Pagaya's 2024 Q3 Results: Network Volume Surge and Strategic Initiatives

Pagaya Technologies Ltd. (NASDAQ: PGY) recently announced its third quarter and nine months ended 2024 results, showcasing significant growth and strategic progress. The global technology company, delivering artificial intelligence infrastructure for the financial ecosystem, reported a 11% year-over-year (YoY) increase in network volume, reaching $2.4 billion.
Pagaya's network volume growth was driven by several factors, including the continued growth with existing partners and the successful advancement of its sales pipeline. The company's personal loan network volume grew by 15% YoY, while point-of-sale (POS) network volume surged by 67% YoY. Additionally, Pagaya's strategic initiatives, such as the onboarding of a top 5 bank by total assets in its POS vertical and the integration of Elavon, U.S. Bank's POS business, further boosted its network volume.
The growth in personal loan and POS network volumes significantly impacted Pagaya's revenue and profitability. Total revenue and other income increased by 21% YoY to $257 million, driven by a 24% increase in revenue from fees. Pagaya's adjusted EBITDA margin improved by 846 basis points to 21.8%, reflecting the growing value delivered to lending partners. The company's fee generation and operating leverage also improved, with FRLPC as a percentage of network volume reaching a record 4.3%.
Pagaya's strategic initiatives, such as onboarding a top 5 bank and expanding its POS vertical, have significantly contributed to its network volume growth. These moves have helped Pagaya achieve an 11% YoY growth in network volume, reaching $2.4 billion in the third quarter of 2024.

Pagaya's focus on profitable, sustainable growth has significantly contributed to its fee generation and operating leverage. The company's record fee generation, with FRLPC as a % of network volume reaching a record 4.3%, reflects the growing value it delivers to its lending partners. This, coupled with ongoing operating leverage, has enhanced the flow-through of fees to Pagaya's bottom line, with core operating expenses as a % of FRLPC reaching its lowest level since the Company went public, at 52%.
In conclusion, Pagaya's 2024 Q3 results demonstrate the company's strong performance and strategic progress. With a focus on profitable, sustainable growth, Pagaya has successfully driven fee generation and operating leverage, leading to record adjusted EBITDA and adjusted net income. The company's strategic partnerships and sales pipeline advancements, coupled with structural improvements in its ABS program and expanded funding sources, have contributed to its impressive financial performance. As Pagaya continues to execute its 2024 strategy, investors can expect the company to maintain its momentum and deliver long-term value for shareholders, lending and funding partners, and U.S. consumers.