Pagaya Technologies' Q1 2025: Navigating Key Contradictions in Fair Value, Production, and Macroeconomic Challenges

Fair value adjustments and impairments, macroeconomic uncertainty and business positioning, macroeconomic uncertainty and impact on production, prescreen product rollout and impact on FRLPC, and forward flow agreements and risk retention are the key contradictions discussed in Pagaya Technologies' latest 2025Q1 earnings call.



Revenue Growth and Profitability:
- Pagaya Technologies reported revenue of $290 million for Q1 2025, an increase of 18% year-over-year, with a record annualized run rate of nearly $1.2 billion.
- The growth was driven by efficient operations, a balanced focus on revenue and profitability, and a diversified lending partner network.

Fee Revenue and FRLPC Expansion:
- Fee revenue less production costs (FRLPC) grew by 26% year-over-year, reaching an annualized run rate of over $460 million.
- This expansion was due to increased lending partner contribution and a shift towards more profitable loan types.

Adjusted EBITDA and Net Income:
- Adjusted EBITDA more than doubled year-over-year to a record $80 million, with margins up over 10 percentage points to 27%.
- The company achieved positive GAAP net income of $8 million, the first time as a public company, reflecting improved operating leverage.

Macroeconomic Uncertainty and Risk Management:
- Pagaya acknowledged the heightened macroeconomic uncertainty but maintained a cautious approach to growth.
- The company's strong data capabilities and risk management framework, honed during previous economic cycles, position it to navigate potential volatility.