944 Technology, data and product development (2) 75,213 76,571 74,383 Sales and marketing (2) 53,591 50,404 49,773 General and administrative (2) 159,560 240,781 203,351 Total Costs and Operating Expenses 1,037,533 965,408 836,451 Operating Income (Loss) 263,827 66,840 (24,400) Gains and (losses) on investments in loans and securities (1) (107,030) (404,150) (131,315) Other expense, net (1) (80,417) (83,612) (25,453) Gains and (losses) from extinguishment of debt (1) (24,755) (200) — Income (Loss) Before Income Taxes 51,625 (421,122) (181,168) Income tax (benefit) expense (19,745) 24,576 15,571 Net Income (Loss) Including Noncontrolling Interests 71,370 (445,698) (196,739) Less: Net (loss) income attributable to noncontrolling interests (10,019) (44,292) (68,301) Net Income (Loss) Attributable to Pagaya Technologies Ltd. $ 81,389 $ (401,406) $ (128,438) Earnings (loss) per share attributable to Pagaya Technologies Ltd. ordinary shareholders: Basic $ 0.99 $ (5.66) $ (2.14) Diluted $ 0.93 $ (5.66) $ (2.14) Weighted average shares outstanding: Basic 78,336,095 70,879,807 60,038,893 Diluted 83,097,227 70,879,807 60,038,893 (1) Prior period amounts have been reclassified to conform to the current period’s presentation.
We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA in conjunction with their respective related U.S. GAAP financial measures.
We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA in conjunction with their respective related U.S. GAAP financial measures.
Each public warrant and each private placement warrant that was issued and exchanged for each EJFA Private Placement Warrant in the EJFA Merger entitles the holder thereof to purchase one Class A Ordinary Share at a price of $138 per share (as adjusted for the 1-for-12 reverse share split).
Each public warrant that was issued and exchanged for each EJFA Private Placement Warrant in the EJFA Merger entitles the holder thereof to purchase one Class A Ordinary Share at a price of $138 per share (as adjusted for the 1-for-12 reverse share split).
The Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025, and mature on October 1, 2029, unless earlier repurchased, redeemed, or exchanged.
The 2029 Notes bear interest at a rate of 6.125% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning April 1, 2025, and mature on October 1, 2029, unless earlier repurchased, redeemed, or exchanged.
On or after July 2, 2029 until the close of business on the second scheduled trading day immediately preceding October 1, 2029, the Notes will be exchangeable at the option of the holders at any time regardless of the specified conditions.
On or after July 2, 2029 until the close of business on the second scheduled trading day immediately preceding October 1, 2029, the 2029 Notes will be exchangeable at the option of the holders at any time regardless of the specified conditions.
Borrowings under the Facilities bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to a 2.00% floor) plus a margin of 6.50% and (ii) an adjusted term Secured Overnight Financing Rate (subject to a 1.00% floor) plus a margin of 7.50%.
Borrowings under the Facilities bear interest at a rate per annum equal to, at the Company’s option, (i) a base rate (determined based on the prime rate and subject to a 2.00% floor) plus a margin of 6.50% or (ii) an adjusted term Secured Overnight Financing Rate (subject to a 1.00% floor) plus a margin of 7.50%.
These items are excluded from our Adjusted Net Income (Loss) and Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items is unpredictable, is not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful.
These items are excluded from our Adjusted Net Income and Adjusted EBITDA measures because they are noncash in nature, or because the amount and timing of these items is unpredictable, is not driven by core results of operations and renders comparisons with prior periods and competitors less meaningful.
Moreover, we have included FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA in this report because these are key measurements used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.
Moreover, we have included FRLPC, FRLPC %, Adjusted Net Income and Adjusted EBITDA in this report because these are key measurements used by our management internally to make operating decisions, including those related to operating expenses, evaluate performance, and perform strategic planning and annual budgeting.
The initial exchange rate of the Notes is 71.4669 Class A Ordinary Shares per $1,000 principal amount of Notes (which is equivalent to an initial exchange price of approximately $13.99 per share). The exchange rate will be subject to adjustment upon the occurrence of certain events.
The initial exchange rate of the 2029 Notes is 71.4669 Class A Ordinary Shares per $1,000 principal amount of 2029 Notes (which is equivalent to an initial exchange price of approximately $13.99 per share). The exchange rate will be subject to adjustment upon the occurrence of certain events.
The Notes are exchangeable for cash, Class A Ordinary Shares of the Company, or a combination of both, at the Company’s discretion, subject to certain conditions. The Notes are senior, unsecured obligations of Pagaya US and are fully and unconditionally guaranteed on a senior, unsecured basis by the Company.
The 2029 Notes are exchangeable for cash, Class A Ordinary Shares of the Company, or a combination of both, at the Company’s discretion, subject to certain conditions. The 2029 Notes are senior, unsecured obligations of Pagaya US and are fully and unconditionally guaranteed on a senior, unsecured basis by the Company.
We believe FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance.
We believe FRLPC, FRLPC %, Adjusted Net Income and Adjusted EBITDA provide useful information to investors and others in understanding and evaluating our results of operations, as well as providing a useful measure for period-to-period comparisons of our business performance.
Net Income Attributable to Noncontrolling Interests Net income attributable to noncontrolling interests in our consolidated statements of operations is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net income of these consolidated entities that is not attributable to us.
Net Income (Loss) Attributable to Noncontrolling Interests Net income (loss) attributable to noncontrolling interests in our consolidated statements of operations is a result of our investments in certain of our consolidated variable interest entities (‘‘VIEs’’) and consists of the portion of the net income of these consolidated entities that is not attributable to us.
Adoption of Our Network by Partners We devote significant time to, and have a team that focuses on, onboarding and managing Partners to our network.
Adoption of Our Network by New Partners We devote significant time to, and have a team that focuses on, onboarding and managing Partners to our network.
While our ability to raise funding remains intact, the cost of capital has risen, necessitating adjustments in conversion ratios to meet investor return expectations. Strong Partner application volume has mitigated this impact, sustaining Network Volume growth through 2024 and into early 2025.
While our ability to raise funding remains intact, the cost of capital has risen, necessitating adjustments in conversion ratios to meet investor return expectations. Strong Partner application volume has mitigated this impact, sustaining Network Volume growth through 2024 and 2025.
Production Costs Production Costs are primarily comprised of expenses incurred when Network Volume is transferred from Partners into Financing Vehicles, as our Partners are responsible for marketing and customer interaction and facilitating the flow of additional application flow. Accordingly, the amount and growth of our Production Costs are highly correlated to Netwo rk Volume.
Production Costs Production Costs are primarily comprised of expenses incurred when Network Volume is transferred from Partners into Financing Vehicles, as our Partners are responsible for marketing and customer interaction and facilitating the flow of additional application flow. Accordingly, the amount and growth of our Production Costs are highly correlated to Network Volume.
As of December 31, 2024, there have been no known events or circumstances that have resulted in a material indemnification liability and the Company did not incur material costs to defend lawsuits or settle claims related to these indemnifications.
As of December 31, 2025, there have been no known events or circumstances that have resulted in a material indemnification liability and the Company did not incur material costs to defend lawsuits or settle claims related to these indemnifications.
In addition, upon the occurrence of a “make-whole fundamental change” (as defined in the indenture governing the Notes) or if Pagaya US redeems the Notes, Pagaya US will, in certain circumstances, increase the exchange rate by a number of additional Class A Ordinary Shares for a holder who elects to convert its Notes in connection with such make-whole fundamental change or to convert its Notes called for redemption during the related redemption exchange period.
In addition, upon the occurrence of a “make-whole fundamental change” (as defined in the indenture governing the 2029 Notes (“the 2029 Notes Indenture”)) or if Pagaya US redeems the 2029 Notes, Pagaya US will, in certain circumstances, increase the exchange rate by a number of additional Class A Ordinary Shares for a holder who elects to convert its 2029 Notes in connection with such make-whole fundamental change or to convert its 2029 Notes called for redemption during the related redemption exchange period.
Our AI 69 Table of Contents technology and data-driven insights are designed to enable relative outperformance versus the broader market. We believe that investors in Financing Vehicles view our AI technology as an important component in delivering assets that meet their investment criteria. See “ Item 1A.—Risk Factors—Risks Related to the Operations of Our Business ” in this Annual Report.
Our AI technology and data-driven insights are designed to enable relative outperformance versus the broader market. We believe that investors in Financing Vehicles view our AI technology as an important component in delivering assets that meet their investment criteria. See “ Item 1A.—Risk Factors—Risks Related to the Operations of Our Business ” in this Annual Report.
