Fifth Consecutive Quarter of GAAP Profitability
GAAP net income of $25 million for 1Q26 (fifth straight profitable quarter), up $17 million YoY; GAAP net income margin improved to 8% from 3% in 1Q25.
Pagaya Technologies Ltd
· PGY
May 7th, 2026
Summary
- Earnings Call Date:
- 2026-05-07
- Change Since:
- -1.94%
- Next Earnings Date:
- 2026-08-06
Earnings Call Sentiment
PositiveThe call conveyed a largely positive operational and financial momentum: sustained GAAP profitability (fifth consecutive quarter), double-digit revenue growth, improved margins and strong adjusted EBITDA, record auto performance, successful capital raises and important capital‑market milestones (Fitch AAA, first auto securitization, resecuritizations providing recycleable capital), and an active partner onboarding pipeline. The company is managing market volatility prudently by diversifying funding across ABS and other channels and maintaining disciplined underwriting. Notable negatives include a $38M investment loss, downward fair‑value adjustments, FRLPC margin compression driven by higher cost of capital, ongoing private credit market repricing risk, and intentionally tighter underwriting that keeps application-to-volume conversion below 1%. Overall, the positive operational and capital‑markets achievements and upgraded guidance outweigh the financial and market headwinds discussed.
Company Guidance
After reporting Q1 revenue of $318M, FRLPC of $121M, adjusted EBITDA of $94M and GAAP net income of $25M, Pagaya guided Q2 2026 network volume of $2.875B–$3.075B, total revenue & other income of $345M–$365M, adjusted EBITDA of $100M–$115M and GAAP net income of $25M–$45M; for full-year 2026 it expects network volume of $11.45B–$13.0B (raising the lower bound by ~$200M), total revenue of $1.4B–$1.575B, adjusted EBITDA of $420M–$460M, GAAP net income of $110M–$160M, assumes FRLPC margin of ~4%–5% for the year and that the cost of capital remains elevated at current levels.
Top-Line Growth and Strong Profitability Metrics
Total revenue of $318 million, up 10% year-over-year; fee revenue $299 million, up 6% YoY; fee revenue less production costs (FRLPC) $121 million, up 5% YoY; adjusted EBITDA $94 million (margin 29.6%), up $15 million YoY and +200 basis points in margin versus prior year; operating income $80 million, up 68% YoY.
Network Volume Expansion
Network volume of $2.6 billion, up 9% YoY and up 23% YoY excluding SFR (Darwin Homes). Company raised full-year network volume guidance (FY26 range increased to $11.45B–$13.0B, with the lower end up ~$200M).
Material Funding and Capital‑Markets Milestones
Raised approximately $2.1 billion of funding this quarter via four ABS transactions; attracted five new investors into deals; expanded investor base and completed first-ever auto resecuritization; added Fitch as a major rating agency (first Fitch AAA on personal loan resecuritization shelf); marketed deals to a network of >160 institutional funding partners.
Resecuritization and Capital Recycling Benefits
Resecuritizations returned capital and enhanced flexibility — company reported ~$44 million of net cash flows generated from these transactions over the last 12 months and successfully refinanced ~$800 million of seasoned collateral via resecuritizations.
Auto Business Surge
Auto reached a record performance with an annualized run rate of $2.3 billion (roughly double the level from 1Q25); improved ABS execution, dealer-level transaction optimization, and better recoveries cited as drivers of strong auto profitability.
Partner and Product Expansion Momentum
Onboarded four new partners (GLS, Upstart, Sezzle, Flex Pay) this quarter; personal loans remain 63% of production; added Experian Activate to broaden marketplace distribution; completed 12 prescreen campaigns across five partners; management reports pipeline of regional banks and multiple onboarding opportunities.
Raised Full-Year Financial Guidance
Management increased FY26 guidance for adjusted EBITDA to $420M–$460M and GAAP net income to $110M–$160M; Q2 guidance provided: network volume $2.875B–$3.075B, total revenue $345M–$365M, adjusted EBITDA $100M–$115M, GAAP net income $25M–$45M.
Operating Efficiency and Leverage
Core operating expenses were well controlled (flat sequentially; modestly higher YoY) and represented 39% of FRLPC; management emphasized strong operating leverage with most revenue growth translating into adjusted EBITDA in dollar terms.
Operator
Hello, and welcome, everyone, joining today's Pagaya First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this call is being recorded, and we are standing by. It is now my pleasure to turn the meeting over to Craig Smyth, Investor Relations. Please go ahead.
Craig Smyth
Thank you, and welcome to Pagaya's First Quarter 2026 Earnings Conference Call. Joining me today to talk about our business and results are Gal Krubiner, Chief Executive Officer of Pagaya; Sanjiv Das, President; Evangelos Perros, Chief Financial Officer; and Jon Dobres, Chief Strategy Officer. You can find the materials that accompany our prepared remarks and a replay of today's webcast on the Investor Relations section of our website at investor.pagaya.com. Our remarks today will include forward-looking statements that are based on our current expectations and forecasts with respect to, among other things, our operations and financial performance, including our financial outlook for the second quarter and full year 2026. Our actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially from our expectations include, but are not limited to, those risks described in today's press release and our filings with the U.S. Securities and Exchange Commission. We undertake no obligation to update any forward-looking statements as a result of new information or future events.
Please refer to the documents we file from time to time with the SEC, including our 10-K, 10-Q and other reports for a more detailed discussion ...
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