0001883085-26-000018
SEC filingPagaya achieved profitability in 2025 with net income of $81.4M, driven by 26% revenue growth and improved operating leverage.
Pagaya Technologies Ltd. describes itself as a product-focused technology company that deploys sophisticated data science and proprietary, AI-powered technology to enable better outcomes for financial institutions, their customers, and institutional investors. Since its incorporation in Israel in 2016, the company has built a network connecting financial institutions with investors to facilitate greater access to financial products for consumers. As of February 2024, Pagaya's corporate headquarters is in New York City, and the U.S. is where it conducts its business, generates the majority of its revenue, and where all of its Partners and SFR Partners are domiciled. The company also maintains an office in Tel-Aviv, Israel. Its network has processed more than $3.6 trillion in loan applications since inception across its consumer credit asset classes.
Pagaya does not explicitly break out reporting segments by revenue share in the Business section. However, it organizes its business into four asset classes: personal loans, auto loans, point-of-sale (POS) financing, and single-family rental (SFR). The personal loan segment began as the company's flagship decline monetization product, and has since expanded to auto loans, POS, and SFR. Each asset class is served by a suite of products tailored to the specific lending lifecycle stage, as detailed in the product ecosystem table.
Pagaya offers six named products: Decline Monetization, Dual Look, First Look, Affiliate Optimizer Engine, Direct Marketing Engine, and FastPass. Decline Monetization, the flagship product, allows partners to automatically send rejected loan applications for a "second look," increasing conversion rates without incremental risk. Dual Look enables concurrent evaluation of applications in real time, while First Look routes designated segments before the partner reviews them. Affiliate Optimizer Engine helps partners originate loans through third-party affiliates, and Direct Marketing Engine targets new customers via email and direct mail. FastPass accelerates the transaction process by removing verification friction for qualified borrowers. These products are deployed across personal loan, auto loan, and POS asset classes as indicated in the filing.
Pagaya integrates with its Partners via APIs, requiring limited upfront investment and minimal latency. The company acts as a comprehensive utility for lenders, helping them serve more customers through a diverse range of products. It raises capital from institutional investors through Financing Vehicles, which include funds, securitization vehicles, and special purpose vehicles. These investors range from large institutions like pension funds and sovereign wealth funds to high-net-worth individuals. A limited number of partners account for a substantial portion of network volume, though specific concentration percentages are not disclosed in the Business section.
Pagaya operates in a competitive landscape that includes technology companies aiding the digital transformation of lending, particularly in all-digital lending. It also competes with other "second-look" financing providers across its markets. In sourcing asset investors, Pagaya competes with asset originators utilizing capital markets, such as other fintech lenders and asset management firms. In its SFR business, it competes with companies that invest in single-family rental properties, real estate technology companies, traditional real estate management firms, and real estate brokerage firms and agents. Key competitive strengths cited include scalability, upfront funding model, vast dataset, real-time API processing, seamless customer experience, strong partner relationships (100% historical retention), deep institutional investor relationships, and a lean organization.
Pagaya's growth strategies, as outlined in the Business section, focus on four pillars: accelerating product-led growth by perfecting and expanding its suite of plug-and-play solutions; deepening and institutionalizing partner relationships by transitioning single-product partners to multi-product users and securing long-term agreements; expanding its network to new enterprise lenders across core asset classes; and driving capital efficiency and sustainable profitability through disciplined underwriting, diversified funding sources (ABS, forward flows, private placements), and optimizing capital structure.
As of December 31, 2025, Pagaya had 518 employees globally, referred to as "Pagayans." None of its employees are represented by a labor union or covered by a collective bargaining agreement. The company emphasizes its commitment to diversity, inclusion, and belonging, with goals to become an equitable employer, create an open consumer banking ecosystem, and demonstrate social impact. It cultivates diverse talent pipelines and partners with organizations promoting racial equity and accessibility in financial services.
Pagaya's total revenue and other income increased 26% to $1,301.4 million in 2025, compared to $1,032.2 million in 2024. Revenue from fees, the primary driver, grew 26% to $1,261.3 million, reflecting a $215.2 million increase in Network AI fees (driven by improved economics and 9% Network Volume growth to $10.5 billion) and a $41.6 million increase in contract fees (from higher asset values and performance fees). Interest income rose 50% to $48.4 million due to changes in asset portfolio composition, while investment loss widened to $8.4 million on impairment of proprietary investments.