As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with U.S. GAAP. 76 Table of Contents To address these limitations, we provide a reconciliation of FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable U.S. GAAP measure.
As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our consolidated financial statements prepared and presented in accordance with U.S. GAAP. To address these limitations, we provide a reconciliation of FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA to the most directly comparable U.S. GAAP measure.
We do not have capital expenditure commitments as the vast majority of our capital expenditures relate to the capitalization of certain compensation and non-compensation expenditures used in the development and improvement of our proprietary technology. There are numerous risks to the Company’s financial results, liquidity and capital raising, some of which may not be quantified in the Company’s current estimates.
We do not have capital expenditure commitments as the vast majority of our capital expenditures relate to the capitalization of certain compensation and non-compensation expenditures used in the development and improvement of our proprietary technology. 76 Table of Contents There are numerous risks to the Company’s financial results, liquidity and capital raising, some of which may not be quantified in the Company’s current estimates.
Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the results of operations for the year ended December 31, 2023 in comparison to the year ended December 31, 2022 have been omitted.
Pursuant to the FAST Act Modernization and Simplification of Regulation S-K, discussions related to the results of operations for the year ended December 31, 2024 in comparison to the year ended December 31, 2023 have been omitted.
If a “fundamental change” (as defined in the indenture governing the Notes) of the Company occurs, then, subject to a limited exception, noteholders may require Pagaya US to repurchase their Notes for cash.
If a “Fundamental Change” (as defined in the 2029 Notes Indenture) of the Company occurs, then, subject to a limited exception, noteholders may require Pagaya US to repurchase their 2029 Notes for cash.
We primarily earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume. Capital markets execution and contract fees are primarily earned from investors. Multiple funding channels are utilized to enable the purchase of network assets from our Partners, such as asset backed securitizations.
We primarily earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume. Capital markets execution and contract fees are primarily earned from investors. Multiple funding channels are utilized to enable the purchase of network assets from our Partners, such as asset backed securitizations and forward flow arrangements.
Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria.
Securities issued from our asset-backed securitizations are senior or subordinated, based on the waterfall criteria of 77 Table of Contents loan payments to each security class. The subordinated residual interests issued from these transactions are first to absorb credit losses in accordance with the waterfall criteria.
The decrease in interest income was directly related to our risk retention holdings and related securities held in our consolidated VIEs as well as certain risk retention holdings held directly by our consolidated subsidiaries.
The increase in interest income was directly related to our risk retention holdings and related securities held in our consolidated VIEs as well as certain risk retention holdings held directly by our consolidated subsidiaries.
We also take into consideration certain qualitative factors, in which we adjust our quantitative baseline using our best judgment to consider the inherent uncertainty regarding future economic conditions and consumer loan performance. 83 Table of Contents Additionally, we determine whether an impairment has resulted from a credit loss or other factors.
We also take into consideration certain qualitative factors, in which we adjust our quantitative baseline using our best judgment to consider the inherent uncertainty regarding future economic conditions and consumer loan performance. Additionally, we determine whether an impairment has resulted from a credit loss or other factors.
Sales and marketing expenses in absolute dollars may fluctua te from period to period based on the timing of our investments in our sales and marketing functions. These investments may vary in scope and scale over future periods depending on our pipeline of new Partners and strategic investors.
Sales and marketing expenses in absolute dollars may fluctuate from period to period based on the timing of our investments in our sales and marketing functions. These investments may vary in scope and scale over future periods depending on our pipeline of new Partners and strategic investors.
Revenue from fees is recognized after applying the five-step model consistent with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Consumers” (“ASC 606”). Revenue from fees is inclusive of network AI fees and contract fees. Network AI fees.
Revenue from fees is recognized after applying the five-step model consistent with Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 68 Table of Contents 606, “Revenue from Contracts with Consumers” (“ASC 606”). Revenue from fees is inclusive of network AI fees and contract fees. Network AI fees.
In November 2024, the Company 81 Table of Contents amended the Credit Agreement to increase the Term Loan Facility by $100 million, bringing the total principal amount to $355 million. The Company also increased an aggregate principal amount of the Revolving Credit Facility of $15 million, bringing the total principal amount of the Revolving Credit Facility to $50 million.
In November 2024, the Company amended the Credit Agreement to increase the Term Loan Facility by $100 million, bringing the total principal amount to $355 million. The Company also increased an aggregate principal amount of the Revolving Credit Facility of $15 million, bringing the total principal amount of the Revolving Credit Facility to $50 million.
Adjusted Net Income (Loss) is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions.
Adjusted Net Income is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, and non-recurring expenses associated with mergers and acquisitions and other one-time expenses.
If the market price for our Class A Ordinary Shares is less than $138 per share, we believe warrant holders will be unlikely to exercise on a cash basis their public warrants and private placement warrants that were issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger.
If the market price for our Class A Ordinary Shares is less than $138 per share, we believe warrant holders will be unlikely to exercise on a cash basis their public warrants that were issued in the EJFA Merger.
Adjusted EBITDA is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions, interest expense, depreciation expense, and provision (and benefit from) for income taxes.
Adjusted EBITDA is defined as net income (loss) attributable to our shareholders excluding share-based compensation expense, change in fair value of warrant liability, change in fair value of contingent liability, impairment, including credit-related charges, restructuring expenses, transaction-related expenses, non-recurring expenses associated with mergers and acquisitions and other one-time expenses, interest expense, depreciation and amortization expense, and provision (and benefit from) for income taxes.
We believe the likelihood that warrant holders will exercise their public warrants and private placement warrants that were issued and exchanged for EJFA Private Placement Warrants in the EJFA Merger, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of Class A Ordinary Shares.
We believe the likelihood that warrant holders will exercise their public warrants that were issued in the EJFA Merger, and therefore the amount of cash proceeds that we would receive, is dependent upon the market price of Class A Ordinary Shares.
The Notes rank equally in right of payment with other senior, unsecured indebtedness of Pagaya US and the Company and are structurally subordinated to all existing and future liabilities of Pagaya US’s subsidiaries.
The 2029 Notes rank equally in right of payment with other senior, unsecured indebtedness and are structurally subordinated to all existing and future liabilities of Pagaya US’s subsidiaries.
Prior to the close of business on the business day immediately preceding July 2, 2029, the Notes will be exchangeable at the option of the holders only upon the satisfaction of specified conditions.
Prior to the close of business on the business day immediately preceding July 2, 2029, the 2029 Notes will be exchangeable at the option of the holders only upon the satisfaction of one or more specified conditions.
To the extent the public warrants and private placement warrants are exercised by warrant holders, ownership interest of our shareholders will be diluted as a result of such issuances.
To the extent the public warrants are exercised by warrant holders, ownership interest of our shareholders will be diluted as a result of such issuances.
Our future 78 Table of Contents capital requirements and the adequacy of available funds will depend on many factors, including those set forth in “ Item 1A.—Risk Factors ” in this Annual Report. In addition, we will receive the proceeds from any exercise of any public warrants and private placement warrants in cash.
Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth in “ Item 1A.—Risk Factors ” in this Annual Report. In addition, we will receive the proceeds from any exercise of any public warrants in cash.
In February 2025, the Company further increased the aggregate principal amount of the Revolving Credit Facility by $8 million, resulting in a total principal amount of the Revolving Credit Facility of $58 million. The Facilities replace the SVB Revolving Credit Facility.
In February 2025, the Company further increased the aggregate principal amount of the Revolving Credit Facility by $8 million, resulting in a total principal amount of the Revolving Credit Facility of $58 million.
As our existing Partners grow their usage of our network, new Partners join our network, and as we expand our network into new asset classes, the value of our data asset increa ses.
As our existing Partners grow their usage of our network, new Partners join our network, and as we expand our network into new asset classes, the value of our data asset increases.
Salaries and personnel-related costs, including benefits, b onuses, share-based compensation, and outsourcing comprise a significant component of several of these expense categories.
Salaries and personnel-related costs, including benefits, bonuses, share-based compensation, and outsourcing comprise a significant component of several of these expense categories.
Central banks, including the Federal Reserve, have maintained elevated rates into 2025 to combat inflationary trends, increasing borrowing costs and potentially straining borrowers’ ability to service debt. This could lead to higher delinquencies, defaults, and charge-offs, reducing investor returns and dampening demand for assets generated on our platform.
Central banks, including the Federal Reserve, have maintained elevated rates into early 2026 to combat inflationary trends, increasing borrowing costs and potentially straining borrowers’ ability to service debt. This could lead to higher delinquencies, defaults, and charge-offs, 67 Table of Contents reducing investor returns and dampening demand for assets generated on our platform.
