Pagaya Technologies Ltd. (PGY) Q2 2023 Earnings Call Transcript

Pagaya Technologies Ltd. (NASDAQ:PGY) Q2 2023 Earnings Conference Call August 10, 2023 5:00 PM ET

Company Participants

Jency John – Head of Investor Relations

Gal Krubiner – Chief Executive Officer

Michael Kurlander – Chief Financial Officer

Conference Call Participants

Eugene Simuni – MoffettNathanson

Rayna Kumar – UBS

Joseph Vafi – Canaccord Genuity

Michael Legg – The Benchmark Company

Hal Goetsch – B. Riley Financial

David Scharf – JMP Securities

Vincent Caintic – Stephens

Operator

Good day and welcome to Pagaya’s Second Quarter 2023 Earnings Call. Today’s call is being recorded.

At this time, I would like to turn the call over to Jency John, Head of Investor Relations.

Jency John

Thank you and welcome to Pagaya’s second quarter 2023 earnings conference call. Joining me today to talk about our business and results are Gal Krubiner, Chief Executive Officer of Pagaya; and Michael Kurlander, our Chief Financial Officer. You can find the materials that accompany our prepared remarks and a replay of today’s webcast on the Investor Relations section of our website at investor.pagaya.com.

Our remarks today will include forward-looking statements that are based on our current expectations and forecasts and involve certain risks and uncertainties. These statements include but are not limited to, our competitive advantages and strategies, macroeconomic conditions and outlook, future products and services, and future business and financial performance.

Our actual results may differ from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are described in today’s press release and in our Form 20-F filed on April 20, 2023, with the US Securities and Exchange Commission, as well as our subsequent filings made with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events.

Additionally, non-GAAP financial measures, including adjusted EBITDA, adjusted net income, and fee revenue less production costs. Our FRLPC will be discussed on the call. Reconciliations to the most directly comparable GAAP financial measures are available in our earnings release and other materials which are posted on our Investor Relations website.

Before we begin our prepared remarks, we want to note that this quarter, we published our inaugural shareholder letter in lieu of our usual earnings presentation. We encourage you to review the shareholder letter, which was furnished with the SEC on Form 6-K today for detailed commentary on our business and performance in conjunction with the accompanying earnings supplement and press release. All documents are available on our Investor Relations website.

With that, let me turn the call over to Gal.

Gal Krubiner

Thanks, Jency. At Pagaya, we strive for continuous improvement. As mentioned, we are committed to providing our existing and future shareholders communication that is transparent and comprehensive. Our shareholder letter is a reflection of these commitments and you can expect to see more of that in the future.

We had a strong second quarter, exceeding the high end of our guidance across all our KPIs. Network volume, total revenue, and adjusted EBITDA. Our performance reflects our ability to consistently deliver for the lenders and investors on our network. We delivered record network volume in the second quarter of approximately $2 billion, despite an historical low conversion rate in light of the current macro environment.

Our lending partners are sending more applications our way, as they tighten their own credit boxes and investors continue to come to us to invest their capital. The demand is high for our products on both sides of the network. Total revenue grew by 8% year-over-year to $196 million. We are earning more fees on our lending platform product as demand grows. That resulting in growth in our fee revenue less production costs, both year-over-year and compared to Q1 2023.

Adjusted EBITDA grew to $17.5 million more than triple the prior year period and our second highest EBITDA in our history. With the continued momentum in our business, we are raising our network volume and adjusted EBITDA outlooks for the full year, which Mike will speak to more in a minute.

Now let me spend a few minutes discussing our business for those of you who are new to our story. I encourage all of you to read our shareholder letter index, which discuss our product offering and platform in more detail. Pagaya is designed to solve a critical problem in consumer credit. An estimated 42% of Americans are denied access to credit or don’t get as much credit as they would like under traditional underwriting systems.

Our mission is to unlock that opportunity with technology to help more people get access to more credit. To address this problem, we created a two-sided tech-enabled network that connects the lenders, who originate loans, to investors, who want to purchase those assets. Lenders who integrate with Pagaya’s network originate more loans, gain new customers, and earn more revenues, and all of this without taking any incremental risk.

