Pagaya Technologies (NASDAQ:PGY) reported record second-quarter results, with growth in auto lending and personal loans helping drive higher network volume, revenue, profitability and earnings per share. Management raised its full-year GAAP net income outlook by about 25% at the midpoint, citing visibility into the remainder of 2026 and continued operating leverage.
Chief Executive Officer Gal Krubiner said every major component of the company’s business model reached a record during the quarter, including network volume, fee revenue less production costs, adjusted EBITDA and earnings per share. He said Pagaya’s costs remained largely flat as volume grew, contributing to bottom-line gains.
Record Volume and Profitability
Pagaya reported GAAP operating income of $106 million, up 87% from a year earlier. Adjusted EBITDA rose 43% to $124 million, producing a 32% margin, up five percentage points year over year. GAAP net income was $45 million, compared with $16 million a year earlier, and quarterly GAAP earnings per share reached a record $0.49.
Dobres said core operating expenses declined 6% year over year and were lower sequentially, despite the increase in volume. Core operating expenses represented 31% of FRLPC, an eight-point improvement from the prior year.
FRLPC as a percentage of network volume declined about 60 basis points sequentially to 4.2%. Dobres attributed the change to product and partner mix, as newer products and partners enter at lower initial margins, as well as elevated benchmark rates that pressure funding-related margins. Management expects FRLPC as a percentage of volume to be between 4% and 5% for the rest of 2026.
Auto Growth Drives Network Expansion
President Sanjiv Das said auto lending accounted for more than three-quarters of Pagaya’s year-over-year network-volume growth. Application volume increased 29% from a year earlier, while application-to-volume conversion remained at roughly 1%.
Das said the company’s auto product has been expanded to provide dynamically optimized offers at the dealership. Rather than offering a single loan structure, Pagaya can adjust variables such as down payment, annual percentage rate, loan-to-value ratio and loan term to offer borrowers multiple potential structures.
Management said the approach is intended to help lending partners remain competitive at dealerships, where Das said approximately 83% of auto loans close. Pagaya said it is connected to more than 40% of the U.S. auto market.
Krubiner said growth also resulted from access to additional loan flow from partners, including applications that may previously have remained with lenders. He described the strategy as product-led growth, in which a product developed for one partner can be deployed more broadly across the network.
Personal loans also remained a major business line. Das said Pagaya’s Affiliate Optimizer Engine contributed more than $1 billion in network volume during the quarter. The company expects to add more personal-loan partners to Experian Activate this year and said it expects several new partners, including regional banks, to go live in the second half.
Point-of-Sale and Funding Developments
Management said point-of-sale volume is expected to decline later in the year because one POS partner is rolling off. Dobres said that partner had little effect on FRLPC margins, and the company expects volume to ramp again as it scales newer POS relationships. Das cited existing relationships with Sezzle, Flex Pay and Upgrade, along with discussions around areas such as home-improvement loans and purchase financing.
On the funding side, Pagaya raised $3.7 billion during the quarter and completed six asset-backed securitization transactions, including its largest auto securitization, totaling $600 million. The company added 11 investors, bringing its investor network to 174, and said its last three securitizations were upsized.
Dobres said approximately 40% of current flow comes from funding channels other than pre-funded ABS transactions. The company continues to use forward-flow arrangements, longer-term revolving structures and other committed capital sources to diversify its funding.
As of June 30, Pagaya held $249 million in unrestricted cash and cash equivalents and $1.04 billion in investments in loans and securities. About 50% of its investments were in bond tranches, compared with less than 30% in 2025, according to Dobres. The investment portfolio was adjusted downward by $42 million during the quarter, while the company added $118 million of new investments net of prior-deal paydowns.
Updated 2026 Outlook
For the third quarter, Pagaya expects network volume of $3.425 billion to $3.625 billion, total revenue and other income of $370 million to $390 million, adjusted EBITDA of $120 million to $130 million, and GAAP net income of $42 million to $52 million.
For the full year, the company now expects:
- Network volume of $12.5 billion to $13.25 billion;
- Total revenue of $1.425 billion to $1.525 billion;
- Adjusted EBITDA of $460 million to $490 million; and
- GAAP net income of $155 million to $180 million.
Management said underwriting standards have not changed. Krubiner said Pagaya continues to monitor credit conditions and adjust pricing and risk selection as needed. Das said the company had previously reduced exposure to its highest-risk tiers and characterized the current borrower profile in personal loans as having average income of about $120,000, an average FICO score of roughly 680, 37% homeownership and an average debt-to-income ratio of approximately 28%.
Dobres said Pagaya does not anticipate significant acquisitions in its near-term outlook, though the company continues to assess opportunities and views bond purchases as an attractive use of capital.
About Pagaya Technologies (NASDAQ:PGY)
Pagaya Technologies is a financial technology company that applies artificial intelligence and machine learning to the credit and asset management industries. Through its proprietary data-driven platform, Pagaya analyzes vast datasets from consumer credit portfolios to build predictive risk models, enabling institutional investors to gain access to alternative credit products. The company’s solutions streamline underwriting, optimize portfolio construction and facilitate the efficient securitization of consumer loans, credit card receivables and other asset classes.
Founded in 2016 and headquartered in New York, Pagaya has expanded its operations to serve financial institutions and asset managers primarily in the United States.