Additionally, but to a lesser extent, Production Costs also include expenses incurred to renovate single-family rental properties. 71 Table of Contents Technology, Data and Product Development Technology, data and product development expenses primarily comprise costs associated with the maintenance and ongoing development of our network and AI technology, including pers onnel, allocated costs, and other development-related expenses.
Additionally, but to a lesser extent, Production Costs also include expenses incurred to renovate single-family rental properties. Technology, Data and Product Development Technology, data and product development expenses primarily comprise costs associated with the maintenance and ongoing development of our network and AI technology, including personnel, allocated costs, and other development-related expenses.
We may also raise additional capital, including through borrowings under the credit facility(see further description of the credit facility below in the section titled “ Credit Agreement ”) or through the sale or issuance of equity or debt securities, as described below in the sections titled “ Shelf Registration Statement ” and “ Ordinary Share Offering ,” as well as the issuance of up to an additional 1,666,666 Series A Preferred Shares.
We may also raise additional capital, including through borrowings under the credit facility (see further description of the credit facility below in the section titled “ 2025 Revolving Credit Facility ”) or through the sale or issuance of equity or debt securities, as described below in the sections titled “ Shelf Registration Statement ” and “ Senior Note ,” as well as the issuance of up to an additional 1,666,666 Series A Preferred Shares.
The determination of the maximum potential future payments is based on the notional amount of the guarantees without consideration of possible recoveries under recourse provisions or from collateral held or pledged. As of December 31, 2024, the maximum potential amount of undiscounted future payments the Company could be required to make under these guarantees totaled $35.0 million.
The determination of the maximum potential future payments is based on the notional amount of the guarantees without consideration of possible recoveries under recourse provisions or from collateral held or pledged. As of December 31, 2025, the unfunded maximum potential amount of undiscounted future payments the Company could be required to make under these guarantees totaled $120.2 million.
GAAP, we use the non-GAAP financial measures FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA to provide investors with additional information about our financial performance and to enhance the overall understanding of the results of operations by highlighting the results from ongoing operations and the underlying profitability of our business.
GAAP, we use the non-GAAP financial measures FRLPC, FRLPC as percentage of Network Volume (FRLPC %), Adjusted Net Income (Loss) and Adjusted EBITDA to provide investors with additional information about our financial performance and to enhance the overall 74 Table of Contents understanding of the results of operations by highlighting the results from ongoing operations and the underlying profitability of our business.
In the year ended December 31, 2024, our top 5 ABS investors contributed approximately 54% of our total ABS funding, compared to 50% in the year ended December 31, 2023.
In the year ended December 31, 2025, our top 5 ABS investors contributed approximately 46% of our total ABS funding, compared to 54% in the year ended December 31, 2024.
Non-cash charges primarily consisted of (1) impairment losses on investments in loans and securities, which increased by $279.5 million driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value, of which $50.1 million is not attributable to Pagaya, but rather attributable to the VIEs noncontrolling interests, (2) share-based compensation, which decreased by $9.6 million, (3) depreciation and amortization, which increased by $9.6 million primarily from capitalized software, and (4) fair value adjustment to warrant liability, which decreased by $4.2 million driven by changes in the market price of our Class A Ordinary Shares.
Non-cash charges primarily consisted of (1) impairment losses on investments in loans and securities, which decreased by $299.2 million driven by changes in the fair value of investments in loans and securities as a result of fluctuations in key inputs to the discounted cash flow models used to determine fair value, of which $16.7 million is not attributable to Pagaya, but rather attributable to the VIEs noncontrolling interests, (2) share-based compensation, which decreased by $7.4 million, (3) depreciation and amortization, which increased by $1.3 million primarily from capitalized software, (4) fair value adjustment to warrant liability, which increased by $6.2 million driven by changes in the market price of our Class A Ordinary Shares, and (5) loss from extinguishment of debt of $17.9 million associated with the repayment of term loan.
As a result, the expansion of Network Volume provides insights into the effectiveness of our business strategies and the ability to leverage operational efficiencies across different asset classes. Network Volume is comprised of assets across several asset classes, including personal loans, auto loans, residential real estate, and point-of-sale receivables.
As a result, when viewed in combination with financial profitability metrics, the expansion of Network Volume provides insights into the effectiveness of our business strategies and the ability to leverage operational efficiencies across different asset classes. Network Volume is comprised of assets across several asset classes, including personal loans, auto loans, residential real estate, and point-of-sale receivables.
The increase in Network AI fees was primarily driven by improved economics in AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 17% from $8.3 billion for the year ended December 31, 2023 to $9.7 billion for the year ended December 31, 2024.
The increase in Network AI fees was primarily driven by improved economics in AI integration fees earned from certain Partners, as well as the growth in Network Volume, which increased by 9% from $9.7 billion for the year ended December 31, 2024 to $10.5 billion for the year ended December 31, 2025.
For such omitted discussions, refer to Pagaya’s Operating Results included in the Annual Report on Form 10-K filed with the SEC on April 25, 2024. Company Overview 66 Table of Contents Pagaya’s mission is to deliver more financial opportunity to more people, more often.
For such omitted discussions, refer to Pagaya’s Operating Results included in the Annual Report on Form 10-K filed with the SEC on March 12, 2025. Company Overview 64 Table of Contents Pagaya’s mission is to deliver more financial opportunity to more people, more often.
These increases were partially offset by a slight decrease in capital markets execution fees earned from our ABS transactions during the year ended December 31, 2024.
These increases were partially offset by a decrease in capital markets execution fees earned from our ABS and forward flow transactions during the year ended December 31, 2025.
We believe that Network Volume has benefited from continuous improvements to our proprietary technology, enabling our network to more effectively identify assets for acquisition by the Financing Vehicles, thereby providing additional investment opportunities to investors.
Network Volume is primarily driven by our relationships with our Partners and SFR Partners. We believe that Network Volume has benefited from continuous improvements to our proprietary technology, enabling our network to more effectively identify assets for acquisition by the Financing Vehicles, thereby providing additional investment opportunities to investors.
We expect to use any such proceeds for general corporate and working capital purposes, which would increase our liquidity. As of March 11, 2025, the price of our Class A Ordinary Shares was $9.89 per share.
We expect to use any such proceeds for general corporate and working capital purposes, which would increase our liquidity. As of February 27, 2026, the price of our Class A Ordinary Shares was $11.19 per share.
Holders of Record Based on a review of the information provided to us by our transfer agent, as of December 31, 2024, there were 118 registered holders of our Ordinary Shares, 90 of which were United States registered holders, including Cede & Co., the nominee of The Depository Trust Company, holding approximately 73.5% of our outstanding Ordinary Shares.
Holders of Record Based on a review of the information provided to us by our transfer agent, as of December 31, 2025, there were 100 registered holders of our Ordinary Shares, 81 of which were United States registered holders, including Cede & Co., the nominee of The Depository Trust Company, holding approximately 91.8% of our outstanding Ordinary Shares.
Moreover, the resale of Class A Ordinary Shares issuable upon the exercise of such warrants, or the perception of such sales, may cause the market price of our Class A Ordinary Shares to decline and impact our ability to raise additional financing on favorable terms.
Moreover, the resale of Class A Ordinary Shares issuable upon the exercise of such warrants, or the perception of such sales, may cause the market price of our Class A Ordinary Shares to decline and impact our ability to raise additional financing on favorable terms. See “Item 1A.—Risk Factors” in this Annual Report.
However, this non-GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with U.S. GAAP and may be different from similarly titled non-GAAP financial measures used by other companies. The following tables present a reconciliation of the most directly comparable U.S.
However, this non- 75 Table of Contents GAAP financial information is presented for supplemental informational purposes only, should not be considered a substitute for or superior to financial information presented in accordance with U.S. GAAP and may be different from similarly titled non-GAAP financial measures used by other companies.
The repurchase price will be equal to the principal amount of Credit Agreement On February 2, 2024, the Company entered into certain Credit Agreement (the “Credit Agreement”) which provides for a 5-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million, which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million.
The repurchase price will be equal to the principal amount of the 2029 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. 81 Table of Contents Credit Agreement On February 2, 2024, the Company entered into a certain Credit Agreement (the “Credit Agreement”) which provides for a 5-year senior secured revolving credit facility (the “Revolving Credit Facility”) in an initial principal amount of $25 million, which subsequently increased to $35 million, and a 5 year senior secured term loan facility (the “Term Loan Facility,” and together with the Revolving Credit Facility, the “Facilities”) in an initial principal amount of $255 million.
