Pagaya Technologies Q3 Earnings Call Highlights

Key Points

• Record profitability: Pagaya reported nearly $50 million in Q3 GAAP net income, up 121% year over year, as network volume rose 29% to $3.6 billion while operating expenses remained largely flat.
• Growth pipeline expanded: The company added Citizens Financial Group and FNBO as partners, bringing six onboardings over three quarters, while its partner pipeline grew more than 50% year over year. Application volume also increased 42% to $377 billion.
• Full-year outlook raised: Pagaya increased its 2026 guidance to $12.725 billion–$13.025 billion in network volume, $465 million–$485 million in adjusted EBITDA and $162 million–$182 million in GAAP net income, despite near-term pressure from higher funding costs.

Pagaya Technologies NASDAQ: PGY reported record third-quarter GAAP net income of nearly $50 million as network volume rose 29% year over year to $3.6 billion and the company maintained largely flat operating expenses.

Chief Executive Officer Gal Krubiner said the company’s cost discipline helped incremental growth flow to the bottom line. Chief Financial Officer Jon Dobres said core operating expenses were $45 million, down $2 million from a year earlier and essentially flat for seven consecutive quarters. Operating income increased 41% to $113 million, while adjusted EBITDA rose 22% to $130 million, representing a 33% margin.

GAAP net income increased 121% from the third quarter of 2025, producing a 13% net income margin compared with 6% a year earlier, Dobres said.

Higher rates pressured fee margins

The company said higher interest rates increased its cost of capital during the quarter, pressuring fee revenue less production costs, or FRLPC, as a percentage of network volume. FRLPC increased 5% year over year to $146 million but declined to 4.1% of network volume, at the low end of Pagaya’s 4% to 5% target range.

Dobres said the decline reflected the elevated two-year Treasury rate. In response, Pagaya raised annual percentage rates by 100 basis points for personal loans and 140 basis points for auto loans during September and October. Management expects FRLPC as a percentage of volume to begin rising toward the end of the fourth quarter and move closer to the midpoint of its target range in 2027.

Executives said they had not seen a material change in consumer activation rates or credit performance after the pricing changes. Krubiner said the company’s personal-loan borrowers had average annual income of about $120,000, while auto borrowers originated during the quarter had average annual income of about $88,000.

Credit performance remained in line with expectations across the company’s verticals, according to management. Dobres said recent KBRA surveillance reports upgraded 63 securitization tranches with no downgrades.

New bank partners and expanding pipeline

Pagaya added Citizens Financial Group as a personal-loan partner and FNBO as a home-improvement point-of-sale financing partner during the quarter. The additions brought the company to six new partner onboardings over the past three quarters, exceeding its annual target of two to four partners.

Krubiner said banks are increasingly turning to Pagaya to offer lending products without committing substantial balance-sheet capacity or undertaking lengthy technology development projects. He said Pagaya can help a bank bring a product to market in six to nine months, compared with an estimated two to three years for a bank to build such capabilities internally.

Management said Pagaya entered the fourth quarter with its largest partner pipeline to date. Krubiner said the pipeline grew more than 50% year over year and included larger financial institutions, including what he described as major and “mega” banks. Sanjiv Das, Pagaya’s president, said the company would maintain its guidance of adding two to four partners annually because the timing of partner decisions is not entirely within Pagaya’s control.

Das said newer partners can now access multiple Pagaya products through its application programming interface at launch, compared with a more gradual, one-product-at-a-time approach in the past. He also said the company typically takes about 12 months to prudently ramp conversion rates and volume from a newly activated partner.

Applications, auto growth and funding activity

Application volume increased 42% year over year to $377 billion, while conversion remained around 1%. Dobres said conversion declined slightly as the company onboarded new partners and product-driven volume, but management views application growth as a leading indicator of future originations.

Personal loans remained Pagaya’s largest asset class, while auto grew faster, Dobres said. Auto top-of-funnel application volume increased 40% from a year earlier. Das said the company’s Counter Offer and Dual Look products helped lending partners provide borrowers their full requested loan amount 70% of the time, based on Pagaya’s internal analysis.

The company also highlighted growth in its Affiliate Optimizer Engine, which added Experian and Credit Karma during the quarter. Das said partners using the platform have seen an average 60% increase in issued volume compared with the prior year. Pagaya has completed approximately 70 Direct Marketing Engine campaigns and remains on track to reach a $500 million annualized volume goal by year-end, he said.

On funding, Pagaya raised $3 billion through asset-backed securities during the quarter, including $1.8 billion in personal-loan securitizations and $1.2 billion in auto securitizations. It also announced more than $2 billion in committed capital over the next 24 months through a $700 million auto forward-flow agreement with Neuberger Berman, a $700 million variable funding note and an $850 million revolving personal-loan securitization.

Dobres said Pagaya’s investor network expanded to more than 180 unique investors. The company’s most recent personal-loan securitization saw spreads tighten by more than 20 basis points, he said.

Full-year outlook raised

Pagaya raised its full-year GAAP net-income outlook for the third time this year. The company now expects 2026 network volume of $12.725 billion to $13.025 billion, revenue and other income of $1.45 billion to $1.5 billion, adjusted EBITDA of $465 million to $485 million, and GAAP net income of $162 million to $182 million.

For the fourth quarter, management expects seasonally lower network volume than in the third quarter. Dobres noted that the period will be the first full quarter without Klarna, which contributed approximately $330 million of volume in the third quarter but was not material to FRLPC, EBITDA or profit. Excluding Klarna, Pagaya expects a seasonal volume decline of roughly 5% to 6%, compared with a 9% decline in the prior year.

About Pagaya Technologies (NASDAQ:PGY)

Pagaya Technologies Ltd. is a financial technology company that uses artificial intelligence and machine learning to help financial institutions expand access to credit and other financial products. Its technology platform analyzes large volumes of data to evaluate assets, identify investment opportunities and support lending decisions.

The company works with banks, lenders and other financial institutions, as well as institutional investors. Through its network-based platform, Pagaya helps partners originate loans and other assets while connecting those assets with institutional funding and capital markets solutions.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.