On the other side of our network, institutional investors get access to diversified and high-yielding asset pools at scale. We have pioneered the network comprised of two distinct products, a lending product, and an investor product. We believe this model gives Pagaya an edge over other structures. We are proud of the organization we’ve built. Housing best-in-class lending technology and asset distribution capabilities on one platform.

We hired leading experts in their respective fields. Lending and financial market industry veterans and world-class engineers. As a result, Pagaya offers a value proposition to lenders and investors that we don’t believe is replicated anywhere else today and will be difficult to build organically at this scale.

On the lender side of the network, our product suites provide access to fully automated credit decisioning technology, secured debt exchange in analytics and real-time funding of any loan originated. The product is deeply embedded in each lender’s loan origination system, we are customized seamless APIs. Once integrated, our product allows for smarter and faster credit evaluation with ability to evaluate and price a loan in less than half a second. All of this results in a sticky product, evident by the fact that we have grown to over 25 lending partners and since inception, no lender has left our network.

Institutional investors on the other side of the network, connect to a distribution platform that delivers a continuous flow of billions of dollars of assets across multiple markets. Including personal loans, auto, and point of sale. In the first half of the year, we raised $3.1 billion across seven different ABS deals. And just closed on our most recent $800 million personal loan deal in July. We were once again the number one personal loan ABS issuer in the second quarter. Our reputation as a benchmark issuer and our performance track record continue to draw new investors to our network.

We continue to see improving trends in asset performance. Early stage delinquencies for recent personal loan and onto vintages, our two largest markets continue to decline, while the weighted average coupon remained stable. This translates to improving returns for investors enabled by our continued low conversion rate. The flywheel effect is fueled by hundreds of millions of data points that flow through our network, which enables better outcomes for both existing and future network participants.

The real impact is that over $7 billion of assets were created last year in the consumer finance ecosystem that would not have been created, if it were not for Pagaya. The strength of our product offering reinforce my confidence in our ability to grow existing partners, add new ones, and attract new investors. With the pipeline we have today, we believe we can grow our network significantly over the next few years.

And to my fellow Pagayans, I’m incredibly grateful for your hard work and commitment to achieving our mission of increasing access to credit for more consumers across the country.

With that, let me pass it over to Mike to discuss our financial results in more detail.

Michael Kurlander

Thanks, Gal. We exceeded all of our performance target this quarter, reflecting the momentum of the business and our focus on profitable growth. While macro headwinds continue, we remain focused on what we can control. Lenders are sending more applications our way as we tightened their own credit boxes, enabling us to deliver our highest ever network volume, while managing to a historically low conversion rate.

On the investor side of the network, we’re starting to see some green shoots with market liquidity starting to recover from the significant volatility we saw last year. Investor sentiment appears to be improving with consumer unsecured ABS issuances higher this quarter than the prior two sequential quarters, supporting our ability to continue to raise capital to fund new loan origination.

We continue to improve unit economics as we scale. Total revenue and other income grew 8% year-over-year to $196 million. Revenue from fees, which made up 95% of total revenue in the second quarter grew by 14% year-over-year. Our take rate defined as revenue from fees as a percentage of network volume grew by 110 basis points year-over-year to 9.5% and remained stable sequentially.

Production costs grew by 15% year-over-year and amounted to 6.2% of network volume in the second quarter, 80 basis points above second quarter ’22 and a decline of 60 basis points sequentially versus 1Q ’23. The net result is that our FRLPC, a measure of gross profit grew by 12% year-over-year and 30% sequentially, amounting to 3.3% of network volume, which is within our target range of 3% to 4%.

As you can see in our shareholder letter and page seven of our earning supplement, this growth is primarily a function of the evolving composition of our fees, as well as partner and product mix. As a reminder, we earn margin on both sides of our network, on both our partner product and our investor product. In today’s environment, we see increased reliance on our lending partner product as our lending partners tightened their own credit standards and face more challenging funding markets.

As a result, we are earning higher margin on the lending side of the network. This is helping to offset the lower fees we’re currently earning on the investor product in today’s higher cost of funding environment. The resulting growth in FRLPC was the key driver of our EBITDA delivery this quarter. Demonstrating the ability of our two-sided network to deliver consistent results.