The increase was primarily due to a $220.1 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $696.0 million for the year ended December 31, 2023 to $916.1 million for the year ended December 31, 2024.
The increase was primarily due to a $215.2 million increase in Network AI fees, comprised of AI integration fees and capital markets execution fees, from $916.1 million for the year ended December 31, 2024 to $1,131.3 million for the year ended December 31, 2025.
FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA for the years ended December 31, 2024, 2023 and 2022 are summarized below (in thousands): Year Ended December 31, 2024 2023 2022 Fee Revenue Less Production Cost (FRLPC) $ 406,898 $ 263,870 $ 234,330 Adjusted Net Income (Loss) $ 66,866 $ 16,556 $ (32,664) Adjusted EBITDA $ 210,378 $ 82,022 $ (4,834) FRLPC is defined as revenue from fees less production costs.
FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA FRLPC, FRLPC %, Adjusted Net Income (Loss) and Adjusted EBITDA for the years ended December 31, 2025, 2024 and 2023 are summarized below (in thousands): Year Ended December 31, 2025 2024 2023 Fee Revenue Less Production Cost (FRLPC) $ 512,172 $ 406,898 $ 263,870 Fee Revenue Less Production Costs % (FRLPC %) 4.9 % 4.2 % 3.2 % Adjusted Net Income $ 275,318 $ 66,866 $ 16,556 Adjusted EBITDA $ 370,987 $ 210,378 $ 82,022 FRLPC is defined as revenue from fees less production costs.
In the ordinary course of business, the Company may provide indemnifications or loss guarantees of varying scope and terms to customers and other third parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties. 82 Table of Contents These indemnifications may survive termination of the underlying agreement and the maximum potential amount of future indemnification payments may not be subject to a cap.
In the ordinary course of business, the Company may provide indemnifications or loss guarantees of varying scope and terms to customers and other third parties with respect to certain matters, including, but not limited to, losses arising out of breach of such agreements, services to be provided by the Company or from intellectual property infringement claims made by third parties.
A commitment fee accrues on any unused portion of the commitments under the Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears.
A commitment fee accrues on 79 Table of Contents any unused portion of the commitments under the 2025 Revolving Credit Facility at a rate per annum of 0.25% and is payable quarterly in arrears. The terms and conditions of the 2025 Revolving Credit Facility include customary covenants and restrictions.
Indebtedness Exchangeable Senior Notes On October 1, 2024, Pagaya US Holding Company LLC (“Pagaya US”), a wholly-owned subsidiary of the Company, issued $160 million in aggregate principal amount of 6.125% exchangeable senior notes due 2029 (the “Notes”). The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers.
Exchangeable Notes On October 1, 2024, Pagaya US issued $160 million in aggregate principal amount of 6.125% exchangeable notes due 2029 (the “2029 Notes”). The issuance was in connection with a purchase agreement dated September 26, 2024, with certain initial purchasers.
Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
The Company believes it is in compliance with all covenants. Contractual Obligations, Commitments and Contingencies During the normal course of business, we enter into certain lease contracts with lease terms through 2032. As of December 31, 2024, the total remaining contractual obligations are approximately $47.1 million, of which $9.3 million is for the next 12 months.
Contractual Obligations, Commitments and Contingencies During the normal course of business, we enter into certain lease contracts with lease terms through 2032. As of December 31, 2025, the total remaining contractual obligations are approximately $42.2 million, of which $10.1 million is for the next 12 months.
The increase was primarily driven by an increase in revenue from fees, partially offset by decreases in interest income and investment income. Revenue from fees increased by $231.7 million, or 30%, to $1,004.6 million for the year ended December 31, 2024 from $772.8 million for the year ended December 31, 2023.
The increase was primarily driven by an increase in revenue from fees and interest income, partially offset by an increase in investment loss, net. Revenue from fees increased by $256.8 million, or 26%, to $1,261.3 million for the year ended December 31, 2025 from $1,004.6 million for the year ended December 31, 2024.
An important operating metric to evaluate the success of our economic model, therefore, is FRLPC, or fee revenue less Production Costs.
Accordingly, the amount and growth of our Production Costs are highly correlated to Network Volume. An important operating metric to evaluate the success of our economic model, therefore, is FRLPC, or fee revenue less Production Costs.
We are reliant on these experts’ success in making these improvements to our technology over time. Availability and Pricing of Funding from Investors Regardless of market conditions, the availability and pricing of funding from investors is critical to our growth. We have diversified our investor network and will continue to seek to further diversify our investor base.
Availability and Pricing of Funding from Investors Regardless of market conditions, the availability and pricing of funding from investors is critical to our growth. We have diversified our investor network and will continue to seek to further diversify our investor base.
GAAP, and certain non-GAAP financial measures (see discussion and reconciliation herein titled “Reconciliation of Non-GAAP Financial Measures”), we consider Network Volume to be a key operating metric we use to evaluate our business.
GAAP, and certain non-GAAP financial measures (see discussion and reconciliation herein titled “Reconciliation of Non-GAAP Financial Measures”), we consider Network Volume to be a key operating metric we use to evaluate our business. The following table sets forth our Network Volume for the years ended December 31, 2025, 2024 and 2023.
In addition, Network Volume directly influences Fee Revenue Less Production Cost (FRLPC), a key non-GAAP measure we use to assess operational efficiency. We believe the growth in Network Volume highlights the scalability of our business, which, in turn, affects our operational leverage and profitability. Network Volume is primarily driven by our relationships with our Partners and SFR Partners.
In addition, Network Volume directly influences Fee Revenue Less Production Cost (FRLPC), a key non-GAAP measure we use to assess operational efficiency. While maintaining a focus on profitable growth, which may result in a different targeted volume mix, we believe the growth in Network Volume highlights the scalability of our business, which, in turn, affects our operational leverage and profitability.
The following table sets forth our Network Volume for the years ended December 31, 2024, 2023 and 2022. 70 Table of Contents Year Ended December 31, 2024 2023 2022 ($ in millions) Network Volume $ 9,705 $ 8,299 $ 7,307 Network Volume We believe the Network Volume metric to be a suitable proxy for our overall scale and reach, as we generate revenue primarily on the basis of Network Volume.
Year Ended December 31, 2025 2024 2023 ($ in millions) Network Volume $ 10,534 $ 9,705 $ 8,299 Network Volume We believe the Network Volume metric to be a helpful indicator for our overall scale and reach, as we generate revenue primarily on the basis of Network Volume.
During the year ended December 31, 2024 and 2023, we capitalized $23.0 million and $26.5 million of software development costs, respectively. Depreciation expense, including impairment charges, for capitalized software development costs was $26.5 million and $17.2 million for the year ended December 31, 2024 and 2023, respectively.
Amortization expense, including impairment charges, for capitalized software development costs was $23.9 million and $26.5 million for the year ended December 31, 2025 and 2024, respectively.
Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the section titled “Key Components of Statements of Operations” of this Annual Report and our consolidated financial statements and the related notes contained elsewhere in this Annual Report.
Recent Sales of Unregistered Securities None. Item 6. [Reserved] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with this Annual Report and our consolidated financial statements and the related notes contained elsewhere in this Annual Report.
Net Loss Attributable to Noncontrolling Interests Year Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Net loss attributable to noncontrolling interests $ (44,292) $ (68,301) $ 24,009 35 % Net loss attributable to noncontrolling interests in the year ended December 31, 2024 decreased by $24.0 million, or 35%, compared to the same period in 2023.
Net Loss Attributable to Noncontrolling Interests Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Net loss attributable to noncontrolling interests $ (10,019) $ (44,292) $ 34,273 77 % Net loss attributable to noncontrolling interests in the year ended December 31, 2025 decreased by $34.3 million, or 77%, compared to the same period in 2024.
Multiple funding channels are used to enable the purchase of network assets from our Partners, such as ABS, pass-through and forward flow transactions. Capital markets execution fees are earned when a pre-funded, Pagaya-sponsored ABS vehicle is sold by underwriters. Contract fees. Contract fees primarily include administration and management fees, and performance fees.
Capital markets execution fees are earned when a pre-funded, Pagaya-sponsored ABS vehicle is sold by underwriters, as well as upon the execution of forward flow transactions. Contract fees. Contract fees primarily include administration and management fees, and performance fees.
Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. We earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume.
Network AI fees can be further broken down into two fee streams: AI integration fees and capital markets execution fees. We earn AI integration fees for the creation and delivery of the assets that comprise our Network Volume. Multiple funding channels are used to enable the purchase of network assets from our Partners, such as ABS and forward flow arrangements.
