Release Date: February 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you provide more details on the fair value marks in the quarter and what gives you confidence that there won't be ongoing fair value marks as we go through 2025? A: Gal Krubiner, CEO, explained that the impairments were primarily related to 2023 vintages due to challenging funding conditions. The company has built a robust infrastructure to predict outcomes better and does not expect similar losses in the future. Evangelos Perros, CFO, added that the 2023 vintages were marked down significantly, but the credit performance is better than previous years. The company has optimized ABS structures and diversified funding sources to mitigate future risks.
Q: How should we interpret the guidance on slide 21 regarding write-downs and impairments in the loan portfolio? A: Evangelos Perros, CFO, clarified that the base case drives the expectation for 2025, with scenario A providing an additional $100 million to $150 million potential impairments, if any. This scenario is included in the full-year guidance for 2025, not specifically for Q2.
Q: Can you discuss the factors influencing the wide range in network volume growth guidance for 2025? A: Gal Krubiner, CEO, stated that Pagaya perceives itself as a network rather than an originator, focusing on adding more customers and products. The company aims for a steady 20% CAGR over the cycle, driven by factors like model performance, product sales, partner acquisition, and cost of capital. Sanjiv Das, President, added that predictability is crucial for partners, and the operating environment appears stable.
Q: How do you see the mix of network volume evolving this year, particularly with point-of-sale (POS) loans? A: Evangelos Perros, CFO, mentioned that personal loans will continue to grow, but the focus is on higher ROI areas like auto and POS loans. Sanjiv Das, President, highlighted strong growth in POS, with partnerships like Elavon and Klarna driving expansion.
Q: Is it too early to establish a normalized fair value adjustment margin or percentage of FRLPC or network volume? A: Gal Krubiner, CEO, indicated that while some assumptions are stable, the company is not yet ready to characterize it as a percentage. The GAAP net income guidance includes some fair value adjustments, and further details can be discussed post-call.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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