0001883085-25-000169
SEC filingRevenue up 30% YoY driven by Network Volume growth and improved AI integration fees, with operating income turning positive.
For the three months ended June 30, 2025, Pagaya reported total revenue and other income of $326.4 million, a 30% increase from $250.3 million in the same period of 2024. Revenue from fees rose 31% to $317.7 million, driven by a $64.1 million increase in Network AI fees, which benefited from improved economics in AI integration fees from certain partners and 13.6% growth in Network Volume to $2.6 billion. Contract fees increased by $11.0 million to $31.8 million due to higher net asset values in Financing Vehicles. Interest income grew 31% to $10.7 million, while investment loss widened to $2.1 million from $0.4 million.
Production costs increased 31% to $191.5 million, in line with Network Volume growth and mix. Operating expenses declined modestly: technology, data and product development costs fell 16% to $18.5 million due to lower compensation and depreciation; sales and marketing rose 47% to $19.7 million on higher compensation; general and administrative costs dropped 37% to $40.3 million, driven by lower loan purchase losses and compensation. Operating income improved significantly to $56.5 million from $5.0 million.
Other expense, net decreased by 52% to $34.9 million, primarily due to a $38.0 million reduction in credit-related impairment losses on investments. Income tax expense fell 66% to $5.0 million. Net income attributable to Pagaya was $16.7 million, compared to a net loss of $74.8 million in the prior year. Basic EPS was $0.20 versus a loss of $1.04.
For the six-month period, total revenue and other income grew 24% to $616.4 million, with revenue from fees up 25% to $600.4 million. Network AI fees increased by $102.3 million, while contract fees grew $18.6 million. Production costs rose 23% to $358.5 million. Operating income reached $104.2 million, up from $12.7 million. Adjusted EBITDA for the six months was $165.9 million, up from $90.1 million.
The MD&A does not provide segment-level financial data. Pagaya operates across multiple asset classes including personal loans, auto loans, residential real estate, and point-of-sale receivables. The mix of these asset classes influences production costs and fee revenue, but no discrete segment disclosure is included in this section.
Management highlighted that as of June 30, 2025, the company had $242.0 million in cash, cash equivalents, and restricted cash, which is expected to be sufficient for the next twelve months. Key factors affecting performance include the continued expansion of existing partner usage, onboarding of new partners, improvements in AI technology, and the availability and pricing of investor funding. The company noted that macroeconomic conditions, including elevated interest rates and inflation, could impact consumer demand and funding costs. Pagaya remains focused on profitable growth and operational leverage, as reflected in the improvement in FRLPC % to 4.8% from 4.2% in Q2 2025. Additionally, the company completed a $500 million senior notes issuance in July 2025, using proceeds to repay higher-cost debt, which is expected to reduce interest expense going forward. The loss of emerging growth company status and transition to large accelerated filer status will increase compliance costs but is not expected to materially affect operations.
As of June 30, 2025, Pagaya held $183.0M in cash and cash equivalents, plus $59.0M in restricted cash, totaling $242.0M in liquid assets. Total debt stood at $727.6M, comprised of $314.5M long-term debt (net), $147.5M exchangeable notes, and $265.6M secured borrowings. Shareholders' equity was $468.0M.
The company has a $2.1M purchase commitment for cloud computing services, with $1.7M due within the next 12 months. Additionally, there are guarantees with a maximum potential future payment of $86.9M, of which $51.7M is segregated as restricted cash.
In a subsequent event on July 28, 2025, Pagaya issued $500M in senior unsecured notes due 2030 at 8.875% interest. The proceeds were used to repay $332.1M of long-term debt and $58.1M of secured borrowings, resulting in a net increase in total debt. No share buybacks or dividends were disclosed.
No segment-level reporting is provided in the Notes. Revenue is disaggregated into Network AI fees and Contract fees, but not by geography or business line.