As of December 31, 2024, we had 553 employees, compared to 712 on December 31, 2023. During the first and second quarters of 2024, we reduced our headcount by over 20% across our Israel and U.S. offices. This reduction in workforce enabled us to streamline our operations resulting in cost savings.
As of December 31, 2025, we had 518 employees (242 in the U.S and 276 in Israel), compared to 553 employees (286 in the U.S. and 267 in Israel) on December 31, 2024. During the first and second quarters of 2024, we reduced our headcount by over 20% across our Israel and U.S. offices.
We are eligible for certain tax benefits in Israel under the Law for the Encouragement of Capital Investments or the Investment Law at a reduced tax rate of 12%. Accordingly, as we generate taxable income in Israel, our effective tax rate is expected to be lower than the standard corporate tax rate for Israeli companies, which is 23%.
Accordingly, as we generate taxable income in Israel, our effective tax rate is expected to be lower than the standard corporate tax rate for Israeli companies, which is 23%.
Cash Flows The following table presents summarized consolidated cash flow information for the periods presented (in thousands): Year Ended December 31, 2024 2023 2022 Net cash provided by (used in) operating activities $ 66,520 $ 9,577 $ (40,000) Net cash used in investing activities $ (498,645) $ (412,693) $ (265,419) Net cash provided by financing activities $ 436,688 $ 289,096 $ 437,920 Operating Activities Our primary uses of cash in operating activities are for ordinary course of business, with the primary use related to employee and personnel-related expenses.
Cash Flows The following table presents summarized consolidated cash flow information for the periods presented (in thousands): 78 Table of Contents Year Ended December 31, 2025 2024 2023 Net cash provided by (used in) operating activities $ 238,620 $ 47,751 $ (21,659) Net cash used in investing activities $ (309,710) $ (479,876) $ (381,457) Net cash provided by financing activities $ 129,601 $ 436,688 $ 289,096 Operating Activities Our primary uses of cash in operating activities are for ordinary course of business, with the primary use related to employee and personnel-related expenses.
Technology, Data and Product Development Year Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Technology, data and product development $ 76,571 $ 74,383 $ 2,188 3 % Technology, data and product development costs in the year ended December 31, 2024 increased $2.2 million, or 3%, compared to the same period in 2023.
Technology, Data and Product Development 72 Table of Contents Year Ended December 31, 2025 2024 Change % Change (in thousands, except percentages) Technology, data and product development $ 75,213 $ 76,571 $ (1,358) (2) % Technology, data and product development costs for the year ended December 31, 2025 decreased $1.4 million, or 2%, compared to the same period in 2024.
Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $11.7 million from $76.8 million for the year ended December 31, 2023 to $88.5 million for the year ended December 31, 2024, reflecting $4.4 million contributions from Theorem Technology, Inc.
Contract fees, comprised of administration and management fees, performances fees, and servicing fees, increased by $41.6 million from $88.5 million for the year ended December 31, 2024 to $130.0 million for the year ended December 31, 2025.

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Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRisks Related to Technology, Intellectual Property and Data • Regulators may assert, and courts may conclude, that certain uses of AI technology leads to unintentional bias or discrimination. • Our proprietary AI technology relies in part on the use of our Partners’ borrower data and third-party data, and if we lose the ability to use such data, or if such data contains gaps or inaccuracies, our business could be adversely affected. • Cyberattacks, security breaches or similar events may compromise of our information technology systems, or those of third parties upon which we rely, or our data could adversely impact our brand and reputation and our business, operating results and financial condition. • Our Financing Vehicles rely on third-party service providers for a substantial portion of our business activities and for Financing Vehicles, and any disruption of service experienced by such third-party service providers or our failure to manage and maintain existing relationships or identify other high-quality, third-party service providers could harm our reputation, business, results of operations and growth prospects. 9 Table of Contents Risks Related to our Single Family Rental (“SFR”) Operations • If we fail to continuously innovate, improve and expand the technology we use in our SFR operations, including Darwin’s property management platform, our business, financial condition and results of operations could be negatively impacted. • The SFR market is highly competitive, and we may be unable to compete successfully against our existing and future competitors. • The success of our SFR operations depends on general economic conditions, the health of the U.S. real estate industry generally, and risks generally incident to the ownership and leasing of single-family rental real estate, and our SFR operations may be negatively impacted by economic and industry downturns, including seasonal and cyclical trends, and volatility in the single-family rental real estate lease market. • We are subject to payment-related and leasing fraud from tenants and an increase in or failure to deal effectively with fraud, fraudulent activities, fictitious transactions, or illegal transactions. • Our SFR Partners face significant competition in the leasing market for quality residents, which may limit the ability to lease our single-family homes on favorable terms. • Compliance with governmental laws, regulations, and covenants that are applicable to our SFR Partners’ properties or that may be passed in the future, including affordability covenants, permit, license, and zoning requirements, may adversely affect our ability to manage customer properties and could adversely affect our growth strategy.
Biggest changeRisks Related to Technology, Intellectual Property and Data • Regulators may assert, and courts may conclude, that certain uses of AI technology leads to unintentional bias or discrimination. • Our proprietary AI technology relies in part on the use of our Partners’ borrower data and third-party data, and if we lose the ability to use such data, or if such data contains gaps or inaccuracies, our business could be adversely affected. • Cyberattacks, security breaches or similar events may compromise of our information technology systems, or those of third parties upon which we rely, or our data could adversely impact our brand and reputation and our business, operating results and financial condition. 8 Table of Contents • Our Financing Vehicles rely on third-party service providers for a substantial portion of our business activities and for Financing Vehicles, and any disruption of service experienced by such third-party service providers or our failure to manage and maintain existing relationships or identify other high-quality, third-party service providers could harm our reputation, business, results of operations and growth prospects.
Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; 7 Table of Contents • the Servicemembers Civil Relief Act, which allows military members to suspend or postpone certain civil obligations, requires creditors to reduce the interest rate to 6% on loans to military members under certain circumstances, and imposes restrictions on enforcement of loans to servicemembers, so that military members can devote full attention to military duties; • the Military Lending Act, which requires those who lend to “covered borrowers,” including members of the military and their dependents, to only offer Military APRs (a specific measure of all-in-cost-of-credit) under 36%, prohibits arbitration clauses in loan agreements, and prohibits certain other loan agreement terms and lending practices in connection with loans to military servicemembers, among other requirements, and for which violations may result in penalties including voiding of a loan agreement; • the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require creditors and loan servicers to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • the Right to Financial Privacy Act and similar state laws enacted to provide the financial records of financial institution customers a reasonable amount of privacy from government scrutiny; • the Bank Secrecy Act and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • the regulations promulgated by OFAC under the U.S.
Bankruptcy Code, which limits the extent to which creditors may seek to enforce debts against parties who have filed for bankruptcy protection; • the Servicemembers Civil Relief Act, which allows military members to suspend or postpone certain civil obligations, requires creditors to reduce the interest rate to 6% on loans to military members under certain circumstances, and imposes restrictions on enforcement of loans to servicemembers, so that military members can devote full attention to military duties; 6 Table of Contents • the Military Lending Act, which requires those who lend to “covered borrowers,” including members of the military and their dependents, to only offer Military APRs (a specific measure of all-in-cost-of-credit) under 36%, prohibits arbitration clauses in loan agreements, and prohibits certain other loan agreement terms and lending practices in connection with loans to military servicemembers, among other requirements, and for which violations may result in penalties including voiding of a loan agreement; • the Electronic Fund Transfer Act and Regulation E promulgated thereunder, which provide guidelines and restrictions on the electronic transfer of funds from consumers’ bank accounts, including a prohibition on a creditor requiring a consumer to repay a credit agreement in preauthorized (recurring) electronic fund transfers and disclosure and authorization requirements in connection with such transfers; • the Electronic Signatures in Global and National Commerce Act and similar state laws, particularly the Uniform Electronic Transactions Act, which authorize the creation of legally binding and enforceable agreements utilizing electronic records and signatures and which require creditors and loan servicers to obtain a consumer’s consent to electronically receive disclosures required under federal and state laws and regulations; • the Right to Financial Privacy Act and similar state laws enacted to provide the financial records of financial institution customers a reasonable amount of privacy from government scrutiny; • the Bank Secrecy Act and the USA PATRIOT Act, which relate to compliance with anti-money laundering, borrower due diligence and record-keeping policies and procedures; • the regulations promulgated by OFAC under the U.S.
GAAP net losses, and we may not be able to achieve profitability in the future. • Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity. 8 Table of Contents • Our business, financial condition and results of operations could be adversely affected as a result of an unexpected failure of a vendor, bank or other third party service provider that presents concentration risks to us or our Partners. • We are heavily dependent on our AI technology.