Moving on to operating expenses. Our total research and development, sales and marketing, and general and administrative expenses were approximately $85 million in Q2, down significantly from the prior year quarter, which was impacted by one-time stock-based compensation expenses related to our transition to becoming a public company.

As we said in Q1, our goal this year is to deliver $50 million in annualized cost saving, excluding the impact of our recent Darwin acquisition. We delivered on this target earlier than our original expectation by accelerating our cost savings initiatives, which included actions to reduce both compensation and non-compensation expenses.

Core operating expenses, excluding stock-based comp, depreciation and one-time expenses declined by $12 million versus the fourth quarter of 2022 or roughly $50 million in run rate savings. The resulting operating leverage enabled our FRLPC expansion to drop straight to the bottom-line. We delivered adjusted EBITDA of $17.5 million, compared to $5 million in the second quarter of 2022. We believe, we are on track to continue to deliver sustainable profitability over the long-term, supported by the strengthening of our value add to our partners and investors and the operating leverage embedded in our business model.

Given the strong momentum of our business in the first-half of the year, we are raising our full-year outlook ranges for network volume and adjusted EBITDA. Our outlook for the third quarter and fiscal year 2023 reflects a few assumptions. First, we expect to remain prudent in our conversion rate of application volume, in light of the ongoing macro uncertainties.

Second, we continue to target FRLPC as a percentage of network volume of 3% to 4% as our network growth and we strengthened our value proposition to both our partners and investors. While economics on our partner product have been improving, we are not factoring in any material improvements in financial markets, which can impact the level of capital markets execution fees we earn.

Finally, we will continue to focus on cost discipline and driving operating leverage. In the third quarter of 2023, we expect network volume to range between $1.9 billion and $2 billion. Total revenue and other income to range between $190 million and $200 million and adjusted EBITDA to range between $10 million and $20 million.

For the full-year 2023, we expect network volume to range between $7.6 billion and $8.1 billion. Total revenue and other income to range between $775 million and $825 million and adjusted EBITDA to range between $40 million and $50 million.

With that, let me turn it back to the operator for Q&A.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] Our first question is from Eugene Simuni with MoffettNathanson. Please proceed.

Eugene Simuni

Hi guys, congrats on a strong quarter. Wanted to start with network volume trends. So good to see it exceed expectations. So can you talk a little bit more detail about what allowed network volume to be as strong as it was maybe the attribution across better-than-expected macro environment, better-than-expected demand from your existing customers for a higher level of success with onboarding new customers that would be very helpful?

Michael Kurlander

Hey, Eugene. It’s Mike. Thanks for the question. You’re right, we did see a network volume hit a record level this quarter and really what that was driven by to start with was, really strong demand from both sides of the network. On the investor — on the partner side, we had 20% increase in application flow and that’s really the core driver and we also saw increased demand on the investor side as well, and that led to the network volume. Now within that actually, actually see that the macro headwinds were still with us and one of the things that we control on our side is the conversion ratio of that increased application flow.

We kept our conversion ratio very, very low this quarter, and that’s really a function of us being very prudent in light of the existing macro. Our core — one of our core responsibilities of course is to create returns and the right returns for our investors. And so, even though we had higher demand from our lending partners, we kept the conversion ratio really tight and within that, we delivered record network volume. And so that gives us a lot of encouragement around where we think we can go in the future in the embedded growth that’s within the network. When we can pull that conversion ratio a little bit higher.

Eugene Simuni

Got it. That’s very helpful and then follow-up on that, can you talk a bit about your success with capture and on boarding new customers especially larger US banks?

Gal Krubiner

So, Hi Eugene. This is Gal, I’m going to take this one. So when we are speaking about where we are spending in the pipeline, we feel very confident in our pipeline today. We actually think we can land another big bank partner over the next 12 months and we are actually in conversations with many of the top 25 banks that they are seeing the unique product that we are offering to the lenders. Part of the context for that is some headwinds in the banking industry that liquidity might be more constraint and therefore the fact that we can allow for the ability to progress more loans with consumers is actually something that they are very much in like and therefore is giving us a little bit of tailwind for that ability.

