Pagaya Technologies 2025 Q1 Earnings Strong Performance as Net Income Swings to Profitability

Pagaya Technologies (PGY) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Pagaya Technologies surpassed expectations with a significant turnaround in its earnings, achieving a net income of $2.49 million, compared to a loss in the previous year’s quarter. The company raised its full-year revenue guidance, projecting total revenue to be between $1.175 billion and $1.3 billion. These results indicate a positive trajectory, supported by effective strategies and a focus on growth.

Revenue
Pagaya Technologies experienced a 19.3% increase in total revenue, reaching $282.70 million in Q1 2025, up from $237 million in Q1 2024. This growth was primarily driven by revenue from fees, which amounted to $282.70 million. Other income contributed $7.29 million, while interest income added $7.68 million. However, investment income recorded a loss of $391,000, culminating in a total revenue and other income figure of $289.99 million.

Earnings/Net Income
Pagaya Technologies returned to profitability with an EPS of $0.10 in Q1 2025, a significant improvement from a loss of $0.33 per share in Q1 2024, marking a 130.3% positive change. The company achieved a net income of $2.49 million, showing a 107.9% positive swing from a net loss of $31.66 million in Q1 2024. This EPS indicates a strong performance turnaround for the company.

Price Action
The stock price of Pagaya Technologies tumbled 10.50% during the latest trading day, edged up 2.65% during the most recent full trading week, and surged 17.19% month-to-date.

Post-Earnings Price Action Review
Over the past five years, a strategy of buying Pagaya Technologies (PGY) shares following a quarter-over-quarter revenue increase and holding for 30 days has returned -2.79%, underperforming the benchmark. This strategy has exhibited a Sharpe Ratio of -0.29 and a maximum drawdown of -4.46%. The compound annual growth rate (CAGR) stands at -0.70%, with volatility recorded at 2.40%. These metrics indicate that the strategy has faced challenges, with relatively high volatility and a notable maximum drawdown, which have contributed to its underperformance compared to the benchmark.

CEO Commentary
Gal Krubiner, Chief Executive Officer, emphasized the robust performance of Pagaya Technologies, noting an 18% year-over-year revenue growth and a significant achievement of positive GAAP net income of $8 million, delivered one quarter ahead of guidance. He highlighted the importance of a diversified growth strategy and the successful expansion of lending partners, stating, "We have more lending partners contributing meaningfully to our volume." Krubiner underlined the company's focus on responsible growth amidst macroeconomic uncertainty, affirming, "We are building a business for the long term to navigate all cycles," while expressing pride in the team’s accomplishments and the transformative impact Pagaya has on the financial ecosystem.

Guidance
Pagaya Technologies expects network volume for the second quarter of 2025 to range between $2.3 billion and $2.5 billion, with total revenue projected between $290 million and $310 million. Adjusted EBITDA is anticipated to be between $75 million and $90 million, while GAAP net income is estimated to range from breakeven to $10 million. For the full year, the company is increasing total revenue guidance to between $1.175 billion and $1.3 billion, with network volume expected to be between $9.5 billion and $11 billion, and GAAP net income projected in the range of $10 million to $45 million.

Additional News
Pagaya Technologies has recently diversified its funding sources, including a forward flow agreement with Blue Owl Capital to purchase up to $2.4 billion in loans over 24 months. This agreement aims to enhance Pagaya's financial flexibility and support growth initiatives. Meanwhile, macroeconomic and geopolitical uncertainties continue to pose challenges, impacting certain areas of Pagaya's operations. The company remains focused on managing these risks through strategic planning and disciplined execution. Additionally, Pagaya is advancing its pre-screen product to scale across partners over the next 12 to 18 months, aiming to optimize customer acquisition and engagement strategies. These developments highlight Pagaya's ongoing efforts to strengthen its market position and drive sustainable growth.