GAAP net losses, and we may not be able to achieve profitability in the future. • Adverse developments affecting financial institutions, companies in the financial services industry or the financial services industry generally, such as actual events or concerns involving liquidity, defaults or non-performance, could adversely affect our operations and liquidity. • Our business, financial condition and results of operations could be adversely affected as a result of an unexpected failure of a vendor, bank or other third party service provider that presents concentration risks to us or our Partners. 7 Table of Contents • We are heavily dependent on our AI technology.
In particular, certain statutes, laws, regulations and rules to which we, our Partners, the Financing Vehicles or their service providers are subject to, and we facilitate compliance with, include, among others: • foreign, U.S. federal and state lending statutes and regulations that require certain parties, including our Partners, to hold licenses or other government approvals or filings in connection with specified activities, and impose requirements related to marketing and advertising, transaction disclosures and terms, fees and interest rates, usury, credit discrimination, credit reporting, service member relief, debt collection, repossession, unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, conduct in connection with data breaches and money transmission; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act, and similar state and municipal fair lending laws; • foreign, U.S. federal and state securities laws, including, among others, the Securities Act, the Exchange Act, the Investment Advisers Act, and the Investment Company Act rules and regulations adopted under those laws, and similar foreign and state laws and regulations, which govern securities law, advisory services, Financing Vehicles or how we purchase consumer credit assets, the Israeli Joint Investment Law, the Israeli Securities Law and loan product regulations; • foreign, U.S. federal and state laws and regulations addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection and processing of certain types of data, including, among others, FCRA, GLBA, Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, CAN-SPAM, Canada’s Anti-Spam Law, TCPA, FTC Act, CCPA and GDPR; • the Fair Credit Reporting Act and Regulation V promulgated thereunder, which impose certain obligations on users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining or using consumer reports, taking adverse action on the basis of information from consumer reports, the accuracy and integrity of furnished information, addressing risks of identity theft and fraud and protecting the privacy and security of consumer reports and consumer report information and other related data use law and regulations; • the Gramm-Leach-Bliley Act and Regulation P promulgated thereunder, which include limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances require financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and require financial institutions to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other privacy laws and regulations; • the U.S. credit risk retention rules promulgated under the Dodd-Frank Act, which require a securitizer of securitization vehicles to retain an economic interest in the credit risk of the assets collateralizing the securitization vehicles, or similar foreign rules (including in the EU); • the Truth in Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their consumer credit obligations, require creditors to comply with certain practice restrictions, limit the ability of a creditor to impose certain terms, impose disclosure requirements in connection with credit applications and solicitations and impose disclosure requirements in connection with credit advertising; • Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive, unconscionable, unlawful or abusive acts or practices; • the Credit Practices Rule, which (i) prohibits creditors from using certain contract provisions that the Federal Trade Commission has found to be unfair to consumers; (ii) requires creditors to advise consumers who co-sign obligations about their potential liability if the primary obligor fails to pay; and (iii) prohibits certain late charges; • the FDIC, OCC and other regulatory guidance related to model risk management and management of vendors and other bank specific requirements pursuant to the terms of service agreements with banks and the examination and enforcement authority of the FDIC under the Bank Service Company Act; • U.S. federal and state regulation and licensing requirements related to the auto insurance and finance industries, including related to being a manager general agent; • the U.S.
In addition, we and our Partners, vendors, and other service providers must comply with laws and regulatory regimes that apply to us directly and our Partners, vendors, and other service providers indirectly, including through certain of our products and services, and in areas such as consumer finance and lending, investment advisory and securities law, and data protection, use and cybersecurity, and through our relationships with our Partners, the Financing Vehicles, and asset investors. 5 Table of Contents In particular, certain statutes, laws, regulations and rules to which we, our Partners, the Financing Vehicles or their service providers are subject to, and we facilitate compliance with, include, among others: • foreign, U.S. federal and state lending statutes and regulations that require certain parties, including our Partners, to hold licenses or other government approvals or filings in connection with specified activities, and impose requirements related to marketing and advertising, transaction disclosures and terms, fees and interest rates, usury, credit discrimination, credit reporting, service member relief, debt collection, repossession, unfair or deceptive business practices and consumer protection, as well as other state laws relating to privacy, information security, conduct in connection with data breaches and money transmission; • the Equal Credit Opportunity Act and Regulation B promulgated thereunder, which prohibit creditors from discouraging or discriminating against credit applicants on the basis of race, color, sex, age, religion, national origin, marital status, the fact that all or part of the applicant’s income derives from any public assistance program or the fact that the applicant has in good faith exercised any right under the federal Consumer Credit Protection Act, and similar state and municipal fair lending laws; • foreign, U.S. federal and state securities laws, including, among others, the Securities Act, the Exchange Act, the Investment Advisers Act, and the Investment Company Act rules and regulations adopted under those laws, and similar foreign and state laws and regulations, which govern securities law, advisory services, Financing Vehicles or how we purchase consumer credit assets, the Israeli Joint Investment Law, the Israeli Securities Law and loan product regulations; • foreign, U.S. federal and state laws and regulations addressing privacy, cybersecurity, data protection, and the receipt, storing, sharing, use, transfer, disclosure, protection and processing of certain types of data, including, among others, FCRA, GLBA, Children’s Online Privacy Protection Act, Personal Information Protection and Electronic Documents Act, CAN-SPAM, Canada’s Anti-Spam Law, TCPA, FTC Act, CCPA and GDPR; • the Fair Credit Reporting Act and Regulation V promulgated thereunder, which impose certain obligations on users of consumer reports and those that furnish information to consumer reporting agencies, including obligations relating to obtaining or using consumer reports, taking adverse action on the basis of information from consumer reports, the accuracy and integrity of furnished information, addressing risks of identity theft and fraud and protecting the privacy and security of consumer reports and consumer report information and other related data use law and regulations; • the Gramm-Leach-Bliley Act and Regulation P promulgated thereunder, which include limitations on financial institutions’ disclosure of nonpublic personal information about a consumer to nonaffiliated third parties, in certain circumstances require financial institutions to limit the use and further disclosure of nonpublic personal information by nonaffiliated third parties to whom they disclose such information and require financial institutions to disclose certain privacy notices and practices with respect to information sharing with affiliated and unaffiliated entities as well as to safeguard personal borrower information, and other privacy laws and regulations; • the U.S. credit risk retention rules promulgated under the Dodd-Frank Act, which require a securitizer of securitization vehicles to retain an economic interest in the credit risk of the assets collateralizing the securitization vehicles, or similar foreign rules (including in the EU); • the Truth in Lending Act and Regulation Z promulgated thereunder, and similar state laws, which require certain disclosures to borrowers regarding the terms and conditions of their consumer credit obligations, require creditors to comply with certain practice restrictions, limit the ability of a creditor to impose certain terms, impose disclosure requirements in connection with credit applications and solicitations and impose disclosure requirements in connection with credit advertising; • Section 5 of the Federal Trade Commission Act, which prohibits unfair and deceptive acts or practices in or affecting commerce, and Section 1031 of the Dodd-Frank Act, which prohibits unfair, deceptive or abusive acts or practices in connection with any consumer financial product or service, and analogous state laws prohibiting unfair, deceptive, unconscionable, unlawful or abusive acts or practices; • the Credit Practices Rule, which (i) prohibits creditors from using certain contract provisions that the Federal Trade Commission has found to be unfair to consumers; (ii) requires creditors to advise consumers who co-sign obligations about their potential liability if the primary obligor fails to pay; and (iii) prohibits certain late charges; • the FDIC, OCC and other regulatory guidance related to model risk management and management of vendors and other bank specific requirements pursuant to the terms of service agreements with banks and the examination and enforcement authority of the FDIC under the Bank Service Company Act; • U.S. federal and state regulation and licensing requirements related to the auto insurance and finance industries, including related to being a manager general agent; • the U.S.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. 5 Table of Contents We are deeply committed to diversity, inclusion and belonging. Our core goals in this area include becoming an equitable employer of the future, creating an open and equitable consumer banking ecosystem and demonstrating social impact and community investment.
None of our employees are represented by a labor union or covered by a collective bargaining agreement. We are deeply committed to diversity, inclusion and belonging. Our core goals in this area include becoming an equitable employer of the future, creating an open and equitable consumer banking ecosystem and demonstrating social impact and community investment.
To achieve these goals, we cultivate diverse talent pipelines and partner with organizations committed to promoting racial equity and greater accessibility in the financial services ecosystem. Our Competition We compete with a variety of technology companies that seek to help financial services providers with the digital transformation of their businesses, particularly with respect to all-digital lending.