We did work in the last year if you remember a little bit about we’ve invested not a little bit about moving our product to become more AAA rate for banks, and we’re feeling very strongly that our offering right now is in the level at this stage. That is relevant and therefore we are — we expect to see more conversions coming through based on the airline cloud success we had in the past.

Eugene Simuni

Got it. Okay, thank you.

Operator

Our next question is from Rayna Kumar with UBS. Please proceed.

Rayna Kumar

Hi, good evening. Thanks for taking my question. Just wanted to start with your third quarter guidance. I noticed that the midpoint of your 3Q guide implies a 120 basis point quarter-over-quarter decline in adjusted EBITDA margin. Just curious, if that’s seasonality or if there’s any other underlying drivers there?

Michael Kurlander

Hey, Rayna, it’s Mike. I’ll take that one. Thanks for the question. Let me, maybe take a step back for a second and just mentioned that, we’re definitely pleased with the gains that we’ve been able to put through in terms of our profitability this year. And your question was on third quarter. But when you think about the full-year, we’re now expecting to be $40 million to $50 million that’s 10 times where we were last year.

We’ve been able to do that because we took — we’ve been able to increase our FRLPC margin and really that’s all dropped to the bottom line. So the core driver is our gross margin increasing in that operating leverage that’s really been able to drop all way down to the bottom line.

And to your question, and as a reminder, we are still a growth company. And so as we move forward, we do expect to see opportunities to invest in our growth and that’s really all going to be driven just by a long-term focus on the company expanding and growing. And as we expand the network, we’re going to continue to invest in our product, but continue to — continue the trend to profitability that you’ve seen so far this year.

Rayna Kumar

Got it. That’s very helpful. And then just another question on conversion rates, of course, the macro environment still remains very fluid. But with more talk of a soft landing here is, the Fed were to pivot, how would you manage conversion rate? Would this be a signal to begin lifting conversion rate? And would it be an immediate transition or would there be a few quarter lag before you become more constructive on it?

Michael Kurlander

Here’s the way we think about it, Rayna. Really rates are a bit of an indirect impact to us, because we’re not a direct lender. And our job is really to manage the investor returns holistically in terms of whatever is driving their investor returns and their hurdles. So the way we think about it is, we will lift our conversion rates when we feel comfortable to do so that it meets our investor return thresholds. Obviously, those hurdles will come down and it should come down when the macro becomes more stable.

And from a response perspective, I think one of the things that we’re really proud of around what we’ve built here is that our response is in real time. And you can go back to late ‘21 when we started to see trends of consumer behavior deteriorating. We responded in real time and on the other side, when we see the environment improving, we also expect to respond in real time.

Now with all of that said, we’ve definitely — they said before are going to maintain prudent with the conversion rate in light of the continued macro and within that we were able to produce record volume and we will look forward to improving that conversion ratio as soon as we feel comfortable that the macro is stabilizing.

Rayna Kumar

Got it. Thank you.

Operator

Our next question is from Joseph Vafi with Canaccord Genuity. Please proceed.

Joseph Vafi

Good afternoon, nice to see good solid demand from both sides of the network. Maybe, we just start I know application, it does feel like application flow was also growing not just network volume. I know you didn’t really disclosed that. But wanted to get a feel, if there is a kind of a range or a band that you wanted to throw out on what application flow growth might have been. And then also, I know you said that conversion rate was also muted. But was wondering, if you dialed that down at all in the quarter or was it kind of more flattish sequentially and then I’ll follow-up.

Michael Kurlander

Hey, Joe, it’s Mike. Yes, our application flow this quarter was up 20% sequentially over the prior quarter. So the top of the funnel for us is really healthy. We’re really excited to see that growth come through. Now, if you think about that. In the range of how that translates into network volume, the application flow kinds our conversion rate is, ultimately, what drives our network volume. We see — we saw roughly $200 billion in additional application for this quarter. And so, think about that in terms of our conversion ratio, we can produce in the order of 20% higher network volume to the extent we can produce 20% higher in the conversion ratio. That’s the way we think about it, is we’re managing to a pretty low conversion ratio right now, slightly below 2%, and there’s a lot of embedded growth in that as we can grow that conversion ratio from there. Does that answer your question?