Operating income surged to $263.8 million from $66.8 million, as total costs and operating expenses grew only 7% to $1,037.5 million. Production costs increased 25% to $749.2 million, in line with Network Volume growth. Notably, general and administrative expenses fell 34% to $159.6 million, driven by lower loss from loan purchases, reduced transaction costs, and decreased compensation. Technology costs declined 2%, while sales and marketing rose 6%.
Below the operating line, net losses on investments in loans and securities improved 74% to $107.0 million, benefiting from lower credit impairment losses ($95.4 million vs. $412.1 million) and fair value gains from ABS resecuritizations. Other expenses net decreased 4%, and a $24.8 million loss from extinguishment of debt (from repaying the term loan) was partially offset by gains from note repurchases. Income tax swung to a $19.7 million benefit from a $24.6 million expense, due to uncertain tax positions and new U.S. tax law. Net income attributable to Pagaya was $81.4 million, compared to a $401.4 million loss in 2024.
The MD&A does not break out revenue or profit by asset class or partner type. However, Network Volume composition spans personal loans, auto loans, residential real estate, and point-of-sale receivables. The 9% volume growth was supported by existing partner expansion and new partner onboarding, while asset class mix shifts influenced production costs and fee economics.
Management highlighted several strategic priorities: continued investment in AI technology and data network, diversification of funding sources (top 5 ABS investors contributed 46% in 2025 vs. 54% in 2024), and capital structure optimization via the $500 million 8.875% Senior Notes due 2030 and new revolving credit facility. Macroeconomic risks include inflation, elevated interest rates, and the Middle East conflict escalation, but no numerical guidance was provided. The company expects to fund operations through existing cash, operating cash flows, and secured borrowings, with no capital expenditure commitments.
No balance sheet highlights are explicitly stated in the Notes section provided. The notes discuss accounting policies for cash, restricted cash, and investments but do not disclose totals.
No purchase commitments or contractual obligations are disclosed in the available notes.
The notes do not provide details on buybacks, dividends, or debt changes. Capital expenditures are not discussed in the notes beyond accounting policy for software capitalization.
Note 2 explicitly states that the company operates as a single operating segment. Therefore, no segment or geographic breakdown is available. Revenue is generated from Network AI fees and contract fees, with Network AI fees comprising the majority.
Pagaya depends heavily on a small number of Fintech partners for the majority of its network volume and revenue. The loss of any key partner would severely impact financial results. Additionally, the company's ability to raise capital from asset investors through securitizations and forward flow agreements is vital. In 2025, the five largest asset investors accounted for 46% of ABS funding raised, down from 54% in 2024, indicating some diversification but continued concentration. Any disruption in funding availability could cripple loan acquisition volumes.
Pagaya's AI credit models have not been extensively tested during economic downturns. The company is expanding into new asset classes like single-family rentals (SFR) and point-of-sale, where model performance is unproven. Higher interest rates and inflation could increase borrower defaults, reducing investor returns and appetite for new financing vehicles. The risk is compounded by the unsecured nature of most personal loans, which are less likely to be repaid in a downturn.
The company faces heightened regulatory scrutiny from the CFPB and FTC regarding AI-driven underwriting. New laws like the EU AI Act and Colorado AI Act impose strict compliance requirements. The CFPB has signaled that discriminatory algorithmic outcomes may be treated as UDAAP violations. Failure to provide specific adverse action reasons or maintain unbiased models could lead to fines, model disgorgement, or operational restrictions.
Pagaya is incorporated and has significant operations in Israel. The ongoing conflict in the Middle East and proposed judicial reforms create uncertainty that could affect capital raising and business continuity. The SFR segment introduces additional operational risks including tenant defaults, renovation cost overruns, HOA restrictions, and fraud. The company's reliance on third-party service providers for critical functions (loan aggregators, servicers) adds further vulnerability.
The fintech lending space is highly competitive, with large incumbents and new entrants. Competitors with lower funding costs or broader product offerings could pressure margins. Pagaya's intellectual property, especially its AI models, is critical to its value proposition; any failure to protect or improve it could erode competitive advantage.
The provided excerpt from Pagaya Technologies Ltd. 10-K filing dated 2026-03-02 includes the index, audit report, and other sections but does not include the Consolidated Statements of Cash Flows. Therefore, no cash flow figures can be extracted.