To achieve these goals, we cultivate diverse talent pipelines and partner with organizations committed to promoting racial equity and greater accessibility in the financial services ecosystem. 4 Table of Contents Our Competition We compete with a variety of technology companies that seek to help financial services providers with the digital transformation of their businesses, particularly with respect to all-digital lending.
For a more complete discussion of the material risks facing our business, see “Item 1A.—Risk Factors”: Risks Related to the Operations of Our Business • We are a rapidly growing company with a relatively limited operating history, which may result in increased risks, uncertainties, expenses and difficulties, and it may be difficult to evaluate our future prospects. • Our revenue and FRLPC growth rate and financial performance in recent periods may not be indicative of future performance and such growth may slow or reverse over time. • If we fail to effectively manage our growth, our business, financial condition, and results of operations could be adversely affected. • We have incurred U.S.
For a more complete discussion of the material risks facing our business, see “Item 1A.—Risk Factors”: Risks Related to the Operations of Our Business • We are a rapidly growing company, which may result in increased risks, uncertainties, expenses and difficulties, and it may be difficult to evaluate our future prospects. • Our revenue and FRLPC growth rate and financial performance in recent periods may not be indicative of future performance and such growth may slow or reverse over time. • If we fail to effectively manage our growth, our business, financial condition, and results of operations could be adversely affected. • We have incurred U.S.
Lenders’ Investments May Favor Brand and User Experience Over Evolving Credit Underwriting and Automation While financial services providers invest in the development and growth of their businesses, there are a number of competing priorities for the use of these investment dollars. Financial services providers are typically consumer-facing businesses.
Lenders’ Investments May Favor Brand and User Experience Over Evolving Credit Underwriting and Automation 3 Table of Contents While financial services providers invest in the development and growth of their businesses, there are a number of competing priorities for the use of these investment dollars. Financial services providers are typically consumer-facing businesses.
Our team-oriented approach, entrepreneurial culture and overall growth trajectory, together with our competitive compensation and benefits, enable us to successfully retain our employees and to effectively recruit new talent aligned with our vision. As of December 31, 2024, we had a total of 553 “Pagayans,” or team members across the globe.
Our team-oriented approach, entrepreneurial culture and overall growth trajectory, together with our competitive compensation and benefits, enable us to successfully retain our employees and to effectively recruit new talent aligned with our vision. As of December 31, 2025, we had a total of 518 “Pagayans,” or team members across the globe.
As of December 31, 2024, our intellectual property portfolio included 11 registered and pending trademarks and one patent pending. We are also a party to various license agreements with third parties that typically grant us the right to use certain third-party technology in conjunction with our proprietary technology.
As of December 31, 2025, our intellectual property portfolio included 10 registered and pending trademarks and one patent pending. We are also a party to various license agreements with third parties that typically grant us the right to use certain third-party technology in conjunction with our proprietary technology.
Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations—Revenue ” included elsewhere in this Annual Report. For geographical revenue, see Note 19 to our consolidated financial statements included elsewhere in this Annual Report.
Item 7.—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Components of Results of Operations—Revenue. ” For geographical revenue, see Note 19 to our consolidated financial statements included elsewhere in this Annual Report. Industry Overview Siloed Data and Technology Infrastructure Hinder Financial Services Providers We believe that legacy systems create inefficient outcomes for financial services providers and their customers.
Risks Related to Our Legal and Regulatory Environment • Litigation, regulatory actions, consumer complaints and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses. • If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements, our activities may be restricted, and our ability to conduct business could be materially adversely affected. • If obligations by one or more Partners that benefit from our network were subject to successful challenge that the Partner was not the “true lender,” such obligations may be unenforceable, subject to rescission or otherwise impaired, we or other program participants may be subject to penalties, and/or our commercial relationships may suffer, each of which would adversely affect our business, financial condition and results of operations. • The CFPB has at times taken expansive views of its authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new government agency could adversely affect our business, financial condition and results of operations.
Risks Related to our Single Family Rental (“SFR”) Operations • If we fail to continuously innovate, improve and expand the technology we use in our SFR operations, including Darwin’s property management platform, our business, financial condition and results of operations could be negatively impacted. • The SFR market is highly competitive, and we may be unable to compete successfully against our existing and future competitors. • The success of our SFR operations depends on general economic conditions, the health of the U.S. real estate industry generally, and risks generally incident to the ownership and leasing of single-family rental real estate, and our SFR operations may be negatively impacted by economic and industry downturns, including seasonal and cyclical trends, and volatility in the single-family rental real estate lease market. • We are subject to payment-related and leasing fraud from tenants and an increase in or failure to deal effectively with fraud, fraudulent activities, fictitious transactions, or illegal transactions. • Our SFR Partners face significant competition in the leasing market for quality residents, which may limit the ability to lease our single-family homes on favorable terms. • Compliance with governmental laws, regulations, and covenants that are applicable to our SFR Partners’ properties or that may be passed in the future, including affordability covenants, permit, license, and zoning requirements, may adversely affect our ability to manage customer properties and could adversely affect our growth strategy.Risks Related to Our Legal and Regulatory Environment • Litigation, regulatory actions, consumer complaints and compliance issues could subject us to significant fines, penalties, judgments, remediation costs and/or requirements resulting in increased expenses. • If we are deemed to be an investment company under the Investment Company Act, we may be required to institute burdensome compliance requirements, our activities may be restricted, and our ability to conduct business could be materially adversely affected. • If obligations by one or more Partners that benefit from our network were subject to successful challenge that the Partner was not the “true lender,” such obligations may be unenforceable, subject to rescission or otherwise impaired, we or other program participants may be subject to penalties, and/or our commercial relationships may suffer, each of which would adversely affect our business, financial condition and results of operations. • The CFPB has at times taken expansive views of its authority to regulate consumer financial services, creating uncertainty as to how the agency’s actions or the actions of any other new government agency could adversely affect our business, financial condition and results of operations.
We may not be able to realize the potential benefits of any such future business investments or acquisitions, and we may not be able to successfully integrate an acquisition, which could hurt our ability to grow our business.
We may not be able to realize the potential benefits of any such future business investments or acquisitions, and we may not be able to successfully integrate an acquisition, which could hurt our ability to grow our business. • A disruption or failure in services provided by third parties could materially and adversely affect our business. • We are exposed to risks relating to our incorporation and location in Israel. • We could be adversely affected by the soundness of other financial institutions.
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Industry Overview Siloed Data and Technology Infrastructure Hinder Financial Services Providers We believe that legacy systems create inefficient outcomes for financial services providers and their customers.
Added
Our Growth Strategies Accelerate Product-Led Growth Our strategy for the next phase of our development is centered on product-led growth. We are focused on perfecting and expanding our suite of solutions—such as Direct Marketing Engine, Affiliate Optimizer, and FastPass—to solve fundamental challenges for lenders.
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Our Product Focus 4 Table of Contents Building off our early success in the personal loan market, we made significant investments in technology and infrastructure over the last few years to expand our product to new markets, such as auto and point of sale.
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By productizing our capabilities into plug-and-play solutions, we aim to become a necessary utility for lenders across the U.S., allowing them to serve more customers with improved experiences. We believe this approach creates a compounding flywheel effect: solving specific partner needs strengthens our product ecosystem, and enhancing product effectiveness deepens every partner relationship in return.
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We expect that this diversification will continue in 2025 as we expand our product ecosystem to new lenders across markets. We believe that the continuous flow of real-time data through our network from our connectivity to more than 30 U.S. lending partners enables enhanced insights on changing economic, demographic and consumer behavioral trends across the United States.
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Deepen and Institutionalize Partner Relationships We are focused on expanding our relationships with existing Partners by transitioning them from single-product users to multi-product Partners. By cross-selling additional products and features—such as deploying Decline Monetization alongside Affiliate Optimizer—we enable Partners to capture volume at multiple stages of the lending lifecycle.
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We believe our access to this large and growing pool of data points enables our AI technology and data science to improve upon traditional credit metrics and rules-based underwriting approaches, which are based on a limited number of variables.
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Furthermore, we are actively working to institutionalize these relationships through long-term agreements that establish stability and commitments around flow size, quality, and controls, mitigating the impact of cyclical changes in credit appetite. Expand Our Network to New Enterprise Lenders We continue to onboard new, high-potential Partners across our core asset classes of Personal Loans, Auto, and Point-of-Sale (POS).