Joseph Vafi

Yes, that makes sense. Obviously, I think with that kind of sequential growth and clearly, you got to filter that down and be prudent. So that makes total sense. Just wanted to dig down also into FRLPC margin or as a percentage of network volume and kind of connect that back to your commentary on investor side of the network fees being a little muted and that margin was up, I guess to 3.3% here in this quarter versus 3% a year ago?

And I know that the lender side is doing well. I’m just trying to get a feel for was — would you say that margin year-over-year and FRLPC as a percentage of network volume is down on the investor side or do you think it’s flat year-over-year and then the gain was coming from the lender side, if that question makes sense? Thanks.

Michael Kurlander

Sure. Really the gains that we’ve seen is really on the partner product. Demand on the partner product side has been very strong as our partners are relying on us more for growing their business and actually converting more of their application flow. Now when you think about that overall, we’re really pleased about the evolution of our FRLPC by product. So we talked to you — remember, we talked last quarter about some of the new initiatives we had for economics unit, growing our unit economics on the partner products side.

This quarter going to 3.3%, you’re seeing the full quarter impact of those taking hold. Now as you said, we’re actually seeing lower contribution from FRLPC on the investor side. Now, we expect that will come back with market liquidity. But right now, if you think about where we were a year ago versus today, what we’re really excited about it, we now have a much more balanced approach and much more balanced mix of our FRLPC between the partner side and the investor side and then actually encourage you to look, there was — there is a slide we put into the financial supplement. But actually break this out going over the last few quarters and so you can see that in the investor deck.

Joseph Vafi

Awesome. Thanks, very helpful, thanks, guys.

Operator

Our next question is from Michael Legg with The Benchmark Company. Please proceed.

Michael Legg

Thanks. Great quarter guys. Can you talk a little bit about the ABS funds raised, the performance of those funds have done and how it impacts current raises? And then kind of relate that a little bit to your exposure to your investments in that? And then further how — if that limits your capacity and the ability to raise those funds or is that you obviously the largest one that maybe ask can you raise as much as you want? And then by the amount of ways how that impacts your decisions on the conversion rate? Thanks.

Gal Krubiner

Hi, Mike. It’s Gal here. So I will take the first part and then Mike will chime in. So from a funding perspective, we definitely see an improvement in market conditions. I think both from the terms of the liquidity in the market, Q4 was the bottom and hence then we see that it in productivity. And in that capacity, I think, like what we are seeing very clearly is it a repeatable strongest wells like ourselves are getting traction, but smaller shelves et cetera are not really managing to close deals.

So it’s like kind of like talking to the scale and the importance of scale and believing these things in motion. Just to give you one example in July, we upsized the deal, an ABS deal from $600 million to $800 million at the peak of the older book we had $2 billion of orders. So that speaks to the strength and the ability of the team to deliver that capabilities into a funding strategies that are becoming very material for our ability to perform in different market conditions.

Now to the side of the investment, Mike do you want to take it?

Michael Kurlander

Yes. From a balance sheet perspective, actually quite manageable and I’ll explain why. As you know, we don’t actually put loans on our balance sheet. And so really our only asset on the balance sheet is the risk retention, which comes from issuing ABS and the 5% mandatory holdings that we have to put on the balance sheet.

And so if you think about that 5% and the fact that every quarter, we’re actually receiving cash flows from our private — prior investments, actually we had material cash flows this quarter from prior investments around $65 million. And the fact that we’ve been able to grow and diversify our funding facilities for the investments in loans and securities. That means that the actual net outflow from a cash flow perspective is in the 2% to 3% range.

So that gives us actually a long runway to be able to continue to grow the business. Obviously, long term will diversify and actually supplement the ABS distribution mechanism with other funding products that don’t have the same balance sheet requirements. But in the near term, we feel really good about the position we’re in.

Michael Legg

Great. Congrats on the quarter. Nice job.

