pagaya.com<\/a>.<\/p>\nCautionary Note About Forward-Looking Statements
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<\/b>This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. These forward-looking statements generally are identified by the words \u201canticipate,\u201d \u201cbelieve,\u201d \u201ccontinue,\u201d \u201ccan,\u201d \u201ccould,\u201d \u201cestimate,\u201d \u201cexpect,\u201d \u201cintend,\u201d \u201cmay,\u201d \u201copportunity,\u201d \u201cfuture,\u201d \u201cstrategy,\u201d \u201cmight,\u201d \u201coutlook,\u201d \u201cplan,\u201d \u201cpossible,\u201d \u201cpotential,\u201d \u201cpredict,\u201d \u201cproject,\u201d \u201cshould,\u201d \u201cstrive,\u201d \u201cwill,\u201d \u201cwould,\u201d \u201cwill be,\u201d \u201cwill continue,\u201d \u201cwill likely result,\u201d and similar expressions. All statements other than statements of historical fact are forward-looking statements, including statements regarding: The Company\u2019s strategy and future operations, including the Company\u2019s ability to continue to deliver consistent results for its lending partners and investors; the Company\u2019s ability to continue to drive sustainable gains in profitability; the Company\u2019s ability to achieve continued momentum in its business; the Company\u2019s ability to maintain positive net cash flow; and the Company\u2019s financial outlook for Network Volume, Total Revenue and Other Income, Net Income and Adjusted EBITDA for the fourth quarter and full year 2025. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Risks, uncertainties and assumptions include factors relating to: the Company’s ability to attract new partners and to retain and grow its relationships with existing partners to support the underlying investment needs for its securitizations and funds products; the need to maintain a consistently high level of trust in its brand; the concentration of a large percentage of its investment revenue with a small number of partners and platforms; its ability to sustain its revenue growth rate or the growth rate of its related key operating metrics; its ability to improve, operate and implement its technology, its existing funding arrangements for the Company and its affiliates that may not be renewed or replaced or its existing funding sources that may be unwilling or unable to provide funding to it on terms acceptable to it, or at all; the performance of loans facilitated through its model; changes in market interest rates; its securitizations, warehouse credit facility agreements; the impact on its business of general economic conditions, including, but not limited to rising interest rates, inflation, supply chain disruptions, exchange rate fluctuations and labor shortages; the effect of and uncertainties related to public health crises such as the COVID-19 pandemic (including any government responses thereto); geopolitical conflicts such as the war in Israel; its ability to realize the potential benefits of past or future acquisitions; anticipated benefits and savings from our recently announced reduction in workforce; changes in the political, legal and regulatory framework for AI technology, machine learning, financial institutions and consumer protection; the ability to maintain the listing of our securities on Nasdaq; the financial performance of its partners, and fluctuations in the U.S. consumer credit and housing market; its ability to grow effectively through strategic alliances; seasonal fluctuations in our revenue as a result of consumer spending and saving patterns; pending and future litigation, regulatory actions and\/or compliance issues including with respect to the merger with EJF Acquisition Corp.; and other risks that are described in the Company\u2019s Form 10-K filed on March 12, 2025 and subsequent filings with the U.S. Securities and Exchange Commission. These forward-looking statements reflect the Company’s views with respect to future events as of the date hereof and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, investors should not place undue reliance on these forward-looking statements. The forward-looking statements are made as of the date hereof, reflect the Company\u2019s current beliefs and are based on information currently available as of the date they are made, and the Company assumes no obligation and does not intend to update these forward-looking statements.<\/p>\n
Financial Information; Non-GAAP Financial Measures
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<\/b>Some of the unaudited financial information and data contained in this press release and Form 8-K, such as Fee Revenue Less Production Costs (\u201cFRLPC\u201d), Adjusted EBITDA and Adjusted Net Income, have not been prepared in accordance with United States generally accepted accounting principles (\u201cU.S. GAAP\u201d). To supplement the unaudited consolidated financial statements prepared and presented in accordance with U.S. GAAP, management uses the non-GAAP financial measures FRLPC, Adjusted Net Income 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. Management believes these non-GAAP measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods. However, non-GAAP financial measures have limitations in their usefulness to investors because they have no standardized meaning prescribed by U.S. GAAP and are not prepared under any comprehensive set of accounting rules or principles. In addition, non-GAAP financial measures may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies. As a result, non-GAAP financial measures should be viewed as supplementing, and not as an alternative or substitute for, our unaudited consolidated financial statements prepared and presented in accordance with U.S. GAAP. To address these limitations, management provides a reconciliation of Adjusted Net Income and Adjusted EBITDA to net income (loss) attributable to Pagaya\u2019s shareholders and FRLPC to operating income. Management encourages investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Adjusted Net Income and Adjusted EBITDA in conjunction with its respective related GAAP financial measures.<\/p>\n
\nNon-GAAP financial measures include the following items:<\/p>\n
\nFee Revenue Less Production Costs (\u201cFRLPC\u201d) is defined as revenue from fees less production costs.<\/p>\n
\nAdjusted Net Income (Loss) is defined as net income (loss) attributable to Pagaya Technologies Ltd.\u2019s 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.<\/p>\n
\nAdjusted EBITDA is defined as net income (loss) attributable to Pagaya Technologies Ltd.\u2019s 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 expense, and income tax expense (benefit).<\/p>\n
\nThese 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.<\/p>\n
\nWe 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. Moreover, we have included FRLPC, Adjusted Net Income (Loss) and Adjusted EBITDA 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. 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 tables below provide reconciliations of this non-GAAP financial information to its most directly comparable U.S. GAAP metric.<\/p>\n
\nIn addition, Pagaya provides an outlook for the fourth quarter of 2025 and the fiscal year 2025 on a non-GAAP basis. The Company cannot reconcile its expected Adjusted EBITDA to expected Net Income Attributable to Pagaya under \u201cFull-Year 2025 Financial Outlook\u201d without unreasonable effort because certain items that impact net income (loss) and other reconciling items are out of the Company’s control and\/or cannot be reasonably predicted at this time, which unavailable information could have a significant impact on the Company\u2019s U.S. GAAP financial results.<\/p>\n
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