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We believe we benefit, as is typically characteristic of AI and machine learning, from a flywheel effect: incremental training data points—from new applications, new Partners and asset classes—enable enhanced intelligence, which can drive better results for our Partners and investors, which can lead to increased application volume from existing Partners as well from the addition of new Partners as we strengthen our value proposition.
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Our onboarding pipeline includes leading banks and fintechs looking to support and scale existing businesses or launch new asset classes. We leverage pre-built integrations for our full suite of products to accelerate the scaling process for new Partners, validating our product-market fit and value proposition.
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Our AI technology is designed to identify attractive risk-reward opportunities for investors in our Financing Vehicles, by pricing risk more efficiently than traditional methods. The Pagaya network is designed to offer streamlined integration with Partners, via modern APIs. Once connected, our network provides an automated solution for transactions, whereby Partners’ customer applications are processed with minimal latency.
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Drive Capital Efficiency and Sustainable Profitability We remain committed to building a through-the-cycle business capable of withstanding fluctuations in the macroeconomic environment. This involves maintaining disciplined underwriting while diversifying our funding sources to include asset-backed securitizations (ABS), forward flow agreements, and strategic private placements.
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We believe that the growth in our Network Volume demonstrates our ability to scale quickly, as our network generated approximately $9.7 billion in Network Volume in the year ending December 31, 2024, as compared to approximately $1.6 billion in Network Volume in the year ended December 31, 2020.
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We intend to continue optimizing our capital structure and improving unit economics to support long-term, profitable growth. Our Team Our people are a key reason for our success and are essential for our continued growth.
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Our Growth Strategies Expand our product to new, enterprise-level lenders In 2024, we further expanded our network by onboarding several new partners, including OneMain Financial, a leading consumer finance company, and Avvance, the point-of-sale leading solution offered by US Bank and Elavon, strengthening our presence in auto, personal loan and point-of-sale products.
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We believe that the addition of each enterprise-level lender could represent an opportunity to connect to millions of new consumers and expand across multiple products and markets. Our existing partner growth and new partner pipeline remain robust, with leading institutions across all asset classes.
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We continue to make significant progress in monetizing existing partnerships, adding new products to long-standing relationships, and ramping those that are newer to our network.
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Deepen Existing Partnerships and enhance network monetization Higher customer conversion from our flagship product has unlocked opportunities to help our lending partners further monetize their customer relationships, enhance customer lifetime value and remain their customers’ lender of choice. This creates new monetization opportunities for Pagaya.
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As we continue to demonstrate our value-add, we will work closely with newer partners to elevate existing economic arrangements to the levels we have with our more mature partners.
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The growth in our Fee Revenue Less Production Costs (FRLPC) continues to be driven by fees from our lending partners, which comprised 69% of total FRLPC in 2024 as compared to 57% in 2023.
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Build out the roadmap to expand our product ecosystem Our recent integrations with large U.S. lenders are deepening our understanding of how these institutions can leverage technology to elevate their customer relationships. We are actively developing new products, such as pre-screen online programs, that allow our partners to reward their existing customers with additional credit opportunities.
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We believe the continued development of our product roadmap can improve partner economics and diversify our revenue streams over time.
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Drive capital efficiency and profitable growth We expect to execute a financial strategy that will focus on network monetization, disciplined cost management and an efficient funding and capital allocation plan to optimize net cash flows as we fund new network volume. Our Team Our people are a key reason for our success and are essential for our continued growth.
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In addition, we and our Partners, vendors, and other service providers must comply with laws and regulatory regimes that apply to us directly and our Partners, vendors, and other service 6 Table of Contents providers indirectly, including through certain of our products and services, and in areas such as consumer finance and lending, investment advisory and securities law, and data protection, use and cybersecurity, and through our relationships with our Partners, the Financing Vehicles, and asset investors.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeWe are also exposed to credit risk in the event of non-performance by the financial institutions holding our cash or providing access to our credit line. We maintain our cash deposits in highly-rated financial institutions. In the United States, the majority of our cash deposits are held at federally insured accounts.
Biggest changeWe maintain our cash deposits in highly-rated financial institutions. In the United States, the majority of our cash deposits are held at federally insured accounts. We manage this risk by maintaining our cash deposits at well-established, well-capitalized financial institutions and diversifying our counterparties.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in market prices. Our market risk exposure primarily relates to fluctuations in credit risk.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in market prices. Our market risk exposure primarily relates to fluctuations in credit 83 Table of Contents risk.
For future securitization issuances, higher interest rates could effect overall deal economics as well as the returns we would generate on our related risk retention investments. 84 Table of Contents Foreign Exchange Risk Foreign currency exchange rates do not pose a material market risk exposure.
For future securitization issuances, higher interest rates could effect overall deal economics as well as the returns we would generate on our related risk retention investments. Foreign Exchange Risk Foreign currency exchange rates do not pose a material market risk exposure.
Additionally, we maintain certain financing sources with varying degrees of interest rate sensitivities, including floating-rate interest payments on Pagaya’s credit facilities. Accordingly, trends in the prevailing interest rate environment can influence interest expense/payments and harm the results of our operations.
This would also impact future loans and securitizations. Additionally, we maintain certain financing sources with varying degrees of interest rate sensitivities, including floating-rate interest payments on Pagaya’s credit facilities. Accordingly, trends in the prevailing interest rate environment can influence interest expense/payments and harm the results of our operations.
As of December 31, 2024 and 2023, we were exposed to credit risk on $764 million and $717 million, respectively, of investments in loans and securities held on our consolidated balance sheet, with $659 million and $618 million, respectively, representing net exposure exclusive of non-controlling interests.
As of December 31, 2025 and 2024, we were exposed to credit risk on $945 million and $764 million, respectively, of investments in loans and securities held on our consolidated balance sheets, with $871 million and $659 million, respectively, representing net exposure exclusive of non-controlling interests.
Higher interest rates could negatively impact collections on the underlying loans, leading to increased delinquencies, defaults, and our borrower bankruptcies, all of which could have a substantial adverse effect on our business. This would also impact future loans and securitizations.
Interest Rate Risk The interest rates charged on the loans originated by Partners are subject to change by the platform sellers, originators, and/or servicers. Higher interest rates could negatively impact collections on the underlying loans, leading to increased delinquencies, defaults, and our borrower bankruptcies, all of which could have a substantial adverse effect on our business.
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We manage this risk by maintaining our cash deposits at well-established, well-capitalized financial institutions and diversifying our counterparties. Interest Rate Risk The interest rates charged on the loans originated by Partners are subject to change by the platform sellers, originators, and/or servicers.
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The following table summarizes the potential effect that changes in estimates would have on the fair value of our investments in loans and securities as of December 31, 2025 given a hypothetical change in significant unobservable inputs (in millions): Change in Fair Value Basis point change scenario December 31, 2025 Credit loss rate increase of 100 basis point $ (112.8) Credit loss rate decrease of 100 basis point $ 131.3 These scenarios illustrate a hypothetical, instantaneous shift in the value of our investments in loans and securities and do not represent management's performance expectations.
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As of December 31, 2025, our portfolio is comprised of 43% notes and 56% certificates. Of the current portfolio, 42% was originated in 2025, 39% in 2024 and 19% in 2023 and prior. We would normally expect more seasoned vintages and more senior investments to be less impacted by changes in credit loss rates.
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To manage this risk, management integrates these sensitivities into our continuous portfolio monitoring and stress-testing framework, ensuring our operations and capital structure remains resilient to such fluctuations. We are also exposed to credit risk in the event of non-performance by the financial institutions holding our cash or providing access to our credit line.
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Discount Rate Risk The discount rate risk refers to the risk of loss of future earnings, values or future cash flows that may results from change in market discount rates.
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The fair values of loans, securitization notes, and residual certificates are estimated based on a discounted cash flow model, where the discount rate represents an estimate of the required rate of return by market participants.
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The changes in the discount rates reflect the expected returns of similar financial instruments available in the market and can be caused by changes in the interest rates.
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The following table summarizes the potential effect that changes in estimates would have on the fair value of our investments in loans and securities as of December 31, 2025 given a hypothetical change in significant unobservable inputs (in millions): Change in Fair Value Basis point change scenario December 31, 2025 Discount rate increase of 100 basis point $ (7.2) Discount rate decrease of 100 basis point $ 5.2 84 Table of Contents These scenarios illustrate potential market shifts rather than internal forecasts.
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While changes in market discount rates—reflecting the required rate of return for market participants—can influence the estimated fair value of our loans and securitization notes and certificates, management incorporates these hypothetical fluctuations into our proactive capital allocation and deal execution strategies. This modeling ensures we maintain operational stability and consistent access to funding across varying market conditions.