Operator

Our next question is from Hal Goetsch with B. Riley Financial. Please proceed.

Hal Goetsch

Could you give us a perspective of this application flow $200 billion in the quarter is the staggering sum of money. Only about $2 billion of it is actually closed on 1% and that’s a huge number, very selective process. Could you tell us more about, what — tell us more about that? And also maybe the mix of this application for how much of it is coming from auto and different private loans and also it was a year ago on application flow. Thank you.

Michael Kurlander

Sure. So it’s Gal here. From the level of application flow, I think the important piece to share is the importance of seeing this flow even if a conversion is happening or not, because part of that is the data that we’re collecting and our ability to reach to a bigger and better parts of them American consumer parts. We are choosing actively both because of the food business and some other advanced if you need to do on the modeling side to be focus on small population of that and to be able to deliver that.

But when you think about the network itself as a product or as a connectivity from that perspective, I think we are now seeing something like almost a trillion dollar level of application yield and therefore you can imagine the ability to create a lot of value and to monetize that over time, we’ll not end up in the 1% or the 2%. As such, and we find more and better ways to be able to do that.

From a growth perspective on the network side, again, rough numbers, I will say, it’s like over 100% over the last few years. So and from that perspective, I would say that majority are coming from home to loans and PL, on the PL side, it was more flow from partners and also it was new partner that we have committed to bringing up. A last example that I will leave it with you is that for example application on point of sale, like a year ago, we didn’t have our partner Klarna and this time around, we are seeing lot of complications through that, is a total new space that our network was exposed to and now we’re starting to ramp up that connected data and obviously taking a better model.

The last piece I will say is like, internally we believe that like AI capabilities could improve the ability to convert by 30% year-over-year, 20% to 30%. To that extent, this macro situations could change that over the short-term period. But like what we’re building here and seeing that is how we monetize that piece out of the network and connectivity that they share and that’s really the secret sauce.

Hal Goetsch

Thank you.

Operator

[Operator Instructions] Our next question is from David Scharf with JMP Securities. Please proceed.

David Scharf

Hi, good afternoon and thanks for taking my questions. I appreciate all the color on sort of the current cyclical backdrop maybe can focus couple of questions on just future new business in secular growth. First is, I’m curious on the personal loan side. The bulk of the volume is still originated by sort of legacy branch-based companies like the One Mains, Mariners, World Acceptance, Landmark and so forth. Obviously, your partners are our digital lenders. I’m curious, are any of these sort of legacy non-prime, near prime personal lenders exploring using third party services like yours for handling turn downs?

Gal Krubiner

Yes, definitely. So to my comments in the earlier of the Q&A. We are speaking with top 25 banks, part of the compensation over there are personal loans. We actually had two very — two prospects that we have in discussions on this basis and other relevant. So I would say definitely, I think — if I take a step back, the banking industry is really interested in three main products. The personal loan, the auto and the point of sale. Point of sale obviously something that is a little bit more new that people are trying together hands around and place in market share.

And then from an auto perspective, there is a lot of maturity in that space is and it’s just a matter of getting into that we are a little bit more relevant to the subprime side rather than the super-prime banks are going with super-prime relevant for us. And on the PL, it’s more a complementary product that’s usually banks must offer to their customer base and that’s where we see the biggest success from a PL perspective on the traditional.

David Scharf

Okay. Maybe a good segue to my next question, which was to get a little better understanding on maybe what products you’d be involved in with the large banks? I mean the companies I just rattled off were non-bank financials and specifically, it’s because large banks historically have just not care that much about personal loans, it’s been sort of an afterthought asset class they dabble in here or there, so recognizing that.

And then on the subprime auto side, you already have really good penetration with a lot of leading subprime auto lenders, based on who is in your securitizations. So as it relates to asset class with a large bank, is it on the card side point of sale, because once again, we kind of know that personal loans is not a real big feeling within the banking community. Is card or revolving credit something that they’re interested exploring with you?

Unidentified Analyst

As long as you keep it on the counter by you, you’d be fine.

Gal Krubiner

So I’m not sure who — that I think look like to that — to your question. I think if you look on the full growth strategy of the company. The answer is all of them. The capabilities the Pagaya has is really divided to two. Through the product connectivity to the banks, becoming bank lenders, becoming very embedded in their loan origination systems and different parts of the system that needs to be able to maintain that in a seamless API integrator. The second piece is the ability to take all of that data and to create from an AI liability to approve more volumes and then the third piece is the distribution of these assets into the investor communities.

So when you think about that. The same flow works in personal loan, auto loan, POS and credit card. And then when you asking yourself. What is the growth strategy that you wanted to sway, your after the question of opportunity versus effort versus capabilities. But when we started from the PL space, and to your comment, PL is definitely much smaller than credit cards.

But because we have so much knowledge and capabilities in that is very natural for us to continue to explore that with banks, even if it’s not the biggest part of their books. And on the very high — the second side of the discussion, you have the credit cards, which is by far the biggest opportunities with banks, but we don’t have the fully yet mature credit card part.

Actually on the credit card part, we have a partnership with Visa to be able to we selling they’ll go to be able to persuade it and to bring that capabilities and offering and products to the banks, which is in motion and in works. And I would be swipe POS as the new merger, the DC is definitely starting to become much more interesting that most of the banks we are speaking with having internal initiatives, which we are kind of like connecting into that response strategy. So I hope that gave you the color.

David Scharf

Yes, no, very much thank you and congrats, just terrific results today.

Gal Krubiner

Appreciate that.

Operator

Our final question is from Vincent Caintic with Stephens. Please proceed.

Vincent Caintic

Hi, good afternoon, and thanks for taking my questions. And it’s nice to see both good volume growth, as well as good EBITDA growth as well. I wanted to — if you could kind of talk about your business versus — compare versus the rest of the fintechs, the lending fintechs in the industry, because it’s interesting to see your strong growth, your ability to launch several ABS this year so far, as well as sign on and be signing on new bank partners.

Whereas, it seems like in the industry the other companies that have reported so far this quarter are talking about banks being conservative, pulling back from their platform, some of the marketplace lenders are struggling for volume as well. So it’s nice to see Pagaya’s growth, and I was wondering if you could maybe from your perspective, describe how you’re able to have these partnerships succeed. Thank you.

Michael Kurlander

Hey, Vincent. It’s Mike. Thanks for the question. Look, I really think it comes back to a little bit of the business model and we are in a very unique position in the ecosystem. A number of players that you just spoke about are actually partners of ours. Our business model, when we were formed is really to solve the problem of consumers not getting access to credit. We sell that through technology and data, but we do that through partnering with lending institutions. And so, as they look to grow their businesses, whether that be a fintech or large bank, we’re partnering with them and helping them actually grow their underwriting and their lending volumes.

And then actually connecting those assets on the other side with investors who are looking for exposure to the underlying assets. That’s very different than the way most other participants play in the market. Most are either on one side or the other side of that equation. And what I feel like we’ve tried to do over our history is, really be in the middle actually complementing what everyone else is doing and that’s led to a lot of the growth that you’ve seen, because we have a really unique vantage point in that. We’re seeing, not only all the data science that comes with all the publicly available data that others could get as well, but we’re also then seeing the application flow from 25 different lending partners.

And we believe that gives us a bit of an edge in terms of applying that the data science to that amount of information that we see coming through every day. And the core focus of just the actual capability itself as opposed to the other aspects of running a consumer-facing business. We feel like that’s actually put us in a really good position to deliver not only for our lending partners and ability to grow their Network Cloud, their volume, but then also for our investors who are looking for access to these sorts of assets, and we feel like our business model has allowed us to do those sides.

Vincent Caintic

That’s very helpful. Thanks very much.

Operator

We have reached end of our question-and-answer session. I would like to turn the conference back over to Gal for closing remarks.

Gal Krubiner

Thanks, operator. I’m proud of our accomplishment this quarter, which I believe reflects the strength of our organization we have built. We continue to exceed our short-term goals, while advancing our long-term growth strategy to expand our network. Above all, we continue to be driven by our mission of delivering more financial opportunity to more people. Thank you all for joining today and we look forward to building our partnership with you. Thank you.

Operator

Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.